Document and Entity Information

9 Months Ended

Sep. 30, 2016

Nov. 4, 2016

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

Sep. 30, 2016

Document Fiscal Year Focus

2016

Document Fiscal Period Focus

Q3

Amendment Flag

false

Trading Symbol

CHRW

Entity Common Stock, Shares Outstanding

141,609,479

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)

Sep. 30, 2016

Dec. 31, 2015

Current assets:

Cash and cash equivalents

$ 224,449,000

$ 168,229,000

Receivables, net of allowance for doubtful accounts of $39,802 and $43,455

1,682,686,000

1,505,620,000

Deferred tax asset

5,755,000

16,788,000

Prepaid expenses and other

54,659,000

40,061,000

Total current assets

1,967,549,000

1,730,698,000

Property and equipment, net

226,470,000

190,874,000

Goodwill

1,275,390,000

1,108,337,000

Other intangible assets, net

150,027,000

120,242,000

Other assets

44,626,000

34,207,000

Total assets

3,664,062,000

3,184,358,000

Current liabilities:

Accounts payable

820,299,000

697,585,000

Outstanding checks

77,394,000

86,298,000

Accrued expenses:

Compensation and profit-sharing contribution

95,572,000

146,666,000

Income taxes

10,753,000

12,573,000

Other accrued liabilities

70,779,000

55,475,000

Current portion of debt

725,000,000

450,000,000

Total current liabilities

1,799,797,000

1,448,597,000

Long-term debt

500,000,000

Noncurrent income taxes payable

18,843,000

19,634,000

Deferred tax liabilities

75,531,000

65,460,000

Other long-term liabilities

223,000

217,000

Total liabilities

2,394,394,000

2,033,908,000

Stockholders’ investment:

Preferred stock, $ .10 par value, 20,000 shares authorized; no shares issued or outstanding

0

Common stock, $ .10 par value, 480,000 shares authorized; 178,783 and 178,784 shares issued, 141,898 and 143,455 outstanding

14,190,000

14,345,000

Additional paid-in capital

411,244,000

379,444,000

Retained earnings

3,122,577,000

2,922,620,000

Accumulated other comprehensive loss

(37,500,000)

(37,900,000)

Treasury stock at cost (36,885 and 35,329 shares)

(2,240,888,000)

(2,128,013,000)

Total stockholders’ investment

1,269,668,000

1,150,450,000

Total liabilities and stockholders’ investment

$ 3,664,062,000

$ 3,184,358,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)

In Thousands, except Share data, unless otherwise specified

Sep. 30, 2016

Dec. 31, 2015

Statement of Financial Position [Abstract]

Receivables, allowance for doubtful accounts

$ 39,802

$ 43,455

Preferred stock, par value (in dollars per share)

$ 0.10

Preferred stock, shares authorized (shares)

20,000,000

Preferred stock, shares issued (shares)

0

Preferred stock, shares outstanding (shares)

0

Common stock, par value (in dollars per share)

$ 0.10

Common stock, shares authorized (shares)

480,000,000

Common stock, shares issued (shares)

178,783,000

178,784,000

Common stock shares outstanding (shares)

141,898,000

143,455,000

Treasury stock (shares)

36,885,000

35,329,000

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (USD $)

In Thousands, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Revenues:

Transportation

$ 2,998,583

$ 3,044,500

$ 8,593,767

$ 9,122,479

Sourcing

357,171

374,753

1,135,671

1,142,752

Total revenues

3,355,754

3,419,253

9,729,438

10,265,231

Costs and expenses:

Purchased transportation and related services

2,469,939

2,484,409

6,974,556

7,518,895

Purchased products sourced for resale

327,353

346,269

1,038,870

1,048,633

Personnel expenses

256,883

264,077

804,631

783,220

Other selling, general, and administrative expenses

90,312

91,787

267,415

270,752

Total costs and expenses

3,144,487

3,186,542

9,085,472

9,621,500

Income from operations

211,267

232,711

643,966

643,731

Interest and other expense

(7,426)

