| Document and Entity Information | ||
| 3 Months Ended
Mar. 31, 2010 | May. 05, 2010
| |
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | 2010-03-31 | |
| Document Fiscal Year Focus | 2,010 | |
| Document Fiscal Period Focus | Q1 | |
| Trading Symbol | CHRW | |
| 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 | |
| Entity Common Stock, Shares Outstanding | 165,890,340 |
| Condensed Consolidated Balance Sheets (USD $) | ||
| In Thousands | Mar. 31, 2010
| Dec. 31, 2009
|
| Current assets: | ||
| Cash and cash equivalents | $229,645 | $337,308 |
| Available-for-sale securities | 52,716 | 48,310 |
| Receivables, net of allowance for doubtful accounts of $27,593 and $30,651 | 1,002,807 | 885,543 |
| Deferred tax asset | 4,785 | 6,454 |
| Prepaid expenses and other | 33,485 | 29,654 |
| Total current assets | 1,323,438 | 1,307,269 |
| Property and equipment, net | 115,543 | 117,699 |
| Goodwill | 359,266 | 361,666 |
| Intangible and other assets, net | 30,178 | 33,192 |
| Deferred tax asset | 13,782 | 14,422 |
| Total assets | 1,842,207 | 1,834,248 |
| Current liabilities: | ||
| Accounts payable and outstanding checks | 643,235 | 606,514 |
| Accrued expenses: | ||
| Compensation and profit-sharing contribution | 37,254 | 90,855 |
| Other accrued liabilities | 75,571 | 34,438 |
| Total current liabilities | 756,060 | 731,807 |
| Long term liabilities: | ||
| Noncurrent income taxes payable | 11,539 | 10,546 |
| Other long term liabilities | 11,513 | 11,995 |
| Total liabilities | 779,112 | 754,348 |
| Stockholders' investment: | ||
| Preferred stock, $0.10 par value, 20,000 shares authorized; no shares issued or outstanding | 0 | 0 |
| Common stock, $0.10 par value, 480,000 shares authorized; 176,668 and 176,686 shares issued; 166,146 and 167,098 shares outstanding | 16,615 | 16,710 |
| Retained earnings | 1,444,152 | 1,402,306 |
| Additional paid-in capital | 162,098 | 165,104 |
| Accumulated other comprehensive loss | (5,764) | (1,636) |
| Treasury stock at cost (10,522 and 9,588 shares) | (554,006) | (502,584) |
| Total stockholders' investment | 1,063,095 | 1,079,900 |
| Total liabilities and stockholders' investment | $1,842,207 | $1,834,248 |
| Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | ||
| In Thousands, except Per Share data | Mar. 31, 2010
| Dec. 31, 2009
|
| Receivables, allowance for doubtful accounts | $27,593 | $30,651 |
| Preferred stock, par value | 0.1 | 0.1 |
| Preferred stock, shares authorized | 20,000 | 20,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value | 0.1 | 0.1 |
| Common stock, shares authorized | 480,000 | 480,000 |
| Common stock, shares issued | 176,668 | 176,686 |
| Common stock, shares outstanding | 166,146 | 167,098 |
| Treasury stock, shares | 10,522 | 9,588 |
| Condensed Consolidated Statements of Operations and Comprehensive Income (USD $) | ||
| In Thousands, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
| REVENUES: | ||
| Transportation | $1,639,236 | $1,318,526 |
| Sourcing | 422,655 | 359,134 |
| Information Services | 12,726 | 10,340 |
| Total revenues | 2,074,617 | 1,688,000 |
| COSTS AND EXPENSES: | ||
| Purchased transportation and related services | 1,354,299 | 1,020,832 |
| Purchased products sourced for resale | 387,717 | 328,565 |
| Personnel expenses | 146,755 | 153,223 |
| Other selling, general, and administrative expenses | 49,839 | 48,012 |
| Total costs and expenses | 1,938,610 | 1,550,632 |
| Income from operations | 136,007 | 137,368 |
| Investment and other income | 474 | 490 |
| Income before provision for income taxes | 136,481 | 137,858 |
| Provision for income taxes | 52,469 | 52,475 |
| Net income | 84,012 | 85,383 |
| Other comprehensive loss | (4,128) | (7,120) |
| Comprehensive income | $79,884 | $78,263 |
| Basic net income per share | 0.51 | 0.5 |
| Diluted net income per share | 0.5 | 0.5 |
| Basic weighted average shares outstanding | 165,440 | 169,140 |
| Dilutive effect of outstanding stock awards | 1,135 | 1,685 |
| Diluted weighted average shares outstanding | 166,575 | 170,825 |
| Condensed Consolidated Statements of Cash Flows (USD $) | ||
| In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
| OPERATING ACTIVITIES | ||
| Net income | $84,012 | $85,383 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Stock-based compensation | 4,664 | 5,627 |
| Depreciation and amortization | 7,559 | 7,481 |
| Provision for doubtful accounts | 2,637 | 3,858 |
| Deferred taxes and other | 3,111 | (1,258) |
| Changes in operating elements: | ||
| Receivables | (119,117) | 26,128 |
| Prepaid expenses and other | (4,401) | (6,809) |
| Accounts payable and outstanding checks | 36,964 | (47,468) |
| Accrued compensation and profit-sharing contribution | (52,332) | (54,244) |
| Accrued income taxes and other | 40,828 | 39,985 |
