C H ROBINSON WORLDWIDE INC, 10-Q filed on 5/9/2017
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2017
May 5, 2017
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
C H ROBINSON WORLDWIDE INC 
 
Entity Central Index Key
0001043277 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2017 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q1 
 
Amendment Flag
false 
 
Trading Symbol
CHRW 
 
Entity Common Stock, Shares Outstanding
 
140,928,814 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 229,794 
$ 247,666 
Receivables, net of allowance for doubtful accounts of $39,508 and $39,543
1,802,777 
1,711,191 
Prepaid expenses and other
60,039 
49,245 
Total current assets
2,092,610 
2,008,102 
Property and equipment, net
235,059 
232,953 
Goodwill
1,240,950 
1,232,796 
Other intangible assets, net
162,945 
167,525 
Deferred tax asset
3,527 
2,250 
Other assets
40,653 
44,132 
Total assets
3,775,744 
3,687,758 
Current liabilities:
 
 
Accounts payable
893,237 
839,736 
Outstanding checks
74,020 
82,052 
Accrued expenses:
 
 
Compensation
60,243 
98,107 
Income taxes
59,007 
15,472 
Other accrued liabilities
50,860 
70,351 
Current portion of debt
740,000 
740,000 
Total current liabilities
1,877,367 
1,845,718 
Long-term debt
500,000 
500,000 
Noncurrent income taxes payable
17,919 
18,849 
Deferred tax liabilities
64,351 
65,122 
Other long-term liabilities
233 
222 
Total liabilities
2,459,870 
2,429,911 
Stockholders’ investment:
 
 
Preferred stock, $ .10 par value, 20,000 shares authorized; no shares issued or outstanding
0 
0 
Common stock, $ .10 par value, 480,000 shares authorized; 179,003 and 179,006 shares issued, 141,164 and 141,258 outstanding
14,116 
14,126 
Additional paid-in capital
417,624 
419,280 
Retained earnings
3,248,014 
3,190,578 
Accumulated other comprehensive loss
(44,000)
(61,442)
Treasury stock at cost (37,839 and 37,748 shares)
(2,319,843)
(2,304,695)
Total stockholders’ investment
1,315,874 
1,257,847 
Total liabilities and stockholders’ investment
$ 3,775,744 
$ 3,687,758 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Statement of Financial Position [Abstract]
 
 
Receivables, allowance for doubtful accounts
$ 39,508 
$ 39,543 
Preferred stock, par value (in dollars per share)
$ 0.10 
$ 0.10 
Preferred stock, shares authorized (shares)
20,000,000 
20,000,000 
Preferred stock, shares issued (shares)
0 
0 
Preferred stock, shares outstanding (shares)
0 
0 
Common stock, par value (in dollars per share)
$ 0.10 
$ 0.10 
Common stock, shares authorized (shares)
480,000,000 
480,000,000 
Common stock, shares issued (shares)
179,003,000 
179,006,000 
Common stock shares outstanding (shares)
141,164,000 
141,258,000 
Treasury stock (shares)
37,839,000 
37,748,000 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Revenues:
 
 
Transportation
$ 3,102,043 
$ 2,713,688 
Sourcing
313,082 
360,255 
Total revenues
3,415,125 
3,073,943 
Costs and expenses:
 
 
Purchased transportation and related services
2,563,885 
2,179,622 
Purchased products sourced for resale
282,674 
330,986 
Personnel expenses
290,504 
277,497 
Other selling, general, and administrative expenses
90,104 
86,886 
Total costs and expenses
3,227,167 
2,874,991 
Income from operations
187,958 
198,952 
Interest and other expense
(9,302)
(8,772)
Income before provision for income taxes
178,656 
190,180 
Provision for income taxes
56,576 
71,217 
Net income
122,080 
118,963 
Other comprehensive income
17,405 
3,550 
Comprehensive income
$ 139,485 
$ 122,513 
Basic net income per share (in dollars per share)
$ 0.86 
$ 0.83 
Diluted net income per share (in dollars per share)
$ 0.86 
$ 0.83 
Basic weighted average shares outstanding (shares)
141,484 
143,525 
Dilutive effect of outstanding stock awards (shares)
374 
133 
Diluted weighted average shares outstanding (shares)
141,858 
143,658 
Cash dividends declared per common share (in dollars per share)
$ 0.45 
$ 0.43 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
OPERATING ACTIVITIES
 
 
Net income
$ 122,080 
$ 118,963 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
22,431 
16,875 
Provision for doubtful accounts
3,618 
85 
Stock-based compensation
12,318 
15,179 
Deferred income taxes
(2,048)
15,350 
Excess tax benefit on stock-based compensation
(9,344)
(13,827)
Loss on sale/disposal of assets
485 
180 
Changes in operating elements (net of acquisitions):
 
 
Receivables
(95,204)
42,295 
Prepaid expenses and other
(6,049)
(7,378)
Other non-current assets
(1,016)
0 
Accounts payable and outstanding checks
47,201 
(22,783)
Accrued compensation
(37,864)
(84,431)
Accrued income taxes
51,949 
32,732 
Other accrued liabilities
(15,861)
(9,090)
Net cash provided by operating activities
92,696 
104,150 
INVESTING ACTIVITIES
 
 
Purchases of property and equipment
(13,537)
(13,121)
Purchases and development of software
(3,183)
(4,704)
Acquisitions, net of cash acquired
1,780 
0 
Other
56 
(770)
Net cash used for investing activities
(18,444)
(18,595)
FINANCING ACTIVITIES
 
 
Proceeds from stock issued for employee benefit plans
15,823 
6,990 
Stock tendered for payment of withholding taxes
(18,955)
(32,270)
Repurchase of common stock
(28,999)
(21,249)
Cash dividends
(64,597)
(63,888)
Excess tax benefit on stock-based compensation
0 
13,827 
Proceeds from short-term borrowings
2,450,000 
1,480,000 
Payments on short-term borrowings
(2,450,000)
(1,460,000)
Net cash used for financing activities
(96,728)
(76,590)
Effect of exchange rates on cash
4,604 
2,212 
Net (decrease)/increase in cash and cash equivalents
(17,872)
11,177 
Cash and cash equivalents, beginning of period
247,666 
168,229 
Cash and cash equivalents, end of period
229,794 
179,406 
Noncash transactions from investing and financing activities:
 
