Form 10-Q

 

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

(Mark One)

 

x

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

OR

 

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                 TO                

Commission File Number
000-23189

C.H. ROBINSON WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

 

41-1883630
(I.R.S. Employer Identification No.)

     

8100 Mitchell Road, Eden Prairie, Minnesota
(Address of principal executive offices)

 

55344-2248
(Zip Code)

(952) 937-8500
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes  x     No  o

As of October 31, 2001, the number of outstanding shares of the registrant's common stock was 84,501,657.


 


PART I –  FINANCIAL INFORMATION

ITEM 1.   Financial Statements

C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)

ASSETS

  September 30,
2001

    December 31,
2000

 
   

(unaudited)

       

CURRENT ASSETS:

               

       Cash and cash equivalents

 

$

86,552

   

$

79,912

 

       Receivables, net of allowance for doubtful accounts
          of $24,445 and $22,712

   

386,880

     

354,953

 

       Deferred tax asset

   

12,466

     

21,219

 

       Prepaid expenses and other

   

5,468

     

4,155

 
   
   
 

                 Total current assets

   

491,366

     

460,239

 
                   

PROPERTY AND EQUIPMENT, net

   

31,860

     

29,402

 

INTANGIBLE AND OTHER ASSETS, net

   

150,628

     

154,566

 
   
   
 
   

$

673,854

   

$

644,207

 
   
   
 
                     

LIABILITIES AND STOCKHOLDERS' INVESTMENT

               
                     

CURRENT LIABILITIES:

               

       Accounts payable

 

$

280,925

   

$

285,932

 

       Accrued expenses –

               

          Compensation and profit-sharing contribution

   

24,642

     

33,456

 

          Income taxes and other

   

23,756

     

26,863

 
   
   
 

                 Total current liabilities

   

329,323

     

346,251

 
                   

LONG TERM OBLIGATIONS AND OTHER

   

2,410

     

940

 
                   

STOCKHOLDERS' INVESTMENT:

               

       Preferred stock, $0.10 par value, 20,000 shares authorized;
          no shares issued or outstanding

   

     

 

       Common stock, $0.10 par value; 130,000 shares authorized;
          85,008 and 85,008 shares issued, 84,510 and 84,621
          shares outstanding

   

8,451

     

8,462

 

       Additional paid-in capital

   

99,682

     

101,571

 

       Retained earnings

   

255,187

     

204,463

 

       Deferred compensation

   

(6,431

)

   

(6,980

)

       Cumulative other comprehensive loss

   

(1,310

)

   

(1,049

)

       Treasury stock at cost (498 and 387 shares)     (13,458 )     (9,451 )
   
   
 

                 Total stockholders' investment

   

342,121

     

297,016

 
   
   
 
   

$

673,854

   

$

644,207

 
   
   
 

The accompanying notes are an integral part of these condensed consolidated balance sheets.

-2-


 


C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share data)
(unaudited)

    Three Months
Ended September 30,

    Nine Months
Ended September 30,

 
    2001
    2000
    2001
    2000
 

GROSS REVENUES

 

$

784,517

   

$

747,615

   

$

2,313,695

   

$

2,148,700

 

COST OF TRANSPORTATION AND
PRODUCTS

   

671,325

     

640,461

     

1,969,191

     

1,836,773

 
   
   
   
   
 

NET REVENUES

   

113,192

     

107,154

     

344,504

     

311,927

 

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES

   

78,422

     

77,004

     

243,803

     

225,252

 
   
   
   
   
 

INCOME FROM OPERATIONS

   

34,770

     

30,150

     

100,701

     

86,675

 

INVESTMENT AND OTHER INCOME

   

2,508

     

361

     

3,753

     

288

 
   
   
   
   
 

INCOME BEFORE PROVISION FOR INCOME
TAXES

   

37,278

     

30,511

     

104,454

     

86,963

 

PROVISION FOR INCOME TAXES

   

14,650

     

12,051

     

41,050

     

34,350

 
   
   
   
