<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED SEPTEMBER 30, 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 (I.R.S. Employer Identification No.)
of incorporation or organization)
8100 South Mitchell Road, Suite 200, Eden Prairie, Minnesota 55344-2248
(Address of principal executive offices) (Zip Code)
(612) 937-8500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes /x/ No
As of October 31, 1998, the number of outstanding shares of the registrant's
common stock was 41,200,819.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. Financial Statements
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In Thousands, except per share amounts)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................................. $ 101,258 $ 62,497
Available-for-sale securities .............................................. 20,723 10,428
Receivables, net of allowance for doubtful accounts of $12,279 and $8,936 .. 237,805 206,743
Inventories ................................................................ 3,302 3,109
Deferred tax benefit ....................................................... 6,761 4,781
Prepaid expenses and other ................................................. 5,462 5,797
Income taxes receivable .................................................... -- 17,334
--------- ---------
Total current assets ..................................................... 375,311 310,689
PROPERTY AND EQUIPMENT, net ................................................... 20,223 22,226
INTANGIBLE & OTHER ASSETS, net ................................................ 10,550 7,713
--------- ---------
$ 406,084 $ 340,628
========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable ........................................................... $ 202,084 $ 166,789
Accrued expenses-
Compensation and profit-sharing contribution ............................. 20,931 22,107
Income taxes & other ..................................................... 21,384 12,751
--------- ---------
Total current liabilities .............................................. 244,399 201,647
STOCKHOLDERS' INVESTMENT
Preferred stock, $0.10 par value, 20,000 shares authorized; none outstanding -- --
Common stock, $0.10 par value; 130,000 shares authorized;
41,265 issued, 41,203 and 41,265 outstanding ............................. 4,126 4,126
Additional paid-in capital ................................................. 62,000 62,108
Retained earnings .......................................................... 97,988 73,465
Foreign currency translation adjustment .................................... (1,052) (718)
Treasury stock at cost (62 and 0 shares).................................... (1,377) --
--------- ---------
Total stockholders' investment ......................................... 161,685 138,981
--------- ---------
$ 406,084 $ 340,628
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
2
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income
(In Thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
GROSS REVENUES ........................ $ 516,181 $ 466,408 $ 1,531,042 $ 1,321,560
COST OF TRANSPORTATION
AND PRODUCTS ....................... 452,422 412,944 1,348,770 1,168,940
----------- ----------- ----------- -----------
NET REVENUES .......................... 63,759 53,464 182,272 152,620
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ............ 44,826 38,146 131,364 110,611
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS ................ 18,933 15,318 50,908 42,009
INVESTMENT AND OTHER INCOME ........... 831 936 1,961 2,817
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES .. 19,764 16,254 52,869 44,826
PROVISION FOR INCOME TAXES ............ 7,853 6,369 20,972 17,708
----------- ----------- ----------- -----------
NET INCOME FROM CONTINUING
OPERATIONS ......................... 11,911 9,885 31,897 27,118
NET INCOME FROM DISCONTINUED
OPERATIONS, net of income taxes .... -- 550 -- 1,450
----------- ----------- ----------- -----------
NET INCOME ............................ $ 11,911 $ 10,435 $ 31,897 $ 28,568
----------- ----------- ----------- -----------
OTHER COMPREHENSIVE INCOME:
Foreign currency translation
adjustment.......................... (88) -- (335) --
----------- ----------- ----------- -----------
COMPREHENSIVE INCOME .................. $ 11,823 $ 10,435 $ 31,562 $ 28,568
=========== =========== =========== ===========
BASIC NET INCOME PER SHARE:
From continuing operations ......... $ 0.29 $ 0.24 $ 0.77 $ 0.66
From discontinued operations ....... -- 0.01 -- 0.03
----------- ----------- ----------- -----------
Net income ......................... $ 0.29 $ 0.25 $ 0.77 $ 0.69
=========== =========== =========== ===========
DILUTED NET INCOME PER SHARE:
From continuing operations ......... $ 0.29 $ 0.24 $ 0.77 $ 0.66
From discontinued operations ....... -- 0.01 -- 0.03
----------- ----------- ----------- -----------
Net income ......................... $ 0.29 $ 0.25 $ 0.77 $ 0.69
=========== =========== =========== ===========
BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING ........................ 41,203 41,265 41,223 41,292
DILUTIVE EFFECT OF OUTSTANDING STOCK
OPTIONS ............................ 89 -- 97 --
----------- ----------- ----------- -----------
DILUTED WEIGHTED AVERAGE SHARES
OUTSTANDING ........................ 41,292 41,265 41,320 41,292
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.
