What changed in this filing

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Item 1. Financial Statements

2020-10-30 compared with 2020-07-31 · 84 added, 61 removed, 545 unchanged (21% of the section changed)

3 unchanged sentences

(unaudited, in thousands, except per share data)

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Current assets:

47 unchanged sentences

(unaudited, in thousands except per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

47 unchanged sentences

Balance June 30, 2020 134,724 13,472 543,608 4,227,257 ( 84,091 ) ( 2,995,918 ) 1,704,328

Net income 136,529 136,529

Foreign currency translation, net of tax 13,236 13,236

Dividends declared, $ 0.51 per share

( 70,188 ) ( 70,188 )

Stock issued for employee benefit plans 1,176 118 1,032 77,528 78,678

Stock-based compensation expense — — 10,776 — 10,776

Balance September 30, 2020 135,900 $ 13,590 $ 555,416 $ 4,293,598 $ ( 70,855 ) $ ( 2,918,390 ) $ 1,873,359

See accompanying notes to the condensed consolidated financial statements.

ROBINSON WORLDWIDE, INC.

Condensed Consolidated Statements of Stockholders’ Investment, continued

(unaudited, in thousands, except per share data)

Outstanding Amount Additional

22 unchanged sentences

Balance June 30, 2019 135,731 13,573 541,090 4,037,610 ( 72,326 ) ( 2,860,636 ) 1,659,311

Net income 146,894 146,894

Foreign currency translation ( 18,576 ) ( 18,576 )

Dividends declared, $ 0.50 per share

( 68,855 ) ( 68,855 )

Stock issued for employee benefit plans 194 20 ( 561 ) 11,359 10,818

Issuance of restricted stock, net of forfeitures 9 1 ( 1 ) —

Stock-based compensation expense — — 8,850 — 8,850

Repurchase of common stock ( 782 ) ( 79 ) ( 65,267 ) ( 65,346 )

Balance September 30, 2019 135,152 $ 13,515 $ 549,378 $ 4,115,649 $ ( 90,902 ) $ ( 2,914,544 ) $ 1,673,096

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES

34 unchanged sentences

Net cash used for financing activities ( 274,984 ) ( 517,078 )

Effect of exchange rates on cash ( 5,183 ) 461

Effect of exchange rates on cash and cash equivalents 612 ( 7,465 )

Net change in cash and cash equivalents ( 195,289 ) 5,809

50 unchanged sentences

Translation 2,689 1,096 548 4,333

Balance June 30, 2020 $ 1,190,266 $ 207,771 $ 67,718 $ 1,465,755

Balance, September 30, 2020 $ 1,195,099 $ 210,023 $ 68,318 $ 1,473,440

Goodwill is tested at least annually for impairment on November 30, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

1 unchanged sentence

If the Step Zero Analysis indicates it is more likely than not that the fair value of our reporting units is less than their respective carrying value, an additional impairment assessment is performed (“Step One Analysis”).

We considered whether there were any changes in circumstances indicating that our goodwill might be impaired, including consideration of the impacts of the novel coronavirus (“COVID-19”) on financial markets and our business operations, and determined the more likely than not criteria had not been met, and therefore a Step One Analysis was not required as of June 30, 2020.

Identifiable intangible assets consisted of the following (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Cost Accumulated Amortization Net Cost Accumulated Amortization Net

5 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Amortization expense $ 9,937 $ 9,731 $ 27,968 $ 28,699

Finite-lived intangible assets, by reportable segment, as of June 30, 2020, will be amortized over their remaining lives as follows (in thousands):

Finite-lived intangible assets, by reportable segment, as of September 30, 2020, will be amortized over their remaining lives as follows (in thousands):

NAST Global Forwarding All Other and Corporate Total

12 unchanged sentences

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 June 30, 2020 and December 31, 2019.

We had no Level 3 assets or liabilities as of and during the periods ended September 30, 2020 and December 31, 2019.

