What changed in this filing

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Item 1. Financial Statements

2021-04-30 compared with 2020-10-30 · 95 added, 230 removed, 399 unchanged (45% of the section changed)

3 unchanged sentences

(unaudited, in thousands, except per share data)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Current assets:

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Total current assets 3,410,109 2,941,701

Property and equipment, net 183,244 208,423

Property and equipment, net of accumulated depreciation and amortization 174,119 178,949

Goodwill 1,483,560 1,487,187

Other intangible assets, net 118,741 90,931

Other intangible assets, net of accumulated amortization 105,969 113,910

Right-of-use lease assets 313,463 319,785

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(unaudited, in thousands except per share data)

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

2020 2019 2020 2019

Three Months Ended March 31,

Transportation $ 4,560,227 $ 3,542,118

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Net income 173,305 78,146

Other comprehensive income (loss), net of tax 13,236 ( 18,576 ) 5,294 ( 18,967 )

Other comprehensive loss, net of tax ( 7,286 ) ( 32,195 )

Comprehensive income $ 166,019 $ 45,951

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Comprehensive

Income (Loss) Treasury

Loss Treasury

Stockholders’

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Balance March 31, 2021 133,243 13,324 568,209 4,476,532 ( 53,284 ) ( 3,136,594 ) 1,868,187

Net income 143,939 143,939

Foreign currency translation, net of tax 24,253 24,253

Dividends declared, $ 0.51 per share

( 69,791 ) ( 69,791 )

Stock issued for employee benefit plans 138 13 ( 1,165 ) 9,007 7,855

Stock-based compensation expense — — 10,954 — 10,954

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

Capital Retained

Earnings Accumulated

Comprehensive Income (Loss) Treasury

Earnings Accumulated Other Comprehensive Loss Treasury

Stockholders’

1 unchanged sentence

Net income 78,146 78,146

Foreign currency adjustments 5,297 5,297

Foreign currency adjustments, net of tax ( 32,195 ) ( 32,195 )

Dividends declared, $ 0.51 per share

5 unchanged sentences

Balance March 31, 2020 134,586 13,459 533,819 4,153,109 ( 108,344 ) ( 3,004,925 ) 1,587,118

Net income 169,180 169,180

Foreign currency translation ( 5,688 ) ( 5,688 )

Dividends declared, $ 0.50 per share

( 69,268 ) ( 69,268 )

Stock issued for employee benefit plans 129 13 ( 681 ) 8,367 7,699

Issuance of restricted stock, net of forfeitures 23 2 ( 2 ) —

Stock-based compensation expense — — 14,684 — 14,684

Repurchase of common stock ( 1,310 ) ( 131 ) ( 109,726 ) ( 109,857 )

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)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES

Net income $ 173,305 $ 78,146

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

Adjustments to reconcile net income to net cash (used for) provided by operating activities:

Depreciation and amortization 23,278 24,393

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Other assets and liabilities 1,099 884

Net cash provided by operating activities 337,049 623,858

Net cash (used for) provided by operating activities ( 56,692 ) 58,499

INVESTING ACTIVITIES

2 unchanged sentences

Acquisitions, net of cash acquired — ( 223,617 )

Other investing activities 5,525 16,625

Net cash used for investing activities ( 13,506 ) ( 238,320 )

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Cash dividends ( 70,030 ) ( 69,871 )

Proceeds from long-term borrowings — 929,000

Payments on long-term borrowings — ( 1,018,000 )

Proceeds from short-term borrowings 816,000 765,600

Payments on short-term borrowings ( 566,000 ) ( 587,600 )

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

Net cash provided by financing activities 46,763 37,040

Effect of exchange rates on cash and cash equivalents ( 2,750 ) ( 10,505 )

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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, 2020.

RECENTLY ADOPTED ACCOUNTING STANDARDS

In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , and in November 2018 issued a subsequent amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses .

This update changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The update replaces the historical “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost.