3
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income .......................................................... $ 31,897 $ 28,568
Adjustments to reconcile net income to net cash provided by operating
activities-
Depreciation and amortization ..................................... 6,274 6,293
Loss on sale of assets ............................................ 32 --
Deferred income taxes ............................................. (2,692) (992)
Changes in operating elements-
Receivables ..................................................... (28,669) (30,960)
Inventories ..................................................... (193) 1,938
Prepaid expenses and other current assets ....................... 491 (4,612)
Accounts payable ................................................ 29,969 23,118
Accrued compensation and profit sharing ......................... (1,230) 663
Accrued income taxes and other .................................. 25,323 12,249
--------- ---------
Net cash provided by operating activities ..................... 61,202 36,265
INVESTING ACTIVITIES:
Additions of property and equipment ................................. (4,007) (4,078)
Disposals of property and equipment ................................. 1,857 1,311
Sales of long term investments ...................................... -- 4,349
Sales/maturities of available-for-sale securities ................... 22,285 78,670
Purchases of available-for-sale securities .......................... (32,578) (48,903)
Cash used by discontinued operations ................................ -- (3,935)
Other, net .......................................................... (3,538) 577
--------- ---------
Net cash provided by (used for) investing activities .......... (15,981) 27,991
FINANCING ACTIVITIES:
Sales of common stock ............................................... 1,062 103
Repurchases of common stock ......................................... (2,575) (1,416)
Cash dividends ...................................................... (4,947) (825)
--------- ---------
Net cash used for financing activities ........................ (6,460) (2,138)
--------- ---------
Net increase in cash and cash equivalents ..................... 38,761 62,118
CASH AND CASH EQUIVALENTS, beginning of period ......................... 62,497 42,567
--------- ---------
CASH AND CASH EQUIVALENTS, end of period ............................... $ 101,258 $ 104,685
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.
4
<PAGE>
C.H. ROBINSON WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
GENERAL:
Unless the context otherwise requires, the use of the terms "Company,"
"we," "us," and "our" in the following refers to C.H. Robinson Worldwide, Inc.
and its Subsidiaries.
We are a global provider of multimodal transportation services and
logistic solutions through a network of branch offices throughout the United
States, along with offices in Canada, Mexico, Belgium, the United Kingdom,
France, Italy, Poland, Brazil and South Africa. The condensed consolidated
financial statements include the accounts of C.H. Robinson Worldwide, Inc. and
its majority owned and controlled subsidiaries. Our financial services segment,
which was sold in the fourth quarter of 1997, is presented in the accompanying
consolidated financial statements as discontinued operations. Minority interests
in subsidiaries are not significant. All significant intercompany transactions
and balances have been eliminated in the condensed consolidated financial
statements.
The condensed consolidated financial statements which are unaudited
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). In management's opinion, these financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of operations for the interim
periods presented. The results of operations for the nine months ended September
30, 1998 and 1997 are not necessarily indicative of results to be expected for
the entire year. Pursuant to SEC rules and regulations, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted from these statements. The condensed consolidated financial statements
and notes thereto should be read in conjunction with the financial statements
and notes included in our Annual Report on Form 10-K.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT:
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 131 "Disclosures about Segments of an Enterprise and
Related Information" (SFAS No. 131) in June 1997. SFAS No. 131 establishes
accounting standards for segment reporting and is effective for fiscal years
beginning after December 15, 1997. We believe the adoption of SFAS No. 131 will
not affect our financial statements or the disclosures contained therein.
