What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-17 compared with 2022-02-23 · 160 added, 193 removed, 838 unchanged (30% of the section changed)

29 unchanged sentences

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.

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How the Critical Audit Matter Was Addressed in the Audit

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We have served as the Company's auditor since 2002.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, 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.

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 year ended December 31, 2022, of the Company and our report dated February 17, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

17 unchanged sentences

February 17, 2023

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ROBINSON WORLDWIDE, INC.

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See accompanying notes to the consolidated financial statements.

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ROBINSON WORLDWIDE, INC.

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See accompanying notes to the consolidated financial statements.

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ROBINSON WORLDWIDE, INC.

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Stock issued for employee benefit plans 1,364 136 ( 21,017 ) 92,552 71,671

Issuance of restricted stock, net of forfeitures ( 26 ) ( 3 ) 3 —

Stock-based compensation expense — — 90,677 — 90,677

2 unchanged sentences

See accompanying notes to the consolidated financial statements.

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ROBINSON WORLDWIDE, INC.

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Net cash provided by operating activities 1,650,171 94,955 499,191

94,955 499,191 835,419

INVESTING ACTIVITIES

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Acquisitions, net of cash acquired — ( 14,750 ) ( 223,230 )

Other investing activities — 5,525 16,636

Proceeds from sale of property and equipment 63,579 — 5,525

Net cash used for investing activities ( 64,918 ) ( 85,672 ) ( 271,714 )

( 85,672 ) ( 271,714 ) ( 113,029 )

FINANCING ACTIVITIES

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Payments on short-term borrowings ( 4,646,000 ) ( 3,203,251 ) ( 1,579,600 )

Net cash provided by (used for) financing activities

7,573 ( 440,667 ) ( 651,253 )

Net cash (used for) provided by financing activities ( 1,619,546 ) 7,573 ( 440,667 )

Effect of exchange rates on cash and cash equivalents ( 5,638 ) ( 3,239 ) 9,128

10 unchanged sentences

See accompanying notes to the consolidated financial statements.

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ROBINSON WORLDWIDE, INC.

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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.

The preparation of financial statements, in conformity with accounting principles generally accepted in the U.S., 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.

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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.

When the customer’s 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 .

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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.

Revenue is recognized when our performance obligations under these contracts are 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.

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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.

Substantially all of our revenues are 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.

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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.

Most transactions in our transportation and sourcing businesses are recorded at the gross amount we charge our customers for the services we provide and goods we sell.

In these transactions, we are primarily responsible for fulfilling the promise to provide the specified good or service to our customers 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.

brokerage, managed services, freight forwarding, and sourcing managed procurement transactions are recorded at the net amount we charge our customers for the services 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.

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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.

Most balance sheet accounts of foreign subsidiaries are remeasured at the current exchange rate as of the end of the year and translated to our U.S.

Dollar reporting currency.

Translation adjustments are recorded in other comprehensive (loss) income.

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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.

Cash and cash equivalents held outside the U.S.

totaled $ 204.7 million and $ 217.1 million as of December 31, 2022 and 2021, respectively.

Approximately half 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.

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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.

Prepaid expenses and other includes items such as software maintenance contracts, prepaid insurance premiums, other prepaid operating expenses, and inventories, consisting primarily of produce and related products held for resale.

RIGHT-OF-USE LEASE ASSETS.

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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.

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Depreciation is computed using the straight-line method over the estimated life of the asset.

Amortization of leasehold improvements is computed over the shorter of the lease term or the estimated useful life of the improvement.

We recognized the following depreciation expense (in thousands):

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________________________________

(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.

(1) Our corporate aircraft and an office building in Kansas City, Missouri, were reclassified as held-for-sale assets as of December 31, 2021.

These held-for-sale assets of $ 35.0 million were sold in 2022 and were included within Prepaid expenses and other current assets in our Consolidated Balance Sheets as of December 31, 2021.

The fair value of the assets that were held for sale was $ 64.0 million.

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.

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Other assets consist primarily of purchased and internally developed software.

We amortize software using the straight-line method over three years .

We amortize software when it is put into service using the straight-line method over three years .