The update affects loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope of this amendment that have the contractual right to receive cash.

We adopted this standard on January 1, 2020.

We have updated our allowance for credit losses, formerly described as our allowance for doubtful accounts, significant accounting policy below as a result of adopting the new standard.

The impact of adoption was not material to our consolidated financial position, results of operations, or cash flows.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional practical expedients to simplify accounting for reference rate reform.

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The amendments in this ASU are effective for all entities beginning on March 12, 2020, and companies may elect to apply the amendments prospectively through December 31, 2022.

The Company is currently evaluating the effects that adoption of this guidance will have on the consolidated financial statements.

As of March 31, 2021 the Company has not utilized any of the expedients discussed within this ASU.

We will continue to assess our agreements to determine if LIBOR is included and if the expedients will be utilized during the allowed period through December 31, 2022.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020, includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements.

We have updated these policies below to give effect to the adoption of Accounting Standards Codification (“ASC”) 326 in the first quarter of 2020.

ALLOWANCE FOR CREDIT LOSSES.

Accounts receivable and contract assets are reduced by an allowance for expected credit losses.

We determine our allowance for expected credit losses by evaluating two approaches that consider our past credit loss experience, our customers' credit ratings, and other customer-specific and macroeconomic factors.

The first approach is pooling our customers by credit rating and applying an expected loss ratio based upon credit rating and number of days the receivable has been outstanding, (i.e.

aging approach).

The second approach is to compute an expected loss ratio for each credit rating pool based upon our historical write-off experience and apply it to our accounts receivable, (i.e.

loss ratio approach).

These two approaches are evaluated in consideration of other known information and customer specific and macroeconomic factors, including the price of diesel fuel, for purposes of determining the expected credit loss allowance.

GOODWILL AND OTHER INTANGIBLE ASSETS

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Translation ( 1,974 ) ( 1,386 ) ( 510 ) ( 3,870 )

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

Balance March 31, 2021 $ 1,202,241 $ 212,596 $ 68,723 $ 1,483,560

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.

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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 September 30, 2020.

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 March 31, 2021.

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Cost Accumulated Amortization Net Cost Accumulated Amortization Net

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Customer relationships $ 170,223 $ ( 72,854 ) $ 97,369 $ 171,684 $ ( 67,312 ) $ 104,372

Trademarks — — — 1,875 ( 937 ) 938

Total finite-lived intangibles 170,223 ( 72,854 ) 97,369 173,559 ( 68,249 ) 105,310

Indefinite-lived intangibles

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

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

2020 2019 2020 2019

Three Months Ended March 31,

Amortization expense $ 7,086 $ 8,376

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

Finite-lived intangible assets, by reportable segment, as of March 31, 2021, will be amortized over their remaining lives as follows (in thousands):

NAST Global Forwarding All Other and Corporate Total

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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, 2020 and December 31, 2019.

We had no Level 3 assets or liabilities as of and during the periods ended March 31, 2021 and December 31, 2020.

There were no transfers between levels during the period.

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Average interest rate as of Carrying value as of

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

March 31, 2021 December 31, 2020 Maturity March 31, 2021 December 31, 2020

Revolving credit facility 1.21 % — % October 2023 $ 250,000 $ —

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Senior Notes, Series C 4.60 % 4.60 % August 2033 175,000 175,000

Receivables securitization facility (1)

0.80 % 2.41 % December 2020 59,979 142,885

Senior Notes (1)

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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.

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

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.

If the Notes were recorded at fair value, they would be classified as a Level 2 financial liability.

The fair value of the Notes approximated $ 544.6 million at March 31, 2021.

The Note Purchase Agreement contains various restrictions and covenants that require us to maintain certain financial ratios, including a maximum leverage ratio of 3.00 to 1.00, a minimum interest coverage ratio of 2.00 to 1.00, and a maximum consolidated priority debt to consolidated total asset ratio of 15 percent.