 
Accrued share repurchases held in other accrued liabilities
3,000 
3,000 
Accrued purchases of property and equipment
$ 1,404 
$ 0 
GENERAL
GENERAL
GENERAL
Basis of Presentation - C.H. Robinson Worldwide, Inc. and our subsidiaries (“the company,” “we,” “us,” or “our”) are a global provider of transportation services and logistics solutions operating through a network of offices located in North America, Europe, Asia, Australia, New Zealand, and South America. The consolidated financial statements include the accounts of C.H. Robinson Worldwide, Inc. and our majority owned and controlled subsidiaries. Our minority interests in subsidiaries are not significant. All intercompany transactions and balances have been eliminated in the consolidated financial statements.
Our reportable segments are North American Surface Transportation ("NAST"), Global Forwarding, Robinson Fresh, and All Other and Corporate. The All Other and Corporate segment includes Managed Services, Other Surface Transportation outside of North America, and other miscellaneous revenues and unallocated corporate expenses. We group offices primarily by services they provide. For financial information concerning our reportable segments, refer to Note 9.
The condensed consolidated financial statements, which are unaudited, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
Consistent with SEC rules and regulations, we have condensed or omitted certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. You should read the condensed consolidated financial statements and related notes in conjunction with the consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended December 31, 2016.
Recently Issued Accounting Standards - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, and in August 2015 issued ASU No. 2015-14, which amended the standard as to effective date. The new comprehensive revenue recognition standard will supersede all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. For the majority of our revenue arrangements, no significant impacts are expected as these transactions are not accounted for under industry-specific guidance that will be superseded by the ASU and generally consist of a single performance obligation to transfer promised goods or services. This standard is effective for us as of January 1, 2018, and permits the use of either a retrospective or a cumulative effect transition method. In preparation for our adoption of the new standard in the quarter beginning January 1, 2018, management assembled a project management team, which has obtained representative samples of contracts and other forms of agreements with our customers and is evaluating the provisions contained within those documents based on the new guidance. We do not expect this change to have a material impact on our results of operations, financial position, and cash flows once implemented. We are still evaluating the disclosure requirements under these standards. As we complete our overall evaluation, we are also identifying and preparing to implement changes to our accounting policies, practices, and controls to support the new standards.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing, and uncertainty of cash flows arising from leases. This update is effective for annual and interim periods beginning after December 15, 2018, which will require us to adopt these provisions in the first quarter of 2019 using a modified retrospective approach. Early adoption is permitted, although we do not plan to adopt early. We have obligations under lease agreements for facilities and equipment, which are classified as operating leases under the existing lease standard. While we are still evaluating the impact ASU 2016-02 will have on our consolidated results of operations, financial condition, and cash flows, our financial statements will reflect an increase in both assets and liabilities due to the requirement to recognize right-of-use assets and lease liabilities on the consolidated balance sheets for our facility and equipment leases.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718). This update was issued as part of the FASB’s simplification initiative and affects all entities that issue share-based payment awards to their employees. The amendments in this update cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, and accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification, and the classification of those taxes paid on the statement of cash flows. This update is effective for annual and interim periods beginning after December 15, 2016. During the first quarter of 2017, we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718). The adoption of ASU 2016-09 prospectively impacts the recording of income taxes related to share-based payment awards in our consolidated statement of financial position and results of operations, as well as the operating and financing cash flows on the consolidated statements of cash flows. The magnitude of such impacts are dependent on our future grants of stock-based compensation, our future stock price in relation to the fair value of awards on grant date, and the exercise behavior of our option holders. We have prospectively adopted these provisions in the first quarter of 2017. Prior periods have not been restated. This adoption resulted in a decrease in our provision for income taxes of $9.3 million in the first quarter of 2017.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, any impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. Early adoption is permitted for interim and annual goodwill impairment tests performed after January 1, 2017. We have not yet selected a transition date nor have we determined the effect of the standard on our ongoing financial reporting.
GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill was allocated to each of our segments based on the relative fair value at November 30, 2016. The change in carrying amount of goodwill is as follows (in thousands):
 
NAST
 
Global Forwarding
 
Robinson Fresh
 
All Other and Corporate
 
Total
December 31, 2016 balance
$
907,230

 
$
159,050

 
$
139,558

 
$
26,958

 
$
1,232,796

Translation
6,001

 
1,052

 
923

 
178

 
8,154

March 31, 2017 balance
$
913,231

 
$
160,102

 
$
140,481

 
$
27,136

 
$
1,240,950


We will allocate goodwill resulting from future business combinations to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on a continual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.
Identifiable intangible assets consisted of the following (in thousands):
 
March 31, 2017
 
December 31, 2016
 
Cost
 
Accumulated Amortization
 
Net
 
Cost
 
Accumulated Amortization
 
Net
Finite-lived intangibles
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
248,530

 
$
(96,248
)
 
$
152,282

 
$
244,036

 
$
(87,199
)
 
$
156,837

Non-competition agreements
500

 
(312
)
 
188

 
500

 
(287
)
 
213

Total finite-lived intangibles
249,030

 
(96,560
)
 
152,470

 
244,536

 
(87,486
)
 
157,050

 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangibles
 
 
 
 
 
 
 
 
 
 
 
Trademarks
10,475

 
—

 
10,475

 
10,475

 
—

 
10,475

Total intangibles
$
259,505

 
$
(96,560
)
 
$
162,945

 
$
255,011

 
$
(87,486
)
 
$
167,525


Amortization expense for other intangible assets is as follows (in thousands): 
 
Three Months Ended March 31,
 
2017
 
2016
Amortization expense
$
8,874

 
$
6,093


Definite-lived intangible assets, by reportable segment, as of March 31, 2017, will be amortized over their remaining lives as follows (in thousands):
 
NAST
 
Global Forwarding
 
Robinson Fresh
 
All Other and Corporate
 
Total
Remainder of 2017
$
5,670

 
$
20,640

 
$
—

 
$
375

 
$
26,685

2018
7,560

 
27,476

 
—

 
—

 
35,036

2019
7,560

 
27,476

 
—

 
—

 
35,036

2020
—

 
24,772

 
—

 
—

 
24,772

2021
—

 
11,251

 
—

 
—

 
11,251

Thereafter
—

 
19,690

 
—

 
—

 
19,690

Total

 

 

 