5
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Company's
Condensed Consolidated Financial Statements and Notes thereto.
GENERAL
Gross revenues represent the total amount of services and goods we have
sold to our customers. Costs of transportation and products include our direct
costs of transportation contracted, including motor carrier, intermodal, ocean,
air, and other costs, and our purchase price of products sourced. We act
principally as a service provider to add value and expertise in the execution
and procurement of these services for our customers. Our net revenues (gross
revenues less costs of transportation and products) are the primary indicator of
our ability to source, add value and resell services and products that are
provided by third parties, and are considered by management to be our primary
measurement of growth. Accordingly, the discussion of results of operations
below focuses on the changes in our net revenues.
In the transportation industry generally, results of operations show a
seasonal pattern as customers reduce shipments during and after the winter
holiday season. In recent years, our operating income and income from continuing
operations have been higher in the second and third quarters than in the first
and fourth quarters. Although seasonality in the transportation industry has not
had a significant impact on the Company's cash flow or results of operations in
recent years, we cannot fully predict the impact it may have in the future.
Inflation has not materially affected our operations due to the short-term,
transactional basis of our business.
RESULTS OF OPERATIONS
The following table summarizes net revenue by service line:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
1998 1997 % change 1998 1997 % change
--------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Revenue (in thousands)
Transportation $ 49,036 $ 41,205 19.0% $139,261 $116,887 19.1%
Sourcing 11,451 9,997 14.5 34,734 29,659 17.1
Information services 3,272 2,262 44.7 8,277 6,074 36.3
-------------------------- --------------------------
Total $ 63,759 $ 53,464 19.3% $182,272 $152,620 19.4%
========================== ==========================
</TABLE>
The following table represents certain income statement data shown as
percentages of the Company's net revenues:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------- --------------
1998 1997 1998 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
Selling, general and administrative expenses 70.3 71.3 72.1 72.5
----- ----- ----- -----
Income from operations 29.7 28.7 27.9 27.5
Investment and other income 1.3 1.8 1.1 1.9
----- ----- ----- -----
Income from continuing operations before provision for
income taxes 31.0 30.4 29.0 29.4
Provision for income taxes 12.3 11.9 11.5 11.6
----- ----- ----- -----
Net income from continuing operations 18.7% 18.5% 17.5% 17.8%
===== ===== ===== =====
</TABLE>
6
<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997
Revenues. Gross revenues for the three months ended September 30, 1998
were $516.2 million, an increase of 10.7% over gross revenues of $466.4 million
for the three months ended September 30, 1997. Net revenues for the three months
ended September 30, 1998 were $63.8 million, an increase of 19.3% over net
revenues of $53.5 million for the three months ended September 30, 1997,
resulting from an increase in transportation services net revenues of 19.0% to
$49.0 million, an increase in sourcing net revenues of 14.5% to $11.5 million,
and an increase in information services net revenues of 44.7% to $3.3 million.
Our net revenue growth is increasing at a faster rate than our gross revenue
growth due to the different growth rates in the mix of our service lines. Our
information services net revenues as a percentage of gross revenues is highest
of our three lines, followed by our transportation business and finally our
sourcing business. As our transportation and information services lines have
been growing faster than our sourcing line, our net revenues are growing faster
than gross revenues and are becoming a larger percentage of gross revenues than
in previous periods.
The increase in transportation net revenue resulted primarily from an
increase in transaction volume. The increase in transaction volume was driven by
significant expansion of business with current customers and from new domestic
and international customers.
Sourcing net revenues increased by 14.5% due principally to net revenue
growth from sourcing produce for our large retail chain customers and a new
program with an international produce exporter.
The increase in information services net revenue was the result of
significant growth in transaction volume. We continue to add customers and
expand services with existing customers. We also acquired a non-asset based
LTL carrier with an information services line in the third quarter of 1998. This
addition of net revenue accounted for approximately one fourth of our third
quarter growth in information services net revenue.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended September 30, 1998 were $44.8
million, an increase of 17.5% over $38.1 million for the three months ended
September 30, 1997. Selling, general and administrative expenses as a percent of
net revenue decreased to 70.3% for the three months ended September 30, 1998
compared to 71.3% for the three months ended September 30, 1997. This reduction
was due primarily to the elimination and consolidation of warehouse facilities.
