(State or other jurisdiction of

incorporation or organization)

(Address of principal executive officers, including zip code)

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 par value	CHRW	Nasdaq Global Select Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Emerging Growth Company

☐

~~Large accelerated filer~~

☒

~~Accelerated filer~~

☐

~~Emerging Growth Company~~

☐

Non-accelerated filer

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August 6, 2019,~~April 29, 2020, the number of shares outstanding of the registrant’s Common Stock, par value $0.10 per share, was ~~135,377,884.~~134,609,978.

C.H. ROBINSON WORLDWIDE, INC.

(Inunaudited, in thousands, except per share data)

See accompanying notes to the condensed consolidated financial statements.

(unaudited, in thousands except per share data)

See accompanying notes to the condensed consolidated financial statements.

(unaudited, in thousands, except per share data)

See accompanying notes to the condensed consolidated financial statements.

(unaudited, in ~~thousands, unaudited)~~thousands)

See accompanying notes to the condensed consolidated financial statements.

NOTE 1. 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 operating through a network of offices located 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.

On January 1, 2019, we reorganized our enterprise transportation services structure to combine our North American Surface Transportation (“NAST”) and Robinson Fresh transportation networks. The newly combined transportation network will be managed by and reported under the NAST reportable segment. Our reportable segments are NAST and Global Forwarding with all other segments included in All Other and Corporate. ~~We have determined that the remaining Robinson Fresh segment no longer meets the requirements of a reportable segment. Robinson Fresh will be included in the~~The All Other and Corporate reportable segment ~~with~~includes Robinson Fresh, Managed Services, Other Surface Transportation outside of North America, and other miscellaneous revenues and unallocated corporate expenses. ~~Prior period information has been reclassified to conform with this presentation.~~ For financial information concerning our reportable segments, refer to Note 9, Segment Reporting.

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 our opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

Consistent with SEC rules and regulations, we have condensed or omitted certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States. You should read the condensed consolidated financial statements and related notes in conjunction with the consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

RECENTLY ADOPTED ~~ACCOUNTING STANDARDS~~

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02,~~ ~~Leases(Topic 842)~~. This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use lease asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing, and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-11, ~~Leases (Topic 842)~~: Targeted Improvements, which provides another transition method no longer requiring application to previously reported periods. Therefore, prior period balances will not be restated. We adopted Topic 842 during the first quarter of 2019 by recognizing right-of-use lease assets and lease liabilities of approximately $265.4 million and $273.3 million, respectively, on January 1, 2019. The adoption of this standard did not have a significant impact on our consolidated results of operations or consolidated statements of cash flows. Refer to Note 11, ~~Leases, for further information.~~

~~In February 2018, the FASB issued ASU 2018-02,~~ ~~Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income~~, which amends existing guidance for reporting comprehensive income to reflect changes resulting from the Tax Cuts and Jobs Act of 2017 (“Tax Act”). The amendment provides the option to reclassify stranded tax effects resulting from the Tax Act within accumulated other comprehensive income (“AOCI”) to retained earnings. This amendment became effective for us on January 1, 2019. The adoption of this standard did not have a material impact on our consolidated financial statements and disclosures.

~~RECENTLY ISSUED~~ ACCOUNTING STANDARDS

In June 2016, the FASB issued ASU (“Accounting Standards Update”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and in November 2018 issued a subsequent amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. This update ~~significantly~~ changes how entities ~~will~~ measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The update ~~will replace today’s~~replaces the historical “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. ~~ASU 2018-19 will affect~~The update affects loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope of this amendment that have the contractual right to receive cash. ~~This update is effective for fiscal years and interim periods beginning after December 15, 2019, and is effective for our fiscal year beginning~~We adopted this standard on January 1, 2020. We ~~are evaluating~~have updated our allowance for credit losses, formerly described as our allowance for doubtful accounts, significant accounting policy below as a result of adopting the new standard. The impact of ~~the new standard on~~adoption was not material to our consolidated financial position, results of operations, ~~and~~or cash flows.

RECENTLY ISSUED ACCOUNTING STANDARDS

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 the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the effects that adoption of this guidance will have on the consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. We have ~~expanded~~updated these policies below to effect the adoption of Accounting Standards Codification (“ASC”) ~~842~~326 in the first quarter of ~~2019.~~2020.

~~RIGHT-OF-USE LEASE ASSETS.~~ ALLOWANCE FOR CREDIT LOSSES.~~Right-of-use lease~~ Accounts receivable and contract assets are ~~recognized~~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 ~~lease commencement~~credit rating and ~~represent~~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 ~~right~~historical write-off experience and apply it to ~~use an underlying asset~~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 ~~lease term.~~expected credit loss allowance.

~~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.~~

NOTE 2. GOODWILL AND OTHER INTANGIBLE ASSETS

The change in carrying amount of goodwill is as follows (in thousands):

⁽¹⁾ ~~Amounts have been reclassified related to the reorganization of the NAST and Robinson Fresh transportation networks discussed in Note 9,~~ ~~Segment Reporting~~.

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 a result~~We considered whether there were any changes in circumstances indicating that our goodwill might be impaired, including consideration of the ~~segment reorganization discussed in Note 9,~~ ~~Segment Reporting, we determined~~impacts of the ~~fair value of each of~~novel coronavirus (“COVID-19”) on financial markets and our ~~reporting units to further support our qualitative assessment~~business operations, and determined the more likely than not criteria had not been met, and therefore a Step One Analysis was not required as of ~~June 30, 2019.~~March 31, 2020.

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

Table of Contents

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

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Amortization expense $ 9,675
$ 9,196
$ 18,968
$ 18,595


	Three Months Ended March 31,
	2020		2019
Amortization expense	$	8,376	$	9,293

~~Definite-lived~~Finite-lived intangible assets, by reportable segment, as of ~~June 30, 2019,~~March 31, 2020, will be amortized over their remaining lives as follows (in thousands):


										NAST		Global Forwarding		All Other and Corporate		Total
	NAST		Global Forwarding		All Other and Corporate		Total
Remainder of 2019	$	3,907	$	15,040	$	310	$	19,257
2020	250		28,071		620		28,941
Remaining 2020									Remaining 2020	$	6,070	$	19,111	$	450	$	25,631
2021	250		14,551		620		15,421		2021	8,092		13,076		600		21,768
2022	250		14,551		620		15,421		2022	8,092		13,076		600		21,768
2023	250		11,938		620		12,808		2023	8,092		10,969		600		19,661
2024									2024	8,014		3,498		600		12,112
Thereafter	164		6,884		1,498		8,546		Thereafter	17,024		2,723		851		20,598
Total							$	100,394	Total							$	121,538

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 no0 Level 3 assets or liabilities as of and during the periods ended ~~June 30, 2019,~~March 31, 2020, and December 31, ~~2018.~~2019. There were no transfers between levels during the period.

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
June 30, 2019 December 31, 2018 Maturity June 30, 2019 December 31, 2018
Revolving credit facility — % 3.64 % October 2023 $ —
$ 5,000
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⁾
3.05 % 3.15 % December 2020 161,823
249,744
Senior Notes ⁽¹⁾
4.20 % 4.20 % April 2028 592,026
591,608
Total debt 1,253,849
1,346,352
Less: Current maturities and short-term borrowing —
(5,000 )
Long-term debt $ 1,253,849
$ 1,341,352


	Average interest rate as of							Carrying value as of
	March 31, 2020		December 31, 2019		Maturity	March 31, 2020		December 31, 2019
Revolving credit facility	1.94	%	—	%	October 2023	$	71,000	$	—
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⁾	1.64	%	2.41	%	December 2020	249,917		142,885
Senior Notes ⁽¹⁾	4.20	%	4.20	%	April 2028	592,660		592,448
Total debt						1,413,577		1,235,333
Less: Current maturities and short-term borrowing						(320,917)		(142,885)
Long-term debt						$	1,092,660	$	1,092,448

⁽¹⁾Net of unamortized discounts and issuance costs.

SENIOR UNSECURED REVOLVING CREDIT FACILITY

We have a senior unsecured revolving credit facility (the "Credit Agreement")~~. On October 24, 2018, the Credit Agreement was amended to increase the~~ with a total availability ~~from $900 million to~~of $1 billion and ~~extend the~~a maturity date ~~from December 31, 2019, to~~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~~applicable LIBOR plus ~~a specified margin). As of June 30, 2019, the variable rate equaled LIBOR plus 1.13~~1.125 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.

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 ~~$527.7~~$511.7 million at ~~June 30, 2019.~~March 31, 2020. We estimate the fair value of the Notes primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering our own risk. If the Notes were recorded at fair value, they would be classified as 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 Company, Inc., a Minnesota corporation and an indirect wholly-owned subsidiary of the company.

U.S. TRADE ACCOUNTS RECEIVABLE SECURITIZATION

~~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~~We have a receivables securitization facility (the “Receivables Securitization Facility”)~~. On~~ that currently expires on December 17, ~~2018, we entered into an amended Receivables Securitization Facility with Wells Fargo Bank, N.A. and Bank of America, N.A. to extend~~2020, unless extended by the ~~maturity date from April 26, 2019, to December 17, 2020.~~parties. The Receivables Securitization Facility is based on the securitization of certain of our U.S. trade accounts receivable and provides funding of up to $250 million. The interest rate on borrowings under the Receivables Securitization Facility is based on ~~30-day~~one-month LIBOR plus ~~a margin.~~0.65 percent. There is also a commitment fee we are required to pay on any unused portion of the facility. ~~The Receivables Securitization Facility expires on December 17, 2020, 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, therefore, we consider these borrowings to be a Level 2 financial liability.

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

On April 9, 2018, we issued senior unsecured notes ("Senior Notes") through a public offering. 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. ~~The proceeds from the Senior Notes were utilized to pay down the balance on our Credit Agreement.~~ 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 ~~$640.9~~$648.5 million as of ~~June 30, 2019,~~March 31, 2020, based primarily on the market prices quoted from external sources. The carrying value of the Senior Notes was ~~$592.0~~$592.7 million as of ~~June 30, 2019.~~March 31, 2020. 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 and consolidate, or 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.

As of ~~June 30, 2019,~~March 31, 2020, we were in compliance with all of the covenants under the Credit Agreement, Note Purchase Agreement, Receivables Securitization Facility, and Senior Notes.

NOTE 5. INCOME TAXES

C.H. Robinson Worldwide, Inc., and its 80 percent (or more) owned U.S. subsidiaries file a consolidated federal 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 2012. We are currently under an Internal Revenue Service audit for the 2015 tax year.

Our effective tax rate for the three months ended ~~June 30,~~March 31, 2020, and 2019 ~~and 2018~~ was ~~23.4~~17.1 percent and ~~25.6 percent, respectively, and our effective tax rate for the six months ended June 30, 2019, and 2018 was 22.7 percent and 23.6~~22.0 percent, respectively. The effective income tax rate for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, was ~~higher~~lower than the statutory federal income tax rate primarily due to ~~state income taxes, net of federal benefit, and foreign income taxes, but was partially offset by~~ the tax impact of share-based payment ~~awards. Additionally,~~awards, which reduced the ~~six~~effective tax rate by 3.6 percentage points, and foreign tax impacts recorded in the three months ended ~~June 30, 2018, included net income tax expense of $1.0 million related to adjustments to~~March 31, 2020.

In 2019 we removed our assertion that the ~~one-time transition tax required as part of the Tax Act. We have asserted that we will indefinitely reinvest~~unremitted earnings of foreign subsidiaries ~~to support expansion of our international business.~~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 ~~$16.5~~$3.9 million as of ~~June 30, 2019.~~March 31, 2020.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). This law included provisions which may benefit us in two primary ways. First, the CARES Act allows for a deferral of the employer share of federal payroll taxes otherwise due through December 31, 2020. 50 percent of the deferred amount is 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 our business without any interest cost. We are in the process of determining the amount of cash to be made available as a result of this provision. Second, the CARES Act 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. We are in the process of determining the amount of any such credit.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent and requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries and adding new rules for Global Intangible Low-tax Income (“GILTI”) and Foreign Derived Intangible Income (“FDII”) ~~were enacted as part of the Tax Act on December 22, 2017.~~. Although enacted more than ~~a year~~two years ago, regulatory guidance on the application of FDII has not been finalized. We have included the tax impact of both GILTI and FDII in our income tax expense for the ~~six~~three months ended ~~June 30,~~March 31, 2020, and 2019, based on our understanding of the rules available at the time of this filing. However, our calculations could be impacted by future regulations as guidance is finalized. We will continue to monitor any new guidance related to FDII and determine any impact it may have on our calculations.