(6,559)

(22,463)

(22,058)

Income before provision for income taxes

203,841

226,152

621,503

621,673

Provision for income taxes

74,813

86,720

230,422

238,557

Net income

129,028

139,432

391,081

383,116

Other comprehensive income (loss)

518

(6,395)

491

(15,463)

Comprehensive income

$ 129,546

$ 133,037

$ 391,572

$ 367,653

Basic net income per share (in dollars per share)

$ 0.90

$ 0.96

$ 2.73

$ 2.63

Diluted net income per share (in dollars per share)

$ 0.90

$ 0.96

$ 2.73

$ 2.63

Basic weighted average shares outstanding (shares)

142,611

144,578

143,040

145,423

Dilutive effect of outstanding stock awards (shares)

272

204

205

178

Diluted weighted average shares outstanding (shares)

142,883

144,782

143,245

145,601

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)

In Thousands, unless otherwise specified

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

OPERATING ACTIVITIES

Net income

$ 391,081

$ 383,116

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

52,716

49,513

Provision for doubtful accounts

2,738

11,975

Stock-based compensation

30,626

43,512

Deferred income taxes

21,832

(8,356)

Loss on sale/disposal of assets

566

459

Changes in operating elements (net of acquisitions):

Receivables

(137,813)

(39,051)

Prepaid expenses and other

(12,148)

(6,347)

Other non-current assets

(2,793)

124

Accounts payable and outstanding checks

93,510

23,037

Accrued compensation and profit-sharing contribution

(50,105)

(3,585)

Accrued income taxes

(3,159)

17,774

Other accrued liabilities

(10,223)

(7,728)

Net cash provided by operating activities

376,828

464,443

INVESTING ACTIVITIES

Purchases of property and equipment

(56,125)

(19,317)

Purchases and development of software

(14,986)

(13,494)

Acquisitions, net of cash acquired

(220,203)

(367,108)

Restricted cash

0

359,388

Other

(735)

535

Net cash used for investing activities

(292,049)

(39,996)

FINANCING ACTIVITIES

Proceeds from stock issued for employee benefit plans

16,003

13,036

Stock tendered for payment of withholding taxes

(36,220)

(10,980)

Repurchase of common stock

(109,085)

(161,115)

Cash dividends

(191,129)

(171,448)

Excess tax benefit on stock-based compensation

17,207

7,298

Proceeds from short-term borrowings

4,415,000

5,508,000

Payments on short-term borrowings

(4,140,000)

(5,583,000)

Net cash used for financing activities

(28,224)

(398,209)

Effect of exchange rates on cash

(335)

(12,091)

Net increase in cash and cash equivalents

56,220

14,147

Cash and cash equivalents, beginning of period

168,229

128,940

Cash and cash equivalents, end of period

224,449

143,087

Noncash transactions from investing activities:

Accrued purchases of property and equipment

$ 4,332

$ 0

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, Oceania, 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.

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, 2015.

Recently Issued Accounting Standards - In May 2014, the Financial Accounting Standards Board (“FASB”) issued a final standard on revenue recognition from contracts with customers. The new standard sets forth a single comprehensive model for recognizing and reporting revenue. The new standard is effective for annual reporting periods after December 15, 2017, and permits the use of either a retrospective or a cumulative effect transition method. We are evaluating the effect of the new standard on our consolidated financial statements and related disclosures, and have not yet selected a transition method or determined the impact of this standard on our consolidated financial statements.

In November 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-17, “Balance Sheet Classification of Deferred Taxes.” ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the effect of the new standard on our consolidated financial statements and related disclosures, and have not yet selected a transition method or determined the impact of this standard on our consolidated financial statements.

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. We have not yet selected a transition date nor have we determined the effect of the standard on our ongoing financial reporting.

