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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, 1998
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 (I.R.S. Employer Identification No.)
incorporation or organization)
8100 Mitchell Road, Eden Prairie, Minnesota 55344-2248
(Address of principal executive offices) (Zip Code)
(612) 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 $.01 per share
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 12, 1999 was approximately $878,140,625 (based on the
last sale price of such stock as quoted on The Nasdaq National Market ($26.875)
on such date).
As of March 12, 1999, the number of shares outstanding of the
registrant's Common Stock, par value $.01 per share, was 41,187,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the year
ended December 31, 1998 (the "Annual Report"), are incorporated by reference in
Parts II and IV.
Portions of the Registrant's Proxy Statement relating to its Annual
Meeting of Stockholders to be held May 4, 1999 (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 1998 gross revenues of $2 billion. The Company is a global provider
of multimodal transportation services and logistics solutions through a network
of 120 offices in 38 states and Canada, Mexico, Belgium, the United Kingdom,
France, Spain, Italy, Poland, Brazil, Argentina, Venezuela and South Africa.
Through contracts with over 17,000 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 and cross-docking. During 1998, the Company handled over
1,000,000 shipments for 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. Through its motor carrier contracts, the Company
maintains access to more than 450,000 dry vans, 140,000 temperature-controlled
vans and containers and 100,000 flatbed trailers. The Company also has
intermodal marketing contracts with 12 railroads, including all of the major
North American railroads, which give the Company access to more than 180,000
additional trailers and containers.
Throughout its 94-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), which 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 1,600 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 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 December of 1998, the Company acquired Comexter Group. Comexter
Group provides transportation, freight forwarding, customs brokerage and trading
services in Argentina, the Mercosur and between South America,
the United States and Europe. Comexter Group has offices in Sao Paulo, Brazil;
Buenos Aires, Argentina; and Miami, Florida, and had combined annual net
revenues of approximately $1,000,000 in 1998.
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 addition to Caen, Norminter has offices
located in Pau, Metz and Lyon, France; Madrid and Barcelona, Spain; and
Birmingham, U.K, adding seven more offices to the Company's 120 offices
worldwide.
The Company's corporate office is located at 8100 Mitchell Road, Eden
Prairie, Minnesota 55344-2248, and its telephone number is (612) 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. That salesperson enters all
appropriate information about each load into the Company's computer based
Customer Oriented Shipment Management Operating System ("COSMOS"), 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.
The 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
distribution center, at specific rates, but subject to seasonal variation. Most
of the Company's rate commitments are for
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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:
o Truck--Through its contracts with over 17,000 motor carriers,
the Company maintains access to more than 450,000 dry vans,
140,000 temperature-controlled units and 100,000 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.
o 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.
o 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 12 railroads, which give
the Company access to more than 180,000 additional trailers
and containers.
o 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.
o 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 revenue by transportation mode
for the periods indicated:
Transportation Services Net Revenue
(in thousands)
Year Ended December 31,
----------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
Truck(1)........... $ 81,122 $ 97,636 $110,460 $133,110 $164,186
Intermodal ........ 7,828 6,864 8,014 9,680 6,671
Ocean ............. 6,865 7,212 8,121 9,226 10,215
Air ............... 550 1,402 1,687 1,954 3,427
Miscellaneous(2)... 2,922 3,907 4,964 5,290 5,298
Total ....... $ 99,287 $117,021 $133,246 $159,260 $189,797
- -------------
(1) Includes LTL net revenue.
(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, the United Kingdom, France, Spain,
Italy, Poland, Brazil, Argentina, Venezuela and South Africa. The Notes to the
Company's Consolidated Financial Statements present the Company's gross revenues
from international customers for the years ended December 31, 1996, 1997 and
1998, and the Company's long-lived assets as of December 31, 1997 and 1998, in
the United States and in foreign locations.
Sourcing
Throughout its 94-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 introduced its proprietary The Fresh 1(R) brand of produce in
1989, which includes a wide range of uniform quality, top grade fruits and
vegetables purchased from various domestic and international growers. During
1998, the Company entered into new sourcing programs that have expanded the
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Company's market presence and sourcing capabilities with respect to both product
lines and nationally recognized brand names.
