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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number: 000-23189
C.H. ROBINSON WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
Delaware 41-1883630
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
8100 Mitchell Road, Eden Prairie, Minnesota 55344-2248
Address of principal executive offices) (Zip Code)
(952) 937-8500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.10 per
share
Preferred Share
Purchase Rights
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of Common Stock held by non-affiliates of the
registrant as of March 10, 2000 was approximately $1,709,870,973 (based on the
last sale price of such stock as quoted on The Nasdaq National Market ($49.438)
on such date).
As of March 10, 2000, the number of shares outstanding of the registrant's
Common Stock, par value $.10 per share, was 42,276,929.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the year
ended December 31, 1999 (the "Annual Report"), are incorporated by reference in
Part II.
Portions of the Registrant's Proxy Statement relating to its Annual Meeting
of Stockholders to be held May 2, 2000 (the "Proxy Statement"), are incorporated
by reference in Part III.
PART I
ITEM 1. BUSINESS
Overview
Founded in 1905, C.H. Robinson Worldwide, Inc. (the "Company" or
"Robinson") is one of the largest third-party logistics companies in North
America with 1999 gross revenues of $2.3 billion. The Company is a global
provider of multimodal transportation services and logistics solutions through a
network of 131 offices in the United States, Canada, Mexico, Europe and South
America. Through contracts with approximately 20,000 motor carriers, the Company
maintains the single largest network of motor carrier capacity in North America
and is one of the largest third-party providers of intermodal services in the
United States. In addition, the Company regularly provides air, ocean and
customs services. As an integral part of the Company's transportation services,
the Company provides a wide range of value-added logistics services, such as
fresh produce sourcing, freight consolidation, information reporting and cross-
docking. During 1999, the Company handled over 1,500,000 shipments for more than
10,000 customers ranging from Fortune 100 companies to small businesses in a
wide variety of industries.
The Company has developed global multimodal transportation and distribution
networks to provide seamless logistics services worldwide. As a result, the
Company has the capability of managing all aspects of the supply chain on behalf
of its customers. As a non-asset based transportation provider, the Company can
focus on optimizing the transportation solution for its customer rather than on
its own asset utilization, using established relationships with motor carriers,
railroads (primarily intermodal service providers), air freight carriers and
ocean carriers.
Throughout its 95-year history, the Company has been in the business of
sourcing fresh produce. Much of the Company's logistics expertise can be traced
to its significant experience in handling perishable commodities. Due to the
time-sensitive nature and quality requirements of the shipments, fresh produce
represents a unique logistics challenge, and the distribution and transportation
costs are significant. The Company has developed a network of produce sources
and maintains access to specialized equipment and transportation modes designed
to ensure timely delivery of uniform quality produce. In response to demand from
large grocery retailers and food service distributors, the Company has developed
its own brand of produce, The Fresh 1/(R)/, and entered into licensing
agreements for national brand names. The produce for these brands is sourced
through various relationships and packed to order through contract packing
agreements.
The Company's business philosophy has accounted for its strong historical
results and has positioned the Company for continued growth. The Company's
principal competitive advantage is its large decentralized branch network,
staffed by approximately 2,392 salespersons who are employees rather than
agents. These branch employees are in close proximity to both customers and
carriers which facilitates quick responses to customers' changing needs. Branch
employees act as a team in both marketing the Company's services and providing
these services to individual customers. The Company compensates its branch
employees principally on the basis of individual performance and their branch's
profitability, which in the Company's opinion produces a more service-oriented,
focused and creative sales force. The Company believes it is owned by more than
1,000 of its employees holding a majority of the Company's Common Stock.
The Company was reincorporated in Delaware in 1997 as the successor to a
business existing, in various legal forms, since 1905. The Company's Common
Stock began trading on The Nasdaq National Market under the symbol "CHRW" on
October 15, 1997. Certain stockholders of the Company sold 12,165,155 shares of
the Company's Common Stock to the public pursuant to a registered public
offering, the proceeds of which were paid entirely to the selling stockholders.
Prior to such date, there was no established public trading market for the
Company's Common Stock.
In January 1999, the Company acquired Norminter S.A., a European third
party logistics company, and its subsidiaries. Norminter, headquartered in
Caen, France, provides transportation and logistics services within Europe to
shippers in a variety of industries. Norminter had combined annual net revenues
of approximately $5,000,000 in 1998.
In August 1999, the Company acquired the ongoing operations and certain
assets of Vertex Transportation, Inc., a non-asset based third-party
transportation provider in East Rochester, New York. Vertex was the operating
subsidiary of Country Wide Transport Services, Inc., which had annual net
revenues of approximately $5,000,000 in 1998.
In December 1999, the Company acquired the ongoing operations and certain
assets of American Backhaulers, Inc., a privately held, non-asset based third-
party transportation provider, located primarily in Chicago, Illinois. American
Backhaulers had annual net revenues of approximately $54,000,000 in 1999. The
Company issued 1,120,715 shares as part of the purchase price for this
acquisition.
The Company's corporate office is located at 8100 Mitchell Road, Eden
Prairie, Minnesota 55344-2248, and its telephone number is (952) 937-8500. Its
web site address is www.chrobinson.com.
Logistic Services
As a global, third-party logistics company, the Company provides multimodal
transportation and related logistics services, sourcing and fee-based
information services.
The Company seeks to establish long-term relationships with its customers
in order to provide logistics solutions that reduce or eliminate inefficiencies
in customers' supply chains. Whenever appropriate, the Company analyzes the
customer's current transportation rate structures, modes of shipping and carrier
selection. The Company may also examine the customer's warehousing, picking
procedures, loading, unloading and dock scheduling procedures, as well as
packaging and pallet configuration procedures. The Company then evaluates how
these procedures interact with shipping, manufacturing and customer service.
Upon completion of an initial analysis, the Company proposes solutions which
allow the customer to streamline operating procedures and contain costs, while
improving the management of its supply chain. Robinson branch employees remain
involved with the customer throughout the analysis and implementation of the
proposed solution. In the course of providing day-to-day transportation
services, branch employees offer further logistics analysis and solutions as the
employees become more familiar with the customer's daily operations and the
nuances of its supply chain. The Company's ultimate goal is to assist the
customer in managing its entire supply chain while being the customer's key
provider of individual transportation services.
Multimodal Transportation Services
On a day-to-day basis, customers communicate their freight needs, typically
on a load-by-load basis, to the Company by means of a telephone call, fax
transmission, Internet, e-mail or EDI message to the branch office salesperson
responsible for the particular customer. All appropriate information about each
load is entered into the Company's computer based operating system. With the
help of the operating system, a salesperson then determines the appropriate mode
of transportation for the load and selects a carrier or carriers, based upon the
salesperson's knowledge of the carrier's service capability, equipment
availability, freight rates and other relevant factors. A salesperson then
communicates with the carrier's dispatch office to confirm a price for the
transportation and the carrier's commitment to provide the transportation. At
this point, the salesperson provides the carrier information to the customer,
together with the Company's sales price, which is intended to provide a profit
to the Company for the totality of services performed for the customer. By
accepting the customer's order, the Company becomes legally responsible for
transportation of the load from origin to destination, rather than being a mere
freight broker. The carrier's contract is with the Company, not the customer,
and the Company is responsible for prompt payment of carrier charges. The
Company is also responsible to its customer for any claims for damage to freight
while in transit or performance. In most cases, the Company receives
reimbursement from the carrier for these claims.