We recognized the following amortization expense of purchased and internally developed software (in thousands):

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Net software $ 88,800 $ 70,112

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INCOME TAXES.

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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.

We have issued stock awards, including stock options, performance-based restricted shares, performance-based restricted stock units, and time-based restricted stock units to certain key employees.

The awards vest over three to five years , either based on the company’s earnings or adjusted gross profits 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.

For grants of restricted 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.

For grants of stock options, we use the Black-Scholes option pricing model to estimate the fair value of these share-based payment awards.

The determination of the fair value of stock options is affected by our stock price and a number of assumptions, including expected volatility, expected term, risk-free interest rate, and dividend yield.

GOODWILL AND OTHER INTANGIBLE ASSETS

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December 31, 2020 balance $ 1,203,972 $ 213,982 $ 69,233 $ 1,487,187

$ 1,015,570 $ 208,420 $ 67,770 $ 1,291,760

Acquisitions 243 — 10,754 10,997

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December 31, 2021 balance 1,196,333 210,391 78,030 1,484,754

1,203,972 213,982 69,233 1,487,187

Acquisitions 243 — 10,754 10,997

Foreign currency translation ( 8,257 ) ( 4,202 ) ( 1,482 ) ( 13,941 )

December 31, 2022 balance $ 1,188,076 $ 206,189 $ 76,548 $ 1,470,813

$ 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.

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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”).

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.

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As part of our annual Step Zero Analysis performed in 2022, we determined that due to certain qualitative factors and the recent performance of our Europe Surface Transportation reporting unit that the more likely than not criteria had been met, and therefore a Step One Analysis was completed for this reporting unit.

Our Step Zero Analysis did not indicate that the more likely than not criteria was met for any other reporting units and therefore a Step One Analysis was not completed for those reporting units.

As a result of our Step One Analysis for Europe Surface Transportation, we determined that the fair value was greater than the reporting unit's respective carrying value and as such the goodwill balance was not impaired.

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):

Identifiable intangible assets consisted of the following as of December 31 (in thousands):

Cost Accumulated Amortization Net Cost Accumulated Amortization Net

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Customer relationships $ 162,358 $ ( 106,932 ) $ 55,426 $ 169,308 $ ( 88,302 ) $ 81,006

Trademarks — — — 1,875 ( 937 ) 938

Total finite-lived intangibles 162,358 ( 106,932 ) 55,426 169,308 ( 88,302 ) 81,006

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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 December 31, 2021, or December 31, 2020.

We had no Level 3 assets or liabilities as of and during the periods ended December 31, 2022 or 2021.

There were no transfers between levels during the period.

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FINANCING ARRANGEMENTS

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December 31, 2022 December 31, 2021 Maturity December 31, 2022 December 31, 2021

Revolving credit facility 1.23 % — % October 2023 $ 525,000 $ —

Revolving credit facility — % 1.23 % November 2027 $ — $ 525,000

364-day revolving credit facility 5.12 % — % May 2023 379,000 —

Senior Notes, Series A 3.97 % 3.97 % August 2023 175,000 175,000

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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;

We have a senior unsecured revolving credit facility (the “Credit Agreement”) with a total availability of $ 1 billion and a maturity date of November 19, 2027.

As of December 31, 2022, the variable rate equaled SOFR and a Credit Spread Adjustment of 0.10 percent plus 1.00 percent.

In addition, there is a commitment fee on the average daily undrawn stated amount under the facility ranging from 0.07 percent to 0.15 percent.

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

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

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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.

364-DAY UNSECURED REVOLVING CREDIT FACILITY

On May 6, 2022, we entered into an unsecured revolving credit facility (the “364-day Credit Agreement”) with a total availability of $ 500 million and a maturity date of May 5, 2023.

Borrowings under the 364-day Credit Agreement generally bear interest at an alternate base rate plus a margin or a term SOFR-based rate plus a margin of 0.625 percent to 1.25 percent.

The alternate base rate is determined by a pricing schedule (which is the highest of (a) 0 percent, (b) U.S.

Bank’s prime rate, (c) the federal funds effective rate plus 0.50 percent, or (d) a term SOFR-based rate plus 1.00 percent).

