C. H. ROBINSON WORLDWIDE, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of C.H. Robinson Worldwide, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of C.H. Robinson Worldwide, Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive income, stockholders’ investment, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021 , based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition — Refer to Notes 1 and 10 to the financial statements Critical Audit Matter Description Transportation and logistics revenue is recognized for performance obligations identified in the customer contract as they are satisfied over the contract term, which generally represents the transit period. Recognizing revenue at period end for contracts where the transit period is partially complete at period end or completed and not yet invoiced, requires management to make judgments that affect the amounts and timing of revenue recognized. At December 31, 2021 the Company recorded revenue of $453.7 million for services it provided while a shipment was still in-transit but for which it had not yet completed its performance obligation or had not yet invoiced the customer. Auditing the estimate of the Company’s revenue recorded for contracts where the transit period is partially complete or completed and not yet invoiced as of the reporting date required a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures. 38 T able of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s estimate of the revenue recorded for contracts where the transit period is partially complete or completed and not yet invoiced as of the reporting date included the following, among others: • We tested the effectiveness of controls over revenue recognized over time, including management’s controls over the identification of shipments in transit, the portion of the transit period completed, and the estimate of contracts completed but not yet invoiced. • We evaluated management’s ability to identify the shipments in transit and to estimate the revenue to be recorded for contracts where the transit period is partially complete or completed and not yet invoiced at the reporting date by: – Performing a retrospective review of management’s estimate for prior reporting periods. – Testing the accuracy and completeness of the data in the system-generated report utilized in management’s revenue cutoff estimate with the assistance of our information technology specialists. – Assessing the estimate methodology for reasonableness, in light of recent market events or changes within the Company’s operating environment. – Testing the mathematical accuracy of management’s estimate. /s/ DELOITTE & TOUCHE LLP Minneapolis, Minnesota February 23, 2022 We have served as the Company's auditor since 2002. 39 T able of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of C.H. Robinson Worldwide, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of C.H. Robinson Worldwide, Inc. and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the fiscal year ended December 31, 2021, of the Company and our report dated February 23, 2022, expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP Minneapolis, Minnesota February 23, 2022 40 T able of Contents C.H. ROBINSON WORLDWIDE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 257,413 $ 243,796 Receivables, net of allowance for credit loss of $ 41,542 and $ 38,113 3,963,487 2,449,577 Contract assets, net of allowance for credit loss 453,660 197,176 Prepaid expenses and other 129,593 51,152 Total current assets 4,804,153 2,941,701 Property and equipment 442,112 478,982 Accumulated depreciation and amortization ( 302,281 ) ( 300,033 ) Net property and equipment 139,831 178,949 Goodwill 1,484,754 1,487,187 Other intangible assets, net of accumulated amortization of $ 88,302 and $ 68,249 89,606 113,910 Right-of-use lease assets 292,559 319,785 Deferred tax assets 124,900 18,640 Other assets 92,309 84,086 Total assets $ 7,028,112 $ 5,144,258 LIABILITIES AND STOCKHOLDERS’ INVESTMENT Current liabilities: Accounts payable $ 1,813,473 $ 1,195,099 Outstanding checks 105,828 88,265 Accrued expenses: Compensation 201,421 138,460 Transportation expense 342,778 153,574 Income taxes 100,265 43,700 Other accrued liabilities 171,266 154,460 Current lease liabilities 66,311 66,174 Current portion of debt 525,000 — Total current liabilities 3,326,342 1,839,732 Long-term debt 1,393,649 1,093,301 Noncurrent lease liabilities 241,369 268,572 Noncurrent income taxes payable 28,390 26,015 Deferred tax liabilities 16,113 22,182 Other long-term liabilities 315 14,523 Total liabilities 5,006,178 3,264,325 Commitments and contingencies Stockholders’ investment: Preferred stock, $ 0.10 par value, 20,000 shares authorized; no shares issued or outstanding — — Common stock, $ 0.10 par value, 480,000 shares authorized; 179,206 and 179,232 shares issued, 129,186 and 134,298 outstanding 12,919 13,430 Additional paid-in capital 673,628 566,022 Retained earnings 4,936,861 4,372,833 Accumulated other comprehensive loss ( 61,134 ) ( 45,998 ) Treasury stock at cost ( 50,020 and 44,934 shares) ( 3,540,340 ) ( 3,026,354 ) Total stockholders’ investment 2,021,934 1,879,933 Total liabilities and stockholders’ investment $ 7,028,112 $ 5,144,258 See accompanying notes to the consolidated financial statements. 41 T able of Contents C.H. ROBINSON WORLDWIDE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except per share data) For the years ended December 31, 2021 2020 2019 Revenues: Transportation $ 22,046,574 $ 15,147,562 $ 14,322,295 Sourcing 1,055,564 1,059,544 987,213 Total revenues 23,102,138 16,207,106 15,309,508 Costs and expenses: Purchased transportation and related services 18,994,574 12,834,608 11,839,433 Purchased products sourced for resale 955,475 960,241 883,765 Personnel expenses 1,543,610 1,242,867 1,298,528 Other selling, general, and administrative expenses 526,371 496,122 497,806 Total costs and expenses 22,020,030 15,533,838 14,519,532 Income from operations 1,082,108 673,268 789,976 Interest and other expenses ( 59,817 ) ( 44,937 ) ( 47,719 ) Income before provision for income taxes 1,022,291 628,331 742,257 Provision for income taxes 178,046 121,910 165,289 Net income 844,245 506,421 576,968 Other comprehensive (loss) income ( 15,136 ) 30,151 ( 4,214 ) Comprehensive income $ 829,109 $ 536,572 $ 572,754 Basic net income per share $ 6.37 $ 3.74 $ 4.21 Diluted net income per share $ 6.31 $ 3.72 $ 4.19 Basic weighted average shares outstanding 132,482 135,532 136,955 Dilutive effect of outstanding stock awards 1,352 641 780 Diluted weighted average shares outstanding 133,834 136,173 137,735 See accompanying notes to the consolidated financial statements. 42 T able of Contents C.H. ROBINSON WORLDWIDE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT (In thousands, except per share data) Common Shares Outstanding Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders’ Investment Balance December 31, 2018 137,284 $ 13,728 $ 521,486 $ 3,845,593 $ ( 71,935 ) $ ( 2,713,785 ) $ 1,595,087 Net income 576,968 576,968 Foreign currency adjustments ( 4,214 ) ( 4,214 ) Dividends declared, $ 2.01 per share ( 277,727 ) ( 277,727 ) Stock issued for employee benefit plans 1,017 102 ( 13,920 ) 61,795 47,977 Issuance of restricted stock 28 3 ( 3 ) — Stock-based compensation expense — — 39,083 — 39,083 Repurchase of common stock ( 3,434 ) ( 343 ) ( 306,101 ) ( 306,444 ) Balance December 31, 2019 134,895 13,490 546,646 4,144,834 ( 76,149 ) ( 2,958,091 ) 1,670,730 Net income 506,421 506,421 Foreign currency adjustments 30,151 30,151 Dividends declared, $ 2.04 per share ( 278,422 ) ( 278,422 ) Stock issued for employee benefit plans 1,754 175 ( 24,600 ) 114,228 89,803 Issuance of restricted stock 192 19 ( 19 ) — Stock-based compensation expense — — 43,995 — 43,995 Repurchase of common stock ( 2,543 ) ( 254 ) ( 182,491 ) ( 182,745 ) Balance December 31, 2020 134,298 13,430 566,022 4,372,833 ( 45,998 ) ( 3,026,354 ) 1,879,933 Net income 844,245 844,245 Foreign currency adjustments ( 15,136 ) ( 15,136 ) Dividends declared, $ 2.08 per share ( 280,217 ) ( 280,217 ) Stock issued for employee benefit plans 1,068 107 ( 22,374 ) 66,216 43,949 Issuance of restricted stock, net of forfeitures ( 26 ) ( 3 ) 3 — Stock-based compensation expense — — 129,977 — 129,977 Repurchase of common stock ( 6,154 ) ( 615 ) ( 580,202 ) ( 580,817 ) Balance December 31, 2021 129,186 $ 12,919 $ 673,628 $ 4,936,861 $ ( 61,134 ) $ ( 3,540,340 ) $ 2,021,934 See accompanying notes to the consolidated financial statements. 