As a result of the Company's logistics capabilities, many customers now
look to Robinson to handle all, or a substantial portion, of their freight
transportation requirements to or from a particular manufacturing facility or
distribution center. In a number of instances, the Company has contracts with
the customer whereby the Company agrees to handle a specified number of loads
usually to specified destinations, such as from the customer's plant to a
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distribution center, at specific rates, but subject to seasonal variation. Most
of the Company's rate commitments are for periods of one year or less. To meet
its obligations under these customer contracts, Robinson may obtain advance
commitments from one or more carriers to transport all, or a significant
portion, of the contracted loads, again at specific rates, for the length of
Robinson's customer contract.
As part of its customer focus, Robinson offers a wide range of logistics
services on a worldwide basis to assure timely, efficient and cost effective
delivery through the use of one or more transportation modes. These logistics
services include: transportation management (price and modal comparisons and
selection; shipment consolidation and optimization; improvement of operating and
shipping procedures and claims management); minimization of storage (through
cross-docking and other flow-through operations); logistics network and nodal
location analysis to optimize the entire supply chain; tracking and tracing;
reverse logistics and other special needs; management information; and analysis
of a customer's risk and claims management practices. Robinson will evaluate a
customer's core carrier program by reviewing such factors as carriers' insurance
certificates, safety ratings and financial stability as well as establishing a
program to measure and monitor key quality standards for those core carriers.
These services are bundled with underlying transportation services and are not
typically separately priced, but instead are reflected as a part of the cost of
transportation services provided by the Company on a transactional basis
pursuant to continuing customer relationships. Incident to these transportation
services, the Company may supply sourcing, contract warehousing, consulting and
other services, for which it is separately compensated.
The Company is capable of arranging all modes of transportation services on
a worldwide basis:
. Truck--Through its contracts with approximately 20,000 motor carriers,
the Company maintains access to dry vans, temperature-controlled units
and flatbeds. It offers both time-definite and expedited truck
transportation. In many instances, particularly in connection with its
sourcing business, the Company will consolidate partial loads for several
customers into full truckloads.
. Less Than Truckload ("LTL") -- LTL transportation involves the shipment
of small package, single or multiple pallet, up to and including full
trailer-load freight. The Company focuses on pallet to partial load
freight, although it handles any size shipment. Through contracts with
motor carriers and its proprietary Internet-based software system,
Robinson consolidates both freight and freight information to provide
shippers with single source tracking and tracing capability, and the
economic benefits of consolidating partial loads into full truckloads.
. Intermodal--Intermodal transportation involves the shipment of trailers
or containers by a combination of truck, rail and/or ship in a
coordinated manner. The Company provides intermodal service by both rail
and ship, arranges local pickup and delivery (known as drayage) through
local motor carriers and provides temperature-controlled double and
triple-stacked intermodal containers. The Company currently owns or
leases approximately 500 intermodal containers. The Company also has
intermodal marketing contracts with railroads, which give the Company
access to additional trailers and containers.
. Ocean--As an indirect ocean carrier and freight forwarder, the Company
consolidates shipments, determines routing, selects ocean carriers,
contracts for ocean shipments, provides for local pickup and delivery of
shipments and arranges for customs clearance of shipments, including the
payment of duties.
. Air--The Company provides door-to-door service as a full-service air
freight forwarder, both domestically and internationally.
-3-
The table below shows the Company's net revenues by transportation mode for
the periods indicated:
Transportation Net Revenues
(in thousands)
Year Ended December 31,
---------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- ------- ------
Truck(1)............... $ 97,636 $110,460 $133,110 $164,186 $202,877
Intermodal............. 6,864 8,014 9,680 6,671 10,738
Ocean.................. 7,212 8,121 9,226 10,215 11,476
Air.................... 1,402 1,687 1,954 3,427 2,858
Miscellaneous(2)....... 3,907 4,964 5,290 5,298 5,899
Total................ $117,021 $133,246 $159,260 $189,797 $233,848
________________
(1) Includes LTL net revenues.
(2) Consists of customs clearance (Automated Brokerage Interface (ABI) and
Automated Clearing House (ACH) capabilities with the U.S. Customs Service),
warehousing, and other miscellaneous services.
As the Company has emphasized integrated logistics solutions, its
relationships with many customers have become broader, with the Company becoming
a business partner responsible for a greater portion of supply chain management.
Customers may be served by specially created Robinson teams and over several
branches. Robinson's multimodal transportation services are provided to
numerous international customers through its domestic branch offices as well as
through branch offices in Canada, Mexico, Belgium, England, France, Germany,
Italy, Poland, Spain, Argentina, Brazil and Venezuela. The Notes to the
Company's Consolidated Financial Statements present the Company's gross revenues
from international customers for the years ended December 31, 1997, 1998 and
1999, and the Company's long-lived assets as of December 31, 1998 and 1999, in
the United States and in foreign locations.
Sourcing
Throughout its 95-year history, Robinson has been in the business of
sourcing fresh produce. Much of the Company's logistics expertise can be traced
to the Company's significant experience in handling perishable commodities.
Because of its perishable nature, produce must be quickly packaged, transported
within tight timetables in temperature controlled equipment and distributed
quickly to replenish high turnover inventories maintained by wholesalers, food
service companies and retailers. In most instances, the Company consolidates
individual customers' produce orders into truckload quantities at the point of
origin and arranges for transportation of the truckloads, often to multiple
destinations. The Company's sourcing business is with produce wholesalers, who
purchase produce in relatively large quantities through the Company and resell
the produce to grocery retailers, restaurants and other resellers of food, and
with grocery store chains and other multistore retailers. Most of the Company's
remaining customers are food service companies that distribute a range of food
products to retailers, restaurants and institutions.
During the past five years, the Company has actively sought to expand its
food sourcing customer base by focusing on the larger multistore retailers. As
these retailers have expanded through store openings and industry consolidation,
their traditional methods of produce sourcing and store-level distribution,
which relied principally on regional or even local purchases from wholesalers,
have become inefficient. The Company's logistics and perishable commodities
sourcing expertise can greatly improve the retailers' produce purchasing as well
as assure uniform quality from region to region and store to store. The Company
provides just-in-time replenishment services to retailers. The Company
introduced its proprietary The Fresh 1/(R)/ brand of produce in 1989, which
includes a wide range of uniform
-4-
quality, top grade fruits and vegetables purchased from various domestic and
international growers. During 1998, the Company entered into new sourcing
programs, including licensing agreements for major national brands, that have
expanded the Company's market presence and sourcing capabilities with respect to
both product lines and nationally recognized brand names.