There were no transfers between levels during the period.

2 unchanged sentences

Average interest rate as of Carrying value as of

June 30, 2020 December 31, 2019 Maturity June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019 Maturity September 30, 2020 December 31, 2019

Revolving credit facility — % — % October 2023 $ — $ —

15 unchanged sentences

In addition, there is a commitment fee on the average daily undrawn stated amount under each letter of credit issued under the facility ranging from 0.075 percent to 0.200 percent.

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.

The recorded amount of borrowings outstanding, if any, approximates fair value because of the short maturity period of the debt;

therefore, we would consider these borrowings to be a Level 2 financial liability.

The Credit Agreement contains various restrictions and covenants that require us to maintain certain financial ratios, including a maximum leverage ratio of 3.50 to 1.00.

6 unchanged sentences

Interest on the Notes is payable semi-annually in arrears.

The fair value of the Notes approximated $ 546.8 million at June 30, 2020.

The fair value of the Notes approximated $ 549.7 million at September 30, 2020.

We estimate the fair value of the Notes 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.

21 unchanged sentences

Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, the Senior Notes have an effective yield to maturity of approximately 4.39 percent per annum.

The fair value of the Senior Notes, excluding debt discounts and issuance costs, approximated $ 694.1 million as of June 30, 2020, based primarily on the market prices quoted from external sources.

The carrying value of the Senior Notes was $ 592.9 million as of June 30, 2020.

The fair value of the Senior Notes, excluding debt discounts and issuance costs, approximated $ 703.0 million as of September 30, 2020, based primarily on the market prices quoted from external sources.

The carrying value of the Senior Notes was $ 593.1 million as of September 30, 2020.

If the Senior Notes were measured at fair value in the financial statements, they would be classified as a Level 2 financial liability in the fair value hierarchy.

7 unchanged sentences

The indenture does not contain any financial ratios or specified levels of net worth or liquidity to which we must adhere.

As of June 30, 2020, we were in compliance with all of the covenants under the Credit Agreement, Note Purchase Agreement, Receivables Securitization Facility, and Senior Notes.

Our effective tax rate for the three months ended June 30, 2020 and 2019 was 19.4 percent and 23.4 percent, respectively, and our effective tax rate for the six months ended June 30, 2020 and 2019 was 18.6 percent and 22.7 percent, respectively.

The effective income tax rate for the three and six months ended June 30, 2020, was lower than the statutory federal income tax rate primarily due to the tax impact of share-based payment awards, including the tax benefit from the delivery of a one-time deferred stock award that was granted to the company's prior Chief Executive Officer in 2000, which reduced the effective tax rate by 4.5 percentage points and 4.2 percentage points, respectively, and foreign tax impacts recorded in the three and six months ended June 30, 2020.

As of September 30, 2020, we were in compliance with all of the covenants under the Credit Agreement, Note Purchase Agreement, Receivables Securitization Facility, and Senior Notes.

Our effective tax rate for the three months ended September 30, 2020 and 2019 was 15.1 percent and 21.8 percent, respectively, and our effective tax rate for the nine months ended September 30, 2020 and 2019 was 17.3 percent and 22.5 percent, respectively.

The effective income tax rate for the three and nine months ended September 30, 2020 was lower than the statutory federal income tax rate primarily due to the tax impact of share-based payment awards, which reduced the effective tax rate by 3.8 percentage points and 4.1 percentage points, respectively.

Foreign tax impacts also contributed to a lower federal income tax rate, reducing our effective tax rate in the three and nine months ended September 30, 2020 by 5.2 percentage points and 3.1 percentage points, respectively.

This impact on the tax rate was partially offset by state income tax expense, which increased the effective income tax rate.

The effective income tax rate for the three and nine months ended September 30, 2019 was higher than the statutory federal income tax rate due to state income taxes, net of federal benefit, and foreign income taxes, but was partially offset by the tax impact of share-based payment awards and the combined tax impact of Global Intangible Low-tax Income ("GILTI") and Foreign Derived Intangible Income ("FDII").