 
$
152,470

FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
•
Level 1 — Quoted market prices in active markets for identical assets or liabilities.
•
Level 2 — Observable market-based inputs or unobservable inputs that are corroborated by market data.
•
Level 3 — Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.
We had no Level 3 assets or liabilities as of and during the periods ended March 31, 2017, and December 31, 2016. There were no transfers between levels during the period.
FINANCING ARRANGEMENTS
FINANCING ARRANGEMENTS
FINANCING ARRANGEMENTS
Senior Unsecured Revolving Credit Facility
We have a senior unsecured revolving credit facility (the "Credit Agreement") with total availability of $900 million which expires in December 2019. As of both March 31, 2017, and December 31, 2016, we had $740 million respectively, in borrowings outstanding under the Credit Agreement, which is classified as a current liability on the condensed consolidated balance sheets. At March 31, 2017, we had remaining borrowing availability of $160 million. The recorded amount of borrowings outstanding approximates fair value because of the short maturity period of the debt; therefore, we consider these borrowings to be a Level 2 financial liability.
Borrowings under the Credit Agreement generally bear interest at a variable rate determined by a pricing schedule or the base rate (which is the highest of (a) the administrative agent's prime rate, (b) the federal funds rate plus 0.50 percent, or (c) the sum of one-month LIBOR plus a specified margin). As of March 31, 2017, the variable rate equaled LIBOR plus 1.13 percent. In addition, there is a commitment fee on the average daily undrawn stated amount under each letter of credit issued under the facility. The weighted average interest rate incurred on borrowings during the quarter ended March 31, 2017, was approximately 1.9 percent and at March 31, 2017, was approximately 2.1 percent. The weighted average interest rate incurred on borrowings during the quarter ended March 31, 2016, was approximately 1.5 percent and at March 31, 2016, was approximately 1.4 percent.
The Credit Agreement contains various restrictions and covenants. Among other requirements, we may not permit our leverage ratio, determined as of the end of each of our fiscal quarters, of (i) Consolidated Funded Indebtedness to (ii) EBITDA (earnings before interest, taxes, depreciation, and amortization), to exceed 3.00 to 1.00. We were in compliance with all of the financial debt covenants under the Credit Agreement as of March 31, 2017.
The Credit Agreement also contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then the administrative agent may declare any outstanding obligations under the Credit Agreement to be immediately due and payable. In addition, if we become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency, or similar law, then any outstanding obligations under the Credit Agreement will automatically become immediately due and payable.
Note Purchase Agreement
On August 23, 2013, we entered into a Note Purchase Agreement with certain institutional investors (the “Purchasers”) named therein (the “Note Purchase Agreement”). Pursuant to the Note Purchase Agreement, the Purchasers purchased, on August 27, 2013, (i) $175,000,000 aggregate principal amount of the company’s 3.97 percent Senior Notes, Series A, due August 27, 2023 (the “Series A Notes”), (ii) $150,000,000 aggregate principal amount of the company’s 4.26 percent Senior Notes, Series B, due August 27, 2028 (the “Series B Notes”), and (iii) $175,000,000 aggregate principal amount of the company’s 4.60 percent Senior Notes, Series C, due August 27, 2033 (the “Series C Notes” and, together with the Series A Notes and the Series B Notes, the “Notes”). Interest on the Notes is payable semi-annually in arrears. We applied the proceeds of the sale of the Notes for share repurchases.
The Note Purchase Agreement contains customary provisions for transactions of this type, including representations and warranties regarding the company and its subsidiaries and various covenants, including covenants that require us to maintain specified financial ratios. The Note Purchase Agreement includes the following financial covenants: we will not permit our leverage ratio, determined as of the end of each of our fiscal quarters, of (i) Consolidated Funded Indebtedness to (ii) EBITDA (earnings before interest, taxes, depreciation, and amortization), to exceed 3.00 to 1.00; we will not permit the interest coverage ratio, as of the end of each of our fiscal quarters and for the twelve-month period then ending, of (i) Consolidated EBIT (earnings before income taxes) to (ii) Consolidated Interest Expense to be less than 2.00 to 1.00; and we will not permit, as of the end of each of our fiscal quarters, Consolidated Priority Debt to exceed 15 percent of Consolidated Total Assets. We were in compliance with all of the financial debt covenants under the Note Purchase Agreement as of March 31, 2017.
The Note Purchase Agreement provides for customary events of default, generally with corresponding grace periods, including, without limitation, payment defaults with respect to the Notes, covenant defaults, cross-defaults to other agreements evidencing indebtedness of the company or its subsidiaries, certain judgments against the company or its subsidiaries, and events of bankruptcy involving the company or its material subsidiaries. The occurrence of an event of default would permit certain Purchasers to declare certain Notes then outstanding to be immediately due and payable.
Under the terms of the Note Purchase Agreement, the Notes are redeemable, in whole or in part, at 100 percent of the principal amount being redeemed together with a “make-whole amount” (as defined in the Note Purchase Agreement), and accrued and unpaid interest with respect to each Note. The obligations of the company under the Note Purchase Agreement and the Notes are guaranteed by C.H. Robinson Company, a Delaware corporation and a wholly-owned subsidiary of the company, and by C.H. Robinson Company, Inc., a Minnesota corporation and an indirect wholly-owned subsidiary of the company.
The Notes were issued by the company to the initial purchasers in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The fair value of long-term debt approximated $533.3 million at March 31, 2017. We estimate the fair value of our debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering our own risk. If our long-term debt was recorded at fair value, it would be classified as Level 2.
INCOME TAXES
INCOME TAXES
INCOME TAXES
C.H. Robinson Worldwide, Inc. and its 80 percent (or more) owned U.S. subsidiaries file a consolidated federal return. We file unitary or separate state returns based on state filing requirements. With few exceptions, we are no longer subject to audits of U.S. federal, state and local, or non-U.S. income tax returns before 2009. During the first quarter of 2017, we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718). This adoption resulted in a decrease in our provision for income taxes of $9.3 million in the first quarter of 2017. We have asserted that we will indefinitely reinvest earnings of foreign subsidiaries to support expansion of our international business. If we repatriated all foreign earnings, the estimated effect on income taxes payable would be an increase of approximately $19.6 million as of March 31, 2017.
Our effective tax rate for the three months ended March 31, 2017 and 2016 was 31.7 percent and 37.4 percent, respectively. The effective income tax rate for the three months ended March 31, 2017 was lower than the statutory federal income tax rate due to the adoption of ASU 2016-09.
It is possible the amount of unrecognized tax benefit could change in the next twelve months as a result of a lapse of the statute of limitations and settlements with taxing authorities; however, we do not anticipate the change will have a material impact on our condensed consolidated results of operations or condensed consolidated financial position.
STOCK AWARD PLANS
STOCK AWARD PLANS
STOCK AWARD PLANS
Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense as it vests. A summary of our total compensation expense recognized in our condensed consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands):
 
Three Months Ended March 31,
 
2017
 
2016
Stock options
$
3,002

 
$
3,337

Stock awards
8,410

 
10,840

Company expense on ESPP discount
906

 
1,002

Total stock-based compensation expense
$
12,318

 
$
15,179


On May 12, 2016, our shareholders approved an amendment to and restatement of our 2013 Equity Incentive Plan, which allows us to grant certain stock awards, including stock options at fair market value and performance shares and restricted stock units, to our key employees and outside directors. A maximum of 13,041,803 shares can be granted under this plan. Approximately 4,969,608 shares were available for stock awards as of March 31, 2017. Shares subject to awards that expire or are canceled without delivery of shares or that are settled in cash generally become available again for issuance under the plan.
Stock Options - We have awarded performance-based stock options to certain key employees. These options are subject to certain vesting requirements over a five-year period based on the company’s earnings growth. Any options remaining unvested at the end of the five-year vesting period are forfeited to the company. Although participants can exercise options via a stock swap exercise, we do not issue reloads (restoration options) on the grants.
The fair value of these options is established based on the market price on the date of grant, discounted for post-vesting holding restrictions, calculated using the Black-Scholes option pricing model. Changes in measured stock price volatility and interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards. As of March 31, 2017, unrecognized compensation expense related to stock options was $53.6 million. The amount of future expense to be recognized will be based on the company’s earnings growth and certain other conditions.
Full Value Awards - We have awarded performance shares and restricted stock units to certain key employees and non-employee directors. These awards are subject to certain vesting requirements over a five-year period, based on the company’s earnings growth. The awards also contain restrictions on the awardees’ ability to sell or transfer vested awards for a specified period of time. The fair value of these awards is established based on the market price on the date of grant, discounted for post-vesting holding restrictions. The discounts on outstanding grants vary from 15 percent to 22 percent and are calculated using the Black-Scholes option pricing model-protective put method. Changes in measured stock price volatility and interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards.
We have also awarded restricted shares and restricted stock units to certain key employees that vest primarily based on their continued employment. The value of these awards is established by the market price on the date of the grant and is being expensed over the vesting period of the award.
We have also issued to certain key employees and non-employee directors restricted stock units which are fully vested upon issuance. These units contain restrictions on the awardees’ ability to sell or transfer vested units for a specified period of time. The fair value of these units is established using the same method discussed above. These grants have been expensed during the year they were earned.
As of March 31, 2017, there was unrecognized compensation expense of $131.3 million related to previously granted full value awards. The amount of future expense to be recognized will be based on the company’s earnings growth and certain other conditions.
Employee Stock Purchase Plan - Our 1997 Employee Stock Purchase Plan ("ESPP") allows our employees to contribute up to $10,000 of their annual cash compensation to purchase company stock. Purchase price is determined using the closing price on the last day of each quarter discounted by 15 percent. Shares vest immediately. The following is a summary of the employee stock purchase plan activity (dollar amounts in thousands): 
Three Months Ended March 31, 2017
Shares purchased
by employees
 