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, which will require us to adopt these provisions in the first quarter of 2017. This guidance will be applied either prospectively, retrospectively or using a modified retrospective transition method. Early adoption is permitted. We have not yet selected a transition date or method, nor have we determined the effect of the standard on our ongoing financial reporting.

GOODWILL AND OTHER INTANGIBLE ASSETS

The change in the carrying amount of goodwill is as follows (in thousands):




Balance, December 31, 2015	$	1,108,337
Acquisitions	166,272
Foreign currency translation	781
Balance, September 30, 2016	$	1,275,390

A summary of our other intangible assets, with finite lives, which include primarily customer relationships and non-competition agreements, is as follows (in thousands):



	September 30, 2016			December 31, 2015
Gross	$	218,863		$	171,172
Accumulated amortization	(79,311		)	(61,405		)
Net	$	139,552		$	109,767

Other intangible assets, with indefinite lives, are as follows (in thousands):



	September 30, 2016		December 31, 2015
Trademarks	$	10,475	$	10,475

Amortization expense for other intangible assets is as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Amortization expense	$	6,094	$	6,093	$	18,282	$	18,282

Intangible assets at September 30, 2016, will be amortized over the next five years, and that expense is as follows:



Remainder of 2016	$	7,852
2017	31,146
2018	30,648
2019	30,648
2020	20,384
2021	6,863
Thereafter	12,011
Total	$	139,552

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 September 30, 2016, and December 31, 2015. There were no transfers between levels during the period.

FINANCING ARRANGEMENTS

On October 29, 2012, we entered into a senior unsecured revolving credit facility for up to $500 million with a $500 million accordion feature (the "Credit Agreement") with a syndicate of financial institutions led by U.S. Bank. The purpose of this facility was to partially fund the acquisition of Phoenix International Freight Services, Ltd. ("Phoenix") and to allow us to continue to fund working capital, capital expenditures, dividends, and share repurchases. In December 2014, we amended the credit facility to increase the amount available from $500 million to $900 million and to extend the expiration date from October 2017 to December 2019.

As of September 30, 2016, and December 31, 2015, we had $725 million and $450 million, respectively, in borrowings outstanding under the Credit Agreement, which is classified as a current liability on the condensed consolidated balance sheets. 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 September 30, 2016, the variable rate equaled LIBOR plus 1.00 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 September 30, 2016, was approximately 1.4 percent and at September 30, 2016, was approximately 1.5 percent. The weighted average interest rate incurred on borrowings during the quarter ended September 30, 2015, was approximately 1.4 percent and at September 30, 2015, was approximately 1.3 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 as of September 30, 2016.

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.

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 as of September 30, 2016.

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 $559.7 million at September 30, 2016. 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

C.H. Robinson Worldwide, Inc. and its 80 percent (or more) owned U.S. subsidiaries file a consolidated federal income tax 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 2016, we asserted that we will indefinitely reinvest earnings of foreign subsidiaries to support expansion of our international businesses. The assertion decreased deferred income taxes related to undistributed foreign earnings by $1.9 million in the third quarter of 2016 and reduced the effective tax rate compared to the third quarter of 2015. During the nine months ended September 30, 2016, the assertion decreased deferred income taxes related to undistributed foreign earnings by $4.4 million and reduced the effective tax rate compared to the same period of 2015.

Our effective tax rate for the three months ended September 30, 2016 and 2015 was 36.7 percent and 38.3 percent, respectively. Our effective tax rate for the nine months ended September 30, 2016 and 2015 was 37.1 percent and 38.4 percent, respectively. The effective income tax rate for both periods is greater than the statutory federal income tax rate due to state income taxes, net of federal benefit.