As of ~~June 30, 2019,~~March 31, 2020, we have ~~$39.6~~$38.6 million of unrecognized tax benefits and related interest and penalties. It is possible the amount of unrecognized tax benefit could change in the next 12 months as a result of a lapse of the statute of limitations and settlements with taxing authorities. The total liability for unrecognized tax benefits is expected to decrease by approximately ~~$3.0~~$2.5 million in the next 12 months due to the lapsing of ~~statutes.~~statutes of limitations. 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 2013. We are currently under an Internal Revenue Service audit for 2015, 2016 and 2017 tax years.

NOTE 6. 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 of our total compensation expense recognized in our condensed consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands):

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 ~~2013 Equity Incentive~~ 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. A maximum of 17,041,803 shares can be granted under this plan following the amendment and restatement. Approximately ~~5,207,623~~2,940,625 shares were available for stock awards under the plan as of ~~June 30, 2019.~~March 31, 2020. Shares subject to awards that expire or are canceled without delivery of shares or that are settled in cash generally become available again for issuance under the plan.

Stock Options - We have awarded ~~time-based and performance-based~~ stock options to certain key employees. These options are subject to certain vesting requirements over a five-year period based on the company’s earnings growth or on the employees continued employment. Any options remaining unvested at the end of the five-year vesting period are forfeited to the company. Although participants can exercise options via a stock swap exercise, we do not issue reloads (restoration options) on the grants.

The fair value of these options is established based on the market price on the date of grant, discounted for post-vesting holding restrictions, calculated using the Black-Scholes option pricing model. Changes in measured stock price volatility and interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards. As of ~~June 30, 2019,~~March 31, 2020, unrecognized compensation expense related to stock options was ~~$48.4~~$58.3 million. The amount of future expense to be recognized will be based on the passage of time and the ~~company’s earnings growth, and certain other conditions.~~employees' continued employment.

~~Full Value~~We granted 1,660,548 stock options on February 5, 2020. These awards had a weighted average exercise price of $72.74 and a weighted average grant date fair value of $13.88. These awards will vest over a five-year period with a first vesting date of December 31, 2020.

Stock Awards - We have awarded performance-based restricted shares and restricted stock units and time-based restricted stock units to certain key employees and non-employee directors. ~~These~~Performance-based awards are subject to certain vesting requirements over a ~~five-year~~five-year period, based on our earnings growth. Time-based awards vest primarily based on the employee's continued employment. The awards also 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 1512 percent to 2122 percent and are calculated using the Black-Scholes option pricing model-protective put method. Changes in measured stock price volatility and interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards.

We ~~have also awarded~~granted 405,776 performance-based restricted shares and restricted stock units and 329,586 time-based restricted shares and restricted stock units ~~to certain key employees that vest primarily based~~ on ~~their continued employment. The~~February 5, 2020. These awards had a weighted average grant date fair value of ~~these awards is established by the market price on the~~$59.34 and will vest over a five-year period with a first vesting date of ~~the grant, discounted for post-vesting holding restrictions, and is being expensed over the vesting period of the award.~~December 31, 2020.

We have also issued restricted stock units to certain key employees and non-employee directors, which are fully vested upon issuance. These units contain restrictions on the awardees’ ability to sell or transfer vested units for a specified period of time. The fair value of these units is established using the same method discussed above. These grants have been expensed during the year they were earned.

As of ~~June 30, 2019,~~March 31, 2020, there was unrecognized compensation expense of ~~$100.2~~$136.4 million related to previously granted full value awards. The amount of future expense to be recognized will be based on the passage of time, the company’s earnings growth, and certain other conditions.

Employee Stock Purchase Plan - Our 1997 Employee Stock Purchase Plan ("ESPP") allows our employees to contribute up to $10,000 of their annual cash compensation to purchase company stock. Purchase price is determined using the closing price on the last day of each quarter discounted by 15 percent. Shares vest immediately. The following is a summary of the employee stock purchase plan activity:


Three Months Ended March 31, 2020
Shares purchased by employees	Aggregate cost to employees		Expense recognized by the company
98,839	$	5,561,671	$	981,471

Three Months Ended June 30, 2019
Shares purchased
by employees

Aggregate cost
to employees

Expense recognized
by the company
53,503
$ 3,621,065
$ 639,011

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. For some legal proceedings, we have accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to our condensed consolidated financial position, results of operations, or cash flows. Because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the inconsistent treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings, we are often unable to estimate an amount or range of any reasonably possible additional losses. However, based upon our historical experience, the resolution of these proceedings is not expected to have a material effect on our consolidated financial position, results of operations, or cash flows.

NOTE 8. ACQUISITIONS

Prime Distribution 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.


Current assets	$	8,197
Property and equipment	7,356
Right-of-use lease assets	35,017
Other intangible assets	55,000
Goodwill	176,397
Total assets	281,967

Current liabilities	10,470
Lease liabilities	35,017
Deferred tax liabilities	13,375
Net assets acquired	$	223,105

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


	Estimated Life (years)
Customer relationships	7	$	55,000

There was $176.4 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 preliminary, subject to revision primarily related to certain potential post-closing and working capital adjustments, as final information was not available as of March 31, 2020. The goodwill will not be deductible for tax purposes. The acquisition was effective as of February 29, 2020, and therefore the results of operations of Prime Distribution have been included as part of the North American Surface Transportation segment in our consolidated financial statements since March 1, 2020.

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 ~~preliminary.~~complete. No goodwill was recognized for Italian tax purposes from the acquisition. The 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 ~~$44.1~~$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 ~~$24.6~~$26.4 million of goodwill recorded related to the acquisition of Space Cargo. The Space Cargo goodwill is a result of acquiring and retaining the Space Cargo workforce and expected synergies from integrating its business into ours. Purchase accounting is considered ~~preliminary.~~complete. No goodwill was recognized for Spanish tax purposes from the acquisition. The results of operations of Space Cargo have been included as part of the Global Forwarding segment in our consolidated financial statements since March 1, 2019.

NOTE 9. SEGMENT REPORTING

On January 1, 2019, we reorganized our enterprise transportation services structure to combine our NAST and Robinson Fresh transportation networks. The newly combined transportation network will be managed by and reported under the NAST reportable segment. We have determined that the remaining Robinson Fresh segment no longer meets the requirements of a reportable segment and will be included in the All Other and Corporate reportable segment. Prior period information has been reclassified to conform with this presentation. Our reportable 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. We identify ~~two~~2 reportable segments in addition to All Other and Corporate as ~~follows:~~summarized below:

•North American Surface Transportation—NAST provides freight transportation services across North America through a network of offices in the United States, Canada, and Mexico. The primary services provided by NAST include truckload, less than truckload (“LTL”), and intermodal.

•Global Forwarding—Global Forwarding provides global logistics services through an international network of offices in North America, Asia, Europe, Oceania, and South America and also contracts with independent agents worldwide. The primary services provided by Global Forwarding include ocean freight services, airfreight services, and customs brokerage.

•NAST provides freight transportation services across North America through a network of offices in the United States, Canada, and Mexico. The primary services provided by NAST include truckload, temperature-controlled transportation, LTL, and intermodal.

~~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 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 Europe Surface Transportation. Europe Surface Transportation provides services similar to NAST across Europe.

The internal reporting of segments is defined, based in part, on the reporting and review process used by our chief operating decision maker (“CODM”), our Chief Executive Officer. 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 reportable segment to our CODM and do not believe they are a meaningful metric for evaluating the performance of our reportable segments.

Reportable segment information as of, and for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020, and 2019, ~~and 2018,~~ is as follows (dollars in thousands):

NAST Global Forwarding All Other and Corporate Consolidated
Three Months Ended June 30, 2019
Total revenues $ 2,872,053
$ 592,483
$ 444,304
$ 3,908,840
Net revenues 486,418
141,936
66,862
695,216
Income (loss) from operations 204,732
26,618
(3,815 ) 227,535
Depreciation and amortization 6,131
9,315
9,636
25,082
Total assets⁽¹⁾
2,685,477
1,014,235
984,397
4,684,109
Average headcount 7,533
4,770
3,409
15,712

NAST Global Forwarding All Other and Corporate Consolidated
Three Months Ended June 30, 2018⁽²⁾

Total revenues $ 3,163,185
$ 617,597
$ 495,255
$ 4,276,037
Net revenues 459,706
144,031
67,746
671,483
Income from operations 188,244
29,788
976
219,008
Depreciation and amortization 6,288
8,753
9,197
24,238
Total assets⁽¹⁾
2,692,908
861,080
899,296
4,453,284
Average headcount 7,401
4,736
3,092
15,229

Total assets⁽¹⁾

Six Months Ended June 30, 2018⁽²⁾

Total assets⁽¹⁾

⁽¹⁾ All cash and cash equivalents are included in All Other and Corporate.

⁽²⁾~~Amounts have been reclassified to reflect the segment reorganization announced in the first quarter of 2019.~~

NOTE ~~10:~~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 three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands):

Transportation and logistics services⁽¹⁾

Three Months Ended June 30, 2019
NAST Global Forwarding All Other and Corporate Total
Major Service Lines
Transportation and logistics services $ 2,872,053
$ 592,483
$ 174,076
$ 3,638,612
Sourcing —
—
270,228
270,228
Total $ 2,872,053
$ 592,483
$ 444,304
$ 3,908,840

Timing of Revenue Recognition
Performance obligations completed over time $ 2,872,053
$ 592,483
$ 174,076
$ 3,638,612
Performance obligations completed at a point in time —
—
270,228
270,228
Total $ 2,872,053
$ 592,483
$ 444,304
$ 3,908,840

Three Months Ended June 30, 2018
NAST Global Forwarding All Other and Corporate Total
Major Service Lines
Transportation and logistics services $ 3,163,185
$ 617,597
$ 172,357
$ 3,953,139
Sourcing —
—
322,898
322,898
Total $ 3,163,185
$ 617,597
$ 495,255
$ 4,276,037

Timing of Revenue Recognition
Performance obligations completed over time $ 3,163,185
$ 617,597
$ 172,357
$ 3,953,139
Performance obligations completed at a point in time —
—
322,898
322,898
Total $ 3,163,185
$ 617,597
$ 495,255
$ 4,276,037
⁽²⁾ Sourcing performance obligations are completed at a point in time.

Six Months Ended June 30, 2019
NAST Global Forwarding All Other and Corporate Total
Major Service Lines
Transportation and logistics services $ 5,668,837
$ 1,130,050
$ 344,657
$ 7,143,544
Sourcing —
—
516,506
516,506
Total $ 5,668,837
$ 1,130,050
$ 861,163
$ 7,660,050

Timing of Revenue Recognition
Performance obligations completed over time $ 5,668,837
$ 1,130,050
$ 344,657
$ 7,143,544
Performance obligations completed at a point in time —
—
516,506
516,506
Total $ 5,668,837
$ 1,130,050
$ 861,163
$ 7,660,050

Six Months Ended June 30, 2018
NAST Global Forwarding All Other and Corporate Total
Major Service Lines
Transportation and logistics services $ 6,071,604
$ 1,171,351
$ 347,824
$ 7,590,779
Sourcing —
—
610,585
610,585
Total $ 6,071,604
$ 1,171,351
$ 958,409
$ 8,201,364

Timing of Revenue Recognition
Performance obligations completed over time $ 6,071,604
$ 1,171,351
$ 347,824
$ 7,590,779
Performance obligations completed at a point in time —
—
610,585
610,585
Total $ 6,071,604
$ 1,171,351
$ 958,409
$ 8,201,364

We typically do not receive consideration and amounts are not due from our customer prior to the completion of our performance obligation and as such contract liabilities as of ~~June 30, 2019,~~March 31, 2020, and revenue recognized in the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ resulting from contract liabilities was not significant. Contract assets and accrued expenses-transportation expense fluctuate from period to period primarily based upon shipments in-transit at period end.