Sourcing accounted for approximately 19%, 18% and 15% of the Company's net
revenues in 1997, 1998 and 1999, respectively.
Information Services
A subsidiary of the Company, T-Chek Systems, Inc. provides motor carrier
customers with funds transfer and driver payroll services, fuel management
services, fuel and use tax reporting as well as on-line access to custom-
tailored information management reports, all through the use of its proprietary
automated system. This system enables motor carriers to track equipment, manage
fleets and dictate where and when their drivers purchase fuel. For several
companies and truck stop chains, T-Chek captures sales and fuel cost data,
applies the margin agreed between seller and purchaser, reprices the sale,
invoices the carrier and provides management information to the seller.
Through its subsidiary, Payment & Logistics Services, Inc., the Company
provides freight payment services to shippers using a proprietary system, often
linked to the carriers by EDI, with the ability to process freight payments by
electronic funds transfer. This system also enables the Company to
automatically audit the customer's freight rates, eliminate duplicate payments
to carriers and produce reports containing information about such matters as
shipping patterns, freight volumes and overall transportation costs. Upon
agreement, the Company and the customer can use this data to better manage the
customer's supply chain.
The Company's information services accounted for approximately 4%, 5% and
6% of the Company's net revenues in 1997, 1998 and 1999, respectively.
Organization
To allow the Company to stay close to customers and markets, the Company
has created and continues to expand a network of 131 offices supported by
executives and services in a central office.
Branch Network
Branch salespersons are responsible for developing new business, receiving
and processing orders from specific customers located in the area served by the
branch and contracting with carriers to provide the transportation requested. In
addition to routine transportation, salespersons are often called upon to handle
customers' unusual, seasonal and emergency needs. Shipments to be transported by
truck are almost always contracted at the branch level, and branches cooperate
with each other to cover loads. Some branches may rely on expertise in other
branches when contracting LTL, intermodal, international and air shipments.
Salespersons in the branches both sell and service their customers rather
than rely exclusively on a central office or dedicated sales staff. Sales
opportunities are identified through the Company's database, industry
directories, referrals by existing customers and leads generated by branch
office personnel through knowledge of their local and regional markets. Each
branch is also responsible for locating and contracting with carriers.
-5-
The table below shows certain information about the Company's branches for
the periods indicated:
Branch Data
(Dollars in thousands)
Year Ended December 31,
--------------------------------------------
1995 1996 1997 1998 1999
------- ------ ------ ------- --------
Average employees per branch 14.6 15.4 16.2 18.4 23.9
Average net revenues per branch $1,683 $1,717 $1,822 $2,082 $2,263
Average net revenues per employee $ 113 $ 115 $ 115 $ 119 $ 120
As of December 31, 1999, the Company's branch salespersons represented
approximately 70% of the Company's total work force and all branch employees,
including support staff, represented over 90% of the Company's work force. At
December 31, 1999, the number of salespersons per Company branch ranged from
three to approximately 450 (including salespersons and customer support at
American Backhaulers).
Branch Expansion. The Company expects to continue to add branch offices as
management determines that a new branch may contribute to continued growth and
as branch salespersons develop the capability to manage a new branch. The
Company intends to continue to open overseas branches as opportunities arise to
serve the local needs of multinational customers. Additional branches are often
opened within a territory previously served by another branch, such as within
major cities, as the volume of business in a particular area warrants opening a
separate branch. Capital required to open a new branch is modest, involving a
lease for a small amount of office space, communication links and often employee
compensation guaranties for a short time.
Branch Employees. For almost two decades, new branch salespersons have been
hired through a sophisticated profiling system using standardized tests to
measure an applicant against the traits determined by the Company to be those of
successful Robinson employees. These common traits facilitate cooperative
efforts necessary for the success of each office. Applicants are recruited
nationally from across the United States and Canada, typically have college
degrees and some have business experience, not necessarily within the
transportation industry. The Company is highly selective in determining to whom
it offers employment.
Newly hired branch employees receive extensive on-the-job training at the
branch level, which ranges from six months to a year and emphasizes development
of the necessary skills and attitude to become productive members of a branch
team. The Company believes most salespersons become productive employees in a
matter of weeks. After gaining a year of experience, each salesperson attends a
Company-sponsored national meeting to receive additional training and foster
relationships between branches.
Employees at the branch level form a team, which is enhanced by the
Company's incentive compensation system under which a significant part of the
cash compensation of most branch managers and salespersons is dependent on the
profitability of the particular branch. For any calendar year, branch managers
and salespersons who have been employed for at least one complete year
participate in the branch's earnings for that calendar year, based on a system
of "points" awarded to the employees on the basis of their productivity and
contribution. Most of a branch manager's cash compensation is provided by this
compensation program. For 1999, incentive-based cash compensation averaged
approximately 30% of branch salespersons' total cash compensation, 59% of branch
managers' total cash compensation and 56% of officers' total cash compensation.
Branch employees also participate in significant individual incentive
compensation based on achieving individual growth goals, and in the Company's
Profit Sharing Plan, contributions to which depend on overall Company
profitability and other factors. In connection with establishing new branches
and other special circumstances, the Company may guaranty a level of
compensation to the branch manager and key salespersons.
-6-
All managers and other employees throughout the Company who have
significant responsibilities are eligible to participate in the Company's 1997
Omnibus Stock Plan. Employees at all levels, after a qualifying period of
employment, are eligible to participate in the Company's Employee Stock Purchase
Plan.
Individual salespersons benefit both through the growth and profitability
of individual branches and by achieving individual goals, and are motivated by
the opportunity to become branch managers, assistant managers or department
managers. All branch salespersons are full time employees.
Executive Officers
Under the Company's decentralized operating system, branch managers report
directly to, and receive guidance and support from, a small group of executive
officers at the Company's central office. Customers, carriers, managers and
employees have direct access to the Company's Chief Executive Officer, D.R.
Verdoorn, and all other executive officers. These executives provide training
and education concerning logistics, develop new services and applications to be
offered to customers and provide broad market analysis.
The executive officers of the Company serve at the discretion of the Board
of Directors and are chosen annually by the Board of Directors. Set forth below
are the names, ages and positions of the executive officers of the Company.
Name Age Position
- ---- --- --------
D.R. Verdoorn 61 Chairman of the Board and Chief Executive Officer
John P. Wiehoff 38 President
Barry W. Butzow 53 Senior Vice President and Director
Gregory D. Goven 48 Senior Vice President
Owen P. Gleason 48 Vice President, General Counsel, Secretary and Director
James V. Larson 46 Vice President, Transportation
Chad M. Lindbloom 35 Vice President and Chief Financial Officer
Timothy P. Manning 35 Vice President, Branch Operations and Organizational Resources
Joseph J. Mulvehill 46 Vice President, International
Michael T. Rempe 46 Vice President, Produce
Mark Walker 42 Vice President, Chief Information Officer
Troy A. Renner 35 Treasurer
Thomas K. Mahlke 28 Corporate Controller
D.R. Verdoorn has been Chief Executive Officer of the Company and its
predecessor since 1977, and a director since 1975. In 1998, Mr. Verdoorn was
also named Chairman of the Board. He has been with the Company since 1963. He
has served on the Boards of Directors for United Fresh Fruit and Vegetable
Association and the Produce Marketing Association. Mr. Verdoorn attended Central
College in Pella, Iowa.