Sourcing accounted for approximately 22%, 19% and 18% of the Company's
net revenues in 1996, 1997 and 1998, respectively.
Information Services
A subsidiary of the Company, T-Chek Systems LLC 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 and Logistics LLC, 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. The Company and the customer use these
data to better manage the customer's supply chain.
The Company's information services accounted for approximately 4%, 4%
and 5% of the Company's net revenues in 1996, 1997 and 1998, respectively.
Organization
To allow the Company to stay close to customers and markets, the
Company has created and continues to expand a network of 127 offices (including
the seven offices added in January 1999 through the acquisition of Norminter
S.A.), 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. Some
branches may rely on expertise in other branches when contracting 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 to serve
the branch's customers.
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The table below shows certain information about the Company's branches
for the periods indicated:
Branch Data
(Dollars in thousands)
Year Ended December 31,
------------------------------------------
1994 1995 1996 1997 1998
------ ------ ------ ------ ------
Average employees per branch .... 15.8 14.6 15.4 16.2 18.4
Average net revenues per branch . $1,597 $1,683 $1,717 $1,822 $2,047
Average net revenues per employee $ 105 $ 113 $ 115 $ 115 $ 120
As of December 31, 1998, the Company's branch salespersons represented
approximately 70% of the Company's total work force and all branch employees,
including support staff, represented approximately 90% of the Company's work
force. At December 31, 1998, the number of salespersons per Company branch
ranged from three to 59.
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 1998, incentive-based cash compensation averaged
approximately 33% of branch salespersons' total cash compensation, 65% of branch
managers' total cash compensation and 57% of officers' total cash compensation.
Branch employees also participate in the Company's Profit Sharing Plan,
contributions to which depend on overall Company profitability. 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 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 through the growth and profitability of
individual branches 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 60 Chairman of the Board, President and Chief Executive Officer
Barry W. Butzow 52 Senior Vice President, Office of the President and Director
Gregory D. Goven 47 Senior Vice President, Office of the President
John P. Wiehoff 37 Senior Vice President, Office of the President and Chief Financial Officer
Micheal T. Rempe 45 Vice President, Produce
Thomas M. Jostes 38 Vice President, Transportation
Owen P. Gleason 47 Vice President, General Counsel, Secretary and Director
Jennifer T. Amys 48 Vice President, Chief Information Officer
Joseph J. Mulvehill 45 Vice President, International
Chad M. Lindbloom 34 Corporate Controller
Troy A. Renner 34 Treasurer and Tax Director
D.R. Verdoorn has been the President and 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.
Barry W. Butzow has been a director since 1986. Mr. Butzow has been a
Vice President of the Company since 1984 and was recently named a Senior Vice
President in the Office of the President. He began employment with the Company
in 1969. He holds a Bachelor of Arts degree from Moorhead State University.
Gregory D. Goven has been a Vice President of the Company since 1988
and was recently named a Senior Vice President in the Office of the President.
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.
John P. Wiehoff was recently named Senior Vice President in the Office
of the President. He has been Chief Financial Officer since June 1998, after
starting with the Company in 1992 as Corporate Controller and also serving as
Treasurer of the Company from May 1997. Prior to that, he was employed as an
audit manager by Arthur Andersen LLP. He holds a Bachelor of Science degree from
St. John's University.
- 7 -
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
is currently on the Board of Directors of the Produce Marketing Association and
Produce for Better Health. Mr. Rempe attended Indiana University Purdue
University in Indianapolis.
Thomas M. Jostes has served as Vice President, Transportation since
1995 and has been employed by the Company since 1984. Mr. Jostes holds a
Bachelor of Arts degree from Iowa State University.
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.
Jennifer T. Amys has been Vice President and Chief Information Officer
of the Company since 1994. From 1989 through 1993, she was Director of Systems
Development and Support for The Quaker Oats Company and prior to that held other
senior MIS positions for several transportation and food companies. She has a
Masters of Business Administration degree from the University of Minnesota and a
Bachelor of Science degree from the University of Taiwan.
Joseph J. Mulvehill was appointed Vice President, International in
1998, and has been employed by the Company since 1975. Mr. Mulvehill holds a
Bachelor of Arts degree from the University of St. Thomas.
Chad M. Lindbloom has been the Corporate Controller of the Company
since June 1998. 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.