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Robinson Company, Inc., a Minnesota corporation and an indirect wholly-owned subsidiary of the company.

TRADE ACCOUNTS RECEIVABLE SECURITIZATION

We have a receivables securitization facility (the “Receivables Securitization Facility”) that currently expires on December 17, 2020, unless extended by the parties.

The Receivables Securitization Facility is based on the securitization of certain of our U.S.

trade accounts receivable and provides funding of up to $ 250 million.

The trade accounts receivable under the facility are owned by C.H.

Robinson Receivables LLC and are not available to the creditors of C.H.

Robinson Worldwide, Inc., and our subsidiaries.

The interest rate on borrowings under the Receivables Securitization Facility is based on one-month LIBOR plus 0.65 percent.

There is also a commitment fee we are required to pay on any unused portion of the facility.

The recorded amount of borrowings outstanding on the Receivables Securitization Facility approximates fair value because it can be redeemed on short notice and the interest rate floats, therefore, we consider these borrowings to be a Level 2 financial liability.

The Receivables Securitization Facility contains various customary affirmative and negative covenants, and it also contains customary default and termination provisions which provide for acceleration of amounts owed under the Receivables Securitization Facility upon the occurrence of certain specified events.

On April 9, 2018, we issued senior unsecured notes ("Senior Notes") through a public offering.

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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 $ 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.

The fair value of the Senior Notes, excluding debt discounts and issuance costs, approximated $ 677.3 million as of March 31, 2021, based primarily on the market prices quoted from external sources.

The carrying value of the Senior Notes was $ 593.5 million as of March 31, 2021.

We may redeem the Senior Notes, in whole or in part, at any time and from time to time prior to their maturity at the applicable redemption prices described in the Senior Notes.

Upon the occurrence of a “change of control triggering event” as defined in the Senior Notes (generally, a change of control of us accompanied by a reduction in the credit rating for the Senior Notes), we will generally be required to make an offer to repurchase the Senior Notes from holders at 101 percent of their principal amount plus accrued and unpaid interest to the date of repurchase.

The Senior Notes were issued under an indenture that contains covenants imposing certain limitations on our ability to incur liens or enter into sales and leaseback transactions above certain limits;

The Senior Notes were issued under an indenture that contains covenants imposing certain limitations on our ability to incur liens or enter into sale and leaseback transactions above certain limits;

and consolidate, or merge or transfer substantially all of our assets and those of our subsidiaries on a consolidated basis.

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

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 $ 2.3 million as of September 30, 2020.

In addition to the above financing agreements, we have a $ 15 million discretionary line of credit with US Bank of which $ 8 million is currently utilized for standby letters of credit related to insurance collateral as of March 31, 2021.

These standby letters of credit are renewed annually and were undrawn as of March 31, 2021.

We estimate the fair value of our financing arrangements 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 risk.

These are considered Level 2 financial liabilities.

TRADE ACCOUNTS RECEIVABLE SECURITIZATION

We had a receivables securitization facility (the “Receivables Securitization Facility”) that expired on December 17, 2020 and was not renewed.

The Receivables Securitization Facility was based on the securitization of certain of our U.S.

trade accounts receivable and provided funding of up to $ 250 million.

The trade accounts receivable under the facility were owned by C.H.

Robinson Receivables LLC and were not available to the creditors of C.H.

Robinson Worldwide, Inc., and our subsidiaries.

The interest rate on borrowings under the Receivables Securitization Facility was based on one-month LIBOR plus 0.65 percent.

There was also a commitment fee we were required to pay on any unused portion of the facility.

Our effective tax rate for the three months ended March 31, 2021 and 2020 was 18.3 percent and 17.1 percent, respectively.

The effective income tax rate for the three months ended March 31, 2021 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 3.2 percentage points.

Taxes on foreign earnings also contributed to a lower federal income tax rate, reducing our effective tax rate in the three months ended March 31, 2021 by 1.7 percentage points.