~~We adopted ASU 2016-02, Leases (Topic 842), as of January 1, 2019. Prior period information was not restated and continues to be presented under ASC 840,~~ ~~Leases~~. We elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to not reassess existing contracts to determine if they contain a lease and to carry forward their historical lease classification upon transition. In addition, we have made a policy election to not apply the guidance of ASC 842 to leases with a term of 12 months or less as allowed by the standard. These leases are recognized as expense on a straight-line basis over the lease term.

Adoption of the new standard resulted in the recording of right-of-use lease assets and lease liabilities of $265.4 million and $273.3 million, respectively, as of January 1, 2019. The adoption of this standard did not materially impact our consolidated statement of operations or consolidated statements of cash flows.

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. In addition, we have made a policy election to not apply the guidance of ASC 842 to leases with a term of 12 months or less as allowed by the standard. These leases are recognized as expense on a straight-line basis over the lease term.

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 at

commencement date at the present value of lease payments, including non-lease components, which consist primarily of common area maintenance charges. Right-of-use lease assets are also recognized at commencement date as the total lease liability plus prepaid rents and less any deferred rent liability that existed under ASC 840, Leases, upon transition. As most of our leases 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 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.

We do not have material lease agreements that have not yet commenced that are expected to create significant rights or obligations as of ~~June 30, 2019.~~March 31, 2020.

Information regarding lease expense, remaining lease term, discount rate, and other select lease information is presented below as of ~~June 30, 2019,~~March 31, 2020, and for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 (dollars in thousands):

Lease Costs Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Operating lease expense $ 16,957
$ 33,779
Short-term lease expense 3,076
5,417
Total lease expense $ 20,033
$ 39,196

Other Lease Information Six Months Ended June 30, 2019
Operating cash flows from operating leases $ 33,376
Right-of-use lease assets obtained in exchange for new lease liabilities 26,198

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

⁽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 ~~4.3~~4.9 years.

The maturity of lease liabilities as of ~~June 30, 2019,~~March 31, 2020, were as follows (in thousands):

Maturity of Lease Liabilities Operating Leases
Remaining 2019 $ 32,490
2020 61,449
2021 49,061
2022 35,940
2023 25,550
Thereafter 109,909
Total lease payments 314,399
Less: Interest (43,777 )
Present value of lease liabilities $ 270,622

~~Minimum future lease commitments under noncancelable lease agreements in excess of one year as of December 31, 2018, are as follows (in thousands):~~

2019 $ 53,675
2020 47,680
2021 36,832
2022 27,644
2023 19,406
Thereafter 81,465
Total lease payments $ 266,702

In addition to minimum lease payments, we are typically responsible under our lease agreements to pay our pro rata share of maintenance expenses, common charges, and real estate taxes of the buildings in which we lease space. Under ASC 842 we have elected to account for non-lease components such as common area maintenance and parking as a single lease component.

NOTE 12. ALLOWANCE FOR CREDIT LOSSES

We adopted ASU 2016-13, Financial Instruments (Topic 326), as of January 1, 2020. Prior period information was not restated and continues to be presented under guidance effective for those periods. Topic 326 changes how entities measure credit losses for certain financial assets including accounts receivable by replacing the historical “incurred loss” approach with an “expected loss” model. We have updated our significant accounting policy for allowance for credit losses as discussed in Note 1, Basis of Presentation.

Our allowance for credit losses is computed using a number of factors including our past credit loss experience, the aging of amounts due from our customers, our customers' credit ratings, in addition to other customer specific factors. We have also assessed the current macroeconomic environment, including the impact of COVID-19, to determine 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 three months ended March 31, 2020:


Balance, December 31, 2019	$	32,838
Provision	5,072
Write-offs	(5,438)
Balance, March 31, 2020	$	32,472

Recoveries of amounts previously written off were not significant for the three months ended March 31, 2020.

NOTE ~~12.~~13. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss is included in Stockholders' investment on our condensed consolidated balance sheets. The recorded balance at ~~June 30, 2019,~~March 31, 2020, and December 31, ~~2018,~~2019, was ~~$72.3~~$108.3 million and ~~$71.9~~$76.1 million, respectively. Accumulated other comprehensive loss is comprised solely of foreign currency adjustments, net of related income tax effects at ~~June 30, 2019,~~March 31, 2020, and December 31, ~~2018.~~2019. Other comprehensive loss was $32.2 million for the three months ended March 31, 2020, which consisted of foreign currency adjustments, including foreign currency translation, net of related income tax effects of $1.5 million.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and related notes.

FORWARD-LOOKING INFORMATION

Our quarterly report on Form 10-Q, including this discussion and analysis of our financial condition and results of operations and our disclosures about market risk, contains certain “forward-looking statements.” These statements represent our expectations, beliefs, intentions, or strategies concerning future events that, by their nature, involve risks and uncertainties. Forward-looking statements include, among others, statements about our future performance, the continuation of historical trends, the sufficiency of our sources of capital for future needs, the effects of acquisitions or dispositions, the expected impact of recently issued accounting pronouncements, and the outcome or effects of litigation. Risks that could cause actual results to differ materially from our current expectations include, but are not limited to, changes in economic conditions, including uncertain consumer demand; changes in market demand and pressures on the pricing for our services; changes due to catastrophic events including pandemics such as COVID-19, competition and growth rates within the third party logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers; our ability to successfully integrate the operations of acquired companies with our historic operations; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with operations outside of the United States; risks associated with the potential impact of changes in government regulations; risks associated with the produce industry, including food safety and contamination issues; fuel price increases or decreases, or fuel shortages; cyber-security related risks; the impact of war on the economy; changes to our capital structure; risks related to the elimination of LIBOR; and other risks and uncertainties detailed in our Annual and Quarterly Reports. Therefore, actual results may differ materially from our expectations based on these and other risks and uncertainties, including those described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the Securities and Exchange Commission on February ~~25, 2019.~~19, 2020 as well as the updates to these risk factors included in Part II—“Item 1A, Risk Factors,” herein.

Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update such statement to reflect events or circumstances arising after such date.

C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the largest third party logistics companies in the world. As a third party logistics provider, we enter into contractual relationships with a wide variety of transportation companies and utilize those relationships to efficiently and cost-effectively arrange the transport of our customers’ freight. We provide freight transportation services and logistics solutions to companies of all sizes, in a wide variety of industries. We operate through a network of offices in North America, Europe, Asia, Oceania, and South America. We have developed global transportation and distribution networks to provide transportation and supply chain services worldwide. As a result, we have the capability of facilitating most aspects of the supply chain on behalf of our customers.

~~Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018~~

Our consolidated total revenues decreased 8.6 percent to $3.9 billion in the second quarter of 2019 from $4.3 billion in the second quarter of 2018 due to a decrease in transportation revenues driven by decreased pricing and volumes in truckload and to a lesser extent decreased volumes in intermodal services. The decrease in truckload pricing and volumes reflects the current state of the North America truckload market which is experiencing weakening demand and excess capacity. Sourcing revenues decreased 16.3 percent to $270.2 million in the second quarter of 2019 from $322.9 million in the second quarter of 2018 which was due to lower pricing per case and lower case volume. Net revenues increased 3.5 percent to $695.2 million in the second quarter of 2019 from $671.5 million in the second quarter of 2018 driven by margin improvement in truckload. Net revenues is a Non-GAAP financial measure defined below. Income from operations increased 3.9 percent to $227.5 million in the second quarter of 2019 from $219.0 million in the second quarter of 2018 driven by the increase in net revenues and was slightly offset by an increase in other selling, general, and administrative expenses. Diluted net income per share increased 8.0 percent to $1.22 in the second quarter of 2019 from $1.13 in the second quarter of 2018.

~~Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018~~

Our consolidated total revenues decreased 6.6 percent to $7.7 billion in the six months ended June 30, 2019, from $8.2 billion in the six months ended June 30, 2018, primarily due to a decrease in truckload pricing and to a lesser extent intermodal volumes and decreased pricing and volumes in air transportation services. Sourcing revenues also decreased 15.4 percent to $516.5 million in the six months ended June 30, 2019, from $610.6 million in the six months ended June 30, 2018, which was due to lower pricing per case and lower case volume. Net revenues increased 5.9 percent to $1.4 billion in the six months ended June 30, 2019, from $1.3 billion in the six months ended June 30, 2018, driven by margin improvement in truckload. Income from operations increased 10.1 percent to $452.1 million in the six months ended June 30, 2019, from $410.6 million in the six months ended June 30, 2018, driven by the increase in net revenues and was slightly offset by an increase in other selling, general, and administrative expenses and, to a lesser extent, personnel expenses. Our cash flow from operations increased 48.0 percent to $456.5 million in the six months ended June 30, 2019, from $308.5 million in the six months ended June 30, 2018, driven primarily by improved working capital performance and the impact of decreasing total transportation revenues and purchased transportation on our accounts receivable and accounts payable balances in addition to growth in income from operations. Diluted net income per share increased 11.7 percent to $2.39 in the six months ended June 30, 2019, from $2.14 in the six months ended June 30, 2018.

On February 28, 2019, we acquired The Space Cargo Group (“Space Cargo”) for the purpose of expanding our presence and capabilities in Spain and Colombia. Our consolidated results include the results of Space Cargo as of March 1, 2019. On May 22, 2019, we acquired Dema Service S.p.A (“Dema Service”) to strengthen our existing footprint in Italy. Our consolidated results include the results of Dema Service as of May 23, 2019.

~~Net~~ revenues are a non-GAAP financial measure calculated as total revenues less the cost of purchased transportation and related services and the cost of purchased products sourced for resale. We believe net revenues are a useful measure of our ability to source, add value, and sell services and products that are provided by third parties, and we consider net revenues to be our primary performance measurement. Accordingly, the discussion of our results of operations often focuses on the changes in our net revenues. The reconciliation of total revenues to net revenues is presented below (in thousands):


	Three Months Ended March 31,
	2020		2019
Revenues:
Transportation	$	3,542,118	$	3,504,932
Sourcing	262,890		246,278
Total revenues	3,805,008		3,751,210
Costs and expenses:
Purchased transportation and related services	3,000,113		2,853,256
Purchased products sourced for resale	236,942		219,154
Total costs and expenses	3,237,055		3,072,410
Net revenues	$	567,953	$	678,800

The North American surface transportation market was impacted by the COVID-19 outbreak during the first quarter of 2020, although the impact varied significantly depending on industry vertical, customer size, and the severity of the outbreak in the regions in which we operate. Certain industry verticals, such as retail, saw a surge of demand near the end of the first quarter of 2020, while other industry verticals experienced a slowdown of demand and production. Many small businesses, in particular, experienced significant slowdowns. These market conditions resulted in continued industry pricing and volume declines. Industry freight volumes, as measured by the Cass Freight Index, declined at a high-single digit rate during the first quarter of 2020 compared to the first quarter of 2019. One of the metrics we use to measure market conditions is the truckload routing guide depth from our Managed Services business. Routing guide depth represents the number of carriers contacted prior to an acceptance when procuring a transportation provider. The average routing guide depth of tender in the first quarter of 2020 was 1.2, representing that on average, the first carrier in a shipper's routing guide was executing the shipment in most cases. This route guide penetration continues to be among the lowest levels we have experienced in the last decade and is a reflection of both softening demand and the reduced pricing and costs experienced during the first quarter of 2020.

The global forwarding market was also impacted by COVID-19. Similar to the North American surface transportation market, the impact varied significantly depending on industry vertical and the severity of the outbreak in the regions in which we operate. Many industries in North Asia and North America experienced volume reductions as factories closed and local transportation was limited in an effort to contain the spread of the virus while regions such as Southeast Asia experienced an increase in volume to offset the reduced production elsewhere in the world. The ocean carrier market was impacted as decreased demand resulted in excess capacity and decreased pricing. The airfreight market experienced significant volatility due to the COVID-19 outbreak which, in some cases, has led to a shift from ocean freight to airfreight due to unexpected government shutdowns impacting the global supply chain and expedited demand for certain commodities and essential products. In addition, as a large percentage of airfreight is transported on commercial flights, the reduction of commercial flights due to the COVID-19 outbreak has resulted in significant airfreight pricing volatility.