   
 

NET INCOME

   

22,628

     

18,460

     

63,404

     

52,613

 

OTHER COMPREHENSIVE LOSS:

                               

        Foreign currency translation adjustment

   

(86

)

   

(172

)

   

(261

)

   

(244

)

   
   
   
   
 

COMPREHENSIVE INCOME

 

$

22,542

   

$

18,288

   

$

63,143

   

$

52,369

 
   
   
   
   
 
           

 

                   

BASIC NET INCOME PER SHARE

 

$

0.27

    $

0.22

   

$

0.75

   

$

0.62

 

DILUTED NET INCOME PER SHARE

 

$

0.26

   

$

0.21

   

$

0.74

   

$

0.61

 

BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING

   

84,294

     

84,518

     

84,339

     

84,553

 

DILUTIVE EFFECT OF OUTSTANDING
STOCK AWARDS

   

1,400

     

1,404

     

1,437

     

1,121

 
   
   
   
   
 

DILUTED WEIGHTED AVERAGE SHARES
OUTSTANDING

   

85,694

     

85,922

     

85,776

     

85,674

 
   
   
   
   
 

The accompanying notes are an integral part of these condensed consolidated statements.

-3-


 

 


C.H. ROBINSON WORLDWIDE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)

    Nine Months Ended
September 30,
 
   
 
      2001     2000  
   
 
 
OPERATING ACTIVITIES:              
    Net income   $ 63,404   $ 52,613  
    Adjustments to reconcile net income to net cash provided by operating
        activities-
             
         Depreciation and amortization     14,417     12,744  
         Deferred compensation expense     549      
         Deferred income taxes     9,453     (881 )
         Gain/loss on sale or disposal of assets     (996 )   273  
    Changes in operating elements-              
         Receivables     (31,927 )   (97,968 )
         Prepaid expenses and other     (1,313 )   (1,408 )
         Accounts payable     (5,009 )   63,249  
         Accrued compensation and profit sharing contribution     (8,814 )   3,771  
         Accrued income taxes and other     (3,107 )   8,072  
   
 
 
              Net cash provided by operating activities     36,657     40,465  
   
 
 
               
INVESTING ACTIVITIES:              
    Purchases of property and equipment     (15,296 )   (13,021 )
    Sales of property and equipment     5,000     131  
    Cash paid for acquisitions         (5,898 )
    Other, net     (1,136 )   (2,716 )
   
 
 
         Net cash used for investing activities     (11,432 )   (21,504 )
   
 
 
FINANCING ACTIVITIES:              
    Stock issued for employee benefit plans     4,071     2,500  
    Repurchase of common stock     (9,978 )   (6,310 )
    Cash dividends     (12,678 )   (10,058 )
   
 
 
         Net cash used for financing activities     (18,585 )   (13,868 )
   
 
 
         Net increase in cash and cash equivalents     6,640     5,093  
CASH AND CASH EQUIVALENTS, beginning of period     79,912     49,637  
   
 
 
CASH AND CASH EQUIVALENTS, end of period   $ 86,552   $ 54,730  
   
 
 

The accompanying notes are an integral part of these condensed consolidated statements.

-4-



C.H. ROBINSON WORLDWIDE INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. General:

Basis of Presentation

       C.H. Robinson Worldwide, Inc. and its Subsidiaries (the "Company," "we," "us," or "our") is a global provider of multimodal transportation services and logistics solutions through a network of 139 branch offices in North America, South America and Europe.  The condensed consolidated financial statements include the accounts of C.H. Robinson Worldwide, Inc. and its majority owned and controlled subsidiaries.  Minority interests in subsidiaries are not significant.  All significant intercompany transactions and balances have been eliminated in the condensed consolidated financial statements.

       The condensed consolidated financial statements, which are unaudited, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC").  In management's opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented.  The results of operations for the nine months ended September 30, 2001 and 2000 are not necessarily indicative of results to be expected for the entire year.  Pursuant to SEC rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from these statements.  The condensed consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K.