These impacts were partially offset by state income tax expense, which increased the effective income tax rate.

For the three months ended March 31, 2020, our effective tax rate 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 3.6 percentage points, and foreign tax impacts but were partially offset by state income tax expense, which increased the effective tax rate.

We have asserted that the unremitted earnings of a limited number of our foreign subsidiaries are permanently reinvested to support expansion of our international business.

If we repatriated all foreign earnings that are considered to be permanently reinvested, the estimated effect on income taxes payable would be an increase of approximately $ 2.0 million as of March 31, 2021.

On March 27, 2020, the U.S.

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This provision allows us to defer certain federal payroll deposits and invest this cash back into the business without any interest cost.

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 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.

On December 22, 2017, the U.S.

government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).

The Tax Act made broad and complex changes to the U.S.

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 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.

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.

The CARES Act also provides for a tax credit related to wages and health benefits provided to an employee whose work from March 17, 2020 through June 30, 2021 was impacted by COVID-19.

The Consolidated Appropriations Act signed into law on December 27, 2020, extended the tax credit through June 30, 2021, and increased the maximum credit per employee from $5,000 per year in 2020 to $7,000 per quarter in 2021.

Through March 31, 2021, we have recognized a payroll deferral and tax credit of $ 28.5 million and $ 0.7 million, respectively, under the CARES Act and The Consolidated Appropriations Act.

We will continue evaluating the impact of both acts over the remainder of 2021.

As of March 31, 2021, we have $ 41.8 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.

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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,

2020 2019 2020 2019

Three Months Ended March 31,

Stock options $ 3,967 $ 5,013

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

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

Approximately 1,782,168 shares were available for stock awards under the plan as of March 31, 2021.

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 stock options to certain key employees.

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.

Stock Options - We have awarded stock options to certain key employees through 2020.

The fair value of these options was established based on the market price on the date of grant calculated using the Black-Scholes option pricing model.

Changes in measured stock price volatility and interest rates were the primary reasons for changes in the fair value.

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

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

As of March 31, 2021, unrecognized compensation expense related to stock options was $ 38.8 million.

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

We granted 1,660,548 stock options on February 5, 2020.

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

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.

Performance-based awards are subject to certain vesting requirements over a five-year period, based on our earnings growth.

Stock Awards - We have awarded performance-based restricted shares through 2020.

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

Performance-based awards are subject to certain vesting requirements based on our earnings and adjusted gross profit growth.

Time-based awards vest primarily based on the employee's continued employment.

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The discounts on outstanding grants vary from 12 percent to 23 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.

Differences in post-holding restrictions, 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 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 are eligible to vest over a five-year period with a first vesting date of December 31, 2020.

We granted 280,255 performance-based restricted stock units and 619,689 time-based restricted stock units on February 3, 2021.

The performance-based and time-based awards had a weighted average grant date fair value of $ 74.76 and $ 71.28 , respectively, and are eligible to vest over a three-year period with a first vesting date of December 31, 2021.

The performance-based awards vest based on our earnings and adjusted gross profit growth and include an upside opportunity of 200 % upon attaining established earnings and adjusted gross profit growth targets.

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

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

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.

As of March 31, 2021, there was unrecognized compensation expense of $ 157.0 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 and adjusted gross profit growth, and certain other conditions.

Employee Stock Purchase Plan - Our 1997 Employee Stock Purchase Plan ("ESPP") allows our employees to contribute up to $ 10,000 of their annual cash compensation to purchase company stock.

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Shares vest immediately.

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

Three Months Ended September 30, 2020

The following is a summary of the employee stock purchase plan activity (dollars in thousands):

Three Months Ended March 31, 2021

Shares purchased

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The Prime Distribution goodwill is a result of acquiring and retaining the Prime Distribution workforce and expected synergies from integrating its business into ours.

Purchase accounting is considered substantially complete.

Purchase accounting is considered complete.