In addition, there is a commitment fee on the aggregate unused commitments under the 364-day Credit Agreement ranging from 0.05 percent to 0.175 percent per annum.

The recorded amount of borrowings outstanding approximates fair value because of the short maturity period of the debt.

The 364-day Credit Agreement contains various restrictions and covenants that require us to maintain certain financial ratios, including an initial maximum leverage ratio of 3.00 to 1.00.

The 364-day Credit Agreement also contains customary events of default.

NOTE PURCHASE AGREEMENT

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

The fair value of the Notes approximated $ 543.5 million at December 31, 2021.

The fair value of the Notes approximated $ 468.7 million as of December 31, 2022.

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.

Senior Notes, Series A mature in August 2023 and are classified as current portion of debt in our Consolidated Balance Sheets as of December 31, 2022.

The Note Purchase 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, 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, a Delaware corporation and a wholly-owned subsidiary of the company, and by C.H.

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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.

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

On November 21, 2022, we executed the third amendment to the Note Purchase Agreement to among other things, facilitate the terms of the Credit Agreement.

TRADE ACCOUNTS RECEIVABLE SECURITIZATION

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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 Receivables Securitization Facility expires on November 17, 2023, unless extended by the parties.

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.

Borrowings on the Receivables Securitization Facility are included within proceeds on current 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.

On July 7, 2022, we amended the Receivables Securitization Facility to effectively increase the receivables pool available with respect to the Receivables Securitization Facility.

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

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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.

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;

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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.

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I n addition to the above financing agreements, we have a $ 15 million discretionary line of credit with U.S.

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These standby letters of credit are renewed annually and were undrawn as of December 31, 2022.

Robinson Worldwide, Inc., and its 80 percent (or more) owned U.S.

Robinson Worldwide, Inc.

and its 80 percent (or more) owned U.S.

subsidiaries file a consolidated federal income tax return.

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income tax returns before 2015.

We are currently under an Internal Revenue Service audit for the 2015-2017 tax years.

We are currently under an Internal Revenue Service audit for the 2015 to 2017 tax years.

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

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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.

The CARES Act allowed for a deferral of the employer share of federal payroll taxes.

We recognized a payroll deferral of $ 14.7 million under the CARES Act as of December 31, 2021, which has been paid as of December 31, 2022.

Income before provision for income taxes consisted of (in thousands):

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The total liability for unrecognized tax benefits is expected to decrease by approximately $ 3.0 million in the next 12 months due to lapsing of statutes.

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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.

During the years ended December 31, 2022, 2021, and 2020, we recognized approximately $ 0.6 million, $ 0.9 million, and $ 1.0 million in interest and penalties, respectively.

We had approximately $ 3.9 million and $ 5.6 million for the payment of interest and penalties related to uncertain tax positions accrued within noncurrent income taxes payable as of December 31, 2022 and 2021, respectively.

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Effective income tax rate 19.4 % 17.4 % 19.4 %

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Deferred tax assets (liabilities) are comprised of the following at December 31 (in thousands):

Deferred tax assets (liabilities) are comprised of the following as of December 31 (in thousands):

Deferred tax assets:

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Foreign affiliate prepayment 1,901 88,399

Long-lived assets 94,268 —

Other 23,990 22,925

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Other ( 9,483 ) ( 9,267 )

Net deferred tax assets (liabilities) $ 108,787 $ ( 3,542 )

Net deferred tax assets $ 167,346 $ 108,787

We had foreign net operating loss carryforwards with a tax effect of $ 9.0 million as of December 31, 2022, and $ 8.6 million as of December 31, 2021.

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All outstanding shares of common stock are fully paid and nonassessable.

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STOCK AWARD PLANS.

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Total stock-based compensation expense $ 90,677 $ 129,977 $ 43,995

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.

On May 5, 2022, our shareholders approved a 2022 Equity Incentive Plan (the “Plan”) and authorized an initial 4,261,884 shares for issuance of awards thereunder.

Upon approval of the Plan, no new awards may be made under our 2013 Equity Incentive Plan.