In 2019, we removed our assertion that the unremitted earnings of foreign subsidiaries were permanently reinvested with limited exceptions.

If we repatriated all foreign earnings that are still considered to be permanently reinvested, the estimated effect on income taxes payable would be an increase of approximately $ 3.9 million as of June 30, 2020.

On March 27, 2020, the U.S.

4 unchanged sentences

The CARES Act also provides for a tax credit of up to $5,000 related to wages and health benefits provided to an employee whose work from March 17, 2020 through December 31, 2020 was impacted by COVID-19.

Through June 30, 2020, we have recognized a payroll deferral and tax credit of $ 8.3 million and $ 0.5 million, respectively, under the CARES Act.

Through September 30, 2020, we have recognized a payroll deferral and tax credit of $ 19.3 million and $ 0.7 million, respectively, under the CARES Act.

We will continue evaluating the impact of the CARES Act over the remainder of 2020.

3 unchanged sentences

tax code, including but not limited to, reducing the U.S.

federal corporate tax rate from 35 percent to 21 percent and adding new rules for Global Intangible Low-tax Income ("GILTI") and Foreign Derived Intangible Income (“FDII”).

Although enacted more than two years ago, regulatory guidance on the application of FDII was not finalized until shortly after the second quarter of 2020.

We have included the tax impact of both GILTI and FDII in our income tax expense for the three and six months ended June 30, 2020, and 2019, based on our understanding of the rules available at the time of filing.

The Treasury Department issued final regulatory guidance related to both GILTI and FDII on July 15, 2020, subsequent to the quarter ended June 30, 2020.

The effective date of these regulations is January 1, 2021, absent an election to apply these rules retroactively to 2018.

federal corporate tax rate from 35 percent to 21 percent and adding new rules for GILTI and FDII.

We have included the tax impact of both GILTI and FDII in our income tax expense for the three and nine months ended September 30, 2020, and 2019.

The Treasury Department issued final regulatory guidance related to both GILTI and FDII on July 15, 2020.

The effective date of these regulations is generally January 1, 2021, absent an election to apply these rules retroactively to a 2018 effective date.

We are reviewing these regulations and the potential to elect a 2018 effective date.

The impact of this new guidance is not expected to have a material impact on full-year 2020 results.

As of June 30, 2020, we have $ 38.9 million of unrecognized tax benefits and related interest and penalties.

On September 29, 2020, the Treasury Department issued final and proposed regulations on determining the foreign tax credit, and allocating and apportioning deductions, under the Internal Revenue Code.

We are still completing our review of these regulations, but they did not have a material impact on the third quarter of 2020 and we do not expect them to have a material impact on full-year 2020 results.

As of September 30, 2020, we have $ 39.0 million of unrecognized tax benefits and related interest and penalties.

It is possible the amount of unrecognized tax benefit could change in the next 12 months as a result of a lapse of the statute of limitations and settlements with taxing authorities.

7 unchanged sentences

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

6 unchanged sentences

A maximum of 17,041,803 shares can be granted under this plan following the amendment and restatement.

Approximately 2,946,808 shares were available for stock awards under the plan as of June 30, 2020.

Approximately 2,974,170 shares were available for stock awards under the plan as of September 30, 2020.

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.

3 unchanged sentences

These grants are being expensed based on the terms of the awards.

As of June 30, 2020, unrecognized compensation expense related to stock options was $ 53.2 million.

As of September 30, 2020, unrecognized compensation expense related to stock options was $ 48.0 million.

The amount of future expense to be recognized will be based on the passage of time and the employees' continued employment.

1 unchanged sentence

These awards had a weighted average exercise price of $ 72.74 and a weighted average grant date fair value of $ 13.88 .

These awards will vest over a five -year period with a first vesting date of December 31, 2020.