Troy A. Renner has been the 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.
Employees
As of December 31, 1998, the Company had a total of 2,205 employees,
substantially all of whom are full-time employees and approximately 2,000 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.
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 1998, 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.
- 8 -
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, 1998, the Company had contracts with more than
17,000 motor carriers (representing approximately 140,000 temperature controlled
vans, 450,000 dry vans and 100,000 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, 1998, the Company also had
intermodal marketing contracts with 12 railroads, including all of the major
North American railroads, giving the Company access to more than 180,000
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.
The Company often competes with respect to price, scope of services or
a combination thereof, but believes that its most significant competitive
advantages are: (i) 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, (ii) its ability to provide a broad range
of logistics services and (iii) 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, to trace shipments. The Company has
developed its own proprietary computer based system, COSMOS. The most recent
enhancements 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. COSMOS makes load data visible to the
entire branch sales
- 9 -
team, 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 ("BSMART") uses data
captured from daily transactions to generate various management reports which
are available to the Company's large logistics customers to provide information
on traffic patterns, product mix and production schedules. BSMART enables
customers to analyze their own customer base, transportation expenditure trends
and the impact on out-of-route and out-of-stock costs.
As discussed in more detail in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Item 7, the Company completed
an assessment of its compliance with Year 2000 issues and will modify or replace
portions of its hardware and software so that its computer systems will function
properly with respect to dates after December 31, 1999. The Company has
completed a majority of the modifications and is currently in the testing phase
of its Year 2000 compliance process. This testing includes running test
transactions with dates beyond December 31, 1999 through its systems to ensure
its daily, monthly and yearly processes accept the transactions, process and
store them, and allow for extraction of the transaction data as needed to
operate its business and generate its internal and external financial
information. The Company is in the process of completing all such testing on its
systems, with a majority of its testing on its information services line to be
completed by June 30, 1999.
In addition, the Company does not believe any material relationships
exist with any customer, produce supplier or transportation carrier that would
have a material impact on its business, results of operations or financial
condition in the instance that these third parties would have material systems
interruptions 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 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.
- 10 -
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 with a deductible of $100,000 per incident. The Company also carries
various liability policies, including auto and general liability, with a $75
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 its 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 and
other documents incorporated by reference contain forward-looking statements
that involve risk and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those contained above in this Item 1--Business, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Item 7 and Exhibit
99.
ITEM 2. PROPERTIES
All of the Company's 127 offices (including the seven offices added in
January 1999 through the acquisition of Norminter S.A.) 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. The Company's corporate headquarters
lease expires in 2000, with a renewal option for five years. The following table
sets forth certain information with respect to the Company's largest branch
offices:
- 11 -
City/State Approximate Square Feet
- ------------------------------ ------------------------------
Oak Brook, IL 9,861
Southfield, MI 9,118
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
College Park, MD 5,500
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.
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"). The Company has
been advised by the United States Attorney for the Eastern District of New York
that Daystar was not the target or the subject of a criminal investigation,
although the United States Attorney is not bound by such statements. When
indictments were issued in the matter in 1998, Daystar was not named as a
defendant. The Company believes, however, that the United States Customs Service
will seek additional duties of approximately $4.0 million and may seek civil
monetary penalties against Daystar. The Company believes the disposition of this
matter will not have a material adverse effect on the business, financial
condition or results of operations of the Company, although there can be no
assurance that the duties and penalties sought against Daystar will not exceed
the Company's reserves for this matter.
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, 1998.
- 12 -
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.
1998 High Low
----------- -----------
First Quarter $26.00 $21.375
Second Quarter 26.75 21.75
Third Quarter 25.813 17.50
Fourth Quarter 26.00 14.75
1997 High Low
----------- -----------
Fourth Quarter (commencing October 15, 1997) $26.50 $19.75
On March 12, 1999, the closing sales price per share of the Company's
Common Stock as quoted on The Nasdaq National Market was $26.875 per share. On
March 12, 1999, 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.