The Plan allows us to grant certain stock awards, including stock options at fair market value, performance-based restricted stock units and shares, and time-based restricted stock units, to our key employees and non-employee directors.

Shares subject to awards granted under the plan or our prior equity incentive plans that expire or are canceled without delivery of shares or that are settled in cash, generally become available again for issuance under the Plan.

There were 4,377,540 shares were available for stock awards under the Plan as of December 31, 2022.

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.

The value of these awards is established by the market price on the date of the 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.

Although participants can exercise options via a stock swap exercise, we do not issue reloads (restoration options) on the grants.

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(in thousands) Average

Outstanding at December 31, 2020 7,260,840 $ 76.37 $ 127,065 6.6

Outstanding as of December 31, 2021 6,493,864 $ 76.88 $ 199,682 5.8

Exercised ( 1,126,384 ) 71.91

Forfeitures ( 8,684 ) 76.43

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

Outstanding as of December 31, 2022 5,358,796 $ 77.93 $ 73,065 5.1

Vested as of December 31, 2022 4,491,967 $ 78.17 4.7

Exercisable as of December 31, 2022 4,491,967 $ 78.17 4.7

As of December 31, 2022, unrecognized compensation expense related to stock options was $ 13.4 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).

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There were no potentially dilutive stock options for 2022 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).

Information on the intrinsic value of options exercised is as follows (in thousands):

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December 31, 2020 December 31, 2024 1,632,187 13.87 643,077

December 31, 2020 December 31, 2024 1,638,791 13.87 976,160

2,785,023 $ 16.46 866,829

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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:

The grant date fair value per option was estimated using the Black-Scholes option pricing model with the following assumptions:

2020 Grants 2019 Grants

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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.

We have awarded performance-based restricted shares, performance-based restricted stock units (“PSUs”), and time-based restricted stock units.

Nearly 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 discounts on outstanding grants with post-vesting holding restrictions 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.

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Performance-Based Awards

We have awarded performance-based restricted shares through 2020 to certain key employees and non-employee directors.

We have awarded performance-based restricted shares through 2020 to certain key employees.

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.

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The following table summarizes our unvested performance-based restricted shares and restricted stock unit grants as of December 31, 2021:

Beginning in 2021, we have awarded annually PSUs to certain key employees.

These PSUs vest over a three-year period based on the company's cumulative three-year dilutive earnings per share growth and annual adjusted gross profits growth.

These PSUs contain an upside opportunity of 200 percent of target contingent upon obtaining certain dilutive earnings per share and adjusted gross profits growth targets.

The following table summarizes activity related to our performance-based restricted shares and PSUs as of December 31, 2022:

Number of Restricted Shares and Restricted Stock Units Weighted Average

Grant Date Fair Value

Unvested at December 31, 2020 1,102,211 $ 67.29

Unvested as of December 31, 2021 407,642 $ 72.21

334,092 76.87

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Forfeitures ( 16,613 ) 70.84

Unvested at December 31, 2021 407,642 $ 72.21

Unvested as of December 31, 2022 517,808 $ 76.89

________________________________

(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:

(1) Amount represents PSU grants at target.

(2) Amount represents incremental shares issuable for achieving 200 percent upside upon meeting certain adjusted gross profits targets in 2022.

The following table summarizes unvested PSUs by vesting period at target:

First Vesting Date Last Vesting Date Performance Shares and Stock Units

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December 31, 2022 December 31, 2024 294,928 76.74 269,100

December 31, 2021 December 31, 2025 285,765 74.91 256,618

556,452 $ 75.85 517,808

________________________________

(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.

(1) Amount shown is the weighted average grant date fair value of PSUs granted, net of forfeitures.

We granted an additional 272,455 performance-based restricted stock units at target in February 2023.

These awards have a weighted average grant date fair value of $ 92.15 and will vest over a three-year period based upon achieving certain cumulative three-year dilutive earnings per share, adjusted gross profits, and adjusted operating margin percentage targets.

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.

We award time-based restricted stock units to certain key employees.

Time-based awards granted through 2020 vest over a five-year period.

Beginning in 2021, we have granted annually time-based awards that vest over a three-year period primarily based on the passage of time and the employee's continued employment.