43 T able of Contents C.H. ROBINSON WORLDWIDE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the year ended December 31, 2021 2020 2019 OPERATING ACTIVITIES Net income $ 844,245 $ 506,421 $ 576,968 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 91,259 101,727 100,449 Provision for credit losses 10,649 17,281 5,853 Stock-based compensation 129,977 43,995 39,083 Deferred income taxes ( 110,188 ) ( 32,984 ) ( 2,407 ) Excess tax benefit on stock-based compensation ( 13,101 ) ( 17,581 ) ( 8,492 ) Other operating activities 1,915 15,096 ( 3,830 ) Changes in operating elements, net of effects of acquisitions: Receivables ( 1,547,545 ) ( 452,145 ) 208,312 Contract assets ( 257,728 ) ( 65,454 ) 26,761 Prepaid expenses and other ( 43,819 ) 27,237 ( 29,871 ) Accounts payable and outstanding checks 660,028 180,272 ( 17,968 ) Accrued compensation 63,912 22,547 ( 40,757 ) Accrued transportation expense 189,204 52,380 ( 18,626 ) Accrued income taxes 72,665 51,916 ( 12,636 ) Other accrued liabilities 1,607 26,503 8,937 Other assets and liabilities 1,875 21,980 3,643 Net cash provided by operating activities 94,955 499,191 835,419 INVESTING ACTIVITIES Purchases of property and equipment ( 34,197 ) ( 23,133 ) ( 36,290 ) Purchases and development of software ( 36,725 ) ( 30,876 ) ( 34,175 ) Acquisitions, net of cash acquired ( 14,750 ) ( 223,230 ) ( 59,200 ) Other investing activities — 5,525 16,636 Net cash used for investing activities ( 85,672 ) ( 271,714 ) ( 113,029 ) FINANCING ACTIVITIES Proceeds from stock issued for employee benefit plans 70,669 107,657 63,092 Stock tendered for payment of withholding taxes ( 26,720 ) ( 17,854 ) ( 15,115 ) Repurchase of common stock ( 581,756 ) ( 177,514 ) ( 309,444 ) Cash dividends ( 277,321 ) ( 209,956 ) ( 277,786 ) Proceeds from long-term borrowings 300,000 — 1,298,000 Payments on long-term borrowings ( 2,048 ) — ( 1,505,000 ) Proceeds from short-term borrowings 3,728,000 1,436,600 185,000 Payments on short-term borrowings ( 3,203,251 ) ( 1,579,600 ) ( 90,000 ) Net cash provided by (used for) financing activities 7,573 ( 440,667 ) ( 651,253 ) Effect of exchange rates on cash and cash equivalents ( 3,239 ) 9,128 ( 1,894 ) Net change in cash and cash equivalents 13,617 ( 204,062 ) 69,243 Cash and cash equivalents, beginning of year 243,796 447,858 378,615 Cash and cash equivalents, end of year $ 257,413 $ 243,796 $ 447,858 Supplemental cash flow disclosures Cash paid for income taxes $ 227,427 $ 93,070 $ 219,029 Cash paid for interest 51,367 47,518 50,854 Accrued share repurchases held in other accrued liabilities 4,293 5,231 — See accompanying notes to the consolidated financial statements. 44 T able of Contents C.H. ROBINSON WORLDWIDE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 through a network of offices operating 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. USE OF ESTIMATES. The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best information available, and our actual results could differ materially from those estimates. REVENUE RECOGNITION. At contract inception, we assess the goods and services promised in our contracts with customers and identify our performance obligations to provide distinct goods and services to our customers. We have determined that the following distinct goods and services represent our primary performance obligations. Transportation and Logistics Services - As a global logistics provider, our primary performance obligation under our customer contracts is to utilize our relationships with a wide variety of transportation companies to efficiently and cost-effectively transport our customers’ freight. Revenue is recognized for these performance obligations as they are satisfied over the contract term, which generally represents the transit period. The transit period can vary based upon the method of transport, generally a number of days for over the road, rail, and air transportation, or several weeks in the case of an ocean shipment. Determining the transit period and how much of it has been completed as of the reporting date may require management to make judgments that affect the timing of revenue recognized. When the customers’ freight reaches its intended destination our performance obligation is complete. Pricing for our services is generally a fixed amount and is typically due within 30 days upon completion of our performance obligation, but can vary based on the nature of the service provided and certain other factors . We also provide certain value-added logistics services, such as customs brokerage, fee-based managed services, warehousing services, small parcel, and supply chain consulting and optimization services. These services may include one or more performance obligations, which are generally satisfied over the service period as we perform our obligations. The service period may be a very short duration, in the case of customs brokerage and small parcel, or it may be longer in the case of warehousing, managed services, and supply chain consulting and optimization services. Pricing for our services is established in the customer contract and is dependent upon the specific needs of the customer but may be agreed upon at a fixed fee per transaction, labor hour, or service period. Payment is typically due within 30 days upon completion of our performance obligation, but can vary based on the nature of the service provided and certain other factors. Sourcing Services - We contract with grocery retailers, restaurants, foodservice distributors, and produce wholesalers to provide sourcing services under the trade name Robinson Fresh ® (“Robinson Fresh”). Our primary service obligation under these contracts is the buying, selling, and/or marketing of produce including fresh fruits, vegetables, and other value-added perishable items. Revenue is recognized when our performance obligations under these contracts is satisfied at a point in time, generally when the produce is received by our customer. Pricing under these contracts is generally a fixed amount and is typically due within 20 to 30 days upon completion of our performance obligation, but can vary based on the nature of the service provided and certain other factors. In many cases, as additional performance obligations, we contract to arrange logistics and transportation of the products we buy, sell, and/or market. These performance obligations are satisfied over the contract term consistent with our other transportation and logistics services. The contract period is typically less than one year . Pricing for our services is generally a fixed amount and is typically due within 30 days upon completion of our performance obligation, but can vary based on the nature of the service provided and certain other factors. Total revenues represent the total dollar value of revenue recognized from contracts with customers for the goods and services we provide. Substantially all of our revenue is attributable to contracts with our customers. Our adjusted gross profits are our total revenues less purchased transportation and related services, including contracted motor carrier, rail, ocean, air, and other costs, and the purchase price and services related to the products we source. Most transactions in our transportation and sourcing businesses are recorded at the gross amount we charge our customers for the service we provide and goods we sell. In 45 T able of Contents these transactions, we are primarily responsible for fulfilling the promise to provide the specified good or service to our customer and we have discretion in establishing the price for the specified good or service. Additionally, in our sourcing business, in some cases we take inventory risk before the specified good has been transferred to our customer. Customs brokerage, managed services, freight forwarding, and sourcing managed procurement transactions are recorded at the net amount we charge our customers for the service we provide because many of the factors stated above are not present. CONTRACT ASSETS. Contract assets represent amounts for which we have the right to consideration for the services we have provided while a shipment is still in-transit but for which we have not yet completed our performance obligation or have not yet invoiced our customer. Upon completion of our performance obligations, which can vary in duration based upon the method of transport, and billing our customer these amounts become classified within accounts receivable and are then typically due within 30 days. ACCRUED TRANSPORTATION EXPENSE. Accrued transportation expense represents amounts we owe to vendors, primarily transportation providers, for the services they have provided while a shipment is still in-transit as of the reporting date. 