John P. Wiehoff has been President of the Company since December 1999.
Previous positions with the Company include Senior Vice President and Chief
Financial Officer since July 1, 1998, Treasurer, and Corporate Controller since
1992. Prior to that, he was employed by Arthur Andersen LLP. He holds a
Bachelor of Science degree from St. John's University.
Barry W. Butzow has been a Vice President of the Company since 1984 and a
director since 1986. In October of 1998, he was named a Senior Vice President.
He began employment with the Company in 1969. He holds a Bachelor of Arts degree
from Moorhead State University.
-7-
Gregory D. Goven has been a Vice President of the Company since 1988, and
was named a Senior Vice President in October of 1998. Mr. Goven joined the
Company in 1973. Mr. Goven holds a Bachelor of Science degree from North Dakota
State University. Mr. Goven's wife is the first cousin of Mr. Verdoorn.
Owen P. Gleason has been Vice President and General Counsel of the Company
since 1990 and served as corporate counsel since 1978. Mr. Gleason has been a
director since 1986. Mr. Gleason holds a law degree from Oklahoma City
University and a Bachelor's Degree from Ripon College.
James V. Larson has been Vice President, Transportation since July 1999.
Prior to that, he served as Vice President of Sales, and later as President, of
Preferred Translocation Systems, which he founded in 1986 and which was acquired
by the Company in July 1998.
Chad M. Lindbloom has been Vice President and Chief Financial Officer of
the Company since December 1999. From June of 1998 until December of 1999, he
served as the Company's Corporate Controller. Mr. Lindbloom joined the Company
in 1990 as a staff accountant. Mr. Lindbloom holds a Bachelor of Science degree
and a Masters of Business Administration from the Carlson School of Management
at the University of Minnesota.
Timothy P. Manning has been Vice President, Branch Operations and
Organizational Resources since December 1999. Previous positions with the
Company include Transportation Manager in the St. Louis branch office, and in
October 1998, Mr. Manning was named Director of Operations. Mr. Manning joined
the Company in 1989. Mr. Manning holds a Bachelor of Science degree from the
University of Minnesota.
Joseph J. Mulvehill has been Vice President, International since 1998. Mr.
Mulvehill joined the Company in 1975. Mr. Mulvehill holds a Bachelor of Arts
degree from the University of St. Thomas.
Michael T. Rempe has been Vice President, Produce since 1994, after
starting with the Company in 1989 as Director of Produce Merchandising. Prior to
that, he held several senior positions in the retail grocery industry. Mr. Rempe
has served on the board of directors of the Produce Marketing Association and is
currently on the board of directors of Produce for Better Health. Mr. Rempe
attended Indiana University Purdue University at Indianapolis.
Mark Walker has been Vice President and Chief Information Officer since
December 1999. Additional positions with the Company include President of T-
Chek Systems LLC and President of Payment & Logistics Services LLC. Mr. Walker
joined the Company in 1980. Mr. Walker holds a Bachelor of Sciences degree from
Iowa State University and a Masters of Business Administration from the
University of St. Thomas.
Troy A. Renner has been Treasurer of the Company since June 1998, and Tax
Director since 1995. Prior to that, he was employed as a tax manager by Arthur
Andersen LLP. Mr. Renner holds a Bachelor of Science and a law degree from the
University of Minnesota.
Thomas K. Mahlke has been Corporate Controller of the Company since
December 1999. Mr. Mahlke joined the Company in November of 1997 as Accounting
Manager. Prior to that, he was employed as a supervisory senior accountant by
Arthur Andersen LLP since 1992. Mr. Mahlke holds a Bachelor of Accountancy
degree from the University of North Dakota.
Employees
As of December 31, 1999, the Company had a total of 3,125 employees,
substantially all of whom are full-time employees and approximately 2,914 of
whom were located in the Company's branch offices. Corporate services such as
accounting, information systems, legal, credit support and claims support are
provided centrally. The Company believes that its compensation and benefit plans
are among the most competitive in the industry and that its relationship with
employees is excellent.
-8-
Customers and Marketing
The Company seeks to establish long-term relationships with its customers
and to increase the amount of business done with each customer by seeking to
provide the customer with a full range of logistic services. The Company serves
customers ranging from Fortune 100 companies to small businesses in a wide
variety of industries. During 1999, no customer accounted for more than 6% of
gross revenues. In recent years, revenue growth has been achieved through the
growth and consolidation of customers, expansion of the services provided by the
Company and an increase in the number of customers served.
The Company believes that decentralization allows salespersons to better
serve the Company's customers by fostering the development of a broad knowledge
of logistics and local and regional market conditions as well as the specific
logistics issues facing individual customers. With the guidance of experienced
branch managers (who have an average tenure of 12 years with the Company),
branches are given significant latitude in pursuing opportunities and committing
the Company's resources to serve customers.
Branches seek additional business from existing customers and pursue new
customers, based on their knowledge of local markets and the range and value of
logistics services that the Company is capable of providing. The Company has
begun placing increased emphasis on national sales and marketing support to
enhance branch capabilities. Increasingly, branches call on central office
executives, a national sales staff and a central logistics group to support them
in the pursuit of multinational corporations and other companies with more
complex logistics requirements.
Relationships with Carriers
The Company seeks to establish long-term relationships with carriers in
order to assure dependable services, favorable pricing and carrier availability
during peak shipping periods and periods of undercapacity. To strengthen and
maintain these relationships, Company salespersons regularly communicate with
carriers serving their region and seek to assist carriers with equipment
utilization, reduction of empty miles and equipment repositioning. The Company
has a policy of prompt payment and provides centralized claims management on
behalf of various shippers. Many smaller carriers effectively consider Robinson
as their sales and marketing department.
As of December 31, 1999, the Company had contracts with approximately
20,000 motor carriers (providing access to temperature controlled vans, dry vans
and flatbeds). Those carriers include owner-operators of a single truck, small
and mid-size fleets, private fleets and the largest national trucking companies.
Consequently, the Company is not dependent on any one carrier. As of December
31, 1999, the Company also had intermodal marketing contracts with railroads,
including all of the major North American railroads, giving the Company access
to additional trailers and containers. The Company qualifies each motor carrier
to assure that it is properly licensed and insured and has the resources to
provide the necessary level of service on a dependable basis. The Company's
motor carrier contracts require that the carrier commit to a minimum number of
shipments, issue invoices only to and accept payment solely from Robinson and
permit Robinson to withhold payment to satisfy previous claims or shortages.