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

The following table summarizes our unvested time-based restricted share and restricted stock unit grants as of December 31, 2022:

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Grant Date Fair Value

Unvested at December 31, 2020 598,039 $ 60.24

Unvested as of December 31, 2021 763,481 $ 69.42

Granted 745,689 77.55

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Forfeitures ( 51,141 ) 72.88

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.

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Unvested as of December 31, 2022 889,412 $ 74.26

We granted an additional 688,341 time-based restricted stock units in February 2023.

These awards have a weighted average grant date fair value of $ 92.74 and will vest over a three-year period.

A summary of the fair value of stock awards vested (in thousands):

2022 $ 74,186

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.

As of December 31, 2022, there was unrecognized compensation expense of $ 119.0 million related to previously granted stock awards assuming maximum achievement is obtained on our performance-based awards.

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

EMPLOYEE STOCK PURCHASE PLAN.

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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.

As of December 31, 2022, we had 7,409,198 shares remaining under the share repurchase authorization.

The activity under these authorizations is as follows (dollar amounts in thousands):

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Annual discretionary contributions may also be made to the plan.

Defined contribution plan expense, including matching contributions, was approximately (in thousands):

Defined contribution plan expense, including matching contributions, is as follows (in thousands):

2022 $ 59,259

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LEASE COMMITMENTS.

We maintain operating leases for office space, warehouses, office equipment, and a small number of intermodal containers.

We maintain operating leases for office space, warehouses, office equipment, trailers, and a small number of intermodal containers.

See Note 11, Leases , for further information.

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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, 2022.

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On June 3, 2021, we acquired all of the outstanding shares of Combinex Holding B.V.

(“Combinex”) to strengthen our European road transportation presence.

(“Combinex”) to strengthen our European surface transportation presence.

Total purchase consideration, net of cash acquired was $ 14.7 million, which was paid in cash.

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Net assets acquired $ 222,718

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

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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.

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

The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies.

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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.

NAST provides freight transportation services across North America through a network of offices in the U.S., Canada, and Mexico.

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

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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.

Robinson Fresh provides sourcing services including the buying, selling, and/or marketing of fresh fruits, vegetables, and other value-added perishable items.

Managed Services provides Transportation Management Services, or Managed TMS ® .

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3,304,480 1,507,913 1,142,171 5,954,564

Average headcount 6,764 5,071 3,926 15,761

Average employee headcount 7,365 5,712 4,524 17,601

NAST Global Forwarding All Other and Corporate Consolidated

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3,349,578 2,843,239 835,295 7,028,112

Average headcount 6,811 4,708 3,600 15,119

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Average employee headcount 6,764 5,071 3,926 15,761

NAST Global Forwarding All Other and Corporate Consolidated

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2,946,409 1,392,411 805,438 5,144,258

Average headcount 7,354 4,766 3,431 15,551

Average employee headcount 6,811 4,708 3,600 15,119

________________________________

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Total revenues

United States $ 19,494,969 $ 13,896,382 $ 13,143,522

$ 20,696,448 $ 19,494,969 $ 13,896,382

Other locations 4,000,177 3,607,169 2,310,724

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Long-lived assets

United States $ 587,339 $ 551,511 $ 489,129

$ 751,984 $ 587,339 $ 551,511

Other locations 142,529 151,866 163,860

Total long-lived assets $ 894,513 $ 739,205 $ 715,371

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REVENUE FROM CONTRACTS WITH CUSTOMERS

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— — 1,180,241 1,180,241

$ 14,507,917 $ 6,729,790 $ 1,864,431 $ 23,102,138

Total $ 15,827,467 $ 6,812,008 $ 2,057,150 $ 24,696,625

Twelve Months Ended December 31, 2021

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— — 1,055,564 1,055,564

$ 11,312,553 $ 3,100,525 $ 1,794,028 $ 16,207,106

Total $ 14,507,917 $ 6,729,790 $ 1,864,431 $ 23,102,138

Twelve Months Ended December 31, 2020

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— — 1,059,544 1,059,544

$ 11,283,692 $ 2,327,913 $ 1,697,903 $ 15,309,508

Total $ 11,312,553 $ 3,100,525 $ 1,794,028 $ 16,207,106

________________________________

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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.