Aggregate cost
to employees
 
Expense recognized
by the company
78,180

 
$
5,136

 
$
906

LITIGATION
LITIGATION
LITIGATION
We are not subject to any pending or threatened litigation other than routine litigation arising in the ordinary course of our business operations, including 17 contingent auto liability cases. For some legal proceedings, we have accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to our condensed consolidated financial position, results of operations, or cash flows. Because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the inconsistent treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings, we are often unable to estimate an amount or range of any reasonably possible additional losses. However, based upon our historical experience, the resolution of these proceedings is not expected to have a material effect on our consolidated financial position, results of operations, or cash flows.
In February 2017, we resolved an outstanding legal claim. The outcome of the resolution was an $8.75 million decrease in other selling, general, and administrative expenses, creating an increase in income from operations in the first quarter of 2017.
ACQUISITIONS
ACQUISITIONS
ACQUISITIONS
On September 30, 2016, we acquired all of the outstanding stock of APC Logistics ("APC") for the purpose of expanding our global presence and bringing additional capabilities and expertise to our portfolio. Total purchase consideration was $229.4 million, which was paid in cash. We used advances under the Credit Agreement to fund part of the cash consideration. The following is a preliminary summary of the allocation of purchase price consideration to the estimated fair value of net assets for the acquisition of APC Logistics (in thousands):
Cash
$
10,181

Receivables
37,190

Inventory and other current assets
2,609

Property and equipment
1,696

Identifiable intangible assets
78,842

Goodwill
132,797

Other noncurrent assets
70

Long term deferred tax asset
814

Total assets
264,199

 
 
Accounts payable
(22,147
)
Accrued expenses
(12,700
)
Estimated net assets acquired
$
229,352


Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):
 
Estimated Life (years)
 
 
Customer relationships
7
 
$
78,842


The APC goodwill is a result of acquiring and retaining the APC existing workforce and expected synergies from integrating their business into ours. Purchase accounting is considered preliminary, subject to revision, mainly with respect to certain potential post-closing and working capital adjustments, as final information was not available as of March 31, 2017. The goodwill will not be deductible for tax purposes. The results of operations of APC have been included in our consolidated financial statements since October 1, 2016. Pro forma financial information for prior periods is not presented because we believe the acquisition to be not material to our consolidated results. We paid $1.8 million resulting from a working capital adjustment due to the sellers per the terms of the agreement.
SEGMENT REPORTING
SEGMENT REPORTING
SEGMENT REPORTING
Our reportable segments are based on our method of internal reporting, which generally segregates the segments by service line and the primary services they provide to our customers. Beginning with the fourth quarter of 2016, based on certain internal reporting changes, we identified three reportable segments as follows:
•
North American Surface Transportation-NAST provides freight transportation services across North America through a network of offices in the United States, Canada, and Mexico. The primary services provided by NAST include truckload, LTL, and intermodal.
•
Global Forwarding-Global Forwarding provides global logistics services through an international network of offices in North America, Asia, Europe, Australia, New Zealand, and South America and also contracts with independent agents worldwide. The primary services provided by Global Forwarding include ocean freight services, airfreight services, and customs brokerage.
•
Robinson Fresh-Robinson Fresh provides sourcing services under the trade name of Robinson Fresh. Our sourcing services primarily include the buying, selling, and marketing of fresh fruits, vegetables, and other perishable items. Robinson Fresh sources products from around the world and has a physical presence in North America, Europe, Asia, and South America. This segment often provides the logistics and transportation of the products they sell, in addition to temperature controlled transportation services for its customers.
•
All Other and Corporate-All Other and Corporate includes our Managed Services segment, as well as Other Surface Transportation outside of North America and other miscellaneous revenues and unallocated corporate expenses. Managed Services provides Transportation Management Services, or Managed TMS®. Other Surface Transportation revenues are primarily earned by Europe Surface Transportation. Europe Surface Transportation provides services similar to NAST across Europe.
The internal reporting of segments is defined, based in part, on the reporting and review process used by our chief operating decision maker, our Chief Executive Officer. The accounting policies of our reporting segments are the same as those described in the summary of significant accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2016. Segment information for prior years has been retroactively recast to align with current year presentation. Segment information as of, and for the quarters ended, March 31, 2017 and 2016, is as follows (dollars in thousands):
 
NAST
 
Global Forwarding
 
Robinson Fresh
 
All Other and Corporate
 
Eliminations
 
Consolidated
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
2,259,252

 
$
468,788

 
$
550,445

 
$
136,640

 
$
—

 
$
3,415,125

  Intersegment revenues
101,154

 
8,143

 
33,340

 
6,878

 
(149,515
)
 
—

Total Revenues
$
2,360,406

 
$
476,931

 
$
583,785

 
$
143,518

 
$
(149,515
)
 
$
3,415,125

Net Revenues
$
372,440

 
$
106,546

 
$
56,837

 
$
32,743

 
—

 
$
568,566

Income from Operations
155,877

 
16,206

 
14,652

 
1,223

 
—

 
187,958

Depreciation and amortization
5,590

 
8,020

 
1,146

 
7,675

 
—

 
22,431

Total assets(1)
2,126,900

 
699,139

 
409,972

 
539,733

 
$
—

 
3,775,744

Average headcount
6,844

 
3,926

 
961

 
2,548

 
—

 
14,279

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NAST
 
Global Forwarding
 
Robinson Fresh
 
All Other and Corporate
 
Eliminations
 
Consolidated
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
2,045,479

 
$
351,112

 
$
564,093

 
$
113,259

 
$
—

 
$
3,073,943

  Intersegment revenues
60,269

 
6,080

 
23,896

 
313

 
(90,558
)
 
—

Total Revenues
$
2,105,748

 
$
357,192

 
$
587,989

 
$
113,572

 
$
(90,558
)
 