Carrier contracts also establish transportation rates that can be modified by
issuance of an individual load confirmation. The Company's contracts with
railroads govern the transportation services and payment terms by which the
Company's intermodal shipments are transported by rail. Intermodal
transportation rates are typically negotiated between the Company and the
railroad on a customer-specific basis.
Competition
The transportation services industry is highly competitive and fragmented.
The Company competes primarily against a large number of other non-asset based
logistics companies, as well as asset-based logistics companies, third-party
freight brokers, carriers offering logistics services and freight forwarders.
The Company also competes against carriers' internal sales forces and shippers'
own transportation departments. It also buys and sells transportation services
from and to companies with which it competes.
-9-
The Company often competes with respect to price, scope of services or a
combination thereof, but believes that its most significant competitive
advantages are:
. its large decentralized branch network, staffed by salespersons who
are employees rather than agents, which enables the Company's
salespersons to gain significant knowledge about individual customers
and the local and regional markets they serve,
. its technology, including Internet communications capabilities,
. its ability to provide a broad range of logistics services and
. its ability to provide door-to-door services on a worldwide basis.
Communications and Information Systems
To handle the large number of daily transactions and to accommodate its
decentralized branch system, the Company has designed an extensive
communications and information system. Employees are linked with each other and
with customers and carriers by telephone, facsimile, Internet, e-mail and/or EDI
to communicate requirements and availability, to confirm and bill orders and,
through the Company's Internet home page CHRWe-Center (www.chrobinson.com), to
contract loads or equipment and track and trace shipments. Customers and
carriers also have access to the Company's systems through the CHRW e-Center.
The Company has developed its own proprietary computer based systems that help
salespersons service customer orders, select the optimal modes of
transportation, build and consolidate loads and selects routes, all based on
customer-specific service parameters, makes load data visible to the entire
sales team as well as customers and carriers, enabling the salespersons to
select carriers and track loads in progress, and automatically provides visible
alerts to any arising problems. The Company's internally developed proprietary
decision support system uses data captured from daily transactions to generate
various management reports which are available to the Company's logistics
customers to provide information on traffic patterns, product mix and production
schedules, and enables customers to analyze their own customer base,
transportation expenditure trends and the impact on out-of-route and out-of-
stock costs.
The Company did not experience any material disruptions or other problems
with its internal computer systems related to the Year 2000 issue. In addition,
the Company is not aware of any material systems interruptions with any
customer, produce supplier or transportation carrier that has had a material
impact on its business as a result of the Year 2000 situation. The Company has
no single third party relationship that accounts for more than 6% of its
business.
Government Regulation
The transportation industry has been subject to legislative and regulatory
changes that have affected the economics of the industry by requiring changes in
operating practices or influencing the demand for, and cost of providing,
transportation services. The Company cannot predict the effect, if any, that
future legislative and regulatory changes may have on the transportation
industry.
The Company is subject to licensing and regulation as a transportation
provider. The Company is licensed by the Department of Transportation ("DOT") as
a broker in arranging for the transportation of property by motor vehicle. The
DOT prescribes qualifications for acting in this capacity, including certain
surety bonding requirements. The Company provides motor carrier transportation
services that require registration with the DOT and compliance with certain
economic regulations administered by the DOT, including a requirement to
maintain insurance coverage in minimum prescribed amounts. The Company is
subject to regulation by the Federal Maritime Commission as an ocean freight
forwarder and maintains a non-vessel operating common carrier bond. The Company
operates as an indirect air cargo carrier subject to economic regulation by the
DOT. The Company provides customs brokerage services as a customs broker under
a license issued by the United States Customs Service of the Department of
Treasury. The Company sources fresh produce under a license issued by the United
States Department of Agriculture. Other sourcing
-10-
and distribution activities may be subject to various federal and state food and
drug statutes and regulations. Although Congress enacted legislation in 1994
that substantially preempts the authority of states to exercise economic
regulation of motor carriers and brokers of freight, the Company and several of
its subsidiaries continue to be subject to a variety of vehicle registration and
licensing requirements. The Company and the carriers that the Company relies on
in arranging transportation services for its customers are also subject to a
variety of federal and state safety and environmental regulations. Although
compliance with the regulations governing licensees in these areas has not had a
materially adverse effect on the Company's operations or financial condition in
the past, there can be no assurance that such regulations or changes thereto
will not adversely impact the Company's operations in the future. Violation of
these regulations could also subject the Company to fines or, in the event of
serious violation, suspension or revocation of operating authority as well as
increased claims liability.
Risk Management and Insurance
In its truck and intermodal operations, the Company assumes full value
cargo risk to its customers. The Company subrogates its losses against the motor
or rail carrier with the transportation responsibilities. The Company requires
all motor carriers participating in its contract program to carry at least
$750,000 in general liability insurance and $25,000 in cargo insurance. Many
carriers carry insurance limits exceeding these minimums. Railroads, which are
generally self-insured, provide limited common carrier liability protection,
generally up to $250,000 per shipment. For both truck and rail transportation,
higher coverage is available to the customer on a load-by-load basis at an
additional price.
In its international freight forwarding, ocean transportation and air
freight businesses, the Company does not assume cargo liability to its customers
above minimum industry standards. The Company offers its customers the option to
purchase ocean marine cargo coverage to insure goods in transit. When the
Company agrees to store goods for its customers for longer terms, it provides
limited warehouseman's coverage to its customers and contracts for warehousing
services from companies which provide the Company the same degree of coverage.
The Company maintains a broad cargo liability policy to protect it against
catastrophic losses that may not be recovered from the responsible carrier. The
Company also carries various liability policies, including auto and general
liability, with a $100 million umbrella.
Agricultural chemicals used on agricultural commodities intended for human
consumption are subject to various approvals, and the commodities themselves are
subject to regulations on cleanliness and contamination. Concern about
particular chemicals and alleged contamination has led to recalls of products,
and tort claims have been brought by consumers of allegedly affected produce.
Because the Company is a seller of produce, it may have legal responsibility
arising from sales of produce. While the Company carries product liability
coverage of $75 million, settlement of class action claims is often costly, and
the Company cannot assure that its liability coverage will be adequate and will
continue to be available. In addition, in connection with any recall, the
Company may be required to bear the cost of repurchasing, transporting and
destroying any allegedly contaminated product, for which it is not insured. Any
recall or allegation of contamination could affect the Company's reputation,
particularly of it's the Fresh 1/(R)/ brand. Loss due to spoilage (including
the need for disposal) is also a routine part of the sourcing business.
Forward-Looking Statements
This Form 10-K Annual Report and the Company's financial statements,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Item 7 and other documents incorporated by reference contain
"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-K 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
-11-
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-K 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 upon a variety of
important factors, including those described in Exhibit 99 to this Form 10-K.