These awards are eligible to vest over a five-year period with a first vesting date of December 31, 2020.

Stock Awards - We have awarded performance-based restricted shares and restricted stock units and time-based restricted stock units to certain key employees and non-employee directors.

7 unchanged sentences

We granted 405,776 performance-based restricted shares and restricted stock units and 329,586 time-based restricted shares and restricted stock units on February 5, 2020.

These awards had a weighted average grant date fair value of $ 59.34 and will vest over a five -year period with a first vesting date of December 31, 2020.

These awards had a weighted average grant date fair value of $ 59.34 and are eligible to vest over a five-year period with a first vesting date of December 31, 2020.

We have also issued restricted stock units to certain key employees and non-employee directors, which are fully vested upon issuance.

2 unchanged sentences

These grants have been expensed during the year they were earned.

As of June 30, 2020, there was unrecognized compensation expense of $ 131.5 million related to previously granted full value awards.

As of September 30, 2020, there was unrecognized compensation expense of $ 125.3 million related to previously granted full value awards.

The amount of future expense to be recognized will be based on the passage of time, the company’s earnings growth, and certain other conditions.

3 unchanged sentences

The following is a summary of the employee stock purchase plan activity:

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Shares purchased

5 unchanged sentences

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.

59 unchanged sentences

We do not report our intersegment revenues by reportable segment to our CODM and do not believe they are a meaningful metric for evaluating the performance of our reportable segments.

Reportable segment information as of, and for the three and six months ended June 30, 2020 and 2019, is as follows (dollars in thousands):

Reportable segment information as of, and for the three and nine months ended September 30, 2020 and 2019, is as follows (dollars in thousands):

NAST Global Forwarding All Other and Corporate Consolidated

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Total revenues $ 2,923,842 $ 831,957 $ 469,001 $ 4,224,800

6 unchanged sentences

NAST Global Forwarding All Other and Corporate Consolidated

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Total revenues $ 2,826,308 $ 597,695 $ 432,129 $ 3,856,132

Net revenues 433,760 135,815 63,856 633,431

Income (loss) from operations 204,732 26,618 ( 3,815 ) 227,535

Income from operations 176,200 24,676 209 201,085

Depreciation and amortization 5,734 9,186 10,560 25,480

3 unchanged sentences

NAST Global Forwarding All Other and Corporate Consolidated

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Total Revenues $ 8,222,879 $ 2,070,161 $ 1,364,614 $ 11,657,654

6 unchanged sentences

NAST Global Forwarding All Other and Corporate Consolidated

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Total Revenues $ 8,495,145 $ 1,727,745 $ 1,293,292 $ 11,516,182

8 unchanged sentences

REVENUE FROM CONTRACTS WITH CUSTOMERS

A summary of our total revenues disaggregated by major service line and timing of revenue recognition is presented below for each of our reportable segments for the three and six months ended June 30, 2020 and 2019 (in thousands):

Three Months Ended June 30, 2020

A summary of our total revenues disaggregated by major service line and timing of revenue recognition is presented below for each of our reportable segments for the three and nine months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30, 2020

NAST Global Forwarding All Other and Corporate Total

4 unchanged sentences

Total $ 2,923,842 $ 831,957 $ 469,001 $ 4,224,800

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

NAST Global Forwarding All Other and Corporate Total

4 unchanged sentences

Total $ 2,826,308 $ 597,695 $ 432,129 $ 3,856,132

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

NAST Global Forwarding All Other and Corporate Total

4 unchanged sentences

Total $ 8,222,879 $ 2,070,161 $ 1,364,614 $ 11,657,654

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

NAST Global Forwarding All Other and Corporate Total

7 unchanged sentences

(2) Sourcing performance obligations are completed at a point in time.

We typically do not receive consideration and amounts are not due from our customer prior to the completion of our performance obligation and as such contract liabilities, as of June 30, 2020, and revenue recognized in the three and six months ended June 30, 2020 and 2019 resulting from contract liabilities was not significant.