2.      New Accounting Pronouncements:

       On June 29, 2001, the Financial Accounting Standards Board (FASB) approved for issuance Statement of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS 142, Goodwill and Intangible Assets.  Major provisions of these Statements are as follows: all business combinations initiated after June 30, 2001 must use the purchase accounting method of accounting; the pooling of interest method of accounting is prohibited except for transactions initiated before July 1, 2001; intangible assets acquired in a business combination must be recorded separately from goodwill if they arise from contractual or other legal rights or are separable from the acquired entity and can be sold, transferred, licensed, rented or exchanged, either individually or as part of a related contract, asset or liability; goodwill and intangible assets with indefinite lives are not amortized but tested for impairment annually, except in certain circumstances, and whenever there is an impairment indicator; all acquired goodwill must be assigned to reporting units for purposes of impairment testing and segment reporting; effective January 1, 2002, goodwill will no longer be subject to amortization.  We have assessed the impact of SFAS 141 and 142 on our financial condition and results of operations.  At the present, we believe there is no impairment of goodwill.  Further, recorded goodwill of $145.0 million as of  September 30, 2001 will no longer be amortized starting on January 1, 2002.  This will reduce our expected amortization expense by $5.3 million in 2002. 

ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

       The following discussion of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and Notes thereto.

General

       Gross revenues represent the total dollar value of services and goods we sell to our customers.  Our costs of transportation and products include the contracted direct costs of transportation, including motor carrier, intermodal, ocean, air, and other costs, and the purchase price of the products we source.  We act principally as a service provider to add value and expertise in the execution and procurement of these services for our customers.  Our net revenues (gross revenues less cost of transportation and products) are the primary indicator of our ability to source,

-5-


 

 


add value and resell services and products that are provided by third parties, and are considered by management to be our primary measurement of growth.  Accordingly, the discussion of results of operations below focuses on the changes in our net revenues.

       In the transportation industry, results of operations generally show a seasonal pattern as customers reduce shipments during and after the winter holiday seasonIn recent years, our operating incomehas been lower in the first quarter than in the other three quarters.  Seasonality in the transportation industry has not had a significant impact on our results of operations or our cash flows in recent years. Also, inflation has not materially affected our operations due to the short-term, transactional basis of our business.  However, we cannot fully predict the impact seasonality and inflation may have in the future.

Results of Operations

       The following table summarizes our net revenues by service line:

 
Three Months Ended
September 30,

 
Nine Months Ended
September 30,

 
 
2001
 
2000
 
% change
 
2001
 
2000
 
% change
 

Net revenues (in thousands)

                               

    Transportation:

                               

       Truck 

$

86,516

 

$

79,945

 

8.2

%

$

263,682

 

$

230,650

 

14.3

%

       Intermodal   

 

4,053

   

3,752

 

8.0

%

 

11,647

   

10,589

 

10.0

%

       Ocean 

 

3,649

   

4,413

 

(17.3

)%

 

11,158

   

12,640

 

(11.7

)%

       Air   

 

538

   

1,211

 

(55.6

)%

 

1,993

   

2,834

 

(29.7

)%

       Miscellaneous

 

1,924

   

1,740

 

10.6

%

 

5,302

   

5,597

 

(5.3

)%

 
 
     
 
     

             Total transportation

 

96,680

   

91,061

 

6.2

%

 

293,782

   

262,310

 

12.0

%

    Sourcing     

 

11,186

   

10,956

 

2.1

%

 

35,152

   

34,461

 

2.0

%

    Information services  

 

5,326

   

5,137

 

3.7

%

 

15,570

   

15,156

 

2.7

%

 
 
     
 
     

             Total  

$

113,192

 

$

107,154

 

5.6

%

$

344,504

 

$

311,927

 

10.4

%

 
 
     
 
     

       The following table represents certain income statement data shown as a percentage of our net revenues:

 
 
Three Months Ended
September 30,

 
 
 
Nine Months Ended
September 30,

 
 