Approximately five percent, five percent, and seven percent of our total revenues for the twelve months ended December 31, 2022, 2021, and 2020, 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.

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Approximately two percent of our total revenues for the twelve months ended December 31, 2022, 2021, and 2020, 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.

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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.

Our lease agreements consist primarily of operating leases for office space, warehouses, office equipment, trailers, 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.

These contracts typically have a term of twelve 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.

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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 December 31, 2022.

Information regarding lease expense, remaining lease term, discount rate, and other select lease information is presented below as of December 31, 2022 and 2021, and for the twelve months ended December 31, 2022 and 2021 (dollars in thousands):

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161,886 52,931 95,005

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As of December 31,

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________________________________

(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.

(1) The weighted average remaining lease term is significantly impacted by a 15 -year lease related to office space in Chicago, IL, which commenced in 2018.

Excluding this lease, the weighted average remaining lease term of our agreements is 5.3 years.

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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.

Our allowance for credit losses is computed using a number of factors including our historical credit loss experience, customer aging trends, 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:

A rollforward of our allowance for credit losses on our accounts receivable balance is presented below for the twelve months ended December 31, 2021 and 2022 (in thousands):

Balance, December 31, 2020 $ 38,113

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Balance, December 31, 2021 41,542

Provision ( 3,442 )

Write-offs ( 9,351 )

Balance, December 31, 2022 $ 28,749

Recoveries of amounts previously written off were not significant for the twelve months ended December 31, 2022.

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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.

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The recorded balance as of December 31, 2022 and 2021, was $ 88.9 million and $ 61.1 million, respectively, and is comprised solely of foreign currency adjustments, including foreign currency translation.

Other comprehensive loss was $ 27.7 million for the twelve months ended December 31, 2022, driven primarily by fluctuations in the Yuan, Singapore Dollar, and Australian Dollar.

Other comprehensive loss was $ 15.1 million for the twelve months ended December 31, 2021, driven primarily by fluctuations in the Singapore Dollar and Australian Dollar.

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.

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For the twelve months ended December 31, 2022, there were no recently issued or newly adopted accounting pronouncements that had, or are expected to have, a material impact to our consolidated financial statements.

RESTRUCTURING

In 2022, we announced organizational changes to support our enterprise strategy of accelerating our digital transformation and productivity initiatives.

We recognized restructuring charges of $ 36.7 million related to cost saving initiatives including workforce reductions and reprioritizing our investments in technology.

For severance and other operating expenses related to restructuring activities, we paid $ 2.7 million in cash in 2022 with nearly all the remaining $ 19.0 million expected to be paid in 2023.

A summary of the restructuring charges recognized is presented below (in thousands):

Twelve Months Ended December 31,

Severance (1)

Other selling, general, and administrative expenses (2)

Other personnel expenses (1)

Total $ 36,684

________________________________

(1) Amounts are included within personnel expenses in our consolidated statement of operations.

(2) We recognized expense of $ 14.8 million related to the impairment of certain capitalized internally developed software projects and $ 0.4 million related other miscellaneous exit costs within other selling, general, and administrative expenses in our consolidated statement of operations.

The following table summarizes restructuring charges by reportable segment for the twelve months ended December 31, 2022 ($ in thousands):

NAST Global Forwarding All Other and Corporate Consolidated

Personnel expenses $ 6,323 $ 3,831 $ 11,380 $ 21,534

Other selling, general, and administrative expenses 3,175 3,174 8,801 15,150

The following table summarizes restructuring reserves included in our consolidated balance sheet as of December 31, 2022:

Accrued Severance and Other Personnel Expenses Other Selling, General, and Administrative Expenses Total

Balance, December 31, 2021 $ — $ — $ —

Restructuring charges 21,534 15,150 36,684

Cash payments ( 2,558 ) ( 94 ) ( 2,652 )

Settled non-cash — ( 15,056 ) ( 15,056 )

Balance, December 31, 2022 $ 18,976 $ — $ 18,976

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data