For 1997, the Company paid quarterly dividends of $0.01 per share for
the first and second quarters. On October 10, 1997, the Company paid an
extraordinary cash dividend of $1.50 per share to stockholders of record on
October 10, 1997. The Company paid a liquidating distribution of the net
proceeds of the sale of the Company's consumer finance services business on
October 14, 1997, to stockholders of record on October 14, 1997 of $0.95 per
share. On December 30, 1997, the Company paid a quarterly dividend of $0.06 per
share to shareholders of record as of December 12, 1997. The Company declared
quarterly dividends during 1998 for an aggregate of $0.25 per share. The Company
has declared a quarterly dividend of $0.07 per share payable to shareholders of
record as of March 8, 1999 payable on April 1, 1999. 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.
ITEM 6. SELECTED FINANCIAL DATA
Selected consolidated financial and operating data on page 16 of the
Annual Report is incorporated by reference.
- 13 -
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's Discussion and Analysis on pages 17 through 20 of the
Annual Report is incorporated by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Disclosure about Market Risk on page 20 of the Annual Report is
incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements on pages 21 through 31
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.
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 9 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 21 through 31 of the Annual Report are incorporated by reference.
- 14 -
(2) Financial Statement Schedules.
Schedule II. Valuation and Qualifying Accounts, is included at
the end of this Report.
(3) Index to Exhibits
Number Description
------ -----------
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 Form of Central Office Management Incentive
Program, including Deferred Compensation
Agreement (Incorporated by reference to
Exhibit 10.1 to the Registrant's
Registration Statement on Form S-1,
Registration No. 333-33731)
10.2 Operational Executive Compensation Program
(Incorporated by reference to Exhibit 10.2
to the Registrant's Registration Statement
on Form S-1, Registration No. 333-33731)
10.3 Employee Incentive Program (Incorporated by
reference to Exhibit 10.3 to the
Registrant's Registration Statement on Form
S-1, Registration No. 333-33731)
10.4 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)
10.5 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)
10.6 Form of Management--Employee Agreement
entered into by Gregory Goven, Thomas Jostes
and Michael Rempe (Incorporated by reference
to Exhibit 10.6 to the Registrant's
Registration Statement on Form S-1,
Registration No. 333-33731)
- 15 -
10.7 Form of Management--Employee Agreement
between the Company and by Thomas Perdue
(Incorporated by reference to Exhibit 10.7
to the Registrant's Registration Statement
on Form S-1, Registration No. 333-33731)
10.8 Amended and Restated Promissory Note, due on
demand or June 30, 1999, payable by C.H.
Robinson Company to the order of U.S. Bank
National Association, up to an aggregate
principal amount of $10,000,000
(Incorporated by reference to Exhibit 10.8
to the Registrant's Registration Statement
on Form S-1, Registration
No. 333-33731)
10.9 Guaranty, dated as of November 30, 1992, by
C.H. Robinson, Inc. for the benefit of U.S.
Bank National Association (Incorporated by
reference to Exhibit 10.9 to the
Registrant's Registration Statement on Form
S-1, Registration No. 333-33731)
10.10 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)
10.11 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)
10.12 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)
10.13 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)
10.14 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)
10.15 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)
10.16 Stock Purchase Agreement dated September 9,
1997 by and between Cityside Holding
Company, C.H. Robinson, Inc. and Norwest
Corporation (Incorporated by reference to
Exhibit 2.1 to the Registrant's Current
Report on Form 8-K dated October 14, 1997)
10.17 Amendment to Stock Purchase Agreement dated
October 13, 1997, by and between Cityside
Holding L.L.C., C.H. Robinson, Inc. and
Norwest Corporation (Incorporated by
reference to Exhibit 2.2 to the Registrant's
Current Report on Form 8-K dated October 14,
1997)
- 16 -
10.18 Escrow Agreement dated October 13, 1997, by
and between Cityside Holding L.L.C., C.H.
Robinson, Inc. and Norwest Bank Iowa, N.A.
(Incorporated by reference to Exhibit 10.1
to the Registrant's Current Report on Form
8-K dated October 14, 1997)
10.19 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)
10.20 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)
*10.21 C.H. Robinson Worldwide, Inc. Directors'
Stock Plan
*13 Selected pages of the Company's Annual
Report to Stockholders for the year ended
December 31, 1998
*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
-----------------
* Filed herewith
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
1998.