 
2001
 
 
 
2000
 
 
 
2001
 
 
 
2000
 

Net revenues    

 

100.0

%

   

100.0

%

   

100.0

%

   

100.0

%

Selling, general and administrative expenses       

 

69.3

%

   

71.9

%

   

70.8

%

   

72.2

%

   
     
     
     
 

Income from operations  

 

30.7

%

   

28.1

%

   

29.2

%

   

27.8

%

Investment and other income      

 

2.2

%

   

0.3

%

   

1.1

%

   

0.1

%

   
     
     
     
 

Income before provisions for income taxes 

 

32.9

%

   

28.4

%

   

30.3

%

   

27.9

%

Provision for income taxes       

 

12.9

%

   

11.2

%

   

11.9

%

   

11.0

%

   
     
     
     
 

Net income     

 

20.0

%

   

17.2

%

   

18.4

%

   

16.9

%

   
     
     
     
 

Three Months Ended September 30, 2001 Compared to Three Months Ended September 30, 2000

       Revenues.  Gross revenues for the three months ended September 30, 2001 were $784.5 million, an increase of 4.9% over gross revenues of $747.6 million for the three months ended September 30, 2000.  Net revenues for the three months ended September 30, 2001 were $113.2 million, an increase of 5.6% over net revenues of $107.2 million for the three months ended September 30, 2000, resulting from an increase in transportation net revenues of 6.2% to $96.7 million, an increase in sourcing net revenues of 2.1% to $11.2 million and an increase in information services net revenues of 3.7% to $5.3 million.  Our net revenues increased at a faster rate than our gross revenues due to the different growth rates of our service lines.  The net revenue margin, or net

-6-


 


 revenues as a percentage of gross revenues, varies by business line.  Information services has the highest net revenue margin, followed by transportation and finally sourcing. 

       Transportation net revenues were 85.4% of our total net revenues for the quarter.  Our transportation net revenues grew at 6.2%, with growth in our truck business of 8.2%, and in our intermodal business of 8.0%.  Our truck business growth, including less-than-truckload business, was primarily volume driven, as net revenue per transaction declined slightly.  Our intermodal net revenue growth rate slowed compared to recent quarters, primarily as a result of somewhat depressed truckload rates, which lessened the financial incentives to move goods via intermodal, and also slower growth of the economy.  Our net revenues in air, ocean and miscellaneous (primarily customs brokerage revenue) decreased a total of 17.0% for the quarter.  A significant portion of our net revenues in these three areas is earned from several key customers.  Our business with these key customers is down due to their decreased volumes.

       Sourcing net revenues increased 2.1% in the third quarter, as we continue to experience a transition in the customer base of our sourcing business.  The consolidation and growth of large grocery retailers has contributed to less reliance on produce wholesalers.  Historically, our primary customer base was produce wholesalers, although we also have been selling to national retailers.  During the quarter, we have increased our business with large produce retailers faster than our traditional business with produce wholesalers decreased. 

       Information services net revenues increased 3.7% in the third quarter.  In the third quarter of 2000, this business line was comprised of T-Chek Systems, a freight payment company and software license fees.  The license fees terminated at the end of 2000 and the freight payment company was phased out June 30, 2001.  For the third quarter of 2001, T-Chek Systems had growth of 14.4%.

       Selling, General and Administrative Expenses.  Selling, general and administrative expenses for the three months ended September 30, 2001 were $78.4 million, an increase of 1.8% over $77.0 million for the three months ended September 30, 2000.  Selling, general and administrative expenses as a percentage of net revenues decreased to 69.3% for the three months ended September 30, 2001 compared to 71.9% for the three months ended September 30, 2000.  This quarter we had notable declines in communications costs,  travel and entertainment expenses and contractor costs.  We continue to examine our use of data and voice communication lines, finding ways to minimize usage and buy these services at lower rates.  The events of September 11, 2001, in addition to emphasis on expense control, contributed to a reduction in travel and entertainment spending in the third quarter.  Additionally, contractor costs for IT development related to the integration of systems from acquisitions continue to decline.