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Revenues:
Transportation $ 3,638,612
$ 3,953,139
$ 7,143,544
$ 7,590,779
Sourcing 270,228
322,898
516,506
610,585
Total revenues 3,908,840
4,276,037
7,660,050
8,201,364
Costs and expenses:
Purchased transportation and related services 2,972,998
3,313,196
5,826,254
6,354,798
Purchased products sourced for resale 240,626
291,358
459,780
549,158
Total costs and expenses 3,213,624
3,604,554
6,286,034
6,903,956
Net revenues $ 695,216
$ 671,483
$ 1,374,016
$ 1,297,408
BUSINESS TRENDS

Our first quarter of 2020 results are largely consistent with the overall market trends summarized above. We saw significant changes in demand over the course of the first quarter of 2020 in nearly all of our service lines depending on industry vertical, customer size, and the regional severity of the COVID-19 outbreak. Despite industry freight volumes declining at a high-single digit rate, we achieved strong volume growth in both NAST truckload and LTL services. Our volume growth is reflective of our pricing strategies to ensure we are near the top of our customers' routing guides. We continued to see a shift from spot-market business towards contractual business, which resulted in margin compression, as spot-market driven carrier pricing declines continued to moderate compared to our contractual pricing declines. We continued to meet our customer commitments despite the carrier pricing declines moderating, and in some instances, carrier prices increasing in certain regions and industries. In our global forwarding business, we saw ocean freight pricing and volume declines, most notably in North Asia and North America driven by the market trends discussed above which were partially offset by ocean freight volume growth in Southeast Asia. As a result of the COVID-19 outbreak, we experienced a significant increase in airfreight pricing near the end of the first quarter of 2020 resulting from the disruption to the global supply chain and the urgency around transporting certain commodities and essential products.

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 $223.1 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 acquisition was effective as of February 29, 2020, and therefore the results of operations of Prime Distribution have been included as part of the North American Surface Transportation segment in our consolidated financial statements since March 1, 2020.

~~RESULTS OF OPERATIONS~~SIGNIFICANT DEVELOPMENTS

During the first quarter of 2020, our financial results and operations were impacted by the COVID-19 outbreak that occurred in many countries beginning in early 2020. The ~~following table summarizes~~impacts to our ~~total revenues (dollars~~business are discussed throughout Item 2, “Management's Discussion and Analysis of Financial Condition and results of Operations.” In addition, see Part II—“Item 1A, Risk Factors,” included herein for an update to the risk factors described in ~~thousands):~~

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 % change 2019 2018 % change
Transportation $ 3,638,612
$ 3,953,139
(8.0 )% $ 7,143,544
$ 7,590,779
(5.9 )%
Sourcing 270,228
322,898
(16.3 )% 516,506
610,585
(15.4 )%
Total $ 3,908,840
$ 4,276,037
(8.6 )% $ 7,660,050
$ 8,201,364
(6.6 )%
“Item 1A, Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission on February 19, 2020. The extent to which the COVID-19 outbreak impacts our financial results and operations for the remainder of 2020 and going forward, for all of our business segments will depend on future developments which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the outbreak and the international actions being taken to contain and treat it.

~~The~~We have taken a variety of measures to ensure the availability, continuity and security of our critical infrastructure, to ensure the health and safety of our employees around the globe, and to provide service and supply chain continuity to our customers and contracted carriers in order to deliver critical and essential goods and services. We are following ~~table illustrates~~public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions, the promotion of social distancing, and the adoption of work-from-home arrangements. We do not believe these policies and initiatives will adversely impact our operations. As of March 31, 2020, over 90 percent of our employees were working remotely executing their duties and responsibilities. In addition, subsequent to March 31, 2020 we have taken steps across the organization to reduce costs, including the elimination of all non-essential travel, temporary salary reductions for company executive officers, temporary reductions in cash retainers for board members, temporary suspension of the company match to retirement plans for U.S. and Canadian employees, accelerating the use of paid time off, and temporarily furloughing approximately seven percent of our U.S and Canadian employees.

Due to the speed with which the situation is developing, we are not able at this time to estimate the impact COVID-19 may have on our financial results and operations for the remainder of 2020 and going forward. However, the impact could be material in all business segments and could be material during any future period affected either directly or indirectly by this pandemic. Many businesses are slowing their production and output which is expected to result in a decrease in freight volumes across a number of industries which may reduce our contractual and spot-market opportunities. In addition, a significant number of our contracted carriers may reduce their capacity or charge higher prices in light of the volatile market conditions which may reduce our net revenue margins ~~for~~as we honor our ~~transportation and sourcing services:~~

contractual freight rates.

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Transportation 18.3 % 16.2 % 18.4 % 16.3 %
Sourcing 11.0 % 9.8 % 11.0 % 10.1 %
Total 17.8 % 15.7 % 17.9 % 15.8 %

The following table summarizes our net revenues by service line. The service line net revenues in the table differ from the segment service line revenues discussed below as our segments have revenues from multiple service lines (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 % change 2019 2018 % change
Transportation
Truckload $ 371,351
$ 341,442
8.8 % $ 749,344
$ 671,733
11.6 %
LTL⁽¹⁾
122,991
119,189
3.2 % 239,220
231,333
3.4 %
Intermodal 6,298
9,181
(31.4 )% 12,374
15,513
(20.2 )%
Ocean 85,472
87,035
(1.8 )% 157,005
155,879
0.7 %
Air 26,134
30,905
(15.4 )% 53,716
59,788
(10.2 )%
Customs 23,306
20,794
12.1 % 45,184
41,449
9.0 %
Other Logistics Services 30,062
31,397
(4.3 )% 60,447
60,286
0.3 %
Total Transportation 665,614
639,943
4.0 % 1,317,290
1,235,981
6.6 %
Sourcing 29,602
31,540
(6.1 )% 56,726
61,427
(7.7 )%
Total $ 695,216
$ 671,483
3.5 % $ 1,374,016
$ 1,297,408
5.9 %

⁽¹⁾~~Less than truckload ("LTL").~~

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

The following ~~table represents certain statements~~summarizes select first quarter 2020 year-over-year operating comparisons to first quarter 2019:

•Total revenues increased 1.4 percent to $3.8 billion, driven by increased volume in truckload and less than truckload, mostly offset by lower pricing in truckload.

Table of ~~operations data, shown as percentages of our net revenues:~~

Contents

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Net revenues 100.0 % 100.0 % 100.0 % 100.0 %
Operating expenses:
Personnel expenses 48.7 % 50.7 % 49.4 % 51.6 %
Other selling, general, and administrative expenses 18.5 % 16.7 % 17.7 % 16.8 %
Total operating expenses 67.3 % 67.4 % 67.1 % 68.4 %
Income from operations 32.7 % 32.6 % 32.9 % 31.6 %
Interest and other expense (1.0 )% (0.8 )% (1.7 )% (1.2 )%
Income before provision for income taxes 31.8 % 31.9 % 31.2 % 30.4 %
Provision for income taxes 7.4 % 8.1 % 7.1 % 7.2 %
Net income 24.3 % 23.7 % 24.1 % 23.2 %
•Net revenues decreased 16.3 percent to $568.0 million, primarily driven by lower margin in truckload services.

•Personnel expenses decreased 2.9 percent to $330.2 million, driven primarily by declines in performance-based compensation, partially offset by a 0.4 percent increase in average headcount.

•Selling, general, and administrative (“SG&A”) expenses increased 12.4 percent to $128.3 million, due primarily to increased technology spending and purchased services related to accelerating our growth and cost savings initiatives.

•Income from operations totaled $109.4 million, down 51.3 percent from last year due to declining net revenues and increased SG&A expenses.

•Operating margin of 19.3 percent decreased 1,380 basis points.

•Diluted earnings per share (EPS) decreased 50.9 percent to $0.57.

•Cash flow from operations decreased 77.2 percent to $58.5 million.

CONSOLIDATED RESULTS OF OPERATIONS

The following table summarizes our results ~~by reportable segment~~of operations (dollars in ~~thousands)~~thousands, except per share data):


	Three Months Ended March 31,
	2020			2019			% change
Revenues:
Transportation	$	3,542,118		$	3,504,932		1.1	%
Sourcing	262,890			246,278			6.7	%
Total revenues	3,805,008			3,751,210			1.4	%
Costs and expenses:
Purchased transportation and related services	3,000,113			2,853,256			5.1	%
Purchased products sourced for resale	236,942			219,154			8.1	%
Personnel expenses	330,220			340,098			(2.9)	%
Other selling, general, and administrative expenses	128,293			114,152			12.4	%
Total costs and expenses	3,695,568			3,526,660			4.8	%
Income from operations	109,440			224,550			(51.3)	%
Interest and other expense	(15,228)			(17,140)			(11.2)	%
Income before provision for income taxes	94,212			207,410			(54.6)	%
Provision for income taxes	16,066			45,622			(64.8)	%
Net income	$	78,146		$	161,788		(51.7)	%

Diluted net income per share	$	0.57		$	1.16		(50.9)	%

Net revenue margin percentage
Transportation	15.3		%	18.6		%	(3.3) pts
Sourcing	9.9		%	11.0		%	(1.1) pts
Total net revenue margin	14.9		%	18.1		%	(3.2) pts

Average headcount	15,450			15,381			0.4	%

NAST Global Forwarding All Other and Corporate Consolidated
Three Months Ended June 30, 2019
Total revenues $ 2,872,053
$ 592,483
$ 444,304
$ 3,908,840
Net revenues 486,418
141,936
66,862
695,216
Income from operations 204,732
26,618
(3,815 ) 227,535

NAST Global Forwarding All Other and Corporate Consolidated
Three Months Ended June 30, 2018 ⁽¹⁾

Total revenues $ 3,163,185
$ 617,597
$ 495,255
$ 4,276,037
Net revenues 459,706
144,031
67,746
671,483
Income from operations 188,244
29,788
976
219,008

A reconciliation of our reportable segments to our consolidated results can be found in Note 9, Segment Reporting, in Part I, Financial Information of this Quarterly Report on Form 10-Q.

NAST Global Forwarding All Other and Corporate Consolidated
Six Months Ended June 30, 2019
Total revenues $ 5,668,837
$ 1,130,050
$ 861,163
$ 7,660,050
Net revenues 972,968
269,172
131,876
1,374,016
Income from operations 416,015
40,821
(4,751 ) 452,085

NAST Global Forwarding All Other and Corporate Consolidated
Six Months Ended June 30, 2018 ⁽¹⁾

Total revenues $ 6,071,604
$ 1,171,351
$ 958,409
$ 8,201,364
Net revenues 898,108
267,068
132,232
1,297,408
Income from operations 367,881
38,009
4,703
410,593

⁽¹⁾~~Amounts have been reclassified to reflect the segment reorganization announced in the first quarter~~Table of ~~2019.~~Contents

Consolidated Results of Operations—Three Months Ended ~~June 30, 2019~~March 31, 2020 Compared to Three Months Ended ~~June 30, 2018~~March 31, 2019

Total revenues and direct costs. ~~Our consolidated total revenues decreased 8.6 percent to $3.9 billion in the second quarter of 2019 compared to $4.3 billion in the second quarter of 2018.~~ Total transportation revenues ~~decreased 8.0 percent~~increased driven by increased volumes in truckload and less than truckload ("LTL") partially offset by lower truckload pricing. Total purchased transportation and related services increased primarily due to ~~$3.6 billion~~increased truckload and LTL volumes. Our sourcing total revenue and purchased products sourced for resale increased due to higher pricing and costs per case partially offset by lower case volume. We experienced an increase in sourcing revenues near the end of the first quarter of 2020 resulting from increased demand at large grocers and retailers but these increases were partially offset by a decrease in demand in the ~~second quarter of 2019 compared to $4.0 billion in the second quarter of 2018. The decrease was~~food service industry.

Net revenues. Our transportation net revenue margin decreased primarily driven by lower ~~pricing and volumes~~margins in truckload, and to a lesser extent ~~decreased intermodal~~LTL services, partially offset by an increase in truckload and LTL volumes. Total purchased transportation and related services decreased 10.3 percent to $3.0 billion in the second quarter of 2019 compared to $3.3 billion in the second quarter of 2018. The decrease was due to decreased cost of transportation in most of our transportation services resulting from softening market demand. Our sourcing total revenue decreased 16.3 percent to $270.2 million in the second quarter of 2019 from $322.9 million in the second quarter of 2018 due to lower pricing per case and lower case volume. Purchased products sourced for resale decreased 17.4 percent in the second quarter of 2019 to $240.6 million from $291.4 million in the second quarter of 2018.