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. FOREIGN CURRENCY. Most balance sheet accounts of foreign subsidiaries are remeasured and translated at the current exchange rate as of the end of the year. Translation adjustments are recorded in other comprehensive (loss) income. Statement of operations items are translated at the average exchange rate during the year. CASH AND CASH EQUIVALENTS. Cash and cash equivalents consist primarily of bank deposits and highly liquid investments with an original maturity of three months or less from the time of purchase. Cash and cash equivalents held outside the United States totaled $ 217.1 million and $ 230.9 million as of December 31, 2021 and 2020. The majority of our cash and cash equivalents balance is denominated in U.S. dollars although these balances are frequently held in locations where the U.S. dollar is not the functional currency. PREPAID EXPENSES AND OTHER. Prepaid expenses and other include such items as software maintenance contracts, insurance premiums, other prepaid operating expenses, and inventories, consisting primarily of produce and related products held for resale. RIGHT-OF-USE LEASE ASSETS. Right-of-use lease assets are recognized upon lease commencement and represent our right to use an underlying asset for the lease term. LEASE LIABILITIES. Lease liabilities are recognized at commencement date and represent our obligation to make the lease payments arising from a lease, measured on a discounted basis. PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost. Maintenance and repair expenditures are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated lives of the assets. Amortization of leasehold improvements is computed over the shorter of the lease term or the estimated useful lives of the improvements. 46 T able of Contents We recognized the following depreciation expense (in thousands): 2021 $ 39,790 2020 42,890 2019 45,016 A summary of our property and equipment as of December 31, is as follows (in thousands): 2021 2020 Furniture, fixtures, and equipment $ 292,224 $ 286,277 Buildings (1) 60,059 93,538 Corporate aircraft (1) — 11,461 Leasehold improvements 70,630 67,037 Land 11,014 19,816 Construction in progress 8,185 853 Less: accumulated depreciation and amortization ( 302,281 ) ( 300,033 ) Net property and equipment $ 139,831 $ 178,949 ________________________________ (1) Our corporate aircraft and an office building in Kansas City, Missouri, have been reclassified as held-for-sale assets as of December 31, 2021. Held-for-sale assets of $ 35.0 million are expected to sell in the first half of 2022 and are included within Prepaid expenses and other current assets in our Consolidated Balance Sheet as of December 31, 2021. The estimated fair value of the assets that are held for sale is $ 64.0 million. GOODWILL. Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable tangible assets and identifiable intangible assets purchased and liabilities assumed. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (November 30 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. See Note 2, Goodwill and Other Intangible Assets . OTHER INTANGIBLE ASSETS. Other intangible assets include definite-lived customer lists, trademarks, non-competition agreements, and indefinite-lived trademarks. The definite-lived intangible assets are being amortized using the straight-line method over their estimated lives. Definite-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite-lived trademarks are not amortized. Indefinite-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, or annually, at a minimum. See Note 2, Goodwill and Other Intangible Assets . OTHER ASSETS. Other assets consist primarily of purchased and internally developed software. We amortize software using the straight-line method over three years . We recognized the following amortization expense of purchased and internally developed software (in thousands): 2021 $ 25,975 2020 22,612 2019 17,023 A summary of our purchased and internally developed software as of December 31, is as follows (in thousands): 2021 2020 Purchased software $ 30,312 $ 29,029 Internally developed software 153,983 127,476 Less accumulated amortization ( 114,183 ) ( 96,891 ) Net software $ 70,112 $ 59,614 47 T able of Contents INCOME TAXES. Income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities using enacted rates. Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues raised may differ from the amounts accrued. The financial statement benefits of an uncertain income tax position are recognized when more likely than not, based on the technical merits, the position will be sustained upon examination. Unrecognized tax benefits are, more likely than not, owed to a taxing authority, and the amount of the contingency can be reasonably estimated. Uncertain income tax positions are included in “Accrued income taxes” or “Noncurrent income taxes payable” in the consolidated balance sheets. COMPREHENSIVE INCOME (LOSS). Comprehensive income (loss) consists primarily of foreign currency translation adjustments. It is presented on our consolidated statements of operations and comprehensive income. STOCK-BASED COMPENSATION. We issue stock awards, including stock options, performance shares, and restricted stock units, to key employees and outside directors. In general, the awards vest over three to five years , either based on the company’s earnings or adjusted gross profit growth or the passage of time. The related compensation expense for each award is recognized over the appropriate vesting period. The fair value of each share-based payment award is established on the date of grant. For grants of shares and restricted stock units, the fair value is established based on the market price on the date of the grant, discounted for post-vesting holding restrictions. The discounts on outstanding grants vary from 12 percent to 24 percent and are calculated using the Black-Scholes option pricing model-protective put method. Changes in expected volatility and risk-free interest rates are the primary reason for changes in the discount. For grants of options, we use the Black-Scholes option pricing model to estimate the fair value of share-based payment awards. The determination of the fair value of share-based awards is affected by our stock price and a number of assumptions, including expected volatility, expected term, risk-free interest rate, and dividend yield. NOTE 2: GOODWILL AND OTHER INTANGIBLE ASSETS The change in the carrying amount of goodwill is as follows (in thousands): NAST Global Forwarding All Other and Corporate Total December 31, 2019 balance $ 1,015,570 $ 208,420 $ 67,770 $ 1,291,760 Acquisitions 176,484 780 — 177,264 Foreign currency translation 11,918 4,782 1,463 18,163 December 31, 2020 balance 1,203,972 213,982 69,233 1,487,187 Acquisitions 243 — 10,754 10,997 Foreign currency translation ( 7,882 ) ( 3,591 ) ( 1,957 ) ( 13,430 ) December 31, 2021 balance $ 1,196,333 $ 210,391 $ 78,030 $ 1,484,754 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. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting units is less than their respective carrying value (“Step Zero Analysis”). 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”). As part of our Step Zero Analysis, we determined that the more likely than not criteria had not been met, and therefore a Step One Analysis was not required. 