Income from Operations. Income from operations was $18.9 million for
the three months ended September 30, 1998, an increase of 23.6% over $15.3
million for the three months ended September 30, 1997. Income from operations as
a percent of net revenue were 29.7% and 28.7% for the three months ended
September 30, 1998 and for the three months ended September 30, 1997,
respectively.
Investment and Other Income. Investment and other income was $831,000
for the three months ended September 30, 1998, a decrease of 11.2% from $936,000
for the three months ended September 30, 1997. This decrease was the result of a
special dividend paid on October 10, 1997 in conjunction with the initial public
offering, which lowered the amount of cash available for investments.
Provision for Income Taxes. The effective income tax rates for
continuing operations were 39.7% and 39.2% for the three months ended September
30, 1998 and for the three months ended September 30, 1997. The effective income
tax rate for both periods is greater than the statutory federal income tax rate
primarily due to state income taxes, net of their federal benefit.
Net Income from Continuing Operations. Net income from continuing
operations was $11.9 million for the three months ended September 30, 1998, an
increase of 20.5% over $9.9 million for the three months ended September 30,
1997. Net income from continuing operations per share increased by 20.8% to
$0.29 (basic and diluted) for the three months ended September 30, 1998 compared
to $0.24 (basic and diluted) for the three months ended September 30, 1997.
7
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1997
Revenues. Gross revenues for the nine months ended September 30, 1998
were $1.53 billion, an increase of 15.9% over gross revenues of $1.32 billion
for the nine months ended September 30, 1997. Net revenues for the nine months
ended September 30, 1998 were $182.3 million, an increase of 19.4% over net
revenues of $152.6 million for the nine months ended September 30, 1997,
resulting from an increase in transportation services net revenues of 19.1% to
$139.3 million, an increase in sourcing net revenues of 17.1% to $34.7 million,
and an increase in information services net revenues of 36.3% to $8.3 million.
Our net revenue growth is increasing at a faster rate than our gross revenue
growth due to the different growth rates in the mix of our service lines. Our
information services net revenues as a percentage of gross revenues is highest
of our three lines, followed by our transportation business and finally our
sourcing business. As our transportation and information services lines have
been growing faster than our sourcing line, our net revenues are growing faster
than gross revenues and are becoming a larger percentage of gross revenues than
in previous periods.
The increase in transportation net revenue resulted primarily from an
increase in transaction volume. The increase in transaction volume was driven by
significant expansion of business with current customers and from new domestic
and international customers.
Sourcing net revenues increased by 17.1% due principally to net revenue
growth from sourcing produce for our large retail chain customers, a new program
with an international produce exporter and temporary opportunities created by
adverse weather conditions in major produce growing areas. Our branch network
and relationships with produce growers worldwide provided us with sources of
produce in this challenging market.
The increase in information services net revenue was the result of
significant growth in transaction volume. We continue to add customers and
expand services with existing customers. We also acquired a non-asset based LTL
carrier with an information services line in the third quarter of 1998. This
addition of net revenue accounted for approximately one tenth of our year to
date growth in information services net revenue.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the nine months ended September 30, 1998 were $131.4
million, an increase of 18.8% over $110.6 million for the nine months ended
September 30, 1997. Selling, general and administrative expenses as a percent of
net revenue decreased slightly to 72.1% for the nine months ended September 30,
1998 compared to 72.5% for the nine months ended September 30, 1997 due
primarily to the elimination and consolidation of warehouse facilities.
Income from Operations. Income from operations was $50.9 million for
the nine months ended September 30, 1998, an increase of 21.2% over $42.0
million for the nine months ended September 30, 1997. Income from operations as
a percent of net revenue were 27.9% and 27.5% for the nine months ended
September 30, 1998 and for the nine months ended September 30, 1997,
respectively.