       Income from Operations.  Income from operations was $34.8 million for the three months ended September 30, 2001, an increase of 15.3% over $30.2 million for the three months ended September 30, 2000.  Income from operations as a percentage of net revenues was 30.7% and 28.1% for the three months ended September 30, 2001 and 2000.

       Investment and Other Income.  Investment and other income was $2.5 million for the three months ended September 30, 2001 compared to $361,000 for the three months ended September 30, 2000.  This includes $2.0 million from unusual items, principally a gain on sale.  Our cash and cash equivalents as of September 30, 2001 increased $31.8 million over the balance as of September 30, 2000.

       Provision for Income Taxes.  The effective income tax rates were 39.3% and 39.5% for the three months ended September 30, 2001 and 2000.  The effective tax rate for both periods is greater than the statutory federal income tax rate primarily due to state income taxes, net of federal benefit. 

       Net Income.  Net income was $22.6 million for the three months ended September 30, 2001, an increase of 22.6% over $18.5 million for the three months ended September 30, 2000.  Net income per share increased by 22.7% to $0.27 (basic) and 23.8% to $0.26 (diluted) for the three months ended September 30, 2001 compared to $0.22 (basic) and $0.21 (diluted) for the three months ended September 30, 2000.

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30, 2000

-7-


 


       Revenues.  Gross revenues for the nine months ended September 30, 2001 were $2.31 billion, an increase of 7.7% over gross revenues of $2.15 billion for the nine months ended September 30, 2000.  Net revenues for the nine months ended September 30, 2001 were $344.5 million, an increase of 10.4% over net revenues of $311.9 million for the nine months ended September 30, 2000, resulting from an increase in transportation net revenues of 12.0% to $293.8 million, an increase in sourcing net revenues of 2.0% to $35.2 million, and an increase in information services net revenues of 2.7% to $15.6 million.  Our net revenues increased at a faster rate than our gross revenues due to the different growth rates of our service lines.  The net revenue margin, or net revenues as a percentage of gross revenues, varies by business line.  Information services has the highest net revenue margin, followed by transportation and finally sourcing.

       Transportation net revenues were 85.3% of our total net revenues for the nine months ended September 30, 2001.  Our transportation net revenues grew at 12.0%, with growth in our truck business of 14.3%, and in our intermodal business of 10.0%.  Our truck business growth was primarily volume driven, with slight expansion in our net revenue margin.  We have historically been able to grow in slowing economies by adding new customers and providing additional services to existing customers.  The net revenue margin expansion is primarily related to the mix of services provided.  Our intermodal net revenue growth rate slowed compared to recent periods.  This was primarily a result of somewhat depressed truckload rates, which lessened the financial incentives to move goods via intermodal and also slower growth of the economy.  Our net revenues in air, ocean and miscellaneous (primarily customs brokerage revenue) decreased a total of 12.4%.  A significant portion of our net revenues in these three areas is earned from several key customers.  Our business with these key customers is down due to their decreased volumes. 

       Sourcing net revenues increased 2.0% in the first nine months of the year as we continue to experience a transition in the customer base of our sourcing business.  The consolidation and growth of large grocery retailers has contributed to less reliance on produce wholesalers.  Historically, our primary customer base was produce wholesalers, although we also have been selling to national retailers.  During the first nine months of the year, we have increased our business with large produce retailers faster than our traditional business with produce wholesalers decreased. 

       Information services net revenues increased 2.7% in the first nine months of the year.  In the first nine months of 2000, this business line was comprised of T-Chek Systems, a freight payment company and software license fees.  The license fees terminated at the end of 2000 and the freight payment company was phased out June 30, 2001.  For the first nine months of the year, T-Chek had growth of 12.1%.