(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 21 through 31 of the Company's Annual Report to Stockholders
for the year ended December 31, 1998):
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Operations for the years ended December 31,
1998, 1997 and 1996
Consolidated Statements of Stockholders' Investment for the years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996
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 26, 1999.
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 26, 1999.
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, President and Chief
- ---------------------------- Executive Officer (Principal Executive
D.R. Verdoorn Officer)
/s/ John P.Wiehoff Senior Vice President, Office of the President,
- ---------------------------- and Chief Financial Officer (Principal
John P. Wiehoff Financial Officer)
/s/ Chad M. Lindbloom Corporate Controller (Principal Accounting
- ---------------------------- Officer)
Chad M. Lindbloom
/s/ Dale S. Hanson Director
- ----------------------------
Dale S. Hanson
/s/ Looe Baker III Director
- ----------------------------
Looe Baker III
/s/ Barry W. Butzow Senior Vice President, Office of the 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 generally accepted auditing standards, 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 February 4, 1999. 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,
February 4, 1999
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, 1996, and 1997 and 1998 were as follows (in thousands):
December 31, December 31, December 31,
1996 1997 1998
Balance, beginning of year $ 8,033 $ 10,079 $ 8,936
Provision 5,139 3,870 6,902
Write-offs (3,093) (5,013) (3,426)
-------- -------- --------
Balance, end of year $ 10,079 $ 8,936 $ 12,412
S-1
Index to Exhibits
Number Description
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 Form of Central Office Management Incentive Program, including Deferred
Compensation Agreement (Incorporated by reference to Exhibit 10.1 to
the Registrant's Registration Statement on Form S-1, Registration No.
333-33731)
10.2 Operational Executive Compensation Program (Incorporated by reference
to Exhibit 10.2 to the Registrant's Registration Statement on Form S-1,
Registration No. 333-33731)
10.3 Employee Incentive Program (Incorporated by reference to Exhibit 10.3
to the Registrant's Registration Statement on Form S-1, Registration
No. 333-33731)
10.4 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)
10.5 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)
10.6 Form of Management--Employee Agreement entered into by Gregory Goven,
Thomas Jostes and Michael Rempe (Incorporated by reference to Exhibit
10.6 to the Registrant's Registration Statement on Form S-1,
Registration No. 333-33731)
10.7 Form of Management--Employee Agreement between the Company and by
Thomas Perdue (Incorporated by reference to Exhibit 10.7 to the
Registrant's Registration Statement on Form S-1, Registration No. 333-
33731)
10.8 Amended and Restated Promissory Note, due on demand or June 30, 1999,
payable by C.H. Robinson Company to the order of U.S. Bank National
Association, up to an aggregate principal amount of $10,000,000
(Incorporated by reference to Exhibit 10.8 to the Registrant's
Registration Statement on Form S-1, Registration No. 333-33731)
10.9 Guaranty, dated as of November 30, 1992, by C.H. Robinson, Inc. for the
benefit of U.S. Bank National Association (Incorporated by reference to
Exhibit 10.9 to the Registrant's Registration Statement on Form S-1,
Registration No. 333-33731)
10.10 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)
10.11 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)
10.12 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)
10.13 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)
10.14 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)
10.15 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)
10.16 Stock Purchase Agreement dated September 9, 1997 by and between
Cityside Holding Company, C.H. Robinson, Inc. and Norwest Corporation
(Incorporated by reference to Exhibit 2.1 to the Registrant's Current
Report on Form 8-K dated October 14, 1997)
10.17 Amendment to Stock Purchase Agreement dated October 13, 1997, by and
between Cityside Holding L.L.C., C.H. Robinson, Inc. and Norwest
Corporation (Incorporated by reference to Exhibit 2.2 to the
Registrant's Current Report on Form 8-K dated October 14, 1997)
10.18 Escrow Agreement dated October 13, 1997, by and between Cityside
Holding L.L.C., C.H. Robinson, Inc. and Norwest Bank Iowa, N.A.
(Incorporated by reference to Exhibit 10.1 to the Registrant's Current
Report on Form 8-K dated October 14, 1997)
10.19 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)
10.20 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)
*10.21 C.H. Robinson Worldwide, Inc. Directors' Stock Plan
*13 Selected pages of the Company's Annual Report to Stockholders for the
year ended December 31, 1997
*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
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* Filed herewith