ITEM 2. PROPERTIES
All of the Company's 131 offices are leased from third parties under leases
with initial terms ranging from three to ten years. The Company leases
approximately 65,000 square feet of office space in Eden Prairie, Minnesota as
its corporate headquarters, and an additional approximately 40,000 square feet
of office space in Eden Prairie for branch sales and operating activities. The
Company's corporate headquarters and Eden Prairie sales office leases expire in
2004. The following table sets forth certain information with respect to the
Company's largest branch offices:
City/state Approximate Square Feet
------------------- ---------------------------
Southfield, MI 13,076
Oak Brook, IL 9,861
Tampa, FL 8,721
Burr Ridge, IL 7,328
Des Plaines, IL 6,324
Watertown, MA 6,000
Paulsboro, NJ 5,910
Sugarland, TX 5,548
Independence, OH 5,475
Secaucus, NJ 5,253
Omaha, NE 5,160
Dallas, TX 5,157
Coralville, IA 5,143
Cheektowga, NY 5,000
Plano, TX 4,932
Knoxville, TN 4,890
St. Louis, MO 4,884
Louisville, KY 4,835
Ashland, VA 4,680
The Company also leases 55,665 square feet of warehouse space in Aurora,
Colorado, and 53,000 square feet of warehouse space in Medley, Florida. Through
its asset acquisition from American Backhaulers, the Company has added
approximately 40,000 square feet of office space in Chicago, Illinois, and will
exercise an option to add an additional approximately 20,000 square feet of
office space. The Company considers its current offices adequate for its current
level of operations. The Company has not had difficulty in obtaining sufficient
office space and believes it can renew existing leases or relocate branches to
new offices as leases expire.
ITEM 3. LEGAL PROCEEDINGS
In 1995, the United States Customs Service began an investigation of
possible duties owed on imports of certain juice concentrates by Daystar-
Robinson, Inc., a subsidiary of the Company ("Daystar"). In the fourth quarter
of 1999, the United States Customs Service agreed to a compromise with Daystar,
whereby Daystar agreed to pay additional duties of approximately $4,175,940 and
a civil monetary penalty of $1,500,000, to be paid in quarterly
-12-
installments over a seven year period following an initial installment of
$1,000,000. In December 1999, the Company paid in advance the full amount owed
by Daystar pursuant to the compromise agreement. The disposition of this matter
has not had, and is not expected to have, a material adverse effect on the
business, financial condition or results of operations of the Company. The
Company had adequately reserved for the payment of duties and penalties owed by
Daystar.
The Company is currently not otherwise subject to any pending or threatened
litigation other than routine litigation arising in the ordinary course of
business, none of which is expected to have a material adverse effect on the
business, financial condition or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock began trading on The Nasdaq National Market
under the symbol "CHRW" on October 15, 1997. Certain stockholders of the
Company sold 12,165,155 shares of the Company's Common Stock to the public
pursuant to a registered public offering, the proceeds of which were paid
entirely to the selling stockholders. Prior to such date, there was no
established public trading market for the Company's Common Stock.
The following table sets forth, for the periods indicated, the high and low
sales prices of the Company's Common Stock, as quoted on The Nasdaq National
Market.
1999 Low High
-------- --------
Fourth Quarter $27.438 $42.063
Third Quarter 30.500 37.625
Second Quarter 25.500 37.625
First Quarter 24.000 29.750
1998 Low High
------------ -----------
Fourth Quarter $14.375 $26.250
Third Quarter 15.625 25.813
Second Quarter 21.500 27.000
First Quarter 21.000 26.250
On March 10, 2000, the closing sales price per share of the Company's
Common Stock as quoted on The Nasdaq National Market was $49.438 per share. On
March 15, 2000, there were approximately 1,400 holders of record and
approximately 5,200 beneficial owners of the Company's Common Stock. On
February 10, 1999, the Company announced that its Board of Directors authorized
a stock repurchase program under which up to 2,000,000 shares of the Company's
Common Stock may be repurchased from time to time through open market
transactions, block purchases, tender offers, private transactions, accelerated
share repurchase programs or otherwise. The Company intends to fund such
repurchases with internally generated funds.
The Company declared quarterly dividends during 1998 for an aggregate of
$0.25 per share, and quarterly dividends during 1999 for an aggregate of $0.29
per share. The Company has declared a quarterly dividend of $0.08
-13-
per share payable to shareholders of record as of March 8, 2000 payable on April
3, 2000. The declaration of dividends by the Company is subject to the
discretion of the Board of Directors. Any determination as to the payment of
dividends will depend upon the results of operations, capital requirements and
financial condition of the Company, and such other factors as the Board of
Directors may deem relevant. Accordingly, there can be no assurance that the
Board of Directors will declare or continue to pay dividends on the shares of
Common Stock in the future.
On December 16, 1999, the Company acquired the operations and certain
assets of American Backhaulers, Inc. The purchase price of the assets was
$136,925,000, including $100,000,000 in cash and 1,120,715 newly issued shares
of common stock. The shares of common stock were issued pursuant to Section
4(2) of the Securities Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
Selected consolidated financial and operating data on page 10 of the Annual
Report is incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis on pages 11 through 15 of the Annual
Report is incorporated by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Disclosure about Market Risk on page 15 of the Annual Report is
incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements on pages 16 through 27 of
the Annual Report are incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the Company's Board of Directors on pages 2
through 4, and "Section 16(a) Beneficial Ownership Reporting Compliance" on page
10 of the Proxy Statement are incorporated by reference. Information with
respect to the Company's executive officers is provided in Part I, Item 1.
ITEM 11. EXECUTIVE COMPENSATION
"Executive Compensation" on pages 4 and 5 of the Proxy Statement is
incorporated by reference.
-14-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"Security Ownership of Certain Beneficial Owners and Management" on page 9
of the Proxy Statement is incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
"Certain Transactions" on page 8 of the Proxy Statement is incorporated by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements.
The Company's consolidated financial statements listed in the
accompanying Index to Consolidated Financial Statements at page F-1, on
pages 16 through 27 of the Annual Report are incorporated by reference.
(2) Financial Statement Schedules.
Schedule II. Valuation and Qualifying Accounts, is included at the end
of this Report.
(3) Index to Exhibits
Number Description
------ -----------
2.1 Asset Purchase Agreement dated November 18, 1999, by and
among the Company, C.H. Robinson Company, American
Backhaulers, Inc., Paul L. Loeb, the Paul L. Loeb Family
Trust and the Jodi Sue Loeb Family Trust (Incorporated by
reference to Exhibit 2 to the Registrant's Current Report on
Form 8-K dated December 28, 1999).
