SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission File Number
000-23189
C.H. ROBINSON WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 41-1883630 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 8100 Mitchell Road, Eden Prairie, Minnesota | 55344-2248 | |
| (Address of principal executive offices) | (Zip Code) | |
(952) 937-8500
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act). Yes x No ¨
As of October 31, 2004, the number of outstanding shares of the registrant’s common stock was 85,318,445.
PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(unaudited)
| September 30, 2004 |
December 31, 2003 (1) |
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| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 187,625 | $ | 198,513 | ||||
| Available-for-sale securities |
46,111 | 45,736 | ||||||
| Receivables, net of allowance for doubtful accounts of $25,578 and $23,569 |
548,459 | 457,455 | ||||||
| Deferred tax asset |
8,543 | 9,535 | ||||||
| Prepaid expenses and other |
5,602 | 6,090 | ||||||
| Total current assets |
796,340 | 717,329 | ||||||
| PROPERTY AND EQUIPMENT, net |
41,736 | 25,625 | ||||||
| GOODWILL, net |
163,193 | 155,070 | ||||||
| INTANGIBLE AND OTHER ASSETS, net |
10,810 | 10,125 | ||||||
| Total assets |
$ | 1,012,079 | $ | 908,149 | ||||
| LIABILITIES AND STOCKHOLDERS’ INVESTMENT |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ | 336,511 | $ | 311,927 | ||||
| Accrued expenses – |
||||||||
| Compensation and profit-sharing contribution |
47,903 | 46,582 | ||||||
| Income taxes and other |
28,214 | 22,692 | ||||||
| Total current liabilities |
412,628 | 381,201 | ||||||
| LONG TERM LIABILITIES: |
||||||||
| Deferred tax liability |
6,125 | 5,598 | ||||||
| Non-qualified deferred compensation obligation |
2,643 | 2,603 | ||||||
| Total liabilities |
421,396 | 389,402 | ||||||
| STOCKHOLDERS’ INVESTMENT: |
||||||||
| Preferred stock, $0.10 par value, 20,000 shares authorized; no shares issued or outstanding |
— | — | ||||||
| Common stock, $0.10 par value, 130,000 shares authorized; 85,783 and 85,762 shares issued, 85,287 and 85,304 shares outstanding |
8,528 | 8,530 | ||||||
| Additional paid-in capital |
170,873 | 174,009 | ||||||
| Retained earnings |
472,683 | 404,750 | ||||||
| Deferred compensation |
(39,873 | ) | (52,285 | ) | ||||
| Cumulative other comprehensive loss |
(1,348 | ) | (363 | ) | ||||
| Treasury stock at cost (496 and 458 shares) |
(20,180 | ) | (15,894 | ) | ||||
| Total stockholders’ investment |
590,683 | 518,747 | ||||||
| Total liabilities and stockholders’ investment |
$ | 1,012,079 | $ | 908,149 | ||||
| (1) | The December 31, 2003 balance sheet has been restated for retroactive adoption of the fair value recognition provisions of SFAS No. 123, Accounting for Stock Based Compensation, as discussed in Note 2. |
The accompanying notes are an integral part of these condensed consolidated balance sheets.
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C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share data)
(unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||
| 2004 |
2003 (1) |
2004 |
2003 (1) | |||||||||||
| GROSS REVENUES |
||||||||||||||
| Transportation |
$ | 943,256 | $ | 720,571 | $ | 2,587,383 | $ | 2,085,347 | ||||||
| Sourcing |
172,026 | 191,249 | 535,513 | 563,865 | ||||||||||
| Information Services |
8,524 | 7,518 | 24,621 | 22,076 | ||||||||||
| Total gross revenues |
1,123,806 | 919,338 | 3,147,517 | 2,671,288 | ||||||||||
| COST OF TRANSPORTATION, PRODUCTS AND HANDLING |
||||||||||||||
| Transportation |
793,108 | 605,221 | 2,173,179 | 1,741,047 | ||||||||||
| Sourcing |
158,525 | 178,296 | 494,526 | 525,304 | ||||||||||
| Total cost of transportation, products and handling |
951,633 | 783,517 | 2,667,705 | 2,266,351 | ||||||||||
| GROSS PROFITS |
172,173 | 135,821 | 479,812 | 404,937 | ||||||||||
| SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES |
||||||||||||||
| Personnel expenses |
85,978 | 69,178 | 244,777 | 207,999 | ||||||||||
| Other selling, general, and administrative expenses |
25,184 | 21,755 | 74,336 | 66,293 | ||||||||||
| Total selling, general, and administrative expenses |
111,162 | 90,933 | 319,113 | 274,292 | ||||||||||
| INCOME FROM OPERATIONS |
61,011 | 44,888 | 160,699 | 130,645 | ||||||||||
| INVESTMENT AND OTHER INCOME |
||||||||||||||
| Interest income and other |
637 | 283 | 1,981 | 1,494 | ||||||||||
| Non-qualified deferred compensation investment (loss) gain |
(80 | ) | 61 | (49 | ) | 244 | ||||||||
| Total investment and other income |
557 | 344 | 1,932 | 1,738 | ||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES |
61,568 | 45,232 | 162,631 | 132,383 | ||||||||||