48 T able of Contents No goodwill or intangible asset impairment has been recorded in any previous or current period presented. Identifiable intangible assets consisted of the following at December 31 (in thousands): 2021 2020 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Finite-lived intangibles Customer relationships $ 169,308 $ ( 88,302 ) $ 81,006 $ 171,684 $ ( 67,312 ) $ 104,372 Trademarks — — — 1,875 ( 937 ) 938 Total finite-lived intangibles 169,308 ( 88,302 ) 81,006 173,559 ( 68,249 ) 105,310 Indefinite-lived intangibles Trademarks 8,600 — 8,600 8,600 — 8,600 Total intangibles $ 177,908 $ ( 88,302 ) $ 89,606 $ 182,159 $ ( 68,249 ) $ 113,910 Amortization expense for other intangible assets was (in thousands): 2021 $ 25,494 2020 36,225 2019 38,410 Finite-lived intangible assets, by reportable segment, as of December 31, 2021, will be amortized over their remaining lives as follows (in thousands): NAST Global Forwarding All Other and Corporate Total 2022 $ 8,096 $ 14,954 $ 1,137 $ 24,187 2023 8,096 12,285 1,137 21,518 2024 7,986 3,702 1,137 12,825 2025 7,857 2,409 1,137 11,403 2026 7,857 391 777 9,025 Thereafter 1,310 — 738 2,048 Total $ 81,006 NOTE 3: 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 December 31, 2021, or December 31, 2020. There were no transfers between levels during the period. 49 T able of Contents NOTE 4: FINANCING ARRANGEMENTS The components of our short-term and long-term debt and the associated interest rates were as follows (dollars in thousands): Average interest rate as of Carrying value as of December 31, 2021 December 31, 2020 Maturity December 31, 2021 December 31, 2020 Revolving credit facility 1.23 % — % October 2023 $ 525,000 $ — Senior Notes, Series A 3.97 % 3.97 % August 2023 175,000 175,000 Senior Notes, Series B 4.26 % 4.26 % August 2028 150,000 150,000 Senior Notes, Series C 4.60 % 4.60 % August 2033 175,000 175,000 Receivables securitization facility (1) 0.73 % — % November 2023 299,481 — Senior Notes (1) 4.20 % 4.20 % April 2028 594,168 593,301 Total debt 1,918,649 1,093,301 Less: Current maturities and short-term borrowing ( 525,000 ) — Long-term debt $ 1,393,649 $ 1,093,301 ________________________________ (1) Net of unamortized discounts and issuance costs. SENIOR UNSECURED REVOLVING CREDIT FACILITY We have a senior unsecured revolving credit facility (the “Credit Agreement”) with a total availability of $ 1 billion and a maturity date of October 24, 2023. 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 December 31, 2021, the variable rate equaled LIBOR plus 1.13 percent. In addition, there is a commitment fee on the average daily undrawn stated amount under each letter of credit issued under the facility 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 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. 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 November 19, 2021, we amended the Credit Agreement to among other things, facilitate the terms of the Receivables Securitization Facility and include provisions for benchmark replacements to LIBOR. NOTE PURCHASE AGREEMENT On August 23, 2013, we entered into a Note Purchase Agreement with certain institutional investors (the “Purchasers”). On August 27, 2013, the Purchasers purchased an aggregate principal amount of $ 500 million of our Senior Notes, Series A, Senior Notes Series B, and Senior Notes Series C, collectively (the “Notes”). Interest on the Notes is payable semi-annually in arrears. The fair value of the Notes approximated $ 543.5 million at December 31, 2021. 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 Level 2. 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. The Note Purchase Agreement provides for customary events of default. 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 50 T able of Contents Company, Inc., a Minnesota corporation and an indirect wholly-owned subsidiary of the company. On November 19, 2021, we amended the Note Purchase Agreement to among other things, facilitate the terms of the Receivables Securitization Facility. U.S. TRADE ACCOUNTS RECEIVABLE SECURITIZATION On November 19, 2021, we entered into a receivables purchase agreement and related transaction documents with Bank of America, N.A. and Wells Fargo Bank, N.A. to provide a receivables securitization facility (the “Receivables Securitization Facility”). The Receivables Securitization Facility is based on the securitization of our U.S. trade accounts receivable with a total availability of $ 300 million as of December 31, 2021. The interest rate on borrowings under the Receivables Securitization Facility is based on Bloomberg Short Term Bank Yield Index (“BSBY”) plus a margin. There is also a commitment fee we are required to pay on any unused portion of the facility. The Receivables Securitization Facility expires on November 17, 2023, unless extended by the parties and is recorded as a noncurrent liability as of December 31, 2021. 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. We consider these borrowings to be a Level 2 financial liability. Borrowings on the Receivables Securitization Facility are included within proceeds on long-term borrowings on the consolidated statement of cash flows. 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 February 1, 2022, we amended the Receivables Securitization Facility primarily to increase the total availability from $ 300 million to $ 500 million pursuant to the provisions of the existing agreement. On April 26, 2017, we entered into a receivables purchase agreement and related transaction documents with The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch and Wells Fargo Bank, N.A. to provide a receivables securitization facility with funding of up to $ 250 million. On December 17, 2018, we entered into an amendment on this facility, which changed the lending parties to Wells Fargo Bank, N.A. and Bank of America, N.A. and extended the maturity date from April 26, 2019, to December 17, 2020. The facility expired on December 17, 2020, and it was not renewed; however, we entered into a new receivables securitization facility in November 2021 as described above. SENIOR NOTES On April 9, 2018, we issued senior unsecured notes (“Senior Notes”) through a public offering. The Senior Notes bear an annual interest rate of 4.20 percent payable semi-annually on April 15 and October 15, until maturity on April 15, 2028. 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 $ 677.1 million as of December 31, 2021, based primarily on the market prices quoted from external sources. The carrying value of the Senior Notes was $ 594.2 million as of December 31, 2021. If the Senior Notes were measured at fair value in the financial statements, they would be classified as Level 2 in the fair value hierarchy. 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; enter into sales and leaseback transactions above certain limits; and consolidate, merge, or transfer substantially all of our assets and those of our subsidiaries on a consolidated basis. It also provides for customary events of default (subject in certain cases to customary grace and cure periods), which include among other things nonpayment, breach of covenants in the indenture, and certain events of bankruptcy and insolvency. If an event of default occurs and is continuing with respect to the Senior Notes, the trustee or holders of at least 25 percent in principal amount outstanding of the Senior Notes may declare the principal and the accrued and unpaid interest, if any, on all of the outstanding Senior Notes to be due and payable. These covenants and events of default are subject to a number of important qualifications, limitations, and exceptions that are described in the indenture. The indenture does not contain any financial ratios or specified levels of net worth or liquidity to which we must adhere. 51 T able of Contents I n addition to the above financing agreements we have a $ 15 million discretionary line of credit with U.S. Bank of which $ 7.9 million is currently utilized for standby letters of credit related to insurance collateral as of December 31, 2021. These standby letters of credit are renewed annually and were undrawn as of December 31, 2021. NOTE 5: 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 2014. We are currently under an Internal Revenue Service audit for the 2015-2017 tax years. In 2019, we removed our assertion that the unremitted earnings of our 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 $ 2.0 million as of December 31, 2021. On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) in response to the COVID-19 pandemic. The CARES Act allows for a deferral of the employer share of federal payroll taxes otherwise due through December 31, 2020. Under the act, 50 percent of the deferred amount was due December 31, 2021, and the remaining 50 percent is due December 31, 2022. 