       Selling, General and Administrative Expenses.  Selling, general and administrative expenses for the nine months ended September 30, 2001 were $243.8 million, an increase of 8.2% over $225.3 million for the nine months ended September 30, 2000.  Selling, general and administrative expenses as a percentage of net revenues decreased to 70.8% for the nine months ended September 30, 2001 compared to 72.2% for the nine months ended September 30, 2000.  During the first nine months of 2001, we had notable declines in communications and contractor costs.  We continue to examine our use of data and voice communication lines, finding ways to minimize usage and buy these services at lower rates.  Additionally, contractor costs for IT development related to the integration of systems from acquisitions continue to decline.

       Income from Operations. Income from operations was $100.7 million for the nine months ended September 30, 2001, an increase of 16.2% over $86.7 million for the nine months ended September 30, 2000.  Income from operations as a percentage of net revenues was 29.2% and 27.8% for the nine months ended September 30, 2001 and 2000.

       Investment and Other Income.  Investment and other income was $3.8 million for the nine months ended September 30, 2001 compared to $288,000 for the nine months ended September 30, 2000.  This includes $2.0 million from unusual items, principally a gain on sale.  Our cash and cash equivalents as of September 30, 2001 increased $31.8 million over the balance as of September 30, 2000.

       Provision for Income Taxes. The effective income tax rates were 39.3% and 39.5% for the nine months ended September 30, 2001 and 2000.  The effective income tax rate for both periods is greater than the statutory rate primarily due to state income taxes, net of federal benefit.

-8-


 


       Net Income.  Net income was $63.4 million for the nine months ended September 30, 2001, an increase of 20.5% over $52.6 million for the nine months ended September 30, 2000.  Net income per share increased by 21.0% to $0.75 (basic) and 21.3% to $0.74 (diluted) for the nine months ended September 30, 2001 compared to $0.62 (basic) and $0.61 (diluted) for the nine months ended September 30, 2000.

Liquidity and Capital Resources

       We have historically generated substantial cash from operations which has enabled us to fund our growth while paying cash dividends and repurchasing stock.  Cash and cash equivalents totaled $86.6 million and $79.9 million as of September 30, 2001 and December 31, 2000.

       We generated $36.7 million and $40.5 million of cash flow from operations for the nine months ended September 30, 2001 and 2000. Our operating cash flows were reduced during the first nine months of 2001 as a result of closing our freight payment company.  This company had a positive cash balance of $22 million as of December 31, 2000 and was closed in early June 2001. 

       We used $11.4 million and $21.5 million of cash and cash equivalents for investing activities for the nine months ended September 30, 2001 and 2000.  The decrease in cash used for investing activities is primarily due to our decrease in net capital expenditures to $10.3 million in the first nine months of 2001 from  $12.9 million in the first nine months of 2000.  In 2000 we purchased computers and related equipment to upgrade our company-wide network and to accommodate our headcount growth.  During 2001, we have maintained a consistent headcount which decreases our need for new capital expenditures.  In addition, we spent $5.9 million in the first nine months of 2000 on acquisitions.  We have made no acquisitions in 2001.

       We also used $18.6 million and $13.9 million of cash and cash equivalents for financing activities for the nine months ended September 30, 2001 and 2000, primarily to pay quarterly cash dividends and to repurchase common stock.  We declared a $0.05 per share dividend payable to stockholders of record as of September 7, 2001, paid on October 1, 2001.

       We had $40.0 million available under an existing line of credit at an interest rate of LIBOR plus 60 basis points, which was terminated during the third quarter.  During the first nine months of 2001, we had borrowings of $9.0 million, all of which was repaid by September 30, 2001.

       We also have 20 million French francs available under a line of credit at an interest rate of Euribor plus 90 basis points (3.73% at September 30, 2001).  This discretionary line of credit has no expiration date.  As of September 30, 2001, the outstanding balance was 13.4 million French francs or $1.9 million, which is included in income taxes and other current liabilities.  Our credit agreement contains certain financial covenants, but does not restrict the payment of dividends. We were in compliance with all covenants of this agreement as of September 30, 2001.