$
3,073,943

Net Revenues
$
383,798

 
$
92,866

 
$
58,185

 
$
28,486

 
$
—

 
$
563,335

Income from Operations
162,351

 
16,857

 
17,733

 
2,011

 
—

 
198,952

Depreciation and amortization
5,502

 
5,079

 
768

 
5,526

 
—

 
16,875

Total assets(1)
1,854,240

 
514,958

 
370,319

 
422,728

 
—

 
3,162,245

Average headcount
6,666

 
3,488

 
922

 
2,175

 
—

 
13,251

(1) All cash and cash equivalents and debt are included in All Other and Corporate. Goodwill was allocated to each segment based on relative fair value as of November 30, 2016.
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss is included in Stockholders' investment on our condensed consolidated balance sheets. The recorded balance, at March 31, 2017, and December 31, 2016, was $44.0 million and $61.4 million, respectively. Accumulated other comprehensive loss is comprised solely of foreign currency translation adjustments at March 31, 2017 and December 31, 2016.
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS
On April 26, 2017, the company, as initial master servicer and performance guarantor, C.H. Robinson Receivables, LLC, a wholly-owned subsidiary of the company and bankruptcy-remote entity (“CHRR”), as seller, Gotham Funding Corporation, as conduit purchaser, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch (“BTMU”) and Wells Fargo Bank, National Association (“Wells Fargo”), as committed purchasers (conduit purchasers and committed purchasers collectively, the “Purchasers”), BTMU and Wells Fargo, as purchaser agents , and BTMU, as administrative agent (in such capacity, the “Agent”), entered into a Receivables Purchase Agreement (the “Receivables Purchase Agreement”). The Receivables Purchase Agreement and related transaction documents provide a receivables securitization facility (the “Receivables Securitization Facility”).
The documentation for the Receivables Securitization Facility includes (i) the Receivables Purchase Agreement, (ii) a Receivables Sale Agreement (the “RSA”) by and among C.H. Robinson Company Inc., a wholly‑owned subsidiary of the company (the “Originator”), CHRR, and the company, as initial master servicer; and (iii) a Performance Guaranty by the company for the benefit of the Agent, the Purchasers, and other affected parties (the “Performance Guaranty”).
CHRR was formed for the purpose of acquiring rights to payment arising from the sale of goods or services by the Originator (the “Receivables”). Under the Receivables Securitization Facility, on an ongoing basis the Originator will sell Receivables to CHRR on a non-recourse basis or transfer Receivables to CHRR as capital contributions. CHRR in turn may obtain funding of up to $250 million from time to time from the conduit purchaser or the committed purchasers by requesting purchases of interests in Receivables owned by CHRR, related assets and collections. The purchase price for Receivables sold by the Originator to CHRR will be paid in cash to the extent available to pay the price of Receivables each day, with the balance being evidenced by one or more subordinated notes from CHRR. The subordinated note obligations will be satisfied from collections of the Receivables available after payment of other amounts owed by CHRR under the Receivables Purchase Agreement. For as long as the company is the master servicer, the company will service, administer, and collect the Receivables on behalf of CHRR and the Purchasers. The Performance Guaranty is a customary undertaking by the company guaranteeing the performance of the obligations of the Originator and any master servicer under the Receivables Purchase Agreement and the RSA, as applicable.
The Receivables Purchase Agreement requires CHRR to pay yield based on the rate for commercial paper issued by a conduit purchaser, in the case of purchases by a conduit purchaser, and based on 30 day LIBOR plus a margin, in the case of other purchases. A different default rate may be used to calculate yield in the case of certain defaults. Different rates may be used to calculate yield with respect to specific tranches if an appropriate LIBOR rate is not available or if the Agent does not receive required notice that the tranche is not to be funded through the issuance of commercial paper notes. In addition, CHRR will pay the Purchasers upfront fees, commitment fees, and fees based on facility use, and will pay an administrative agent fee.
The Receivables Purchase Agreement contains various customary affirmative and negative covenants, and it also contains customary default and termination provisions which provide for acceleration of amounts owed under the Receivables Purchase Agreement upon the occurrence of certain specified events with respect to the company, the Originator, or CHRR, including, but not limited to, the failure to pay yield, fees, and other amounts due, defaults on certain other indebtedness, failure to discharge certain judgments, insolvency events, change in control, and exceeding certain financial ratios designed to capture events negatively affecting the overall credit quality of the Receivables.
The Receivables Securitization Facility will terminate on April 26, 2019 unless extended by the parties. We used the proceeds from the Receivables Securitization Facility to pay down the balance on the Credit Agreement.
GENERAL (Policies)
Basis of Presentation 
Basis of Presentation - C.H. Robinson Worldwide, Inc. and our subsidiaries (“the company,” “we,” “us,” or “our”) are a global provider of transportation services and logistics solutions operating through a network of offices located in North America, Europe, Asia, Australia, New Zealand, and South America. The consolidated financial statements include the accounts of C.H. Robinson Worldwide, Inc. and our majority owned and controlled subsidiaries. Our minority interests in subsidiaries are not significant. All intercompany transactions and balances have been eliminated in the consolidated financial statements.
Our reportable segments are North American Surface Transportation ("NAST"), Global Forwarding, Robinson Fresh, and All Other and Corporate. The All Other and Corporate segment includes Managed Services, Other Surface Transportation outside of North America, and other miscellaneous revenues and unallocated corporate expenses. We group offices primarily by services they provide. For financial information concerning our reportable segments, refer to Note 9.
The condensed consolidated financial statements, which are unaudited, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
Consistent with SEC rules and regulations, we have condensed or omitted certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. You should read the condensed consolidated financial statements and related notes in conjunction with the consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended December 31, 2016.
Recently Issued Accounting Standards 
Recently Issued Accounting Standards - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, and in August 2015 issued ASU No. 2015-14, which amended the standard as to effective date. The new comprehensive revenue recognition standard will supersede all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. For the majority of our revenue arrangements, no significant impacts are expected as these transactions are not accounted for under industry-specific guidance that will be superseded by the ASU and generally consist of a single performance obligation to transfer promised goods or services. This standard is effective for us as of January 1, 2018, and permits the use of either a retrospective or a cumulative effect transition method. In preparation for our adoption of the new standard in the quarter beginning January 1, 2018, management assembled a project management team, which has obtained representative samples of contracts and other forms of agreements with our customers and is evaluating the provisions contained within those documents based on the new guidance. We do not expect this change to have a material impact on our results of operations, financial position, and cash flows once implemented. We are still evaluating the disclosure requirements under these standards. As we complete our overall evaluation, we are also identifying and preparing to implement changes to our accounting policies, practices, and controls to support the new standards.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing, and uncertainty of cash flows arising from leases. This update is effective for annual and interim periods beginning after December 15, 2018, which will require us to adopt these provisions in the first quarter of 2019 using a modified retrospective approach. Early adoption is permitted, although we do not plan to adopt early. We have obligations under lease agreements for facilities and equipment, which are classified as operating leases under the existing lease standard. While we are still evaluating the impact ASU 2016-02 will have on our consolidated results of operations, financial condition, and cash flows, our financial statements will reflect an increase in both assets and liabilities due to the requirement to recognize right-of-use assets and lease liabilities on the consolidated balance sheets for our facility and equipment leases.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718). This update was issued as part of the FASB’s simplification initiative and affects all entities that issue share-based payment awards to their employees. The amendments in this update cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, and accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification, and the classification of those taxes paid on the statement of cash flows. This update is effective for annual and interim periods beginning after December 15, 2016. During the first quarter of 2017, we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718). The adoption of ASU 2016-09 prospectively impacts the recording of income taxes related to share-based payment awards in our consolidated statement of financial position and results of operations, as well as the operating and financing cash flows on the consolidated statements of cash flows. The magnitude of such impacts are dependent on our future grants of stock-based compensation, our future stock price in relation to the fair value of awards on grant date, and the exercise behavior of our option holders. We have prospectively adopted these provisions in the first quarter of 2017. Prior periods have not been restated. This adoption resulted in a decrease in our provision for income taxes of $9.3 million in the first quarter of 2017.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, any impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. Early adoption is permitted for interim and annual goodwill impairment tests performed after January 1, 2017. We have not yet selected a transition date nor have we determined the effect of the standard on our ongoing financial reporting.
Goodwill and Intangible Assets 
We will allocate goodwill resulting from future business combinations to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on a continual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.
Fair Value Measurement 
FAIR VALUE MEASUREMENT
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
•
Level 1 — Quoted market prices in active markets for identical assets or liabilities.
•
Level 2 — Observable market-based inputs or unobservable inputs that are corroborated by market data.
•
Level 3 — Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)
Schedule of Goodwill 
The change in carrying amount of goodwill is as follows (in thousands):
 