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 December 31, 2021, we have recognized a payroll deferral and tax credit of $ 14.7 million and $ 0.7 million, respectively, under the CARES Act. On December 28, 2021, the Treasury Department released final regulations on determining the foreign tax credit, and allocating and apportioning deductions, under the Internal Revenue Code. The impact of this finalized guidance is not expected to have a material impact on our results. Income before provision for income taxes consisted of (in thousands): 2021 2020 2019 Domestic $ 566,847 $ 499,384 $ 649,742 Foreign 455,444 128,947 92,515 Total $ 1,022,291 $ 628,331 $ 742,257 A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands): 2021 2020 2019 Unrecognized tax benefits, beginning of period $ 36,216 $ 33,938 $ 31,515 Additions based on tax positions related to the current year 3,530 3,172 2,212 Additions for tax positions of prior years 1,919 1,568 2,148 Reductions for tax positions of prior years ( 2,431 ) ( 124 ) — Lapse in statute of limitations ( 1,932 ) ( 2,276 ) ( 1,703 ) Settlements — ( 62 ) ( 234 ) Unrecognized tax benefits, end of the period $ 37,302 $ 36,216 $ 33,938 Income tax expense considers amounts that may be needed to cover exposures for open tax years. We do not expect any material impact related to open tax years; however, actual settlements may differ from amounts accrued. As of December 31, 2021, we had $ 42.9 million of unrecognized tax benefits and related interest and penalties, all of which would affect our effective tax rate if recognized. In the unlikely event these unrecognized tax benefits and related interest and penalties were recognized fully in 2021, the impact to the annual effective tax rate would have been 4.2 percent. We are not aware of any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly increase or decrease in the next 12 months. The total liability for unrecognized tax benefits is expected to decrease by approximately $ 5.9 million in the next 12 months due to lapsing of statutes. 52 T able of Contents We recognize interest and penalties related to uncertain tax positions in the provision for income taxes. During the years ended December 31, 2021, 2020, and 2019, we recognized approximately $ 0.9 million, $ 1.0 million, and $ 1.0 million in interest and penalties. We had approximately $ 5.6 million and $ 6.1 million for the payment of interest and penalties related to uncertain tax positions accrued within noncurrent income taxes payable as of December 31, 2021 and 2020, respectively. These amounts are not included in the reconciliation above. The components of the provision for income taxes consist of the following for the years ended December 31 (in thousands): 2021 2020 2019 Tax provision: Federal $ 165,218 $ 99,901 $ 106,009 State 36,718 19,825 25,788 Foreign 85,654 40,103 35,899 287,590 159,829 167,696 Deferred provision (benefit): Federal ( 90,960 ) ( 28,238 ) 1,554 State ( 16,176 ) ( 5,749 ) 316 Foreign ( 2,408 ) ( 3,932 ) ( 4,277 ) ( 109,544 ) ( 37,919 ) ( 2,407 ) Total provision $ 178,046 $ 121,910 $ 165,289 A reconciliation of the provision for income taxes using the statutory federal income tax rate to our effective income tax rate for the years ended December 31, is as follows: 2021 2020 2019 Federal statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 1.7 2.5 2.8 Share-based payment awards ( 0.6 ) ( 2.8 ) ( 0.9 ) Excess foreign tax credits ( 0.4 ) ( 2.2 ) ( 1.5 ) Other U.S. tax credits and incentives ( 3.3 ) ( 1.4 ) ( 0.9 ) Foreign ( 1.2 ) 1.3 1.7 Other 0.2 1.0 0.1 Effective income tax rate 17.4 % 19.4 % 22.3 % 53 T able of Contents Deferred tax assets (liabilities) are comprised of the following at December 31 (in thousands): 2021 2020 Deferred tax assets: Lease liabilities $ 60,846 $ 82,982 Compensation 71,770 60,160 Accrued expenses 92,936 39,987 Foreign affiliate prepayment 88,399 — Other 22,925 26,848 Deferred tax liabilities: Right-of-use assets ( 56,044 ) ( 77,513 ) Intangible assets ( 79,198 ) ( 81,210 ) Accrued revenue ( 47,255 ) ( 18,978 ) Prepaid assets ( 14,021 ) ( 5,732 ) Long-lived assets ( 10,387 ) ( 12,722 ) Foreign withholding tax ( 11,917 ) ( 10,222 ) Other ( 9,267 ) ( 7,142 ) Net deferred tax assets (liabilities) $ 108,787 $ ( 3,542 ) We had foreign net operating loss carryforwards with a tax effect of $ 8.6 million as of December 31, 2021, and $ 11.0 million as of December 31, 2020. The net operating loss carryforwards will expire at various dates from 2022 to 2028, with certain jurisdictions having indefinite carryforward terms. We continually monitor and review the foreign net operating loss carryforwards to determine the ability to realize the deferred tax assets associated with the foreign net operating loss carryforwards. As of December 31, 2021 and 2020, we have recorded a valuation allowance of $ 2.5 million and $ 7.6 million, respectively, against the deferred tax asset related to the foreign operating loss carryforwards. NOTE 6: CAPITAL STOCK AND STOCK AWARD PLANS PREFERRED STOCK. Our Certificate of Incorporation authorizes the issuance of 20,000,000 shares of preferred stock, par value $ 0.10 per share. There are no shares of preferred stock outstanding. The preferred stock may be issued by resolution of our Board of Directors at any time without any action of the stockholders. The Board of Directors may issue the preferred stock in one or more series and fix the designation and relative powers. These include voting powers, preferences, rights, qualifications, limitations, and restrictions of each series. The issuance of any such series may have an adverse effect on the rights of holders of common stock and may impede the completion of a merger, tender offer, or other takeover attempt. COMMON STOCK. Our Certificate of Incorporation authorizes 480,000,000 shares of common stock, par value $ 0.10 per share. Subject to the rights of preferred stock, which may from time to time be outstanding, holders of common stock are entitled to receive dividends out of funds legally available, when and if declared by the Board of Directors, and to receive their share of the net assets of the company legally available for distribution upon liquidation or dissolution. For each share of common stock held, stockholders are entitled to one vote on each matter to be voted on by the stockholders, including the election of directors. Holders of common stock are not entitled to cumulative voting. The stockholders do not have preemptive rights. All outstanding shares of common stock are fully paid and nonassessable. 54 T able of Contents 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 expense recognized within personnel expenses in our consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands): 2021 2020 2019 Stock options $ 16,128 $ 20,162 $ 16,073 Stock awards 110,701 20,985 20,170 Company expense on ESPP discount 3,148 2,848 2,840 Total stock-based compensation expense $ 129,977 $ 43,995 $ 39,083 On May 9, 2019, our shareholders approved an amendment and restatement of our 2013 Equity Incentive Plan (the “Plan”) to increase the number of shares authorized for award by 4,000,000 shares. The Plan 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. At the time our shareholders approved adding additional shares to the plan, a maximum of 17,041,803 shares are available to be granted under this plan. Approximately 1,780,727 shares were available for stock awards under this plan as of December 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 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, discounted for post-vesting holding restrictions, calculated using the Black-Scholes option pricing model and is being expensed over the vesting period of the award. Although participants can exercise options via a stock swap exercise, we do not issue reloads (restoration options) on the grants. The following schedule summarizes stock option activity in the plans. All outstanding unvested options as of December 31, 2021, relate to time-based grants from 2015 through 2020. Options Weighted Average Exercise Price Aggregate Intrinsic Value (in thousands) Average Remaining Life (years) Outstanding at December 31, 2020 7,260,840 $ 76.37 $ 127,065 6.6 Exercised ( 748,198 ) 71.95 Forfeitures ( 18,778 ) 76.03 Outstanding at December 31, 2021 6,493,864 $ 76.88 $ 199,682 5.8 Vested at December 31, 2021 4,789,677 $ 76.08 5.2 Exercisable at December 31, 2021 4,789,677 $ 76.08 5.2 As of December 31, 2021, unrecognized compensation expense related to stock options was $ 26.6 million. The amount of future expense to be recognized will be based on the passage of time and the employees' continued employment. Additional potential dilutive stock options totaling 3,924 for 2021 have been excluded from our diluted net income per share calculations because these securities’ exercise prices were anti-dilutive (e.g., greater than the average market price of our common stock). 