~~Net revenues.~~ ~~Total transportation net revenues increased 4.0 percent to $665.6 million in the second quarter of 2019 from $639.9 million in the second quarter of 2018. Our transportation~~Sourcing net revenue margin ~~increased~~declined due to ~~18.3 percent~~a decrease in the second quarter of 2019 from 16.2 percent in the second quarter of 2018 driven by margin expansion in truckload services as we benefited from a shift to contractual volume in a falling cost market. Sourcing net revenues decreased 6.1 percent to $29.6 million in the second quarter of 2019 from $31.5 million in the second quarter of 2018. Our sourcing net revenue ~~margin increased to 11.0 percent in the second quarter of 2019 from 9.8 percent in the second quarter of 2018 driven by the strategic decision to exit unprofitable business.~~per case.

Operating expenses. ~~Operating~~Personnel expenses increased 3.4 percent to $467.7 million in the second quarter of 2019 from $452.5 million in the second quarter of 2018 driven by selling, general, and administrative expenses as discussed below. Operating expenses as a percentage of net revenues decreased ~~to 67.3 percent in the second quarter of 2019 from 67.4 percent in the second quarter of 2018.~~

~~For the second quarter, personnel expenses decreased 0.5 percent to $338.9 million in 2019 from $340.6 million in 2018. The decrease in personnel expense was~~ primarily due to declines in performance-based compensation, partially offset by ana modest increase ~~of 3.2 percent~~ in average headcount, inincluding the ~~second quarter~~impact of ~~2019 compared to the second quarter of 2018.~~

~~For the second quarter of 2019, other selling, general, and administrative~~acquisitions. Other SG&A expenses increased ~~15.2 percent to $128.8 million in 2019 from $111.8 million in the second quarter of 2018,~~ driven primarily by ~~increases in~~higher purchased services related to accelerating our growth and ~~occupancy costs.~~

~~Income from operations.~~ Income from operations increased 3.9 percent to $227.5 million in the second quarter of 2019 from $219.0 million in the second quarter of 2018. This increase was driven by an increase in income from operations in NAST, partially offset by declines in Global Forwarding and All Other and Corporate. Income from operations as a percentage of net revenues increased to 32.7 percent in the second quarter of 2019 from 32.6 percent in the second quarter of 2018.cost savings initiatives.

Interest and other expense. Interest and other expense ~~was $6.6~~decreased driven by a $2.9 million ~~in the second quarter of 2019 compared to $5.1 million in the second quarter of 2018. The increase included a $2.8 million favorable~~unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses in the ~~second~~first quarter of ~~2019~~2020 compared to ~~an $8.0~~a $5.0 million ~~favorable~~unfavorable impact in the ~~second~~first quarter of ~~2018.~~2019. Interest expense decreased modestly driven by a lower average debt balance in the ~~second~~first quarter of ~~2019~~2020 compared to the ~~second~~first quarter of ~~2018.~~2019.

Provision for income taxes. Our effective income tax rate was ~~23.4~~17.1 percent for the ~~second~~first quarter of ~~2019 and 25.6~~2020 compared to 22.0 percent for the ~~second~~first quarter of ~~2018.~~2019. The effective income tax rate for the three months ended ~~June 30,~~March 31, 2020, was lower than the statutory federal income tax rate due to the tax impact of share-based payment awards, which reduced the effective tax rate by 3.6 percentage points, and foreign tax benefits recorded in the three months ended March 31, 2020 but were partially offset by state income taxes, net of federal benefit and foreign income taxes. The effective income tax rate for the three months ended March 31, 2019 was higher than the statutory federal income tax rate due to state income taxes, net of federal benefit, and foreign income taxes, but was partially offset by the tax impact of share-based payment ~~awards, which resulted in a decrease in our provision for income taxes for~~awards.

Table of Contents

NAST Segment Results of Operations


	Three Months Ended March 31,
(dollars in thousands)	2020		2019		% change
Total revenues	$	2,823,745	$	2,796,784	1.0	%
Purchased transportation and related services	2,450,967		2,310,234		6.1	%
Net revenues
Truckload	243,686		359,031		(32.1)	%
LTL	112,330		114,918		(2.3)	%
Intermodal	7,312		5,976		22.4	%
Other	9,450		6,625		42.6	%
Total net revenues	372,778		486,550		(23.4)	%
Personnel expenses	172,832		185,941		(7.1)	%
Other selling, general, and administrative expenses	101,420		89,326		13.5	%
Income from operations	$	98,526	$	211,283	(53.4)	%

Average headcount	7,038		7,424		(5.2)	%

Service line volume statistics
Truckload					7.5	%
LTL					7.5	%
Intermodal					8.0	%

Three Months Ended March 31, 2020 compared to Three Months Ended March 31, 2019

Total revenues and direct costs. The results of NAST were impacted by the COVID-19 outbreak during the three months ended ~~June 30, 2019, and 2018 of $0.9 million and $1.3 million, respectively.~~

~~Net income.~~ ~~Net income increased 6.3 percent to $169.2 million~~March 31, 2020 as discussed in the ~~second quarter of 2019 from $159.2 million~~market and business trends section above. NAST total revenues increased due to increased volume growth in the second quarter of 2018. Basic net income per share increased 7.9 percent to $1.23 from $1.14 in the second quarter of 2019 compared to the second quarter of 2018. Diluted net income per share increased 8.0 percent to $1.22 from $1.13 in the second quarter of 2019 compared to the second quarter of 2018.

~~Segment Results of Operations—Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018~~

~~North American Surface Transportation.~~ ~~NAST revenues decreased 9.2 percent to $2.9 billion in the second quarter of 2019 from $3.2 billion in the second quarter of 2018. This decrease was primarily driven~~truckload and LTL services, mostly offset by lower pricing ~~and volumes~~ in truckload. The truckload and LTL volume growth is reflective of our pricing strategies to ~~a lesser extent, decreased intermodal volume. These decreases were partially offset by increased LTL volumes.~~ensure we are near the top of our customers' routing guides. NAST cost of transportation and related services ~~decreased 11.8 percent to $2.4 billion in the second quarter of 2019 from $2.7 billion in the second quarter of 2018,~~increased driven by ~~lower~~increased volumes, partially offset by decreased cost per ~~mile in truckload services.~~ mile.

Net revenues. NAST net revenues ~~increased 5.8 percent to $486.4 million~~decreased driven primarily by margin compression in truckload services as discussed in the ~~second quarter of 2019 from $459.7 million in the second quarter of 2018. This was primarily driven by an increase in truckload net revenues as discussed below.~~

NAST truckload net revenues increased 8.6 percent to $352.9 million in the second quarter of 2019 from $325.0 million in the second quarter of 2018 driven by net revenue margin expansion as we benefited from a shift to contractual volume in a falling cost market. As supply and demand in the freight market becomes more balanced, as was the case in the first half of 2019, we typically see our volume shift more heavily toward contractual business ~~accompanied by net revenue margin expansion. NAST truckload volumes decreased 2.5 percent in the second quarter of 2019 compared to the second quarter of 2018.~~

trends section above. Excluding the estimated impacts of the decrease in fuel costs, our average truckload rate per mile charged to our customers decreased approximately ~~11.5~~8.5 percent in the ~~second~~first quarter of ~~2019~~2020 compared to the ~~second~~first quarter of ~~2018 reflecting pricing changes related to the marketplace conditions discussed above.~~2019. Our truckload transportation costs decreased approximately ~~14.5~~2.5 percent, excluding the estimated decrease in fuel costs.

NAST LTL net revenues increased 2.8 percent to $121.5 million in the second quarter of 2019 from $118.2 million in the second quarter of 2018. This increase was primarily due to a volume increase of 3.5 percent in the second quarter of 2019 compared to the second quarter of 2018.

~~NAST intermodal net revenues decreased 33.8 percent to $6.0 million in the second quarter of 2019 from $9.1 million in the second quarter of 2018. NAST intermodal~~ net revenues decreased primarily due to ~~a volume decrease~~reduced margins, partially offset by increased volume. The acquisition of ~~30.5 percent resulting from a combination~~Prime Distribution contributed two percentage points to LTL net revenue growth in the first quarter of ~~lane reductions related to precision scheduled railroading and the decline in truckload pricing driving an industry volume shift from intermodal to truckload.~~2020.

NAST ~~operating expenses~~intermodal net revenues increased ~~3.8 percent in the second quarter of 2019 to $281.7 million compared to $271.5 million in the second quarter of 2018. This was~~ primarily due to increased ~~selling, general,~~volume and ~~administrative expenses, partially offset by a decrease in personnel~~improved net revenue margin.

Operating expenses. ~~The increase in selling, general, and administrative expense is primarily related to continued investments in technology and higher occupancy costs. The decrease in~~ NAST personnel expense isdecreased primarily related to reduced performance-based compensation and a decline in ~~the second quarter of 2019 compared~~average headcount. NAST SG&A expenses increased primarily due to ~~the second quarter of 2018 but was partially offset by the impact of a 1.8 percent~~continued investments in technology, an increase in ~~average headcount in the second quarter of 2019.~~credit loss expense, and higher occupancy costs. The operating expenses of NAST and all other segments include allocated corporate expenses.

~~NAST income from operations increased 8.8 percent~~

Table of Contents

Global Forwarding Segment Results of Operations


	Three Months Ended March 31,
(dollars in thousands)	2020		2019		% change
Total revenues	$	530,384	$	537,567	(1.3)	%
Purchased transportation and related services	402,070		410,331		(2.0)	%
Net revenues
Ocean	69,810		71,457		(2.3)	%
Air	26,877		26,136		2.8	%
Customs	21,193		21,877		(3.1)	%
Other	10,434		7,766		34.4	%
Total net revenues	128,314		127,236		0.8	%
Personnel expenses	70,893		69,544		1.9	%
Other selling, general, and administrative expenses	45,462		43,489		4.5	%
Income from operations	$	11,959	$	14,203	(15.8)	%

Average headcount	4,824		4,707		2.5	%

Service line volume statistics
Ocean					(3.0)	%
Air					(8.0)	%
Customs					(2.5)	%

Three Months Ended March 31, 2020 compared to ~~$204.7 million~~Three Months Ended March 31, 2019

Total revenues and direct costs. The results of Global Forwarding were impacted by the COVID-19 outbreak during the three months ended March 31, 2020 as discussed in the ~~second quarter of 2019 from $188.2 million in the second quarter of 2018 due primarily to the increase in net revenues discussed~~market and business trends section above.

~~Global Forwarding.~~ Global Forwarding total revenues and direct costs decreased ~~4.1 percent to $592.5 million in the second quarter of 2019 compared to $617.6 million in the second quarter of 2018~~ driven by ~~decreased pricing and~~ volume declines in ~~the air service line and, to a lesser extent, ocean pricing decreases as both~~all service lines ~~are being impacted~~and pricing declines in ocean transportation, partially offset by ~~tariff activity. Global Forwarding costs of~~pricing increases in air transportation.

Net revenues. Ocean transportation ~~and related services decreased 4.9 percent to $450.5 million in the second quarter of 2019 from $473.6 million in the second quarter of 2018. Global Forwarding~~ net revenues decreased ~~1.5 percent~~driven by lower volumes most notably in North Asia and North America due to ~~$141.9 million in~~ the ~~second quarter~~impact of ~~2019 compared to $144.0 million in the second quarter of 2018 as the pricing and volume declines discussed above more than~~COVID-19, partially offset ~~the net revenue growth from Space Cargo.~~by margin expansion. The acquisition of Space Cargo contributed ~~approximately~~two percentage points of ocean net revenue growth for the first quarter of 2020. Air transportation net revenues increased driven by increased pricing and by the acquisition of Space Cargo which contributed three percentage points of net revenue growth in ~~Global Forwarding for the second quarter of 2019.~~

~~Global Forwarding ocean transportation net revenues decreased 1.6 percent to $85.4 million in the second quarter of 2019 from $86.8 million in the second quarter of 2018 as decreased margins~~air transportation. These increases were partially offset by ~~the impact of Space Cargo. Space Cargo contributed two percentage points of net revenue growth~~a decline in ~~ocean transportation for the second quarter of 2019. Ocean transportation volumes experienced a modest increase in the second quarter of 2019 compared to the same period of 2018.~~

~~Global Forwarding air transportation~~shipment volumes. Customs net revenues decreased 12.2 percent to $25.2 million in the second quarter of 2019 from $28.7 million in the second quarter of 2018, as margin expansion and the addition of Space Cargo adding six percentage points was more than offsetmodestly driven primarily by ~~a 7.5 percent volume decline in the second quarter of 2019 compared to the same period of 2018.~~lower volumes.