NAST
 
Global Forwarding
 
Robinson Fresh
 
All Other and Corporate
 
Total
December 31, 2016 balance
$
907,230

 
$
159,050

 
$
139,558

 
$
26,958

 
$
1,232,796

Translation
6,001

 
1,052

 
923

 
178

 
8,154

March 31, 2017 balance
$
913,231

 
$
160,102

 
$
140,481

 
$
27,136

 
$
1,240,950

Schedule of Intangible Assets 
Identifiable intangible assets consisted of the following (in thousands):
 
March 31, 2017
 
December 31, 2016
 
Cost
 
Accumulated Amortization
 
Net
 
Cost
 
Accumulated Amortization
 
Net
Finite-lived intangibles
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
248,530

 
$
(96,248
)
 
$
152,282

 
$
244,036

 
$
(87,199
)
 
$
156,837

Non-competition agreements
500

 
(312
)
 
188

 
500

 
(287
)
 
213

Total finite-lived intangibles
249,030

 
(96,560
)
 
152,470

 
244,536

 
(87,486
)
 
157,050

 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangibles
 
 
 
 
 
 
 
 
 
 
 
Trademarks
10,475

 
—

 
10,475

 
10,475

 
—

 
10,475

Total intangibles
$
259,505

 
$
(96,560
)
 
$
162,945

 
$
255,011

 
$
(87,486
)
 
$
167,525

Schedule of Amortization Expense 
Amortization expense for other intangible assets is as follows (in thousands): 
 
Three Months Ended March 31,
 
2017
 
2016
Amortization expense
$
8,874

 
$
6,093

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense 
Definite-lived intangible assets, by reportable segment, as of March 31, 2017, will be amortized over their remaining lives as follows (in thousands):
 
NAST
 
Global Forwarding
 
Robinson Fresh
 
All Other and Corporate
 
Total
Remainder of 2017
$
5,670

 
$
20,640

 
$
—

 
$
375

 
$
26,685

2018
7,560

 
27,476

 
—

 
—

 
35,036

2019
7,560

 
27,476

 
—

 
—

 
35,036

2020
—

 
24,772

 
—

 
—

 
24,772

2021
—

 
11,251

 
—

 
—

 
11,251

Thereafter
—

 
19,690

 
—

 
—

 
19,690

Total

 

 

 

 
$
152,470

STOCK AWARD PLANS (Tables)
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs 
A summary of our total compensation expense recognized in our condensed consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands):
 
Three Months Ended March 31,
 
2017
 
2016
Stock options
$
3,002

 
$
3,337

Stock awards
8,410

 
10,840

Company expense on ESPP discount
906

 
1,002

Total stock-based compensation expense
$
12,318

 
$
15,179

Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity 
The following is a summary of the employee stock purchase plan activity (dollar amounts in thousands): 
Three Months Ended March 31, 2017
Shares purchased
by employees
 
Aggregate cost
to employees
 
Expense recognized
by the company
78,180

 
$
5,136

 
$
906

ACQUISITIONS (Tables)
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed 
The following is a preliminary summary of the allocation of purchase price consideration to the estimated fair value of net assets for the acquisition of APC Logistics (in thousands):
Cash
$
10,181

Receivables
37,190

Inventory and other current assets
2,609

Property and equipment
1,696

Identifiable intangible assets
78,842

Goodwill
132,797

Other noncurrent assets
70

Long term deferred tax asset
814

Total assets
264,199

 
 
Accounts payable
(22,147
)
Accrued expenses
(12,700
)
Estimated net assets acquired
$
229,352

Schedule of Finite-Lived Intangible Assets by Major Class 
Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):
 
Estimated Life (years)
 
 
Customer relationships
7
 
$
78,842

SEGMENT REPORTING (Tables)
Summary of Segment Information
Segment information as of, and for the quarters ended, March 31, 2017 and 2016, is as follows (dollars in thousands):
 
NAST
 
Global Forwarding
 
Robinson Fresh
 
All Other and Corporate
 
Eliminations
 
Consolidated
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
2,259,252

 
$
468,788

 
$
550,445

 
$
136,640

 
$
—

 
$
3,415,125

  Intersegment revenues
101,154

 
8,143

 
33,340

 
6,878

 
(149,515
)
 
—

Total Revenues
$
2,360,406

 
$
476,931

 
$
583,785

 
$
143,518

 
$
(149,515
)
 
$
3,415,125

Net Revenues
$
372,440

 
$
106,546

 
$
56,837

 
$
32,743

 
—

 
$
568,566

Income from Operations
155,877

 
16,206

 
14,652

 
1,223

 
—

 
187,958

Depreciation and amortization
5,590

 
8,020

 
1,146

 
7,675

 
—

 
22,431

Total assets(1)
2,126,900

 
699,139

 
409,972

 
539,733

 
$
—

 
3,775,744

Average headcount
6,844

 
3,926

 
961

 
2,548

 
—

 
14,279

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NAST
 
Global Forwarding
 
Robinson Fresh
 
All Other and Corporate
 
Eliminations
 
Consolidated
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
2,045,479

 
$
351,112

 
$
564,093

 
$
113,259

 
$
—

 
$
3,073,943

  Intersegment revenues
60,269

 
6,080

 
23,896

 
313

 
(90,558
)
 
—

Total Revenues
$
2,105,748

 
$
357,192

 
$
587,989

 
$
113,572

 
$
(90,558
)
 