The goodwill will not be deductible for tax purposes.

The acquisition was effective as of February 29, 2020, and therefore the results of operations of Prime Distribution have been included as part of the North American Surface Transportation segment in our consolidated financial statements since March 1, 2020.

Dema Service S.p.A

On May 22, 2019, we acquired all of the outstanding shares of Dema Service S.p.A.

(“Dema Service”) to strengthen our existing footprint in Italy.

Total purchase consideration, net of cash acquired was $ 14.2 million, which was paid in cash.

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

Estimated Life (years)

Customer relationships 7 $ 4,252

There was $ 7.8 million of goodwill recorded related to the acquisition of Dema Service.

The Dema Service goodwill is a result of acquiring and retaining the Dema Service workforce and expected synergies from integrating its business into ours.

Purchase accounting is considered complete.

No goodwill was recognized for Italian tax purposes from the acquisition.

Th e results of operations of Dema Service have been included as part of the All Other and Corporate segment in our consolidated financial statements since May 23, 2019.

The Space Cargo Group

On February 28, 2019, we acquired all of the outstanding shares of The Space Cargo Group (“Space Cargo”) for the purpose of expanding our presence and capabilities in Spain and Colombia.

Total purchase consideration, net of cash acquired, was $ 45.5 million, which was paid in cash.

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

Estimated Life (years)

Customer relationships 7 $ 16,439

There was $ 26.4 million of goodwill recorded related to the acquisition of Space Cargo.

The Space Cargo goodwill is a result of acquiring and retaining the Space Cargo workforce and expected synergies from integrating its business into ours.

Purchase accounting is considered complete.

No goodwill was recognized for Spanish tax purposes from the acquisition.

The results of operations of Space Cargo have been included as part of the Global Forwarding segment in our consolidated financial statements since March 1, 2019.

SEGMENT REPORTING

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• North American Surface Transportation— NAST provides freight transportation services across North America through a network of offices in the United States, Canada, and Mexico.

The primary services provided by NAST include truckload, less than truckload (“LTL”), and intermodal.

The primary services provided by NAST include truckload and less than truckload (“LTL”) transportation services.

• Global Forwarding— Global Forwarding provides global logistics services through an international network of offices in North America, Asia, Europe, Oceania, and South America and also contracts with independent agents worldwide.

The primary services provided by Global Forwarding include ocean freight services, airfreight services, and customs brokerage.

The primary services provided by Global Forwarding include ocean freight services, air freight services, and customs brokerage.

• All Other and Corporate— All Other and Corporate includes our Robinson Fresh and Managed Services segments, as well as Other Surface Transportation outside of North America and other miscellaneous revenues and unallocated corporate expenses.

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Other Surface Transportation revenues are primarily earned by Europe Surface Transportation.

Europe Surface Transportation provides services similar to NAST across Europe.

Europe Surface Transportation provides transportation and logistics services including truckload and groupage services across Europe.

The internal reporting of segments is defined, based in part, on the reporting and review process used by our chief operating decision maker (“CODM”), our Chief Executive Officer.

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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 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 September 30, 2020

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

Net revenues 367,943 157,657 63,673 589,273

Income (loss) from operations 122,526 46,299 ( 586 ) 168,239

Depreciation and amortization 7,095 9,385 10,436 26,916

Total assets (1)

3,041,974 1,148,118 884,746 5,074,838

Average headcount 6,702 4,607 3,595 14,904

NAST Global Forwarding All Other and Corporate Consolidated

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

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

Total assets (1)

2,649,259 995,137 992,153 4,636,549

Average headcount 7,448 4,790 3,544 15,782

Reportable segment information as of, and for the three months ended March 31, 2021 and 2020, is as follows (dollars in thousands):

NAST Global Forwarding All Other and Corporate Consolidated

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Total revenues $ 3,211,423 $ 1,156,039 $ 436,407 $ 4,803,869