| PROVISION FOR INCOME TAXES |
24,219 | 18,020 | 63,932 | 52,810 | ||||||||||
| NET INCOME |
37,349 | 27,212 | 98,699 | 79,573 | ||||||||||
| OTHER COMPREHENSIVE (LOSS) INCOME: |
||||||||||||||
| Foreign currency translation adjustment |
492 | 211 | (1,287 | ) | 1,213 | |||||||||
| COMPREHENSIVE INCOME |
$ | 37,841 | $ | 27,423 | $ | 97,412 | $ | 80,786 | ||||||
| BASIC NET INCOME PER SHARE |
$ | 0.44 | $ | 0.32 | $ | 1.17 | $ | 0.94 | ||||||
| DILUTED NET INCOME PER SHARE |
$ | 0.43 | $ | 0.32 | $ | 1.14 | $ | 0.93 | ||||||
| BASIC WEIGHTED AVERAGE SHARES OUTSTANDING |
84,616 | 84,401 | 84,638 | 84,375 | ||||||||||
| DILUTIVE EFFECT OF OUTSTANDING STOCK AWARDS |
1,932 | 1,827 | 1,870 | 1,618 | ||||||||||
| DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING |
86,548 | 86,228 | 86,508 | 85,993 | ||||||||||
| (1) | The three months and the nine months ended September 30, 2003 results have been restated for retroactive adoption of the fair value recognition provisions of SFAS No. 123, Accounting for Stock Based Compensation, as discussed in Note 2. |
The accompanying notes are an integral part of these condensed consolidated statements.
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C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
| Nine Months Ended September 30, |
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| 2004 |
2003 (1) |
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| OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 98,699 | $ | 79,573 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities– |
||||||||
| Depreciation and amortization |
8,461 | 8,142 | ||||||
| Other non-cash expenses |
21,982 | 16,055 | ||||||
| Changes in operating elements– |
||||||||
| Receivables |
(96,707 | ) | (49,859 | ) | ||||
| Prepaid expenses and other |
498 | (1,235 | ) | |||||
| Accounts payable |
23,144 | 24,422 | ||||||
| Accrued compensation and profit sharing contribution |
1,303 | 2,612 | ||||||
| Accrued income taxes and other |
5,001 | (4,576 | ) | |||||
| Net cash provided by operating activities |
62,381 | 75,134 | ||||||
| INVESTING ACTIVITIES: |
||||||||
| Purchases of property and equipment, net |
(22,575 | ) | (4,291 | ) | ||||
| Insurance proceeds |
1,590 | |||||||
| Purchases of available for sale securities, net |
(381 | ) | (403 | ) | ||||
| Cash paid for acquisitions, net |
(9,112 | ) | (500 | ) | ||||
| Other |
(1,050 | ) | (1,732 | ) | ||||
| Net cash used for investing activities |
(31,528 | ) | (6,926 | ) | ||||
| FINANCING ACTIVITIES: |
||||||||
| Common stock issued |
9,364 | 8,258 | ||||||
| Common stock repurchased |
(19,457 | ) | (11,500 | ) | ||||
| Common stock dividends |
(30,648 | ) | (20,277 | ) | ||||
| Net cash used for financing activities |
(40,741 | ) | (23,519 | ) | ||||
| Effect of exchange rates on cash |
(1,000 | ) | 1,213 | |||||
| Net (decrease) increase in cash and cash equivalents |
(10,888 | ) | 45,902 | |||||
| CASH AND CASH EQUIVALENTS, beginning of period |
198,513 | 132,999 | ||||||
| CASH AND CASH EQUIVALENTS, end of period |
$ | 187,625 | $ | 178,901 | ||||
| (1) | The September 30, 2003 cash flow has been restated for retroactive adoption of the fair value recognition provisions of SFAS No. 123, Accounting for Stock Based Compensation, as discussed in Note 2. |
The accompanying notes are an integral part of these condensed consolidated statements.
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C.H. ROBINSON WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| 1. | General |
Basis of Presentation
C.H. Robinson Worldwide, Inc. and our subsidiaries (“the Company,” “we,” “us,” or “our”) are a global provider of multimodal transportation services and logistics solutions through a network of 170 branch offices operating in North America, Europe, South America, and Asia. The condensed consolidated financial statements include the accounts of C.H. Robinson Worldwide, Inc. and our majority owned and controlled subsidiaries. Our minority interests in subsidiaries are not significant. All intercompany transactions and balances have been eliminated in the consolidated financial statements.
The condensed consolidated financial statements, which are unaudited, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In management’s opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The results of operations for the three and nine months ended September 30, 2004 and 2003 are not necessarily indicative of results to be expected for the entire year. Pursuant to SEC rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted from these statements. The condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial sta