| Net cash provided by operating activities | 3,925 | 58,683 |
| INVESTING ACTIVITIES | ||
| Purchases of property and equipment | (4,368) | (11,613) |
| Purchases of available-for-sale-securities | (8,541) | 0 |
| Sales/maturities of available-for-sale-securities | 6,481 | 750 |
| Other | (25) | 0 |
| Net cash used for by investing activities | (6,453) | (10,863) |
| FINANCING ACTIVITIES | ||
| Proceeds from stock issued for employee benefit plans | 5,354 | 6,099 |
| Repurchase of common stock | (68,201) | (55,377) |
| Excess tax benefit on stock-based compensation plans | 2,391 | 1,983 |
| Cash dividends | (42,409) | (39,573) |
| Net cash used for financing activities | (102,865) | (86,868) |
| Effect of exchange rates on cash | (2,270) | (5,995) |
| Net change in cash and cash equivalents | (107,663) | (45,043) |
| CASH AND CASH EQUIVALENTS, beginning of period | 337,308 | 494,743 |
| CASH AND CASH EQUIVALENTS, end of period | $229,645 | $449,700 |
| General | |
| 3 Months Ended
Mar. 31, 2010 | |
| General | 1. General Basis of Presentation C.H. Robinson Worldwide, Inc. and our subsidiaries (the company, we, us, or our) are a global provider of multimodal transportation services and logistics solutions through a network of 235 branch offices operating in North America, Europe, Asia, South America, Australia, and the Middle East. The condensed 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 condensed 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 results of operations 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 December31, 2009. |
| Goodwill and Intangible Assets | |
| 3 Months Ended
Mar. 31, 2010 | |
| Goodwill and Intangible Assets | 2. Goodwill and Intangible Assets The change in the carrying amount of goodwill is as follows (in thousands): Balance December31, 2009 361,666 Foreign currency translation (2,400 ) Balance March31, 2010 $ 359,266 A summary of our other intangible assets, with finite lives, which include primarily non-competition agreements and customer relationships, is as follows (in thousands): March31, 2010 December31, 2009 Gross $ 25,569 $ 43,519 Accumulated amortization (10,765 ) (26,947 ) Net $ 14,804 $ 16,572 We also have a trademark valued at $1.8 million which has an indefinite life. Amortization expense for other intangible assets is as follows (in thousands): ThreeMonthsEnded March 31, 2010 2009 Amortization expense $ 1,608 $ 1,658 Estimated amortization expense for each of the five succeeding fiscal years based on the intangible assets at March31, 2010 is as follows (in thousands): Remainder of 2010 $ 3,299 2011 3,739 2012 3,120 2013 2,906 2014 1,740 Total $ 14,804 |
| Litigation | |
| 3 Months Ended
Mar. 31, 2010 | |
| Litigation | 3. Litigation On March20, 2009, a jury in Will County, Illinois, entered a verdict of $23.75 million against us, a federally authorized motor carrier with which we contracted, and the motor carriers driver. The award was entered in favor of three named plaintiffs following a consolidated trial, stemming from an accident that occurred on April1, 2004. The motor carrier and the driver both admitted that at the time of the accident the driver was acting as an agent for the motor carrier, and that the load was being transported according to the terms of our contract with the motor carrier. Our contract clearly defined the motor carrier as an independent contractor. The verdict has the effect of holding us vicariously liable for the damages caused by the admitted negligence of the motor carrier and its driver. There were no claims that our selection or retention of the motor carrier was negligent. Given our prior experience with claims of this nature, we believe the court erred in allowing these claims to be considered by a jury. As a result, we are vigorously pursuing all available legal avenues by which we may obtain relief from the verdict. On September15, 2009, the trial court entered an order denying substantially all of the relief which we had requested in our post-trial motions. Now that the trial court has concluded its handling of the matter, we are entitled to and will be seeking relief from the verdict from the Illinois Court of Appeals. Under the terms of the insurance program which we had in place in 2004, we would be responsible for the first $5.0 million of claims of this nature plus post judgment interest. Because there are multiple potential outcomes, many of which are reasonably possible, but none of which we believe is probable, we have not recorded a liability for this claim at this time. We are not subject to any other pending or threatened litigation other than routine litigation arising in the ordinary course of our business operations, none of which is currently expected to have a material adverse effect on our financial condition, results of operations, or cash flows. |