Net Revenues 1,120,277 448,931 202,471 1,771,679

Income (loss) from operations 136,784 90,589 ( 4,044 ) 223,329

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NAST Global Forwarding All Other and Corporate Consolidated

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Total revenues $ 2,823,745 $ 530,384 $ 450,879 $ 3,805,008

Net Revenues 1,406,728 404,987 195,732 2,007,447

Income (loss) from operations 98,526 11,959 ( 1,045 ) 109,440

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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 nine months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30, 2020

NAST Global Forwarding All Other and Corporate Total

Major Service Lines

Transportation and logistics services (1)

$ 2,923,842 $ 831,957 $ 189,182 $ 3,944,981

— — 279,819 279,819

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

Three Months Ended September 30, 2019

NAST Global Forwarding All Other and Corporate Total

Major Service Lines

Transportation and logistics services (1)

$ 2,826,308 $ 597,695 $ 184,343 $ 3,608,346

— — 247,786 247,786

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

Nine Months Ended September 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 months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31, 2021

NAST Global Forwarding All Other and Corporate Total

4 unchanged sentences

Total $ 3,211,423 $ 1,156,039 $ 436,407 $ 4,803,869

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

NAST Global Forwarding All Other and Corporate Total

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(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 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.

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 March 31, 2021, and revenue recognized in the three months ended March 31, 2021 and 2020 resulting from contract liabilities, were not significant.

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

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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 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,

We do not have material lease agreements that have not yet commenced that are expected to create significant rights or obligations as of March 31, 2021.

Information regarding lease expense, remaining lease term, discount rate, and other select lease information is presented below as of March 31, 2021, and for the three months ended March 31, 2021 (dollars in thousands):

Three Months Ended March 31,

Lease Costs 2021 2020

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Total lease expense $ 23,163 $ 22,546

Nine Months Ended September 30,

Three Months Ended March 31,

Other Lease Information 2021 2020

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Right-of-use lease assets obtained in exchange for new lease liabilities 15,253 60,281

Lease Term and Discount Rate As of September 30, 2020

Lease Term and Discount Rate As of March 31, 2021

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

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Excluding this lease, the weighted average remaining lease term of our agreements is 4.6 years.

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

The maturities of lease liabilities as of March 31, 2021, were as follows (in thousands):

Maturity of Lease Liabilities Operating Leases

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ALLOWANCE FOR CREDIT LOSSES

We adopted ASU 2016-13, Financial Instruments (Topic 326), as of January 1, 2020.

Prior period information was not restated and continues to be presented under guidance effective for those periods.

This ASU changes how entities measure credit losses for certain financial assets including accounts receivable by replacing the historical “incurred loss” approach with an “expected loss” model.

We have updated our significant accounting policy for allowance for credit losses as discussed in Note 1, Basis of Presentation .

Our allowance for credit losses is computed using a number of factors including our past credit loss experience, the aging of amounts due from our customers, and our customers' credit ratings, in addition to other customer specific factors.

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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 nine months ended September 30, 2020:

A rollforward of our allowance for credit losses on our accounts receivable balance is presented below for the three months ended March 31, 2021:

Balance, December 31, 2020 $ 38,113

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Write-offs ( 1,576 )

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.

Balance, March 31, 2021 $ 35,103

Recoveries of amounts previously written off were not significant for the three months ended March 31, 2021.

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, 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.

The recorded balance at March 31, 2021 and December 31, 2020, was $ 53.3 million and $ 46.0 million, respectively.

Accumulated other comprehensive loss is comprised solely of foreign currency adjustments, net of related income tax effects at March 31, 2021 and December 31, 2020.

Other comprehensive loss was $ 7.3 million and $ 32.2 million for the three months ended March 31, 2021 and 2020, respectively.

Other comprehensive loss consisted of foreign currency adjustments, including foreign currency translation, net of related income tax effects of $ 1.0 million and $ 1.5 million for the three months ended March 31, 2021 and 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