Investment and Other Income. Investment and other income was $2.0
million for the nine months ended September 30, 1998, a decrease of 30.4% from
$2.8 million for the nine months ended September 30, 1997. This decrease was the
result of a special dividend paid on October 10, 1997 in conjunction with the
initial public offering, which lowered the amount of cash available for
investments.
Provision for Income Taxes. The effective income tax rates for
continuing operations were 39.7% and 39.5% for the nine months ended September
30, 1998 and for the nine months ended September 30, 1997. The effective income
tax rate for both periods is greater than the statutory federal income tax rate
primarily due to state income taxes, net of their federal benefit.
Net Income from Continuing Operations. Net income from continuing
operations was $31.9 million for the nine months ended September 30, 1998, an
increase of 17.6% over $27.1 million for the nine months ended September 30,
1997. Net income from continuing operations per share increased by 16.7% to
$0.77 (basic and diluted) for the nine months ended September 30, 1998 compared
to $0.66 (basic and diluted) for the nine months ended September 30, 1997.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
We have historically generated substantial cash from operations which
has enabled us to fund our growth while paying cash dividends and repurchasing
stock. Cash and cash equivalents totaled $101.3 million and $62.5 million and
available-for-sale securities totaled $20.7 million and $10.4 million as of
September 30, 1998 and December 31, 1997, respectively. Working capital at
September 30, 1998 and December 31, 1997 totaled $130.9 million and $109.0
million, respectively. We have had no long-term debt for the last five years and
have no material commitments for future capital expenditures.
We generated $61.2 million of positive cash flow from operations for
the nine months ended September 30, 1998. We used $16.0 million of cash and cash
equivalents for investing activities, including $10.3 million for net purchases
of available-for-sale securities and $4.0 million to fund capital expenditures
necessary for continued growth. We also used $6.5 million of cash and cash
equivalents for financing activities, primarily to pay quarterly cash dividends.
Assuming no change in our current business plan, management believes
that our available cash, together with expected future cash generated from
operations, is expected to be sufficient to satisfy its anticipated needs for
working capital, capital expenditures and cash dividends for all future periods.
In addition, we have $17.5 million available under two existing lines of credit
at interest rates of 6.4% and 6.2%, respectively, as of September 30, 1998. The
lines of credit renew annually and do not restrict the payment of dividends.
There were no borrowings under the lines of credit during 1997 or the nine
months ended September 30, 1998. We expect to be able to renew these lines of
credit in the future.
IMPACT OF YEAR 2000
The Company is addressing issues associated with computing difficulties
that may affect existing computer systems as a result of malfunctions in
programming codes written using two digits rather than four to define the
applicable year. We have completed an assessment of our compliance with Year
2000 issues and will modify or replace portions of our hardware and software so
that our computer systems will function properly with respect to dates after
December 31, 1999. We have completed a majority of the modifications and are
currently in the testing phase of our Year 2000 compliance process. This testing
includes running test transactions with dates beyond December 31, 1999 through
our systems to ensure our daily and monthly processing of transactions accepts
the transactions, processes and stores them, and allows for extraction of the
transaction data as needed to operate our business and generate our internal and
external financial information. We expect to complete all such testing on our
systems by December 31, 1998, with the exception of some testing efforts on our
information services line, which we expect to complete by March 31, 1999.
We have also determined that our general ledger system, fixed assets
system and our payroll system are not compliant with Year 2000 requirements and
are in process of replacing these systems. Our new general ledger system and
fixed assets system are operational and are currently running parallel to our
existing systems, with expected full conversion to occur before December 31,
1998. Our expected completion date for having our payroll system operational is
June 30, 1999. Our information services line also has a commercial application
from the Federal Reserve which is not Year 2000 compliant. Management expects a
new version will be available by June 30, 1999. We do not anticipate any
disruptions to be caused by embedded circuitry in our operational systems.
In addition, we do not believe any material relationships exist with
any customer, produce supplier or transportation carrier that would have a
material impact on our 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. We have no single third party
relationship that accounts for more than 5% of our business.