| Fair Value Measurement | |
| 3 Months Ended
Mar. 31, 2010 | |
| Fair Value Measurement | 4. 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 entitys own assumptions or external inputs from inactive markets. A financial asset or liabilitys classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The following table presents information as of March31, 2010, about our financial assets and liabilities that are measured at fair value on a recurring basis, according to the valuation techniques we used to determine their fair values. Level1 Level2 Level 3 TotalFair Value Debt securities- Available-for-sale: State and municipal obligations $ 0 $ 52,486 $ 0 $ 52,486 Corporate bonds 0 1,120 0 1,120 Total assets at fair value $ 0 $ 53,606 $ $ 53,606 Contingent purchase price related to acquisitions $ 0 $ 0 $ 15,460 $ 15,460 Cash and cash equivalents are recorded at amortized cost which approximates fair value as maturities are three months or less. The estimated fair values of debt securities held as available-for-sale are based on other market data for comparable instruments and the transactions related in establishing the prices. In measuring the fair value of the contingent payment liability, we used an income approach that considers the expected future earnings of the acquired businesses and the resulting contingent payments, discounted at a risk-adjusted rate. The table below sets forth a reconciliation of our beginning and ending Level 3 financial liability balances for the quarter ended March31, 2010. Balance December31, 2009 $ 14,658 Total unrealized losses included in earnings 802 Balance March31, 2010 $ 15,460 |
| Stock Award Plans | |
| 3 Months Ended
Mar. 31, 2010 | |
| Stock Award Plans | 5. 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 statements of operations for stock-based compensation is as follows (in thousands): ThreeMonthsEnded March 31, 2010 2009 Stock-based compensation expense $ 4,664 $ 5,627 Our 1997 Omnibus Stock Plan allows us to grant certain stock awards, including stock options at fair market value and restricted shares and units, to our key employees and outside directors. A maximum of 28,000,000 shares can be granted under this plan; approximately 7,856,000 shares were available for stock awards as of March31, 2010, which cover stock options and restricted stock awards. Awards that expire or are cancelled without delivery of shares generally become available for issuance under the plans. Stock OptionsThe contractual lives of all options as originally granted are ten years. Options vested over a five-year period from the date of grant, with none vesting the first year and one quarter vesting each year after that. Recipients are able to exercise options using a stock swap which results in a new, fully-vested restoration option with a grant price established based on the date of the swap and a remaining contractual life equal to the remaining life of the original option. Options issued to non-employee directors vest immediately. The fair value per option is established using the Black-Scholes option pricing model, with the resulting expense being recorded over the vesting period of the award. Other than restoration options, we have not issued any new stock options since 2003. As of March31, 2010, there was no unrecognized compensation expense related to stock options since all outstanding options were fully vested. Restricted Stock AwardsWe have awarded performance-based restricted shares and restricted units to certain key employees and non-employee directors. These restricted shares and restricted units are subject to certain vesting requirements over a five-year period, based on the companys earnings growth. The awards also contain restrictions on the awardees ability to sell or transfer vested shares or units for a specified period of time. The fair value of these shares is established based on the market price on the date of grant, discounted for post-vesting holding restrictions. The discounts have varied from 12 percent to 22 percent and are calculated using the Black-Scholes option pricing model. Increased stock price volatility is the primary reason that the discount increased. These grants are being expensed based on the terms of the awards. We have also awarded restricted shares and 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 shares and units which are fully vested upon issuance. These shares and units contain restr |
| Income Taxes | |
| 3 Months Ended
Mar. 31, 2010 | |
| Income Taxes | 6. 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 2005. ThreeMonthsEnded March 31, 2010 2009 Effective income tax rate 38.4 % 38.1 % The effective income tax rate for both periods is greater than the statutory federal income tax rate primarily due to state income taxes, net of federal benefit. |