3.1 Certificate of Incorporation of the Company (Incorporated by
reference to Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1, Registration No. 333-33731)
3.2 Bylaws of the Company (Incorporated by reference to Exhibit
3.2 to the Registrant's Registration Statement on Form S-1,
Registration No. 333-33731)
3.3 Certificate of Designations of Series A Junior Participating
Preferred Stock of the Company (Incorporated by reference to
Exhibit 3.3 to the Registrant's Registration Statement on
Form S-1, Registration No. 333-33731)
4.1 Form of Certificate for Common Stock (Incorporated by
reference to Exhibit 4.1 to the Registrant's Registration
Statement on Form S-1, Registration No. 333-33731)
4.2 Form of Rights Agreement between the Company and Norwest
Bank Minnesota, National Association (Incorporated by
reference to Exhibit 4.2 to the Registrant's Registration
Statement on Form S-1, Registration No. 333-33731)
-15-
*+10.1 Operational Executive Compensation Program for 1999
+10.2 Employee Incentive Program (Incorporated by reference to
Exhibit 10.3 to the Registrant's Registration Statement on
Form S-1, Registration No. 333-33731)
+10.3 1997 Omnibus Stock Plan (Incorporated by reference to
Exhibit 10.4 to the Registrant's Registration Statement on
Form S-1, Registration No. 333-33731)
+10.4 Form of Stock Option Agreement (Incorporated by reference to
Exhibit 10.22 to the Registrant's Registration Statement on
Form S-1, Registration No. 333-33731)
+10.5 C.H. Robinson Worldwide, Inc. Directors' Stock Plan
(Incorporated by reference to Exhibit 10.21 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998)
+10.6 Form of Management--Employee Agreement between the Company
and each of by D.R. Verdoorn and Barry Butzow (Incorporated
by reference to Exhibit 10.5 to the Registrant's
Registration Statement on Form S-1, Registration No. 333-
33731)
+10.7 Form of Management--Employee Agreement entered into by
Gregory Goven and Michael Rempe (Incorporated by reference
to Exhibit 10.6 to the Registrant's Registration Statement
on Form S-1, Registration No. 333-33731)
10.8 Form of Management Confidentiality and Noncompetition
Agreement (Incorporated by reference to Exhibit 10.21 to the
Registrant's Registration Statement on Form S-1,
Registration No. 333-33731)
10.9 Master Equipment Lease Agreement, dated August 19, 1994,
between Wagonmaster Transportation Company and AT&T
Commercial Finance Corporation (Incorporated by reference to
Exhibit 10.10 to the Registrant's Registration Statement on
Form S-1, Registration No. 333-33731)
10.10 Keep-Well Agreement, dated August 19, 1994, between C.H.
Robinson, Inc., Wagonmaster Transportation Company and AT&T
Commercial Finance Corporation (Incorporated by reference to
Exhibit 10.11 to the Registrant's Registration Statement on
Form S-1, Registration No. 333-33731)
10.11 Master Equipment Lease Agreement, dated ________, 1994,
between Wagonmaster Transportation Company and Metlife
Capital Limited Partnership (Incorporated by reference to
Exhibit 10.12 to the Registrant's Registration Statement on
Form S-1, Registration No. 333-33731)
10.12 Keep-Well Agreement, dated April __, 1994, between C.H.
Robinson, Inc., Wagonmaster Transportation Company and
Metlife Capital Limited Partnership (Incorporated by
reference to Exhibit 10.13 to the Registrant's Registration
Statement on Form S-1, Registration No. 333-33731)
10.13 Long Term Lease Agreement, dated to be effective August 1,
1997, between C.H. Robinson Company and Genstar Container
Corporation (Incorporated by reference to Exhibit 10.19 to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997)
-16-
10.14 Long Term Lease Agreement, dated to be effective November 1,
1997, between C.H. Robinson Company and Genstar Container
Corporation (Incorporated by reference to Exhibit 10.20 to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997)
*10.15 Credit Agreement, dated as of December 29, 1999, by and
among C.H. Robinson Worldwide, Inc., U.S. Bank National
Association and Norwest Bank Minnesota, National Association
*10.16 Revolving Note, dated December 29, 1999, payable by C.H.
Robinson Worldwide, Inc. to the order of U.S. Bank National
Association, up to an aggregate principal amount of
$20,000,000
*10.17 Revolving Note, dated December 29, 1999, payable by C.H.
Robinson Worldwide, Inc. to the order of Norwest Bank
Minnesota, National Association, up to an aggregate
principal amount of $20,000,000
*+10.18 Management Bonus Plan
*13 Selected pages of the Company's Annual Report to
Stockholders for the year ended December 31, 1999
*21 Subsidiaries of the Company
*23 Consent of Arthur Andersen LLP
24 Powers of Attorney (included on signature page of this
Report)
*27 Financial Data Schedule [Filed in electronic format only]
*99 Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995
_________________
+ Management contract or compensatory plan or arrangement required to
be filed as an exhibit to Form 10-K pursuant to Item 14(c) of the
Form 10-K Report.
* Filed herewith
(b) Reports on Form 8-K
A report on Form 8-K, dated December 2, 1999, was filed by the Registrant;
such Report contained information under Item 5 (Other Events) and included
as an exhibit under Item 7 a copy of a press release issued by the
Registrant.
A report on Form 8-K, dated December 28, 1999, was filed by the Registrant;
such Report contained information under Item 2 (Acquisition or Disposition
of Assets) and included under Item 7 as an exhibit a copy of the Asset
Purchase Agreement by and among the Registrant, C.H. Robinson Company,
American Backhaulers, Inc., Paul L. Loeb, the Paul L. Loeb Family Trust and
the Jodi Sue Loeb Family Trust.
(c) See Item 14(a)(3) above.
(d) See Item 14(a)(2) above.
-17-
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
The following financial statements of the Company and its subsidiaries
required to be included in Item 14(a)(1) are listed below:
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Financial Statements (incorporated by reference under Item 8 of
Part II from pages 16 through 27 of the Company's Annual Report to Stockholders
for the year ended December 31, 1999):
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Operations for the years ended December 31,
1999, 1998 and 1997
Consolidated Statements of Stockholders' Investment and Comprehensive
Income for the years ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended December 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements
F-1
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) 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, in the City of Eden
Prairie, State of Minnesota, on March 24, 2000.
C.H. ROBINSON WORLDWIDE, INC.
By: /s/ Owen P. Gleason
-----------------------------
Owen P. Gleason
Vice President, General Counsel and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 24, 2000.
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John P. Wiehoff and Owen P. Gleason (with
full power to act alone), as his or her true and lawful attorneys-in-fact and
agents, with full powers of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments to the Annual Report on Form 10-K of C.H. Robinson Worldwide,
Inc., and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, lawfully do or cause to be done by
virtue hereof.