Although we believe we have internally addressed our risks and have not
discovered any material exposure with our third party relationships, there are
inherent risks that we may not meet our objectives by December 31, 1999. In the
event our systems are unable to process information or process information
incorrectly, business interruption could result. Additionally, we could suffer
loss of business if a number of our third party relationships, taken together,
have similar problems. It is impossible to fully assess the potential
consequences in the event there are disruptions in such infrastructure areas as
utilities, communications, transportation, banking and government.
9
<PAGE>
Any such business interruption could have a material adverse effect on our
results of operations, liquidity, and financial condition depending on the
duration of the interruption. We are developing contingency plans in the event
we are unable to complete remediation efforts or unidentified problems develop.
We expect to have these plans in place by June 30, 1999, but there can be no
assurance that unexpected difficulties will not arise.
We are using primarily internal resources for system modifications and
testing. Total costs we have incurred, plus costs we plan to incur for
programming, testing, purchase of Year 2000 testing software, and outside
consultant costs are expected to be in the range of $300,000 to $400,000.
We have incurred and expensed approximately $200,000 as of September 30, 1998.
The actual cost could exceed this estimate. These costs, however, are not
expected to have a material effect on our financial condition, results of
operations, or cash flows. Our costs to replace the noncompliant systems
mentioned above are not included in the range, as these replacements were
planned to occur and we have not accelerated the replacement due to Year 2000
requirements. All other costs are being expensed as incurred.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
The foregoing Management's Discussion and Analysis of Financial
Condition and Results of Operations contains certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements represent the Company's expectations or
beliefs, including, but not limited to, statements concerning the Company's
operations and financial performance and condition, and the Company's
assumptions about anticipated problems and estimated costs associated with Year
2000 issues. When used in this Form 10-Q and in future filings by the Company
with the Securities and Exchange Commission, in the Company's press releases,
presentations to securities analysts or investors, in oral statements made by or
with the approval of an executive officer of the Company, the words or phrases
"believes," "may," "will," "expects," "should," "continue," "anticipates,"
"intends," "will likely result," "estimates," "projects" or similar expressions
and variations thereof are intended to identify such forward-looking statements.
However, any statements contained in this Form 10-Q that are not statements of
historical fact may be deemed to be forward-looking statements. The Company
cautions that these statements by their nature involve risks and uncertainties,
certain of which are beyond the Company's control, and actual results may differ
materially depending on a variety of important factors, including those
described in Exhibit 99 to the Company's Form 10-K filed with the Securities and
Exchange Commission with respect to the Company's fiscal year ended December 31,
1997.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
10
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings
In accordance with reporting requirements promulgated by the Securities
and Exchange Commission, the Company has no new information to report regarding
legal proceedings for this Quarterly Report on Form 10-Q.
ITEM 2. Changes in Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1998.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 12, 1998
C.H. ROBINSON WORLDWIDE, INC.
By /s/ D.R. Verdoorn
-------------------------------
D.R. Verdoorn
Chief Executive Officer
By /s/ Chad Lindbloom
-------------------------------
Chad Lindbloom
Controller
(principal accounting officer)
12
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF C.H. ROBINSON WORLDWIDE, INC. AND
SUBSIDIARIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q REPORT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 101,258
<SECURITIES> 20,723
<RECEIVABLES> 250,084
<ALLOWANCES> 12,279
<INVENTORY> 3,302
<CURRENT-ASSETS> 375,311
<PP&E> 42,372
<DEPRECIATION> 22,149
<TOTAL-ASSETS> 406,084
<CURRENT-LIABILITIES> 244,399
<BONDS> 0
0
0
<COMMON> 4,120
<OTHER-SE> 157,565
<TOTAL-LIABILITY-AND-EQUITY> 406,084
<SALES> 0
<TOTAL-REVENUES> 1,531,042
<CGS> 0
<TOTAL-COSTS> 1,480,134
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,054
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 52,869
<INCOME-TAX> 20,972
<INCOME-CONTINUING> 31,897
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,897
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.77
</TABLE>