$
3,073,943

Net Revenues
$
383,798

 
$
92,866

 
$
58,185

 
$
28,486

 
$
—

 
$
563,335

Income from Operations
162,351

 
16,857

 
17,733

 
2,011

 
—

 
198,952

Depreciation and amortization
5,502

 
5,079

 
768

 
5,526

 
—

 
16,875

Total assets(1)
1,854,240

 
514,958

 
370,319

 
422,728

 
—

 
3,162,245

Average headcount
6,666

 
3,488

 
922

 
2,175

 
—

 
13,251

(1) All cash and cash equivalents and debt are included in All Other and Corporate. Goodwill was allocated to each segment based on relative fair value as of November 30, 2016.
GENERAL (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Effective income tax rate reconciliation, share-based compensation, excess tax benefit amount
$ 9.3 
GOODWILL AND OTHER INTANGIBLE ASSETS - Change in the Carrying Amount of Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Goodwill [Roll Forward]
 
December 31, 2016 balance
$ 1,232,796 
Translation
8,154 
March 31, 2017 balance
1,240,950 
NAST
 
Goodwill [Roll Forward]
 
December 31, 2016 balance
907,230 
Translation
6,001 
March 31, 2017 balance
913,231 
Global Forwarding
 
Goodwill [Roll Forward]
 
December 31, 2016 balance
159,050 
Translation
1,052 
March 31, 2017 balance
160,102 
Robinson Fresh
 
Goodwill [Roll Forward]
 
December 31, 2016 balance
139,558 
Translation
923 
March 31, 2017 balance
140,481 
All Other and Corporate
 
Goodwill [Roll Forward]
 
December 31, 2016 balance
26,958 
Translation
178 
March 31, 2017 balance
$ 27,136 
GOODWILL AND OTHER INTANGIBLE ASSETS - Summary of Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Finite-lived intangibles
 
 
Finite-lived intangibles
$ 249,030 
$ 244,536 
Accumulated amortization
(96,560)
(87,486)
Net
152,470 
157,050 
Indefinite-lived intangibles
 
 
Total intangibles, Cost
259,505 
255,011 
Total intangibles, Net
162,945 
167,525 
Trademarks
 
 
Indefinite-lived intangibles
 
 
Indefinite-lived intangibles, Gross
10,475 
10,475 
Customer relationships
 
 
Finite-lived intangibles
 
 
Finite-lived intangibles
248,530 
244,036 
Accumulated amortization
(96,248)
(87,199)
Net
152,282 
156,837 
Non-competition agreements
 
 
Finite-lived intangibles
 
 
Finite-lived intangibles
500 
500 
Accumulated amortization
(312)
(287)
Net
$ 188 
$ 213 
GOODWILL AND OTHER INTANGIBLE ASSETS - Estimated Amortization Expense on Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Goodwill [Line Items]
 
 
 
Amortization expense
$ 8,874 
$ 6,093 
 
Estimated amortization expense
 
 
 
Remainder of 2017
26,685 
 
 
2018
35,036 
 
 
2019
35,036 
 
 
2020
24,772 
 
 
2021
11,251 
 
 
Thereafter
19,690 
 
 
Net
152,470 
 
157,050 
NAST
 
 
 
Estimated amortization expense
 
 
 
Remainder of 2017
5,670 
 
 
2018
7,560 
 
 
2019
7,560 
 
 
2020
0 
 
 
2021
0 
 
 
Thereafter
0 
 
 
Global Forwarding
 
 
 
Estimated amortization expense
 
 
 
Remainder of 2017
20,640 
 
 
2018
27,476 
 
 
2019
27,476 
 
 
2020
24,772 
 
 
2021
11,251 
 
 
Thereafter
19,690 
 
 
Robinson Fresh
 
 
 
Estimated amortization expense
 
 
 
Remainder of 2017
0 
 
 
2018
0 
 
 
2019
0 
 
 
2020
0 
 
 
2021
0 
 
 
Thereafter
0 
 
 
All Other and Corporate
 
 
 
Estimated amortization expense
 
 
 
Remainder of 2017
375 
 
 
2018
0 
 
 
2019
0 
 
 
2020
0 
 
 
2021
0 
 
 
Thereafter
$ 0 
 
 
FAIR VALUE MEASUREMENT (Details) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Fair Value Disclosures [Abstract]
 
 
Liability at fair value
$ 0 
$ 0 
FINANCING ARRANGEMENTS (Details) (USD $)
3 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended
Mar. 31, 2017
Mar. 31, 2017
Unsecured Debt
Senior Unsecured Revolving Credit Facility 2019 Term Loan
Mar. 31, 2016
Unsecured Debt
Senior Unsecured Revolving Credit Facility 2019 Term Loan
Dec. 31, 2014
Unsecured Debt
Senior Unsecured Revolving Credit Facility 2019 Term Loan
Mar. 31, 2017
Unsecured Debt
Senior Unsecured Revolving Credit Facility 2019 Term Loan
Federal Funds Rate
Mar. 31, 2017
Unsecured Debt
Senior Unsecured Revolving Credit Facility 2019 Term Loan
London Interbank Offered Rate (LIBOR)
Mar. 31, 2017
Unsecured Debt
Senior Unsecured Revolving Credit Facility 2019 Term Loan
Current Liability
Dec. 31, 2016
Unsecured Debt
Senior Unsecured Revolving Credit Facility 2019 Term Loan
Current Liability
Aug. 23, 2013
Senior Notes
Series A Notes
Aug. 23, 2013
Senior Notes
Series B Notes
Aug. 23, 2013
Senior Notes
Series C Notes
Aug. 23, 2013
Senior Notes
Note Purchase Agreement
Mar. 31, 2017
Senior Notes
Note Purchase Agreement
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit facility, maximum borrowing capacity
 
 
 
$ 900,000,000 
 
 
 
 
 
 
 
 
 
Borrowing outstanding
 
 
 
 
 
 
740,000,000 
740,000,000 
 
 
 
 
 
Borrowing availability
 
160,000,000 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, basis spread on variable rate
 
 
 
 
0.50% 
1.13% 
 
 
 
 
 
 
 
Debt instrument, interest rate during period
 
1.90% 
1.50% 
 
 
 
 
 
 
 
 
 
 
Debt, weighted average interest rate
 
2.10% 
1.40% 
 
 
 
 
 
 
 
 
 
 
Debt instrument, covenant, leverage ratio, maximum
 
3.00 
 
 
 
 
 
 
 
 
 
 
3.00 
Debt instrument, face amount
 
 
 
 
 
 
 
 
175,000,000 
150,000,000 
175,000,000 
 
 
Debt instrument, interest rate, stated percentage
 
 
 
 
 
 
 
 
3.97% 
4.26% 
4.60% 
 
 
Debt instrument, covenant, interest expense ratio, maximum
 
 
 
 
 
 
 
 
 
 
 
 
2.00 
Debt instrument, covenant, priority debt, percentage
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
Debt instrument, redemption price, percentage
 
 
 
 
 
 
 
 
 
 
 
100.00% 
 
Long-term debt, fair value
$ 533,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME TAXES (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Income Tax Contingency [Line Items]
 