       Assuming no change in our current business plan, management believes that our available cash, together with expected future cash generated from operations and the amounts available under our line of credit, are expected to be sufficient to satisfy our anticipated needs for working capital, capital expenditures and cash dividends for all future periods.

New Accounting Pronouncements 

       On June 29, 2001, the Financial Accounting Standards Board (FASB) approved for issuance Statement of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS 142, Goodwill and Intangible Assets.  Major provisions of these Statements are as follows: all business combinations initiated after June 30, 2001 must use the purchase accounting method of accounting; the pooling of interest method of accounting is prohibited except for transactions initiated before July 1, 2001; intangible assets acquired in a business combination must be recorded separately from goodwill if they arise from contractual or other legal rights or are separable from the acquired entity and can be sold, transferred, licensed, rented or exchanged, either individually or as part of a related contract, asset or liability; goodwill and intangible assets with indefinite lives are not amortized but tested for

-9-


 


impairment annually, except in certain circumstances, and whenever there is an impairment indicator; all acquired goodwill must be assigned to reporting units for purposes of impairment testing and segment reporting; effective January 1, 2002, goodwill will no longer be subject to amortization.  We have assessed the impact of SFAS 141 and 142 on our financial condition and results of operations.  At the present, we believe there is no impairment of goodwill.  Further, recorded goodwill of $145.0 million as of  September 30, 2001 will no longer be amortized starting on January 1, 2002.  This will reduce our expected amortization expense by $5.3 million in 2002. 

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk

       We had approximately $86.6 million of cash and investments on September 30, 2001, all of which were cash and cash equivalents.  Substantially all of the cash equivalents are money market securities from domestic issuers.  Because of the credit risk criteria of our investment policies, the primary market risk associated with these investments is interest rate risk.  We do not use derivative financial instruments to manage interest rate risk or to speculate on future changes in interest rates.  A rise in interest rates could negatively affect the fair value of our investments.  We believe a reasonable near-term change in interest rates would not have a material impact on our future earnings due to the short-term nature of our investing practices.

Cautionary Statement Relevant to Forward-Looking Information

       Our discussions and analysis of our financial condition and results of operations, including our market risk discussions, contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements represent our expectations or beliefs, including, but not limited to, our current assumptions about future financial performance, anticipated problems and our plans for future operations, which are subject to various risks and uncertainties.  When used in this Form 10-Q and in future filings by the Company with the Securities and Exchange Commission, in our press releases, presentations to securities analysts or investors, in oral statements made by or with the approval of an executive officer of the Company, the words or phrases "believes", "may", "will", "expects", "should", "continue", "anticipates", "intends", "will likely result", "estimates", "projects" or similar expressions and variations thereof are intended to identify such forward-looking statements.  However, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements.  We caution that these statements by their nature involve risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors, including those described in Exhibit 99 to our Form 10-K filed with the Securities and Exchange Commission with respect to the fiscal year ended December 31, 2000.

-10-


 


PART II — OTHER INFORMATION

ITEM 1.  Legal Proceedings

              None.

ITEM 2.  Changes in Securities and Use of Proceeds

              None.

ITEM 3.  Defaults Upon Senior Securities

              None.

ITEM 4.  Submission of Matters to a Vote of Security Holders

              None.

ITEM 5.  Other Information

              None. 

ITEM 6.  Exhibits and Reports on Form 8-K

(a)         Exhibits

              None.

(b)         Reports on Form 8-K

              A report on Form 8-K was filed by the Company on July 18, 2001; such report contained information under Item 9 (Regulation FD) and included as an exhibit under Item 7 a copy of the Company's earnings release for the quarter ended June 30, 2001.

-11-


 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:    November 14, 2001

 

C.H.ROBINSON WORLDWIDE, INC.

     
 

By

              /s/ D.R. Verdoorn                                                   

   

              D.R. Verdoorn

   

              Chief Executive Officer

     
 

By

              /s/ Thomas K. Mahlke                                            

   

              Thomas K. Mahlke

   

              Controller

   

               (principal accounting officer)

-12-