~~Global Forwarding customs net revenues~~Operating expenses. Personnel expenses increased ~~12.0 percent to $23.3 million in the second quarter of 2019 from $20.8 million in 2018~~ driven by ~~improved pricing~~increased salary expenses due to ~~mix but were partially offset by reduced volumes~~an increase in ~~the second quarter of 2019 compared to the same period of 2018.~~

~~Global Forwarding operating~~average headcount. SG&A expenses increased 0.9 percent in the second quarter of 2019 to $115.3 million from $114.2 million in the second quarter of 2018. This increase was due to increased selling, general, and administrative expenses of 12.4 percent, which was driven by increased investments in technology. ~~Personnel expenses decreased 5.1 percent driven by reduced performance-based compensation but was partially offset by the impact~~

Table of ~~a 0.7 percent increase in average headcount in the second quarter of 2019.~~Contents

Global Forwarding income from operations decreased 10.6 percent to $26.6 million in the second quarter of 2019 from $29.8 million in the second quarter of 2018. This was primarily due to the decrease in net revenues discussed above.

All Other and ~~Corporate.~~ Corporate Segment Results of Operations

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


	Three Months Ended March 31,
(dollars in thousands)	2020		2019		% change
Total revenues	$	450,879	$	416,859	8.2	%
Net revenues
Robinson Fresh	27,458		28,658		(4.2)	%
Managed Services	22,527		20,312		10.9	%
Other Surface Transportation	16,876		16,044		5.2	%
Total net revenues	$	66,861	$	65,014	2.8	%

Three Months Ended March 31, 2020 compared to Three Months Ended March 31, 2019

Total revenues increased driven by elevated demand at large grocers and retailers near the end of the first quarter of 2020 in our Robinson Fresh ~~provides sourcing services including~~business driven by the buying, selling, and marketing of fresh fruits, vegetables, and other perishable items. Managed Services provides Transportation Management Services, or Managed TMS. Other Surface Transportation revenues are primarily earnedCOVID-19 outbreak. These increases were partially offset by ~~Europe Surface Transportation. Europe Surface Transportation provides services similar to NAST across Europe.~~a decrease in demand for customers in the food service industry also resulting from the COVID-19 outbreak.

Robinson Fresh net revenues ~~decreased 4.3 percent~~declined due to ~~$31.2 million~~decreases in ~~the second quarter of 2019 compared to $32.6 million in the second quarter of 2018, driven by strategic decisions to exit unprofitable business.~~

both case volumes and net revenue per case. Managed Services net revenues ~~remained flat at $20.1 million in the second quarter~~increased driven by a combination of ~~2019 consistent with the second quarter of 2018.~~

new customer wins and selling additional services to existing customers. Other Surface Transportation net revenues increased ~~3.3 percent in the second quarter of 2019 to $15.5 million compared to $15.0 million in the second quarter of 2018,~~ primarily driven by the acquisition of Dema Service, which contributed ~~four~~8.5 percentage points of growth.

~~Consolidated Results of Operations—Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018~~

~~Total revenues and direct costs.~~ Our consolidated total revenues decreased 6.6 percent to $7.7 billion in the six months ended June 30, 2019, compared to $8.2 billion in the six months ended June 30, 2018. Total transportation revenues decreased 5.9 percent to $7.1 billion in the six months ended June 30, 2019, from $7.6 billion in the six months ended June 30, 2018. The decrease in total transportation revenues was primarily driven by decreased truckload pricing and, to a lesser extent, lower intermodal volumes and decreased pricing and volumes in the air service line. Total purchased transportation and related services decreased 8.3 percent in the six months ended June 30, 2019 to $5.8 billion from $6.4 billion in the six months ended June 30, 2018. The decrease was primarily due to decreased cost of transportation in most of our transportation services resulting from softening market demand and volume decreases in most transportation service lines. Sourcing revenue decreased 15.4 percent to $516.5 million in the six months ended June 30, 2019, compared to $610.6 million in the six months ended June 30, 2018. Purchased products sourced for resale decreased 16.3 percent to $459.8 million in the six months ended June 30, 2019, compared to $549.2 million in the six months ended June 30, 2018.

~~Net revenues.~~ Total transportation net revenues increased 6.6 percent to $1.3 billion in the six months ended June 30, 2019 from $1.2 billion in the six months ended June 30, 2018, driven by improved truckload margins and, to a lesser extent, increased LTL volumes and margin expansion. Our transportation net revenue margin increased to 18.4 percent in the six months ended June 30, 2019, from 16.3 percent in the six months ended June 30, 2018, driven by truckload services as we benefited from a shift to contractual volume in a falling cost market. Sourcing net revenues decreased 7.7 percent to $56.7 million in the six months ended June 30, 2019, from $61.4 million in the six months ended June 30, 2018. Our sourcing net revenue margin increased in the six months ended June 30, 2019, to 11.0 percent from 10.1 percent in the six months ended June 30, 2018.

~~Operating expenses.~~ Operating expenses increased 4.0 percent in the six months ended June 30, 2019, compared to the six months ended June 30, 2018. Operating expenses as a percentage of net revenues decreased to 67.1 percent in the six months ended June 30, 2019 from 68.4 percent in the six months ended June 30, 2018.

Personnel expenses increased 1.5 percent to $679.0 million in the six months ended June 30, 2019, from $668.9 million in the six months ended June 30, 2018, driven by the impact of a 2.5 percent increase in average headcount, partially offset by declines in performance-based compensation.

Other selling, general, and administrative expenses increased 11.5 percent to $242.9 million in the six months ended June 30, 2019, from $217.9 million in the six months ended June 30, 2018. This increase was primarily driven by increased purchased services and occupancy expenses, partially offset by a decline in the provision for bad debt.

~~Income from operations.~~ Income from operations increased 10.1 percent to $452.1 million in the six months ended June 30, 2019, from $410.6 million in the six months ended June 30, 2018. Income from operations as a percentage of net revenues increased to 32.9 percent in the six months ended June 30, 2019, from 31.6 percent in the six months ended June 30, 2018.

~~Interest and other expense.~~ Interest and other expense was $23.8 million for the six months ended June 30, 2019, compared to$15.8 million for the six months ended June 30, 2018. The six months ended June 30, 2019, included a $2.2 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses compared to a $7.7 million favorable impact for the six months ended June 30, 2018. Interest expense increased for the six months ended June 30, 2019, due to a higher average interest rate compared to the six months ended June 30, 2018.

~~Provision for income taxes.~~ Our effective income tax rate was 22.7 percent for the six months ended June 30, 2019, and 23.6 percent for the six months ended June 30, 2018. The effective income tax rate for the six months ended June 30, 2019, was higher than the statutory federal income tax rate due to state income taxes, net of federal benefit, and foreign income taxes, but was partially offset by the tax impact of share-based payment awards, which resulted in a decrease in our provision for income taxes for the six months ended June 30, 2019, and 2018 of $5.4 million and $7.5 million, respectively.

~~Net income.~~ Net income increased 9.8 percent to $331.0 million in the six months ended June 30, 2019, from $301.5 million in the six months ended June 30, 2018. Basic net income per share increased 11.6 percent to $2.41 in the six months ended June 30, 2019, from $2.16 in the six months ended June 30, 2018. Diluted net income per share increased 11.7 percent to $2.39 in the six months ended June 30, 2019 from $2.14 in the six months ended June 30, 2018.

~~Segment Results of Operations—Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018~~

~~North American Surface Transportation.~~ NAST revenues decreased 6.6 percent to $5.7 billion during the six months ended June 30, 2019, from $6.1 billion during the six months ended June 30, 2018. This decrease was driven by decreased truckload pricing and volumes and, to a lesser extent, lower intermodal volumes. NAST cost of transportation and related services decreased 9.2 percent to $4.7 billion in the six months ended June 30, 2019, from $5.2 billion in the six months ended June 30, 2018. The decreased cost of transportation and related services was also driven by truckload and intermodal services. NAST net revenues increased 8.3 percent to $973.0 million in the six months ended June 30, 2019, from $898.1 million in the six months ended June 30, 2018. This increase was driven by an increase in truckload and LTL net revenues as discussed below.

NAST truckload net revenues increased 11.6 percent to $711.9 million during the six months ended June 30, 2019, from $638.0 million in the six months ended June 30, 2018. NAST truckload net revenue margin increased in the six months ended June 30, 2019, compared to the six months ended June 30, 2018. NAST truckload volumes decreased approximately one percent during the six months ended June 30, 2019, compared to the six months ended June 30, 2018.

Excluding the impacts of fuel costs, our average truckload rate per mile charged to our customers decreased approximately 14.0 percent in the six months ended June 30, 2019, compared to the six months ended June 30, 2018. Our truckload transportation costs decreased 16.5 percent, excluding the impact of fuel costs.

NAST LTL net revenues increased 3.2 percent to $236.4 million in the six months ended June 30, 2019, from $229.1 million in the six months ended June 30, 2018. This increase was primarily due to a volume increase of approximately two percent during the six months ended June 30, 2019, compared to the six months ended June 30, 2018, and an increase in net revenue margin.

NAST intermodal net revenues decreased 21.7 percent to $12.0 million in the six months ended June 30, 2019, from $15.3 million in the six months ended June 30, 2018. Intermodal volumes decreased 25.0 percent in the six months ended June 30, 2019, compared to the six months ended June 30, 2018.

NAST operating expenses increased 5.0 percent during the six months ended June 30, 2019, to $557.0 million compared to $530.2 million during the six months ended June 30, 2018. This increase was driven by increases in selling, general, and administrative expenses and, to a lesser extent, personnel expenses. The increase in selling, general, and administrative expenses was driven by an increase in occupancy expenses and continued investment in technology and was partially offset by a decline in the provision for bad debt. The increase in personnel expense is related to the impact of an increase of 1.6 percent in average headcount and was partially offset by declines in performance-based compensation.

NAST income from operations increased 13.1 percent to $416.0 million during the six months ended June 30, 2019, from $367.9 million in the six months ended June 30, 2018. This was primarily due to the increase in truckload and LTL net revenues discussed above.

~~Global Forwarding.~~ Global Forwarding total revenues decreased 3.5 percent to $1.1 billion in the six months ended June 30, 2019, compared to $1.2 billion in the six months ended June 30, 2018, driven by decreased pricing and volumes in the air service line, and to a lesser extent decreases in ocean pricing. Global Forwarding costs of transportation and related services decreased 4.8 percent to $860.9 million in the six months ended June 30, 2019, from $904.3 million in the six months ended June 30, 2018. Global Forwarding net revenues increased 0.8 percent to $269.2 million in the six months ended June 30, 2019, compared to $267.1 million in the six months ended June 30, 2018. The acquisition of Space Cargo accounted for approximately two percentage points of the net revenue growth in Global Forwarding during the six months ended June 30, 2019.

Global Forwarding ocean transportation net revenues increased 0.9 percent to $156.8 million in the six months ended June 30, 2019, from $155.5 million in the six months ended June 30, 2018, driven by the acquisition of Space Cargo, which contributed approximately two percentage points. Ocean transportation volumes and margins both increased modestly during the six months ended June 30, 2019, compared to the same period of 2018.

Global Forwarding air transportation net revenues decreased 6.2 percent to $51.3 million in the six months ended June 30, 2019, from $54.8 million in the six months ended June 30, 2018, driven by a volume decrease of approximately six percent, which was partially offset by the impact of Space Cargo, which contributed approximately four percentage points.

Global Forwarding customs net revenues increased 9.0 percent to $45.2 million in the six months ended June 30, 2019, from $41.4 million in 2018 driven by improved pricing due to mix. Customs transaction volumes were approximately flat during the six months ended June 30, 2019, compared to the same period of 2018.

Global Forwarding operating expenses decreased modestly by 0.3 percent in the six months ended June 30, 2019, to $228.4 million from $229.1 million in the six months ended June 30, 2018. This decrease was due to a decrease in personnel, partially offset by an increase in selling, general, and administrative expenses. The personnel decrease was driven by the impact of a decrease in average headcount of 0.3 percent, despite the acquisition of Space Cargo adding approximately 3.5 percentage points.