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 September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options	$	603	$	3,100	$	5,818	$	10,973
Stock awards	3,747		8,919		22,770		30,655
Company expense on ESPP discount	491		474		2,038		1,884
Total stock-based compensation expense	$	4,841	$	12,493	$	30,626	$	43,512

On May 12, 2016, our shareholders approved our amended 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 6,000,000 shares plus the shares remaining available for future grants under the 2013 Equity Incentive Plan as of May 12, 2016, can be granted under this plan. Approximately 6,721,154 shares were available for stock awards as of September 30, 2016. 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).

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 September 30, 2016, unrecognized compensation expense related to stock options was $47.4 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 17 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 September 30, 2016, there was unrecognized compensation expense of $111.5 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 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 September 30, 2016
Shares purchased by employees	Aggregate cost to employees		Expense recognized by the company
46,445	$	2,782	$	491

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 18 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.

ACQUISITIONS

On September 30, 2016, we completed the acquisition of APC Logistics for the purpose of expanding C.H. Robinson's global presence and bringing additional capabilities and expertise to the company's portfolio. Total purchase consideration was $229.1 million, which was paid in cash and is subject to post-closing and working capital adjustments, in accordance with the acquisition agreement. 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	$	8,886
Receivables	36,866
Inventory and other current assets	2,450
Property and equipment	1,789
Identifiable intangible assets	48,041
Goodwill	166,272
Other noncurrent assets	194
Long term deferred tax asset	728
Total assets	265,226

Accounts payable	(20,305		)
Accrued expenses	(15,832		)
Estimated net assets acquired	$	229,089

Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):



	Estimated Life (years)
Customer relationships	7	$	48,041

The APC Logistics goodwill is a result of acquiring and retaining the APC Logistics existing workforce and expected synergies from integrating their business into C.H. Robinson. Purchase accounting is considered preliminary, subject to revision, mainly with respect to certain working capital accounts, taxes, identifiable intangible assets, and goodwill, as final information was not available as of September 30, 2016. The goodwill will not be deductible for tax purposes.

On January 1, 2015, we completed the acquisition of Freightquote.com, Inc. for the purpose of enhancing our less than truckload and truckload businesses and expanding our eCommerce capabilities. Total purchase consideration was $398.6 million, which was paid in cash. We used advances under the Credit Agreement to fund part of the cash consideration. The following is a summary of the allocation of purchase consideration to the estimated fair value of net assets for the acquisition of Freightquote (in thousands):



Cash and cash equivalents	$	29,302
Receivables	56,228
Other current assets	2,395
Property and equipment	43,687
Identifiable intangible assets	37,800
Goodwill	287,220
Trademarks	8,600
Other noncurrent assets	3,421
Total assets	468,653

Accounts payable	(44,622		)
Accrued expenses	(5,485		)
Other liabilities	(19,939		)
Estimated net assets acquired	$	398,607

Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):



	Estimated Life (years)
Customer relationships	5	$	37,500
Noncompete agreements	5	300
Total identifiable intangible assets		$	37,800

We also acquired a trademark valued at $8.6 million which has been determined to be indefinite-lived. The Freightquote goodwill is a result of acquiring and retaining the Freightquote existing workforce and expected synergies from integrating their business into C.H. Robinson. Purchase accounting is considered final. The goodwill will not be deductible for tax purposes.

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 September 30, 2016, and December 31, 2015, was $37.5 million and $37.9 million, respectively. Accumulated other comprehensive loss is comprised solely of foreign currency translation adjustments at September 30, 2016 and December 31, 2015.

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, Oceania, 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.

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, 2015.

Recently Issued Accounting Standards

Recently Issued Accounting Standards - In May 2014, the Financial Accounting Standards Board (“FASB”) issued a final standard on revenue recognition from contracts with customers. The new standard sets forth a single comprehensive model for recognizing and reporting revenue. The new standard is effective for annual reporting periods after December 15, 2017, and permits the use of either a retrospective or a cumulative effect transition method. We are evaluating the effect of the new standard on our consolidated financial statements and related disclosures, and have not yet selected a transition method or determined the impact of this standard on our consolidated financial statements.