55 T able of Contents Information on the intrinsic value of options exercised is as follows (in thousands): 2021 $ 20,427 2020 38,551 2019 15,862 The following table summarizes these unvested stock option grants as of December 31, 2021: First Vesting Date Last Vesting Date Options Granted, Net of Forfeitures Weighted Average Grant Date Fair Value (1) Unvested Options December 31, 2018 December 31, 2022 1,441,636 $ 14.25 276,353 December 31, 2019 December 31, 2023 1,154,019 20.12 451,674 December 31, 2020 December 31, 2024 1,638,791 13.87 976,160 4,234,446 $ 15.70 1,704,187 ________________________________ (1) Amount shown is the weighted average grant date fair value of options granted, net of forfeitures. Determining Fair Value We estimated the fair value of stock options granted using the Black-Scholes option pricing model. We estimate the fair value of restricted shares and units using the Black-Scholes option pricing model-protective put method. A description of significant assumptions used to determine the risk-free interest rate, dividend yield, expected volatility, and expected term are as follows: Risk-Free Interest Rate -The risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term. Dividend Yield- The dividend yield assumption is based on our history of dividend payouts. Expected Volatility -Expected volatility was determined based on the implied volatility of traded options of our stock and the historical volatility of our stock price. Expected Term - Expected term represents the period that our stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards. The fair value per option was estimated using the Black-Scholes option pricing model with the following assumptions: 2020 Grants 2019 Grants Weighted-average risk-free interest rate 1.6 % 2.1 % Expected dividend yield 2.5 % 2.0 % Weighted-average volatility 23 % 25 % Expected term (in years) 8.91 6.08 Weighted average fair value per option $ 13.88 $ 17.52 STOCK AWARDS. We have awarded performance-based restricted shares, performance-based restricted stock units, and time-based restricted stock units. All of our awards 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 12 percent to 24 percent and are calculated using the Black-Scholes option pricing model-protective put method. The duration of the restriction period to sell or transfer vested awards, changes in the measured stock price volatility and changes in interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards. Performance-based Awards We have awarded performance-based restricted shares through 2020 to certain key employees and non-employee directors. These awards vest over a five-year period based on the company’s earnings growth. In 2021, we have awarded performance-based restricted stock units to certain key employees and non-employee directors. These awards vest over a three-year period based on the company's cumulative three-year earnings per share growth and annual adjusted gross profit growth. These performance-based restricted stock unit awards contain an upside opportunity of 200 percent contingent upon obtaining certain earnings per share and adjusted gross profit targets. 56 T able of Contents The following table summarizes our unvested performance-based restricted shares and restricted stock unit grants as of December 31, 2021: Number of Restricted Shares and Restricted Stock Units Weighted Average Grant Date Fair Value Unvested at December 31, 2020 1,102,211 $ 67.29 Granted (1) 292,993 74.92 Performance-based grant adjustment (2) 29,147 67.13 Vested ( 980,188 ) 67.37 Forfeitures ( 36,521 ) 71.10 Unvested at December 31, 2021 407,642 $ 72.21 ________________________________ (1) Amount represents performance-based restricted stock unit grants at target. (2) Amount represents incremental shares issuable for achieving 200 percent upside upon meeting certain adjusted gross profit targets in 2021. The following table summarizes unvested performance-based restricted shares and restricted stock units by vesting period: First Vesting Date Last Vesting Date Performance Shares and Stock Units Granted, Net of Forfeitures Weighted Average Grant Date Fair Value (1) Unvested Performance Shares and Restricted Stock Units December 31, 2019 December 31, 2023 354,005 $ 73.79 70,756 December 31, 2020 December 31, 2024 401,548 59.34 80,268 December 31, 2021 December 31, 2025 285,765 74.91 256,618 1,041,318 $ 68.53 407,642 ________________________________ (1) Amount shown is the weighted average grant date fair value of performance-based restricted shares and restricted stock units granted, net of forfeitures. We granted an additional 330,072 performance-based restricted stock units at target on February 9, 2022. These awards have a weighted average grant date fair value of $ 76.74 and will vest over a three-year period based upon our cumulative three-year earnings per share growth and annual adjusted gross profit growth. Time-based Awards We award time-based restricted stock units to certain key employees and non-employee directors. Time-based awards granted through 2020 vest over a five-year while time-based awards granted in 2021 vest over a three-year period primarily based on the passage of time and the employee's continued employment. The following table summarizes our unvested time-based restricted share and restricted stock unit grants as of December 31, 2021: Number of Restricted Shares and Stock Units Weighted Average Grant Date Fair Value Unvested at December 31, 2020 598,039 $ 60.24 Granted 666,311 72.09 Vested ( 439,695 ) 69.29 Forfeitures ( 61,174 ) 68.12 Unvested at December 31, 2021 763,481 $ 69.42 We granted an additional 634,118 time-based restricted stock units on February 9, 2022. These awards have a weighted average grant date fair value of $ 74.67 and will vest over a three-year period with a first vesting date of December 31, 2022. 57 T able of Contents A summary of the fair value of stock awards vested (in thousands): 2021 $ 110,701 2020 20,985 2019 20,170 As of December 31, 2021, there was unrecognized compensation expense of $ 88.3 million related to previously granted stock awards. The amount of future expense to be recognized will be based on the company’s earnings growth and the continued employment of certain key employees. 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 the quarter discounted by 15 percent. Shares are vested immediately. The following is a summary of the employee stock purchase plan activity (dollar amounts in thousands): Shares Purchased By Employees Aggregate Cost to Employees Expense Recognized By the Company 2021 220,970 $ 17,838 $ 3,148 2020 236,062 16,146 2,848 2019 224,596 16,093 2,840 SHARE REPURCHASE PROGRAMS. In May 2018, the Board of Directors authorized a share repurchase program that allows the Company to repurchase 15,000,000 shares of our common stock. On December 9, 2021, the Board of Directors increased the company’s share repurchase authorization by an additional 20,000,000 shares of common stock. As of December 31, 2021, we have 21,635,388 shares remaining under the share repurchase authorization. The activity under these authorizations is as follows (dollar amounts in thousands): Shares Repurchased Total Value of Shares Repurchased 2019 Repurchases 3,434,102 $ 306,444 2020 Repurchases 2,542,915 182,745 2021 Repurchases 6,154,364 580,818 NOTE 7: COMMITMENTS AND CONTINGENCIES EMPLOYEE BENEFIT PLANS. We offer a defined contribution plan, which qualifies under section 401(k) of the Internal Revenue Code and covers all eligible U.S. employees. We can also elect to make matching contributions to the plan. Annual discretionary contributions may also be made to the plan. Defined contribution plan expense, including matching contributions, was approximately (in thousands): 2021 $ 48,714 2020 18,827 2019 42,491 We contributed a defined contribution match of six percent in 2021 and 2019. Effective May 22, 2020, we temporarily suspended the employer-matching contribution due to the impacts of the COVID-19 pandemic. The employer-matching contribution was reinstated effective January 1, 2021. LEASE COMMITMENTS. We maintain operating leases for office space, warehouses, office equipment, and a small number of intermodal containers. See Note 11, Leases , for further information. 