Global Forwarding income from operations increased 7.4 percent to $40.8 million in the six months ended June 30, 2019, from $38.0 million in the six months ended June 30, 2018. This was primarily due to the increase in net revenues and decrease in operating expenses discussed above. In addition, the acquisition of Space Cargo added approximately 3.6 percentage points to the Global Forwarding income from operations.

~~All Other and Corporate.~~ Robinson Fresh net revenues decreased 4.8 percent to $59.9 million in the six months ended June 30, 2019, compared to $62.9 million in the six months ended June 30, 2018, primarily due to strategic decisions to exit unprofitable business.

Managed Services net revenues increased 5.3 percent in the six months ended June 30, 2019, to $40.4 million compared to $38.4 million in the six months ended June 30, 2018, driven by a combination of selling additional service lines to existing customers and new customer wins.

Other Surface Transportation increased 2.0 percent in the six months ended June 30, 2019, to $31.6 million compared to $31.0 million in the six months ended June 30, 2018, primarily driven by the acquisition of Dema Service, which contributed two percentage points of growth.

LIQUIDITY AND CAPITAL RESOURCES

We have historically generated substantial cash from operations, which has enabled us to fund our organic growth while paying cash dividends and repurchasing stock. In addition, we maintain the following debt facilities as described in Note 4, Financing Arrangements(dollars in thousands):


Description	Carrying Value as of June 30, 2019		Borrowing Capacity		Maturity	Description	Carrying Value as of March 31, 2020		Borrowing Capacity		Maturity
Revolving credit facility	$	—	$	1,000,000	October 2023	Revolving credit facility	$	71,000	$	1,000,000	October 2023
Senior Notes, Series A	175,000		175,000		August 2023	Senior Notes, Series A	175,000		175,000		August 2023
Senior Notes, Series B	150,000		150,000		August 2028	Senior Notes, Series B	150,000		150,000		August 2028
Senior Notes, Series C	175,000		175,000		August 2033	Senior Notes, Series C	175,000		175,000		August 2033
Receivables securitization facility ⁽¹⁾	161,823		250,000		December 2020	Receivables securitization facility ⁽¹⁾	249,917		250,000		December 2020
Senior Notes ⁽¹⁾	592,026		600,000		April 2028	Senior Notes ⁽¹⁾	592,660		600,000		April 2028
Total debt	$	1,253,849	$	2,350,000		Total debt	$	1,413,577	$	2,350,000

⁽¹⁾Net of unamortized discounts and issuance costs.

We expect to use our current debt facilities and potentially other indebtedness incurred in the future to assist us in continuing to fund working capital, capital expenditures, possible acquisitions, dividends, and share ~~repurchases.~~repurchases, although we have temporarily suspended share repurchase activity as described below.

Cash and cash equivalents totaled ~~$355.3~~$294.6 million as of ~~June 30, 2019,~~March 31, 2020, and ~~$378.6~~$447.9 million as of December 31, ~~2018.~~2019. Cash and cash equivalents held outside the United States totaled ~~$298.0~~$260.0 million as of ~~June 30, 2019,~~March 31, 2020, and ~~$320.0~~$405.1 million as of December 31, ~~2018. If we repatriated all foreign earnings, the estimated effect on income taxes payable would be an increase of approximately $16.5 million as of June 30,~~ 2019. Working capital decreased from ~~$1.3~~$1.1 billion at December 31, ~~2018,~~2019, to ~~$1.2 billion~~$801.9 million at ~~June 30, 2019.~~March 31, 2020.

We prioritize our investments to grow the business, as we require some working capital and a relatively small amount of capital expenditures to grow. We are continually looking for acquisitions, but those acquisitions must fit our culture and enhance our growth opportunities.

The following table summarizes our major sources and uses of cash and cash equivalents (dollars in thousands):


	Three Months Ended March 31,
	2020		2019		% change
Sources (uses) of cash:
Cash provided by operating activities	$	58,499	$	256,931	(77.2)	%

Capital expenditures	(14,703)		(13,865)
Acquisitions	(223,617)		(44,143)
Other	—		8
Cash used for investing activities	(238,320)		(58,000)		310.9	%

Repurchase of common stock	(68,563)		(67,624)
Cash dividends	(69,871)		(69,742)
Net borrowing (payments) on debt	178,000		(5,000)
Other	(2,526)		7,573
Cash provided by (used for) financing activities	37,040		(134,793)		N/M
Effect of exchange rates on cash and cash equivalents	(10,505)		2,720
Net change in cash and cash equivalents	$	(153,286)	$	66,858

Cash flow from operating activities. ~~We generated $456.5 million and $308.5 million of cash~~Cash flow from ~~operations~~operating activities decreased during the ~~six~~three months ended ~~June 30,~~March 31, 2020 compared to the three months ended March 31, 2019 ~~and June 30, 2018, respectively, an increase of $148.0 million. This increase was primarily driven by improved~~due to unfavorable changes in working capital ~~performance~~ and decreased earnings. The unfavorable changes in working capital were primarily related to a sequential increase in accounts receivables associated with higher sequential gross revenues, whereas in the ~~impact~~first quarter of ~~decreasing total transportation~~2019, accounts receivables and gross revenues declined sequentially. Given the COVID-19 outbreak we are closely monitoring credit and ~~purchased transportation on~~collections activities to minimize risk and we are working with our ~~accounts receivable and accounts payable balances in addition~~customers to ~~growth in income from operations.~~facilitate the movement of goods across their supply chains while also ensuring timely payment.

Cash used for investing activities. We used ~~$89.9~~$223.1 million ~~and $32.9 million~~for the acquisition of ~~cash~~Prime Distribution during the ~~six~~three months ended ~~June 30, 2019, and June 30, 2018, for investing activities.~~

March 31, 2020. We used $44.1 million for the acquisition of Space Cargo ~~and $14.2 million for the acquisition of Dema Service~~ during the ~~six~~three months ended ~~June 30,~~March 31, 2019.

~~We used $31.6 million and $30.1 million for capital expenditures during the six months ended June 30, 2019, and June 30, 2018. During the six months ended June 30, 2019, our capital~~ Capital expenditures consisted primarily of investments in information technology, which are intended to increase employee productivity, automate interactions with our customers and contracted carriers, and improve our internal workflows to help expand our operating margins and grow the business.

Cash used for financing activities. ~~We used $390.4 million and $291.1 million of cash flow for financing activities during~~Net borrowings on debt in the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, were to fund operations and ~~June 30, 2018.~~

~~During~~to fund the ~~six months ended June 30, 2019, we had net repayments on short-term borrowings~~acquisition of ~~$5.0 million. There was no balance outstanding on the revolving credit facility as of June 30, 2019. During the six months ended June 30, 2019, we had net repayments on long-term borrowings of~~ ~~$88.0 million~~ ~~to reduce the outstanding balance on the Receivables Securitization Facility.~~

~~We used $139.0 million and $130.6 million to pay~~Prime Distribution. The slight increase in cash dividends ~~during the six months ended June 30, 2019, and June 30, 2018. The increase~~ was ~~primarily~~ due to a ~~$0.04~~$0.01 dividend ~~rate~~ increase in ~~2019~~2020 compared to ~~2018, partially~~2019, mostly offset by a decrease in shares outstanding during the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to the ~~six~~three months ended ~~June 30, 2018.~~



		PART I. Financial Information


	~~PART I. Financial Information~~

Item 1.	Financial Statements (Unaudited)		3
		Condensed Consolidated Balance Sheets as of ~~June 30, 2019,~~March 31 , 20 20 , and December 31, ~~2018~~2019		3
		Condensed Consolidated Statements of Operations and Comprehensive Income for the Three ~~and Six~~ Months Ended ~~June 30, 2019~~March 31 , 20 20 and ~~2018~~2019		4
		Condensed Consolidated Statements of Stockholders' Investment for the Three ~~and Six~~ Months Ended ~~June 30, 2019~~March 31 , 20 20 and ~~2018~~2019		5
		Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30, 2019~~March 31 , 20 20 and ~~2018~~2019		6
		Notes to Condensed Consolidated Financial Statements		7
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		2928
Item 4.		Controls and Procedures		2928

		PART II. Other Information

Item 1.		Legal Proceedings		3029
Item 1A.		Risk Factors		3029
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 3.		Defaults on Senior Securities		30
Item 4.		Mine Safety Disclosures		30
Item 5.		Other Information		3130
Item 6.		Exhibits		30
		Signatures		31


	June 30, 2019			December 31, 2018				March 31, 2020		December 31, 2019
ASSETS	(unaudited)						ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	355,307		$	378,615		Cash and cash equivalents	$	294,572	$	447,858
Receivables, net of allowance for doubtful accounts of $39,175 and $41,131	2,100,246			2,162,438
Contract assets	179,015			159,635
Receivables, net of allowance for credit loss of $32,472 and $32,838							Receivables, net of allowance for credit loss of $32,472 and $32,838	2,092,613		1,974,381
Contract assets, net of allowance for credit loss							Contract assets, net of allowance for credit loss	123,558		132,874
Prepaid expenses and other	72,005			52,386			Prepaid expenses and other	95,896		85,005

Total current assets	2,706,573			2,753,074			Total current assets	2,606,639		2,640,118
Property and equipment, net	222,390			228,301			Property and equipment, net	211,799		208,423
Goodwill	1,291,715			1,258,922			Goodwill	1,450,999		1,291,760
Other intangible assets, net	110,869			108,822			Other intangible assets, net	132,013		90,931
Right-of-use lease assets	262,355			—			Right-of-use lease assets	345,908		310,860
Deferred tax assets	12,957			9,993			Deferred tax assets	14,605		13,485
Other assets	77,250			68,300			Other assets	86,357		85,483
Total assets	$	4,684,109		$	4,427,412		Total assets	$	4,848,320	$	4,641,060

LIABILITIES AND STOCKHOLDERS’ INVESTMENT							LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:							Current liabilities:
Accounts payable	$	1,064,432		$	971,023		Accounts payable	$	1,098,905	$	984,604
Outstanding checks	58,213			92,084			Outstanding checks	51,649		78,231
Accrued expenses:							Accrued expenses:
Compensation	92,676			153,626			Compensation	88,528		112,784
Transportation expense	138,970			119,820			Transportation expense	93,900		101,194
Income taxes	25,309			28,360			Income taxes	14,473		12,354
Other accrued liabilities	61,948			63,410			Other accrued liabilities	65,930		62,706
Current lease liabilities	54,792			—			Current lease liabilities	70,423		61,280
Current portion of debt	—			5,000			Current portion of debt	320,917		142,885
Total current liabilities	1,496,340			1,433,323			Total current liabilities	1,804,725		1,556,038

Long-term debt	1,253,849			1,341,352			Long-term debt	1,092,660		1,092,448
Noncurrent lease liabilities	215,830			—			Noncurrent lease liabilities	286,210		259,444
Noncurrent income taxes payable	22,063			21,463			Noncurrent income taxes payable	21,576		22,354
Deferred tax liabilities	36,344			35,757			Deferred tax liabilities	55,766		39,776
Other long-term liabilities	372			430			Other long-term liabilities	265		270
Total liabilities	3,024,798			2,832,325			Total liabilities	3,261,202		2,970,330
Stockholders’ investment:							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; 179,423 and 179,400 shares issued, 135,731 and 137,284 outstanding	13,573			13,728
Preferred stock, $0.10 par value, 20,000 shares authorized; 0 shares issued or outstanding							Preferred stock, $0.10 par value, 20,000 shares authorized; 0 shares issued or outstanding	—		—
Common stock, $0.10 par value, 480,000 shares authorized; 179,700 and 179,380 shares issued, 134,586 and 134,895 outstanding							Common stock, $0.10 par value, 480,000 shares authorized; 179,700 and 179,380 shares issued, 134,586 and 134,895 outstanding	13,459		13,490
Additional paid-in capital	541,090			521,486			Additional paid-in capital	533,819		546,646
Retained earnings	4,037,610			3,845,593			Retained earnings	4,153,109		4,144,834
Accumulated other comprehensive loss	(72,326		)	(71,935		)	Accumulated other comprehensive loss	(108,344)		(76,149)
Treasury stock at cost (43,692 and 42,116 shares)	(2,860,636		)	(2,713,785		)
Treasury stock at cost (45,114 and 44,485 shares)							Treasury stock at cost (45,114 and 44,485 shares)	(3,004,925)		(2,958,091)
Total stockholders’ investment	1,659,311			1,595,087			Total stockholders’ investment	1,587,118		1,670,730
Total liabilities and stockholders’ investment	$	4,684,109		$	4,427,412		Total liabilities and stockholders’ investment	$	4,848,320	$	4,641,060