In November 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-17, “Balance Sheet Classification of Deferred Taxes.” ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the effect of the new standard on our consolidated financial statements and related disclosures, and have not yet selected a transition method or determined the impact of this standard on our consolidated financial statements.

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. We have not yet selected a transition date nor have we determined the effect of the standard on our ongoing financial reporting.

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, which will require us to adopt these provisions in the first quarter of 2017. This guidance will be applied either prospectively, retrospectively or using a modified retrospective transition method. Early adoption is permitted. We have not yet selected a transition date or method, nor have we determined the effect of the standard on our ongoing financial reporting.

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 the carrying amount of goodwill is as follows (in thousands):




Balance, December 31, 2015	$	1,108,337
Acquisitions	166,272
Foreign currency translation	781
Balance, September 30, 2016	$	1,275,390

Schedule of Finite-Lived Intangible Assets by Major Class

A summary of our other intangible assets, with finite lives, which include primarily customer relationships and non-competition agreements, is as follows (in thousands):



	September 30, 2016			December 31, 2015
Gross	$	218,863		$	171,172
Accumulated amortization	(79,311		)	(61,405		)
Net	$	139,552		$	109,767

Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):



	Estimated Life (years)
Customer relationships	5	$	37,500
Noncompete agreements	5	300
Total identifiable intangible assets		$	37,800

Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):



	Estimated Life (years)
Customer relationships	7	$	48,041

Schedule of Indefinite-lived Intangible Assets by Major Class

Other intangible assets, with indefinite lives, are as follows (in thousands):



	September 30, 2016		December 31, 2015
Trademarks	$	10,475	$	10,475

Schedule of Amortization Expense

Amortization expense for other intangible assets is as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Amortization expense	$	6,094	$	6,093	$	18,282	$	18,282

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Intangible assets at September 30, 2016, will be amortized over the next five years, and that expense is as follows:



Remainder of 2016	$	7,852
2017	31,146
2018	30,648
2019	30,648
2020	20,384
2021	6,863
Thereafter	12,011
Total	$	139,552

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 September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options	$	603	$	3,100	$	5,818	$	10,973
Stock awards	3,747		8,919		22,770		30,655
Company expense on ESPP discount	491		474		2,038		1,884
Total stock-based compensation expense	$	4,841	$	12,493	$	30,626	$	43,512

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 September 30, 2016
Shares purchased by employees	Aggregate cost to employees		Expense recognized by the company
46,445	$	2,782	$	491

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	$	8,886
Receivables	36,866
Inventory and other current assets	2,450
Property and equipment	1,789
Identifiable intangible assets	48,041
Goodwill	166,272
Other noncurrent assets	194
Long term deferred tax asset	728
Total assets	265,226

Accounts payable	(20,305		)
Accrued expenses	(15,832		)
Estimated net assets acquired	$	229,089

The following is a summary of the allocation of purchase consideration to the estimated fair value of net assets for the acquisition of Freightquote (in thousands):



Cash and cash equivalents	$	29,302
Receivables	56,228
Other current assets	2,395
Property and equipment	43,687
Identifiable intangible assets	37,800
Goodwill	287,220
Trademarks	8,600
Other noncurrent assets	3,421
Total assets	468,653

Accounts payable	(44,622		)
Accrued expenses	(5,485		)
Other liabilities	(19,939		)
Estimated net assets acquired	$	398,607

Schedule of Finite-Lived Intangible Assets by Major Class

A summary of our other intangible assets, with finite lives, which include primarily customer relationships and non-competition agreements, is as follows (in thousands):



	September 30, 2016			December 31, 2015
Gross	$	218,863		$	171,172
Accumulated amortization	(79,311		)	(61,405		)
Net	$	139,552		$	109,767

Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):



	Estimated Life (years)
Customer relationships	5	$	37,500
Noncompete agreements	5	300
Total identifiable intangible assets		$	37,800

Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):



	Estimated Life (years)
Customer relationships	7	$	48,041

GOODWILL AND OTHER INTANGIBLE ASSETS Change in the Carrying Amount of Goodwill (Details) (USD $)

In Thousands, unless otherwise specified

9 Months Ended

Sep. 30, 2016

Goodwill [Roll Forward]

Beginning Balance

$ 1,108,337

Acquisitions

166,272

Foreign currency translation

781

Ending Balance

$ 1,275,390

GOODWILL AND OTHER INTANGIBLE ASSETS Summary of Other Intangible Assets, with Finite Lives (Details) (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2016

Dec. 31, 2015

Finite-Lived Intangible Assets [Line Items]

Net

$ 139,552

Other Intangible Assets

Finite-Lived Intangible Assets [Line Items]

Gross

218,863

171,172

Accumulated amortization

(79,311)

(61,405)

Net

$ 139,552

$ 109,767

GOODWILL AND OTHER INTANGIBLE ASSETS Other Intangible Assets, with Indefinite Lives (Details) (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2016

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Trademarks

$ 10,475

GOODWILL AND OTHER INTANGIBLE ASSETS Amortization Expense of Other Intangible Assets (Details) (Other Intangible Assets, USD $)

In Thousands, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Other Intangible Assets

Finite-Lived Intangible Assets [Line Items]

Amortization expense

$ 6,094

$ 6,093

$ 18,282

GOODWILL AND OTHER INTANGIBLE ASSETS Estimated Amortization Expense on Intangible Assets (Details) (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2016

Estimated amortization expense

Remainder of 2016

$ 7,852

2017

31,146

2018

30,648

2019

30,648

2020

20,384

2021

6,863

Thereafter

12,011

Net

$ 139,552

FAIR VALUE MEASUREMENT (Details) (USD $)

Sep. 30, 2016

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Liability at fair value

$ 0

FINANCING ARRANGEMENTS (Details) (USD $)

3 Months Ended

9 Months Ended

0 Months Ended

9 Months Ended

Sep. 30, 2016

Unsecured Debt

Senior Unsecured Revolving Credit Facility 2019 Term Loan

Sep. 30, 2015

Unsecured Debt

Senior Unsecured Revolving Credit Facility 2019 Term Loan

Dec. 31, 2014

Unsecured Debt

Senior Unsecured Revolving Credit Facility 2019 Term Loan

Oct. 29, 2012

Unsecured Debt

Senior Unsecured Revolving Credit Facility 2019 Term Loan

Sep. 30, 2016

Unsecured Debt

Senior Unsecured Revolving Credit Facility 2019 Term Loan

Federal Funds Rate

Sep. 30, 2016

Unsecured Debt

Senior Unsecured Revolving Credit Facility 2019 Term Loan

London Interbank Offered Rate (LIBOR)

Sep. 30, 2016

Unsecured Debt

Senior Unsecured Revolving Credit Facility 2019 Term Loan

Current Liability

Dec. 31, 2015

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

Sep. 30, 2016

Senior Notes

Note Purchase Agreement

Debt Instrument [Line Items]

Line of credit facility, maximum borrowing capacity

$ 900,000,000

$ 500,000,000

Additional borrowing capacity credit facility

500,000,000

Borrowing outstanding

725,000,000

450,000,000

Debt instrument, basis spread on variable rate

0.50%

1.00%

Debt instrument, interest rate during period

1.40%

Debt, weighted average interest rate

1.50%

1.30%

Debt instrument, covenant, leverage ratio, maximum

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

$ 559,700,000

INCOME TAXES (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Decrease in deferred income taxes related to undistributed foreign earnings

$ 1.9

$ 4.4

Effective income tax

36.70%

38.30%

37.10%

38.40%

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

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock-based compensation expense

$ 4,841

$ 12,493

$ 30,626

$ 43,512

Stock options

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock-based compensation expense