58 T able of Contents 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 certain contingent auto liability cases as of December 31, 2021. 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 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 not able 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. NOTE 8: ACQUISITIONS Combinex Holding B.V. On June 3, 2021, we acquired all of the outstanding shares of Combinex Holding B.V. (“Combinex”) to strengthen our European road transportation presence. Total purchase consideration, net of cash acquired was $ 14.7 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 $ 3,942 There was $ 10.8 million of goodwill recorded related to the acquisition of Combinex. The Combinex goodwill is a result of acquiring and retaining the Combinex workforce and expected synergies from integrating its business into ours. Purchase accounting is considered complete. The goodwill will not be deductible for tax purposes. The results of operations of Combinex have been included as part of the All Other and Corporate segment in our consolidated financial statements since June 3, 2021. Prime Distribution Services On March 2, 2020, we acquired all of the outstanding shares of Prime Distribution Services (“Prime Distribution”), a leading provider of retail consolidation services in North America, for $ 222.7 million in cash. This acquisition adds scale and value-added warehouse capabilities to our retail consolidation platform, adding to our global suite of services. The following is a summary of the allocation of purchase consideration to the estimated fair value of net assets for the acquisition of Prime Distribution (dollars in thousands): Current assets $ 8,879 Property and equipment 7,356 Right-of-use lease assets 35,017 Other intangible assets 55,000 Goodwill 176,727 Total assets 282,979 Current liabilities 12,243 Lease liabilities 35,017 Deferred tax liabilities 13,001 Net assets acquired $ 222,718 59 T able of Contents Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands): Estimated Life (years) Customer relationships 7 $ 55,000 There was $ 176.7 million of goodwill recorded related to the acquisition of Prime Distribution. 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 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 (“NAST”) 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 final. 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 $ 26.7 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 final. 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. 60 T able of Contents NOTE 9: SEGMENT REPORTING Our segments are based on our method of internal reporting, which generally segregates the segments by service line and the primary services they provide to our customers. 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. The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies. We do not report our intersegment revenues by segment to our CODM and do not believe they are a meaningful metric for evaluating the performance of our reportable segments. We identify two reportable segments as follows: • North American Surface Transportation: NAST provides freight transportation services across North America through a network of offices in the United States, Canada, and Mexico. The primary services provided by NAST are 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, 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. Robinson Fresh provides sourcing services including the buying, selling, and/or marketing of fresh fruits, vegetables, and other perishable items. Managed Services provides Transportation Management Services, or Managed TMS ® . Other Surface Transportation revenues are primarily earned by our Europe Surface Transportation segment. Europe Surface Transportation provides transportation and logistics services including truckload and groupage services across Europe. Reportable segment information as of, and for the years ended, December 31, 2021, 2020, and 2019, is as follows (dollars in thousands): NAST Global Forwarding All Other and Corporate Consolidated Twelve Months Ended December 31, 2021 Total revenues $ 14,507,917 $ 6,729,790 $ 1,864,431 $ 23,102,138 Income (loss) from operations 585,351 510,756 ( 13,999 ) 1,082,108 Depreciation and amortization 26,243 22,823 42,193 91,259 Total assets (1) 3,349,578 2,843,239 835,295 7,028,112 Average headcount 6,764 5,071 3,926 15,761 NAST Global Forwarding All Other and Corporate Consolidated Twelve Months Ended December 31, 2020 Total revenues $ 11,312,553 $ 3,100,525 $ 1,794,028 $ 16,207,106 Income (loss) from operations 508,475 175,513 ( 10,720 ) 673,268 Depreciation and amortization 25,314 34,550 41,863 101,727 Total assets (1) 2,946,409 1,392,411 805,438 5,144,258 Average headcount 6,811 4,708 3,600 15,119 61 T able of Contents NAST Global Forwarding All Other and Corporate Consolidated Twelve Months Ended December 31, 2019 Total revenues $ 11,283,692 $ 2,327,913 $ 1,697,903 $ 15,309,508 Income (loss) from operations 722,763 80,527 ( 13,314 ) 789,976 Depreciation and amortization 24,508 36,720 39,221 100,449 Total assets (1) 2,550,010 1,021,592 1,069,458 4,641,060 Average headcount 7,354 4,766 3,431 15,551 ________________________________ (1) All cash and cash equivalents and certain owned properties are included in All Other and Corporate. The following table presents our total revenues (based on location of the customer) and long-lived assets (including intangible and other assets) by geographic regions (in thousands): For the year ended December 31, 2021 2020 2019 Total revenues United States $ 19,494,969 $ 13,896,382 $ 13,143,522 Other locations 3,607,169 2,310,724 2,165,986 Total revenues $ 23,102,138 $ 16,207,106 $ 15,309,508 As of December 31, 2021 2020 2019 Long-lived assets United States $ 587,339 $ 551,511 $ 489,129 Other locations 151,866 163,860 206,567 Total long-lived assets $ 739,205 $ 715,371 $ 695,696 62 T able of Contents NOTE 10: 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 twelve months ended December 31, 2021, 2020, and 2019, as follows (dollars in thousands): Twelve Months Ended December 31, 2021 NAST Global Forwarding All Other and Corporate Total Major service lines: Transportation and logistics services (1) $ 14,507,917 $ 6,729,790 $ 808,867 $ 22,046,574 Sourcing (2) — — 1,055,564 1,055,564 Total $ 14,507,917 $ 6,729,790 $ 1,864,431 $ 23,102,138 Twelve Months Ended December 31, 2020 NAST Global Forwarding All Other and Corporate Total Major service lines: Transportation and logistics services (1) $ 11,312,553 $ 3,100,525 $ 734,484 $ 15,147,562 Sourcing (2) — — 1,059,544 1,059,544 Total $ 11,312,553 $ 3,100,525 $ 1,794,028 $ 16,207,106 Twelve Months Ended December 31, 2019 NAST Global Forwarding All Other and Corporate Total Major service lines: Transportation and logistics services (1) $ 11,283,692 $ 2,327,913 $ 710,690 $ 14,322,295 Sourcing (2) — — 987,213 987,213 Total $ 11,283,692 $ 2,327,913 $ 1,697,903 $ 15,309,508 ________________________________ (1) Transportation and logistics services performance obligations are completed over time. (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 obligations and as such contract liabilities as of December 31, 2021 and 2020, and revenue recognized in the twelve months ended December 31, 2021, 2020, and 2019, 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 and the timing of customer invoicing. Approximately 93 percent, 91 percent, and 92 percent of our total revenues for the twelve months ended December 31, 2021, 2020, and 2019, respectively, are attributable to arranging for the transportation of our customers’ freight for which we transfer control and satisfy our performance obligation over the requisite transit period. A days in transit output method is used to measure the progress of our performance as of the reporting date. We determine the transit period based upon the departure date and the delivery date, which may be estimated if delivery has not occurred as of the reporting date. Determining the transit period and how much of it has been completed as of the reporting date may require management to make judgments that affect the timing of revenue recognized. We have determined that revenue recognition over the transit period provides a faithful depiction of the transfer of goods and services to our customer as our obligation is performed over the transit period. The transaction price for our performance obligation under these arrangements is generally fixed and readily determinable upon contract inception and is not contingent upon the occurrence or non-occurrence of another event. Approximately five percent, seven percent, and six percent of our total revenues for the twelve months ended December 31, 2021, 2020, and 2019, respectively, are attributable to buying, selling, and/or marketing of produce including fresh fruits, vegetables, and other value-added perishable items. Total revenues for these transactions are recognized at a point in time upon completion of our performance obligation, which is generally when the produce is received by our customer. The transaction price for our performance obligation under these arrangements is generally fixed and readily determinable upon contract inception and is not contingent upon the occurrence or non-occurrence of another event. 