	Common Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders’ Investment
Balance December 31, 2019	134,895	$	13,490	$	546,646	$	4,144,834	$	(76,149)	$	(2,958,091)	$	1,670,730
Net income						78,146						78,146
Foreign currency adjustments, net of tax								(32,195)				(32,195)
Dividends declared, $0.51 per share						(69,871)						(69,871)
Stock issued for employee benefit plans	343	34		(24,192)						21,632		(2,526)
Issuance of restricted stock, net of forfeitures	321	32		(32)								—
Stock-based compensation expense	—	—		11,397						—		11,397
Repurchase of common stock	(973)	(97)								(68,466)		(68,563)
Balance March 31, 2020	134,586	$	13,459	$	533,819	$	4,153,109	$	(108,344)	$	(3,004,925)	$	1,587,118



	Common Shares Outstanding		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (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									161,788									161,788
Foreign currency translation												5,297						5,297
Dividends declared, $0.50 per share									(69,683		)							(69,683		)
Stock issued for employee benefit plans	342		34			(11,520		)							19,059			7,573
Issuance of restricted stock, net of forfeitures	(3	)	—			—												—
Stock-based compensation expense	—		—			17,123									—			17,123
Repurchase of common stock	(734	)	(73		)										(64,551		)	(64,624		)
Balance March 31, 2019	136,889		13,689			527,089			3,937,698			(66,638		)	(2,759,277		)	1,652,561
Net income									169,180									169,180
Foreign currency translation												(5,688		)				(5,688		)
Dividends declared, $0.50 per share									(69,268		)							(69,268		)
Stock issued for employee benefit plans	129		13			(681		)							8,367			7,699
Issuance of restricted stock, net of forfeitures	23		2			(2		)										—
Stock-based compensation expense	—		—			14,684									—			14,684
Repurchase of common stock	(1,310	)	(131		)										(109,726		)	(109,857		)
Balance June 30, 2019	135,731		$	13,573		$	541,090		$	4,037,610		$	(72,326	)	$	(2,860,636	)	$	1,659,311


																						Common Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders’ Investment
Balance December 31, 2018																					Balance December 31, 2018	137,284	$	13,728	$	521,486	$	3,845,593	$	(71,935)	$	(2,713,785)	$	1,595,087
Net income																					Net income						161,788						161,788
	Common Shares Outstanding		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders’ Investment
Balance December 31, 2017	139,542		$	13,954		$	444,280		$	3,437,093		$	(18,460	)	$	(2,451,122	)	$	1,425,745
Net income									142,297									142,297
Cumulative effect change - revenue recognition									9,239									9,239
Foreign currency translation												(565		)				(565		)
Dividends declared, $0.46 per share									(65,384		)							(65,384		)
Foreign currency adjustments																					Foreign currency adjustments								5,297				5,297
Dividends declared, $0.50 per share																					Dividends declared, $0.50 per share						(69,683)						(69,683)
Stock issued for employee benefit plans	370		37			(10,441		)							16,810			6,406			Stock issued for employee benefit plans	342	34		(11,520)						19,059		7,573
Issuance of restricted stock, net of forfeitures	(2	)	—			—												—			Issuance of restricted stock, net of forfeitures	(3)	—		—								—
Stock-based compensation expense	—		—			18,127									7			18,134			Stock-based compensation expense	—	—		17,123						—		17,123
Repurchase of common stock	(557	)	(56		)										(51,144		)	(51,200		)	Repurchase of common stock	(734)	(73)								(64,551)		(64,624)
Balance March 31, 2018	139,353		13,935			451,966			3,523,245			(19,025		)	(2,485,449		)	1,484,672
Net income									159,163									159,163
Foreign currency translation												(27,512		)				(27,512		)
Dividends declared, $0.46 per share									(65,084		)							(65,084		)
Stock issued for employee benefit plans	174		17			(85		)							10,615			10,547
Issuance of restricted stock, net of forfeitures	1		—			—												—
Stock-based compensation expense	—		—			26,570									—			26,570
Repurchase of common stock	(784	)	(78		)										(70,119		)	(70,197		)
Balance June 30, 2018	138,744		$	13,874		$	478,451		$	3,617,324		$	(46,537	)	$	(2,544,953	)	$	1,518,159
Balance March 31, 2019																					Balance March 31, 2019	136,889	$	13,689	$	527,089	$	3,937,698	$	(66,638)	$	(2,759,277)	$	1,652,561


	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
	2019			2018			2019			2018				2020		2019
Revenues:													Revenues:
Transportation	$	3,638,612		$	3,953,139		$	7,143,544		$	7,590,779		Transportation	$	3,542,118	$	3,504,932
Sourcing	270,228			322,898			516,506			610,585			Sourcing	262,890		246,278
Total revenues	3,908,840			4,276,037			7,660,050			8,201,364			Total revenues	3,805,008		3,751,210
Costs and expenses:													Costs and expenses:
Purchased transportation and related services	2,972,998			3,313,196			5,826,254			6,354,798			Purchased transportation and related services	3,000,113		2,853,256
Purchased products sourced for resale	240,626			291,358			459,780			549,158			Purchased products sourced for resale	236,942		219,154
Personnel expenses	338,886			340,630			678,984			668,927			Personnel expenses	330,220		340,098
Other selling, general, and administrative expenses	128,795			111,845			242,947			217,888			Other selling, general, and administrative expenses	128,293		114,152
Total costs and expenses	3,681,305			4,057,029			7,207,965			7,790,771			Total costs and expenses	3,695,568		3,526,660
Income from operations	227,535			219,008			452,085			410,593			Income from operations	109,440		224,550
Interest and other expense	(6,615		)	(5,128		)	(23,755		)	(15,828		)	Interest and other expense	(15,228)		(17,140)
Income before provision for income taxes	220,920			213,880			428,330			394,765			Income before provision for income taxes	94,212		207,410
Provision for income taxes	51,740			54,717			97,362			93,305			Provision for income taxes	16,066		45,622
Net income	169,180			159,163			330,968			301,460			Net income	78,146		161,788
Other comprehensive loss	(5,688		)	(27,512		)	(391		)	(28,077		)
Other comprehensive (loss) income, net of tax													Other comprehensive (loss) income, net of tax	(32,195)		5,297
Comprehensive income	$	163,492		$	131,651		$	330,577		$	273,383		Comprehensive income	$	45,951	$	167,085

Basic net income per share	$	1.23		$	1.14		$	2.41		$	2.16		Basic net income per share	$	0.58	$	1.17
Diluted net income per share	$	1.22		$	1.13		$	2.39		$	2.14		Diluted net income per share	$	0.57	$	1.16

Basic weighted average shares outstanding	137,185			139,464			137,518			139,745			Basic weighted average shares outstanding	135,474		137,854
Dilutive effect of outstanding stock awards	1,071			1,147			1,149			1,215			Dilutive effect of outstanding stock awards	495		1,101
Diluted weighted average shares outstanding	138,256			140,611			138,667			140,960			Diluted weighted average shares outstanding	135,969		138,955



Three Months Ended June 30, 2019
Shares purchased by employees	Aggregate cost to employees		Expense recognized by the company
53,503	$	3,621,065	$	639,011



	Six Months Ended June 30, 2019
	NAST		Global Forwarding		All Other and Corporate		Total
Major Service Lines
Transportation and logistics services	$	5,668,837	$	1,130,050	$	344,657	$	7,143,544
Sourcing	—		—		516,506		516,506
Total	$	5,668,837	$	1,130,050	$	861,163	$	7,660,050

Timing of Revenue Recognition
Performance obligations completed over time	$	5,668,837	$	1,130,050	$	344,657	$	7,143,544
Performance obligations completed at a point in time	—		—		516,506		516,506
Total	$	5,668,837	$	1,130,050	$	861,163	$	7,660,050

	Six Months Ended June 30, 2018
	NAST		Global Forwarding		All Other and Corporate		Total
Major Service Lines
Transportation and logistics services	$	6,071,604	$	1,171,351	$	347,824	$	7,590,779
Sourcing	—		—		610,585		610,585
Total	$	6,071,604	$	1,171,351	$	958,409	$	8,201,364

Timing of Revenue Recognition
Performance obligations completed over time	$	6,071,604	$	1,171,351	$	347,824	$	7,590,779
Performance obligations completed at a point in time	—		—		610,585		610,585
Total	$	6,071,604	$	1,171,351	$	958,409	$	8,201,364



Lease Costs	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease expense	$	16,957	$	33,779
Short-term lease expense	3,076		5,417
Total lease expense	$	20,033	$	39,196


Lease Costs	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Operating lease expense	$	19,974	$	16,822
Short-term lease expense	2,572		2,341
Total lease expense	$	22,546	$	19,163



Other Lease Information	Six Months Ended June 30, 2019
Operating cash flows from operating leases	$	33,376
Right-of-use lease assets obtained in exchange for new lease liabilities	26,198



Maturity of Lease Liabilities	Operating Leases
Remaining 2019	$	32,490
2020	61,449
2021	49,061
2022	35,940
2023	25,550
Thereafter	109,909
Total lease payments	314,399
Less: Interest	(43,777		)
Present value of lease liabilities	$	270,622



2019	$	53,675
2020	47,680
2021	36,832
2022	27,644
2023	19,406
Thereafter	81,465
Total lease payments	$	266,702


	Total Number of Shares (or Units) Purchased⁽¹⁾	Average Price Paid Per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Number of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs ⁽²⁾
January 2020	233,984	$	78.15	208,876	9,784,807
February 2020	450,705	72.41		299,495	9,485,312
March 2020	477,207	65.88		463,239	9,022,073
First Quarter 2020	1,161,896	$	70.88	971,610	9,022,073


	June 30, 2019							December 31, 2018								March 31, 2020										December 31, 2019
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net			Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Finite-lived intangibles															Finite-lived intangibles
Customer relationships	$	275,243	$	(174,879	)	$	100,364	$	254,293	$	(156,006	)	$	98,287	Customer relationships	$	282,180	$	(160,642)	$	121,538	$	237,335	$	(156,879)	$	80,456
Non-competition agreements	300		(270		)	30		300		(240		)	60
Total finite-lived intangibles	275,543		(175,149		)	100,394		254,593		(156,246		)	98,347

Indefinite-lived intangibles															Indefinite-lived intangibles
Trademarks	10,475		—			10,475		10,475		—			10,475		Trademarks	10,475		—		10,475		10,475		—		10,475
Total intangibles	$	286,018	$	(175,149	)	$	110,869	$	265,068	$	(156,246	)	$	108,822	Total intangibles	$	292,655	$	(160,642)	$	132,013	$	247,810	$	(156,879)	$	90,931


10.1		Second Amendment to the Receivables Purchase Agreement, dated as of February 14, 2020, by and among C.H. Robinson Receivables, LLC, C.H. Robinson Worldwide, Inc., Bank of America, N.A., and Wells Fargo Bank, N.A. (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019)

~~10.1~~31.1		Amended and Restated C.H. Robinson Worldwide, Inc. 2013 Equity Incentive Plan (incorporated by reference to Appendix A to the Proxy Statement on Form DEF14A filed on March 29, 2019, on file no. 000-23189)

~~31.1~~	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of the ~~Interim~~ Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of the Chief Executive Officer pursuant to ~~Section~~ Sectio n 906 of the ~~Sarbanes-Oxley~~Sarbanes-O xley Act of 2002

32.2		Certification of the ~~Interim~~ Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		Financial statements from the Quarterly Report on Form 10-Q of the Company for the period ended ~~June 30, 2019~~March 31, 2020 formatted in Inline XBRL (embedded within the Inline XBRL document)

104		The cover page from the Quarterly Report on Form 10-Q of the Company for the period ended ~~June 30, 2019~~March 31, 2020 formatted in Inline XBRL (embedded within the Inline XBRL document)

Lease Term and Discount Rate

As of ~~June 30, 2019~~
March 31, 2020

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

Weighted average discount rate

~~3.6~~3.3