603

3,100

5,818

10,973

Stock awards

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock-based compensation expense

3,747

8,919

22,770

30,655

Company expense on ESPP discount

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock-based compensation expense

$ 491

$ 474

$ 2,038

$ 1,884

STOCK AWARD PLANS - Additional Information (Details) (USD $)

3 Months Ended

9 Months Ended

Sep. 30, 2016

Stock Option

May 12, 2016

Stock Option

Sep. 30, 2016

Restricted Stock Awards

Compensation Related Costs Share Based Payments Disclosure [Line Items]

Maximum shares that can be granted under stock plan (shares)

6,000,000

Shares available for stock awards (shares)

6,721,154

Stock award, vesting period

5 years

Unrecognized compensation expense

$ 47,400,000

$ 111,500,000

Restricted stock awards, discount for post-vesting holding restriction, lower limit

17.00%

Restricted stock awards, discount for post-vesting holding restriction, upper limit

22.00%

Maximum employee contribution to purchase company stock

$ 10,000

Discount rate used to determine the purchase price

15.00%

STOCK AWARD PLANS Summary of Employee Stock Purchase Plan Activity (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares purchased by employees (shares)

46,445

Aggregate cost to employees

$ 2,782

Expense recognized by the company

4,841

12,493

30,626

43,512

Company expense on ESPP discount

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Expense recognized by the company

$ 491

$ 474

$ 2,038

$ 1,884

LITIGATION (Details) (Contingent Auto Liability Claim)

9 Months Ended

Sep. 30, 2016

case

Contingent Auto Liability Claim

Loss Contingencies [Line Items]

Contingency auto liability cases (case)

18

ACQUISITIONS - Narrative (Details) (USD $)

In Millions, unless otherwise specified

0 Months Ended

Sep. 30, 2016

APC Logistics

Jan. 1, 2015

Freightquote

Jan. 1, 2015

Freightquote

Trademarks

Business Acquisition [Line Items]

Total purchase price

$ 229.1

$ 398.6

Acquired trademarks value

$ 8.6

ACQUISITIONS Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2016

Dec. 31, 2015

Sep. 30, 2016

APC Logistics

Jan. 1, 2015

Freightquote

Business Acquisition [Line Items]

Cash and cash equivalents

$ 8,886

$ 29,302

Receivables

36,866

56,228

Inventory and other current assets

2,450

Other current assets

2,395

Property and equipment

1,789

43,687

Identifiable intangible assets

48,041

37,800

Goodwill

1,275,390

1,108,337

166,272

287,220

Trademarks

8,600

Other noncurrent assets

194

3,421

Long term deferred tax asset

728

Total assets

265,226

468,653

Accounts payable

(20,305)

(44,622)

Accrued expenses

(15,832)

(5,485)

Other liabilities

(19,939)

Estimated net assets acquired

$ 229,089

$ 398,607

ACQUISITIONS Schedule of Finite-Lived Intangible Assets by Major Class (Details) (USD $)

In Thousands, unless otherwise specified

0 Months Ended

Sep. 30, 2016

APC Logistics

Sep. 30, 2016

APC Logistics

Customer relationships

Sep. 30, 2016

APC Logistics

Customer relationships

Jan. 1, 2015

Freightquote

Jan. 1, 2015

Freightquote

Customer relationships

Jan. 1, 2015

Freightquote

Customer relationships

Jan. 1, 2015

Freightquote

Noncompete agreements

Jan. 1, 2015

Freightquote

Noncompete agreements

Business Acquisition [Line Items]

Estimated Life (years)

7 years

5 years

Identifiable intangible assets

$ 48,041

$ 37,800

$ 37,500

$ 300

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (USD $)

In Millions, unless otherwise specified

Sep. 30, 2016

Dec. 31, 2015

Stockholders' Equity Note [Abstract]

Accumulated other comprehensive loss

$ (37.5)

$ (37.9)