63 T able of Contents Approximately two percent of our total revenues for the twelve months ended December 31, 2021, 2020, and 2019, respectively, are attributable to value-added logistics services, such as customs brokerage, fee-based managed services, warehousing services, small parcel, and supply chain consulting and optimization services. Total revenues for these services are recognized over time as we complete our performance obligation. Transaction price is determined and allocated to these performance obligations at their fixed fee or agreed upon rate multiplied by their associated measure of progress, which may be transactional volumes, labor hours, or time elapsed. We expense incremental costs of obtaining customer contracts (i.e., sales commissions) due to the short duration of our arrangements as the amortization period of such amounts is expected to be less than one year . These amounts are included within personnel expenses in our consolidated statements of operations and comprehensive income. In addition, we do not disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied as of the end of the period, as our contracts have an expected length of one year or less. Finally, for certain of our performance obligations such as fee-based managed services, supply chain consulting and optimization services, and warehousing services, we have recognized revenue in the amount for which we have the right to invoice our customer as we have determined this amount corresponds directly with the value provided to the customer for our performance completed to date. NOTE 11: LEASES We determine if our contractual agreements contain a lease at inception. A lease is identified when a contract allows us the right to control an identified asset for a period of time in exchange for consideration. Our lease agreements consist primarily of operating leases for office space, warehouses, office equipment, and a small number of intermodal containers. We do not have material financing leases. Frequently, we enter into contractual relationships with a wide variety of transportation companies for freight capacity, and utilize those relationships to efficiently and cost-effectively arrange the transport of our customers’ freight. These contracts typically have a term of 12 months or less and do not allow us to direct the use or obtain substantially all of the economic benefits of a specifically identified asset. Accordingly, these agreements are not considered leases. Our operating leases are included on the consolidated balance sheets as right-of-use lease assets and lease liabilities. A right-of-use lease asset represents our right to use an underlying asset over the term of a lease, while a lease liability represents our obligation to make lease payments arising from the lease. Current and noncurrent lease liabilities are recognized on commencement date at the present value of lease payments, including non-lease components, which consist primarily of common area maintenance and parking charges. Right-of-use lease assets are also recognized on the commencement date as the total lease liability plus prepaid rents. As our leases typically do not provide an implicit rate, we use our fully collateralized incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is influenced by market interest rates, our credit rating, and lease term and as such, may differ for individual leases. Our lease agreements typically do not contain variable lease payments, residual value guarantees, purchase options, or restrictive covenants. Many of our leases include the option to renew for a period of months to several years. The term of our leases may include the option to renew when it is reasonably certain that we will exercise that option although these occurrences are seldom. 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. Information regarding lease expense, remaining lease term, discount rate, and other select lease information is presented below as of December 31, 2021 and 2020, and for the twelve months ended December 31, 2021 and 2020 (dollars in thousands): Twelve Months Ended December 31, Lease Costs 2021 2020 Operating lease expense $ 85,521 $ 86,451 Short-term lease expense 8,307 15,130 Total lease expense $ 93,828 $ 101,581 Twelve Months Ended December 31, Other Lease Information 2021 2020 Operating cash outflows from operating leases $ 85,244 $ 74,177 Right-of-use lease assets obtained in exchange for new lease liabilities (1) 52,931 95,005 64 T able of Contents As of December 31, Lease Term and Discount Rate 2021 2020 Weighted average remaining lease term (in years) (1) 6.4 6.8 Weighted average discount rate 3.0 % 3.2 % ________________________________ (1) The weighted average remaining lease term is significantly impacted by a 15 -year lease related to office space in Chicago, IL, that commenced in 2018. Excluding this lease, the weighted average remaining lease term of our agreements is 4.5 years. The maturity of lease liabilities as of December 31, 2021, were as follows (in thousands): Maturity of Lease Liabilities Operating Leases 2022 $ 74,600 2023 69,277 2024 48,819 2025 36,461 2026 26,678 Thereafter 86,859 Total lease payments 342,694 Less: Interest ( 35,014 ) Present value of lease liabilities $ 307,680 NOTE 12. ALLOWANCE FOR CREDIT LOSSES 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, our customers' credit ratings, in addition to other customer specific factors. We have also considered recent trends and developments related to the current macroeconomic environment in determining our ending allowance for credit losses for both accounts receivable and contract assets. 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 twelve months ended December 31, 2021: Balance, December 31, 2020 $ 38,113 Provision 9,405 Write-offs ( 5,976 ) Balance, December 31, 2021 $ 41,542 Recoveries of amounts previously written off were not significant for the twelve months ended December 31, 2021. NOTE 13: CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss is included in the Stockholders’ investment on our consolidated balance sheets. The recorded balance at December 31, 2021 and 2020, was $ 61.1 million and $ 46.0 million, respectively, and is comprised solely of foreign currency adjustments, including foreign currency translation. Other comprehensive loss was $ 15.1 million for the twelve months ended December 31, 2021, and consisted of foreign currency adjustments, including foreign currency translation. Other comprehensive income was $ 30.2 million for the twelve months ended December 31, 2020. Both periods were driven primarily by fluctuations in the Australian Dollar and Singapore Dollar. 65 T able of Contents NOTE 14: RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In March 2020, the FASB issued 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. Amongst other practical expedients, the update allows for contract modifications due to reference rate reform for certain receivables and debt contracts to be accounted for by prospectively adjusting the effective interest rate. 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 our consolidated financial statements. 66 T able of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.