 
Estimated effect on income taxes payable from foreign earnings repatriated
$ 19.6 
 
Effective income tax
31.70% 
37.40% 
Accounting Standards Update 2016-09
 
 
Income Tax Contingency [Line Items]
 
 
Deferred Income Tax Liabilities, Net
$ (9.3)
 
STOCK AWARD PLANS - Summary of Total Compensation Expense Recognized in Statements of Operations for Stock-Based Compensation (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
$ 12,318 
$ 15,179 
Stock options
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
3,002 
3,337 
Stock awards
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
8,410 
10,840 
Company expense on ESPP discount
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
$ 906 
$ 1,002 
STOCK AWARD PLANS - Additional Information (Details) (USD $)
3 Months Ended
Mar. 31, 2017
May 12, 2016
Compensation Related Costs Share Based Payments Disclosure [Line Items]
 
 
Maximum employee contribution to purchase company stock
$ 10,000 
 
Discount rate used to determine the purchase price
15.00% 
 
Stock Option
 
 
Compensation Related Costs Share Based Payments Disclosure [Line Items]
 
 
Maximum shares that can be granted under stock plan (shares)
 
13,041,803 
Shares available for stock awards (shares)
4,969,608 
 
Stock award, vesting period
5 years 
 
Unrecognized compensation expense
53,600,000 
 
Restricted Stock Awards
 
 
Compensation Related Costs Share Based Payments Disclosure [Line Items]
 
 
Stock award, vesting period
5 years 
 
Unrecognized compensation expense
$ 131,300,000 
 
Restricted stock awards, discount for post-vesting holding restriction, lower limit
15.00% 
 
Restricted stock awards, discount for post-vesting holding restriction, upper limit
22.00% 
 
STOCK AWARD PLANS - Summary of Employee Stock Purchase Plan Activity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Shares purchased by employees (shares)
78,180 
 
Aggregate cost to employees
$ 5,136 
 
Expense recognized by the company
12,318 
15,179 
Company expense on ESPP discount
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expense recognized by the company
$ 906 
$ 1,002 
LITIGATION (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Loss Contingencies [Line Items]
 
 
Decrease in other selling, general, and administrative expenses
$ (90,104)
$ (86,886)
Contingent Auto Liability Claim
 
 
Loss Contingencies [Line Items]
 
 
Contingency auto liability cases (case)
17 
 
Resolved Litigation
 
 
Loss Contingencies [Line Items]
 
 
Decrease in other selling, general, and administrative expenses
$ 8,750 
 
ACQUISITIONS - Additional Information (Details) (USD $)
3 Months Ended 0 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Sep. 30, 2016
APC Logistics
Business Acquisition [Line Items]
 
 
 
Total purchase price
 
 
$ 229,400,000 
Payments related to working capital adjustment
$ (1,780,000)
$ 0 
 
ACQUISITIONS - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
APC Logistics
Business Acquisition [Line Items]
 
 
 
Cash and cash equivalents
 
 
$ 10,181 
Receivables
 
 
37,190 
Inventory and other current assets
 
 
2,609 
Property and equipment
 
 
1,696 
Identifiable intangible assets
 
 
78,842 
Goodwill
1,240,950 
1,232,796 
132,797 
Other noncurrent assets
 
 
70 
Long term deferred tax asset
 
 
814 
Total assets
 
 
264,199 
Accounts payable
 
 
(22,147)
Accrued expenses
 
 
(12,700)
Estimated net assets acquired
 
 
$ 229,352 
ACQUISITIONS - Schedule of Finite-Lived Intangible Assets by Major Class (Details) (APC Logistics, USD $)
In Thousands, unless otherwise specified
0 Months Ended
Sep. 30, 2016
Sep. 30, 2016
Business Acquisition [Line Items]
 
 
Identifiable intangible assets
$ 78,842 
$ 78,842 
Customer relationships
 
 
Business Acquisition [Line Items]
 
 
Estimated Life (years)
7 years 
 
Identifiable intangible assets
 
$ 78,842 
SEGMENT REPORTING - Additional Information (Details)
3 Months Ended
Mar. 31, 2017
segment
Segment Reporting [Abstract]
 
Number of reportable segments
3 
SEGMENT REPORTING - Summary of Segment Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
$ 3,415,125 
$ 3,073,943 
 
Net Revenues
568,566 
563,335 
 
Operating Income
187,958 
198,952 
 
Depreciation and amortization
22,431 
16,875 
 
Total assets
3,775,744 
3,162,245 
3,687,758 
Weighted Average
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Average headcount
14,279 
13,251 
 
NAST
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
2,360,406 
2,105,748 
 
Net Revenues
372,440 
383,798 
 
Operating Income
155,877 
162,351 
 
Depreciation and amortization
5,590 
5,502 
 
Total assets
2,126,900 
1,854,240 
 
NAST |
Weighted Average
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Average headcount
6,844 
6,666 
 
Global Forwarding
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
476,931 
357,192 
 
Net Revenues
106,546 
92,866 
 
Operating Income
16,206 
16,857 
 
Depreciation and amortization
8,020 
5,079 
 
Total assets
699,139 
514,958 
 
Global Forwarding |
Weighted Average
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Average headcount
3,926 
3,488 
 
Robinson Fresh
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
583,785 
587,989 
 
Net Revenues
56,837 
58,185 
 
Operating Income
14,652 
17,733 
 
Depreciation and amortization
1,146 
768 
 
Total assets
409,972 
370,319 
 
Robinson Fresh |
Weighted Average
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Average headcount
961 
922 
 
All Other and Corporate
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
143,518 
113,572 
 
Net Revenues
32,743 
28,486 
 
Operating Income
1,223 
2,011 
 
Depreciation and amortization
7,675 
5,526 
 
Total assets
539,733 
422,728 
 
All Other and Corporate |
Weighted Average
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Average headcount
2,548 
2,175 
 
Operating Segments
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
3,415,125 
3,073,943 
 
Operating Segments |
NAST
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
2,259,252 
2,045,479 
 
Operating Segments |
Global Forwarding
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
468,788 
351,112 
 
Operating Segments |
Robinson Fresh
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
550,445 
564,093 
 
Operating Segments |
All Other and Corporate
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
136,640 
113,259 
 
Intersegment revenues
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
(149,515)
(90,558)
 
Intersegment revenues |
NAST
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
101,154 
60,269 
 
Intersegment revenues |
Global Forwarding
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
8,143 
6,080 
 
Intersegment revenues |
Robinson Fresh
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
33,340 
23,896 
 
Intersegment revenues |
All Other and Corporate
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Total Revenues
$ 6,878 
$ 313 
 
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Stockholders' Equity Note [Abstract]
 
 
Accumulated other comprehensive loss
$ (44,000)
$ (61,442)
SUBSEQUENT EVENTS (Details) (Receivables Securitization Facility, Subordinated Debt, CHRR, Subsequent Event, USD $)
Apr. 26, 2017
Receivables Securitization Facility |
Subordinated Debt |
CHRR |
Subsequent Event
 
Subsequent Event [Line Items]
 
Maximum funding that may be obtained
$ 250,000,000