Signature Title
/s/ D. R. Verdoorn Chairman of the Board and Chief Executive Officer
- ---------------------------
D.R. Verdoorn (Principal Executive Officer)
/s/ Chad M. Lindbloom Vice President and Chief Financial Officer
- ---------------------------
Chad M. Lindbloom (Principal Financial Officer)
/s/ Thomas K. Mahlke Corporate Controller (Principal Accounting Officer)
- ----------------------------
Thomas K. Mahlke
/s/ Dale S. Hanson Director
- ----------------------------
Dale S. Hanson
/s/ Looe Baker III Director
- -----------------------------
Looe Baker III
/s/ Barry W. Butzow Senior Vice President and Director
- -------------------------------
Barry W. Butzow
/s/ Owen P. Gleason Vice President, General Counsel, Secretary and Director
- --------------------------------
Owen P. Gleason
/s/ Robert Ezrilov Director
- ---------------------------------
Robert Ezrilov
/s/ Gerald A. Schwalbach Director
- ----------------------------------
Gerald A. Schwalbach
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To C.H. Robinson Worldwide, Inc.:
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in C.H. Robinson
Worldwide, Inc.'s annual report to shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated January 28, 2000. Our
audit was made for the purpose of forming an opinion on those statements taken
as a whole. The accompanying schedule is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission rules and is not part of the basic financial statements.
The schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
January 28, 2000
C.H. Robinson Worldwide, Inc.
Schedule II. Valuation and Qualifying Accounts
Allowance for Doubtful Accounts
The transactions in the allowance for doubtful accounts for the years ended
December 31, 1999, 1998 and 1997 were as follows (in thousands):
December 31, December 31, December 31,
1999 1998 1997
Balance, beginning of year $12,412 $ 8,936 $10,079
Provision 10,393 6,902 3,870
Write-offs (4,525) (3,426) (5,013)
------- ------- -------
Balance, end of year $18,280 $12,412 $ 8,936
S-1
Index to Exhibits
Number Description
- ------ -----------
2.1 Asset Purchase Agreement dated November 18, 1999, by and among the
Company, C.H. Robinson Company, American Backhaulers, Inc., Paul L. Loeb,
the Paul L. Loeb Family Trust and the Jodi Sue Loeb Family Trust
(Incorporated by reference to Exhibit 2 to the Registrant's Current
Report on Form 8-K dated December 28, 1999).
3.1 Certificate of Incorporation of the Company (Incorporated by reference to
Exhibit 3.1 to the Registrant's Registration Statement on Form S-1,
Registration No. 333-33731)
3.2 Bylaws of the Company (Incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form S-1, Registration No. 333-
33731)
3.3 Certificate of Designations of Series A Junior Participating Preferred
Stock of the Company (Incorporated by reference to Exhibit 3.3 to the
Registrant's Registration Statement on Form S-1, Registration No. 333-
33731)
4.1 Form of Certificate for Common Stock (Incorporated by reference to
Exhibit 4.1 to the Registrant's Registration Statement on Form S-1,
Registration No. 333-33731)
4.2 Form of Rights Agreement between the Company and Norwest Bank Minnesota,
National Association (Incorporated by reference to Exhibit 4.2 to the
Registrant's Registration Statement on Form S-1, Registration No. 333-
33731)
*+10.1 Operational Executive Compensation Program for 1999
+10.2 Employee Incentive Program (Incorporated by reference to Exhibit 10.3 to
the Registrant's Registration Statement on Form S-1, Registration No.
333-33731)
+10.3 1997 Omnibus Stock Plan (Incorporated by reference to Exhibit 10.4 to
the Registrant's Registration Statement on Form S-1, Registration No.
333-33731)
+10.4 Form of Stock Option Agreement (Incorporated by reference to Exhibit
10.22 to the Registrant's Registration Statement on Form S-1,
Registration No. 333-33731)
+10.5 C.H. Robinson Worldwide, Inc. Directors' Stock Plan (Incorporated by
reference to Exhibit 10.21 to the Registrant's Annual Report on Form 10-
K for the year ended December 31, 1998)
+10.6 Form of Management--Employee Agreement between the Company and each of
by D.R. Verdoorn and Barry Butzow (Incorporated by reference to Exhibit
10.5 to the Registrant's Registration Statement on Form S-1,
Registration No. 333-33731)
+10.7 Form of Management--Employee Agreement entered into by Gregory Goven and
Michael Rempe (Incorporated by reference to Exhibit 10.6 to the
Registrant's Registration Statement on Form S-1, Registration No. 333-
33731)
10.8 Form of Management Confidentiality and Noncompetition Agreement
(Incorporated by reference to Exhibit 10.21 to the Registrant's
Registration Statement on Form S-1, Registration No. 333-33731)
10.9 Master Equipment Lease Agreement, dated August 19, 1994, between
Wagonmaster Transportation Company and AT&T Commercial Finance
Corporation (Incorporated by reference to Exhibit 10.10 to the
Registrant's Registration Statement on Form S-1, Registration No. 333-
33731)
10.10 Keep-Well Agreement, dated August 19, 1994, between C.H. Robinson, Inc.,
Wagonmaster Transportation Company and AT&T Commercial Finance
Corporation (Incorporated by reference to Exhibit 10.11 to the
Registrant's Registration Statement on Form S-1, Registration No. 333-
33731)
10.11 Master Equipment Lease Agreement, dated ________, 1994, between
Wagonmaster Transportation Company and Metlife Capital Limited
Partnership (Incorporated by reference to Exhibit 10.12 to the
Registrant's Registration Statement on Form S-1, Registration No. 333-
33731)
10.12 Keep-Well Agreement, dated April __, 1994, between C.H. Robinson, Inc.,
Wagonmaster Transportation Company and Metlife Capital Limited
Partnership (Incorporated by reference to Exhibit 10.13 to the
Registrant's Registration Statement on Form S-1, Registration No. 333-
33731)
10.13 Long Term Lease Agreement, dated to be effective August 1, 1997, between
C.H. Robinson Company and Genstar Container Corporation (Incorporated by
reference to Exhibit 10.19 to the Registrant's Annual Report on Form 10-
K for the year ended December 31, 1997)
10.14 Long Term Lease Agreement, dated to be effective November 1, 1997,
between C.H. Robinson Company and Genstar Container Corporation
(Incorporated by reference to Exhibit 10.20 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997)
*10.15 Credit Agreement, dated as of December 29, 1999, by and among C.H.
Robinson Worldwide, Inc., U.S. Bank National Association and Norwest
Bank Minnesota, National Association
*10.16 Revolving Note, dated December 29, 1999, payable by C.H. Robinson
Worldwide, Inc. to the order of U.S. Bank National Association, up to an
aggregate principal amount of $20,000,000
*10.17 Revolving Note, dated December 29, 1999, payable by C.H. Robinson
Worldwide, Inc. to the order of Norwest Bank Minnesota, National
Association, up to an aggregate principal amount of $20,000,000
*+10.18 Management Bonus Plan
*13 Selected pages of the Company's Annual Report to Stockholders for the
year ended December 31, 1999
*21 Subsidiaries of the Company
*23 Consent of Arthur Andersen LLP
24 Powers of Attorney (included on signature page of this Report)
*27 Financial Data Schedule [Filed in electronic format only]
*99 Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995
_________________
+ Management contract or compensatory plan or arrangement required to be filed
as an exhibit to Form 10-K pursuant to Item 14(c) of the Form 10-K Report.
* Filed herewith