We typically do not receive consideration and amounts are not due from our customer prior to the completion of our performance obligation and as such contract liabilities, as of September 30, 2020, and revenue recognized in the three and nine months ended September 30, 2020 and 2019 resulting from contract liabilities was not significant.

Contract assets and accrued expenses-transportation expense fluctuate from period to period primarily based upon shipments in-transit at period end.

18 unchanged sentences

We have lease agreements with lease components (e.g., payments for rent) and non-lease components (e.g., payments for common area maintenance and parking), which are all accounted for as a single lease component.

We do not have material lease agreements that have not yet commenced that are expected to create significant rights or obligations as of June 30, 2020.

Information regarding lease expense, remaining lease term, discount rate, and other select lease information is presented below as of June 30, 2020, and for the three and six months ended June 30, 2020 (dollars in thousands):

Three Months Ended June 30, Six Months Ended June 30,

We do not have material lease agreements that have not yet commenced that are expected to create significant rights or obligations as of September 30, 2020.

Information regarding lease expense, remaining lease term, discount rate, and other select lease information is presented below as of September 30, 2020, and for the three and nine months ended September 30, 2020 (dollars in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

Lease Costs 2020 2019 2020 2019

2 unchanged sentences

Total lease expense $ 25,999 $ 19,510 $ 74,080 $ 58,706

Six Months Ended June 30,

Nine Months Ended September 30,

Other Lease Information 2020 2019

1 unchanged sentence

Right-of-use lease assets obtained in exchange for new lease liabilities 88,857 42,387

Lease Term and Discount Rate As of June 30, 2020

Lease Term and Discount Rate As of September 30, 2020

Weighted average remaining lease term (in years) (1)

3 unchanged sentences

Excluding this lease, the weighted average remaining lease term of our agreements is 4.8 years.

The maturities of lease liabilities as of June 30, 2020, were as follows (in thousands):

The maturities of lease liabilities as of September 30, 2020, were as follows (in thousands):

Maturity of Lease Liabilities Operating Leases

14 unchanged sentences

The allowance for credit losses on contract assets was not significant.

A rollforward of our allowance for credit losses on our accounts receivable balance is presented below for the six months ended June 30, 2020:

A rollforward of our allowance for credit losses on our accounts receivable balance is presented below for the nine months ended September 30, 2020:

Balance, December 31, 2019 $ 32,838

1 unchanged sentence

Write-offs ( 8,422 )

Balance, June 30, 2020 $ 34,183

Recoveries of amounts previously written off were not significant for the three and six months ended June 30, 2020.

Balance, September 30, 2020 $ 36,086

Recoveries of amounts previously written off were not significant for the three and nine months ended September 30, 2020.

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 June 30, 2020 and December 31, 2019, was $ 84.1 million and $ 76.1 million, respectively.

Accumulated other comprehensive loss is comprised solely of foreign currency adjustments, net of related income tax effects at June 30, 2020 and December 31, 2019.

Other comprehensive income was $ 24.3 million for the three months ended June 30, 2020.

Other comprehensive loss was $ 7.9 million for the six months ended June 30, 2020.

Other comprehensive income and loss consisted of foreign currency adjustments, including foreign currency translation, net of related income tax effects of $ 0.7 million and $ 0.8 million for the three and six months ended June 30, 2020, respectively.

The recorded balance at September 30, 2020 and December 31, 2019, was $ 70.9 million and $ 76.1 million, respectively.

Accumulated other comprehensive loss is comprised solely of foreign currency adjustments, net of related income tax effects at September 30, 2020 and December 31, 2019.

Other comprehensive income was $ 13.2 million and $ 5.3 million for the three and nine months ended September 30, 2020, respectively.

Other comprehensive income consisted of foreign currency adjustments, including foreign currency translation, net of related income tax effects of $ 1.0 million and $ 0.2 million for the three and nine months ended September 30, 2020, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements