Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Stockholders and the Board of Directors of

C.H. Robinson Worldwide, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of C.H. Robinson Worldwide, Inc. and subsidiaries (the “Company”) as of December 31, 2017 and 2016, and the related consolidated statements of operations and comprehensive income, stockholders’ investment, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2018, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Minneapolis, Minnesota

February 28, 2018

We have served as the Company's auditor since 2002.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of

C.H. Robinson Worldwide, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of C.H. Robinson Worldwide, Inc. and subsidiaries (the "Company") as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the fiscal year ended December 31, 2017, of the Company and our report dated February 28, 2018, expressed an unqualified opinion on those consolidated financial statements and financial statement schedule.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Minneapolis, Minnesota

February 28, 2018

C.H. ROBINSON WORLDWIDE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	December 31,
	2017				2016
ASSETS
Current assets:
Cash and cash equivalents	$	333,890			$	247,666
Receivables, net of allowance for doubtful accounts of $42,409 and $39,543	2,113,930				1,711,191
Prepaid expenses and other	63,116				49,245
Total current assets	2,510,936				2,008,102
Property and equipment	497,909				450,045
Accumulated depreciation and amortization	(267,583		)		(217,092		)
Net property and equipment	230,326				232,953
Goodwill	1,275,816				1,232,796
Other intangible assets, net of accumulated amortization of $122,283 and $87,486	151,585				167,525
Deferred tax assets	6,870				2,250
Other assets	60,301				44,132
Total assets	$	4,235,834			$	3,687,758
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	1,000,305			$	839,736
Outstanding checks	96,359				82,052
Accrued expenses–
Compensation	105,316				98,107
Income taxes	12,240				15,472
Other accrued liabilities	58,229				70,351
Current portion of debt	715,000				740,000
Total current liabilities	1,987,449				1,845,718
Long-term debt	750,000				500,000
Noncurrent income taxes payable	26,684				18,849
Deferred tax liabilities	45,355				65,122
Other long-term liabilities	601				222
Total liabilities	2,810,089				2,429,911
Commitments and contingencies
Stockholders’ investment:
Preferred stock, $.10 par value, 20,000 shares authorized; no shares issued or outstanding	—				—
Common stock, $.10 par value, 480,000 shares authorized; 179,103 and 179,006 shares issued, 139,542 and 141,258 outstanding	13,954				14,126
Additional paid-in capital	444,280				419,280
Retained earnings	3,437,093				3,190,578
Accumulated other comprehensive loss	(18,460		)		(61,442		)
Treasury stock at cost (39,561 and 37,748 shares)	(2,451,122		)		(2,304,695		)
Total stockholders’ investment	1,425,745				1,257,847
Total liabilities and stockholders’ investment	$	4,235,834			$	3,687,758

See accompanying notes to the consolidated financial statements.

C.H. ROBINSON WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per share data)

	For the years ended December 31,
	2017				2016				2015
Revenues:
Transportation	$	13,502,906			$	11,704,745			$	11,989,780
Sourcing	1,366,474				1,439,668				1,486,304
Total revenues	14,869,380				13,144,413				13,476,084
Costs and expenses:
Purchased transportation and related services	11,257,290				9,549,934				9,842,271
Purchased products sourced for resale	1,244,040				1,316,951				1,365,333
Personnel expenses	1,179,527				1,064,936				1,051,410
Other selling, general, and administrative expenses	413,404				375,061				358,760
Total costs and expenses	14,094,261				12,306,882				12,617,774
Income from operations	775,119				837,531				858,310
Interest and other expense	(46,656		)		(25,581		)		(35,529		)
Income before provision for income taxes	728,463				811,950				822,781
Provision for income taxes	223,570				298,566				313,082
Net income	504,893				513,384				509,699
Other comprehensive income/(loss)	42,982				(23,496		)		(9,336		)
Comprehensive income	$	547,875			$	489,888			$	500,363
Basic net income per share	$	3.59			$	3.60			$	3.52
Diluted net income per share	$	3.57			$	3.59			$	3.51
Basic weighted average shares outstanding	140,610				142,706				144,967
Dilutive effect of outstanding stock awards	772				285				382
Diluted weighted average shares outstanding	141,382				142,991				145,349

See accompanying notes to the consolidated financial statements.

C.H. ROBINSON WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT

(In thousands, except per share data)

	Common Shares Outstanding			Amount				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Loss				Treasury Stock				Total Stockholders’ Investment
Balance December 31, 2014	146,458			$	14,646			$	321,968			$	2,648,539			$	(28,610	)		$	(1,909,528	)		$	1,047,015
Net income												509,699												509,699
Foreign currency translation adjustment																(9,336		)						(9,336		)
Dividends declared, $1.57 per share												(235,618		)										(235,618		)
Stock issued for employee benefit plans	254			25				(9,095		)										13,258				4,188
Issuance of restricted stock	164			16				(16		)														—
Stock-based compensation expense								58,039												28				58,067
Excess tax benefit on deferred compensation and employee stock plans								8,548																8,548
Repurchase of common stock	(3,421	)		(342		)														(231,771		)		(232,113		)
Balance December 31, 2015	143,455			14,345				379,444				2,922,620				(37,946		)		(2,128,013		)		1,150,450
Net income												513,384												513,384
Foreign currency translation adjustment																(23,496		)						(23,496		)
Dividends declared, $1.74 per share												(245,426		)										(245,426		)
Stock issued for employee benefit plans	32			3				(16,121		)										(1,287		)		(17,405		)
Issuance of restricted stock	221			22				(22		)														—
Stock-based compensation expense	17			3				37,517												1,034				38,554
Excess tax benefit on deferred compensation and employee stock plans								18,462																18,462
Repurchase of common stock	(2,467	)		(247		)														(176,429		)		(176,676		)
Balance December 31, 2016	141,258			14,126				419,280				3,190,578				(61,442		)		(2,304,695		)		1,257,847
Net income												504,893												504,893
Foreign currency translation adjustment																42,982								42,982
Dividends declared, $1.81 per share												(258,378		)										(258,378		)
Stock issued for employee benefit plans	612			61				(16,760		)										33,271				16,572
Issuance of restricted stock	97			10				(10		)														—
Stock-based compensation expense	1							41,770												44				41,814
Repurchase of common stock	(2,426	)		(243		)														(179,742		)		(179,985		)
Balance December 31, 2017	139,542			$	13,954			$	444,280			$	3,437,093			$	(18,460	)		$	(2,451,122	)		$	1,425,745

See accompanying notes to the consolidated financial statements.

C.H. ROBINSON WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the year ended December 31,
	2017				2016				2015
OPERATING ACTIVITIES
Net income	$	504,893			$	513,384			$	509,699
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	92,977				74,669				66,409
Provision for doubtful accounts	13,489				5,136				11,538
Stock-based compensation	41,805				37,565				57,661
Deferred income taxes	(28,096		)		15,009				(17,095		)
Excess tax benefit on stock-based compensation	(13,657		)		(18,462		)		(8,548		)
Other	4,491				1,907				7,409
Changes in operating elements, net of effects of acquisitions:
Receivables	(364,181		)		(173,211		)		107,560
Prepaid expenses and other	(9,173		)		(6,378		)		(228		)
Other non-current assets	(19,099		)		(3,934		)		741
Accounts payable and outstanding checks	144,041				115,917				(53,272		)
Accrued compensation	7,209				(47,570		)		18,580
Accrued income taxes	18,817				19,921				13,726
Other accrued liabilities	(9,515		)		(4,545		)		4,156
Net cash provided by operating activities	384,001				529,408				718,336
INVESTING ACTIVITIES
Purchases of property and equipment	(40,122		)		(73,452		)		(28,115		)
Purchases and development of software	(17,823		)		(17,985		)		(16,527		)
Acquisitions, net of cash acquired	(49,068		)		(220,203		)		(369,833		)
Restricted cash	—				—				359,388
Other	(521		)		(1,348		)		641
Net cash used for investing activities	(107,534		)		(312,988		)		(54,446		)
FINANCING ACTIVITIES
Proceeds from stock issued for employee benefit plans	38,130				19,271				15,557
Stock tendered for payment of withholding taxes	(21,557		)		(36,678		)		(11,368		)
Repurchase of common stock	(185,485		)		(172,925		)		(229,863		)
Cash dividends	(258,222		)		(245,430		)		(235,615		)
Excess tax benefit on stock-based compensation	—				18,462				8,548
Proceeds from long-term borrowings	250,000				—				—
Proceeds from short-term borrowings	8,784,000				6,600,000				6,833,000
Payments on short-term borrowings	(8,809,000		)		(6,310,000		)		(6,988,000		)
Net cash used for financing activities	(202,134		)		(127,300		)		(607,741		)
Effect of exchange rates on cash	11,891				(9,683		)		(16,860		)
Net change in cash and cash equivalents	86,224				79,437				39,289
Cash and cash equivalents, beginning of year	247,666				168,229				128,940
Cash and cash equivalents, end of year	$	333,890			$	247,666			$	168,229
Supplemental cash flow disclosures
Cash paid for income taxes	$	262,861			$	269,187			$	311,800
Cash paid for interest	$	37,871			$	28,908			$	28,537
Accrued share repurchases held in other accrued liabilities	$	500			$	5,988			$	2,250

See accompanying notes to the consolidated financial statements.

C.H. ROBINSON WORLDWIDE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION. C.H. Robinson Worldwide, Inc. and our subsidiaries (“the company,” “we,” “us,” or “our”) are a global provider of transportation services and logistics solutions through a network of offices operating in North America, Europe, Asia, Australia, New Zealand, and South America. The consolidated financial statements include the accounts of C.H. Robinson Worldwide, Inc. and our majority owned and controlled subsidiaries. Our minority interests in subsidiaries are not significant. All intercompany transactions and balances have been eliminated in the consolidated financial statements.

USE OF ESTIMATES. The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best information, and our actual results could differ materially from those estimates.

REVENUE RECOGNITION. Total revenues consist of the total dollar value of goods and services purchased from us by customers. Our net revenues are our total revenues less purchased transportation and related services, including contracted motor carrier, rail, ocean, air, and other costs, and the purchase price and services related to the products we source. We act principally as the service provider for these transactions and recognize revenue as these services are rendered or goods are delivered. At that time, our obligations to the transactions are completed and collection of receivables is reasonably assured. Most transactions in our transportation and sourcing businesses are recorded at the gross amount we charge our customers for the service we provide and goods we sell. In these transactions, we are the primary obligor, we have credit risk, we have discretion to select the supplier, and we have latitude in pricing decisions. Additionally, in our sourcing business, we take loss of inventory risk during shipment and have general inventory risk. Certain transactions in customs brokerage, managed services, freight forwarding, and sourcing are recorded at the net amount we charge our customers for the service we provide because many of the factors stated above are not present.

ALLOWANCE FOR DOUBTFUL ACCOUNTS. Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. We continuously monitor payments from our customers and maintain a provision for uncollectible accounts based upon our customer aging trends, historical loss experience, and any specific customer collection issues that we have identified.

FOREIGN CURRENCY. Most balance sheet accounts of foreign subsidiaries are translated or remeasured at the current exchange rate as of the end of the year. Statement of operations items are translated at average exchange rates during the year. The resulting translation adjustment is recorded net of tax as a separate component of comprehensive income in our statements of operations and comprehensive income in 2015. In 2016, we asserted that we will indefinitely reinvest earnings of foreign subsidiaries to support expansion of our international businesses and now the translation adjustment is recorded gross of related income tax benefits.

CASH AND CASH EQUIVALENTS. Cash and cash equivalents consist of bank deposits.

PREPAID EXPENSES AND OTHER. Prepaid expenses and other include such items as prepaid rent, software maintenance contracts, insurance premiums, other prepaid operating expenses, and inventories, consisting primarily of produce and related products held for resale.

PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost. Maintenance and repair expenditures are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated lives of the assets. Amortization of leasehold improvements is computed over the shorter of the lease term or the estimated useful lives of the improvements.

We recognized the following depreciation expense (in thousands):

2017		$	42,817
2016		36,212
2015		32,412

A summary of our property and equipment as of December 31 is as follows (in thousands):

	Useful Lives (in years)		2017				2016
Furniture, fixtures, and equipment	3 to 12		$	277,014			$	236,180
Buildings	3 to 30		130,712				130,050
Corporate aircraft	10		11,334				11,334
Leasehold improvements	3 to 15		50,616				40,312
Land			23,658				23,635
Construction in progress			4,575				8,534
Less accumulated depreciation			(267,583		)		(217,092		)
Net property and equipment			$	230,326			$	232,953

GOODWILL. Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable tangible net assets and identifiable intangible assets purchased and liabilities assumed. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (November 30 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. See Note 2.

OTHER INTANGIBLE ASSETS. Other intangible assets include definite-lived customer lists, non-competition agreements, and indefinite-lived trademarks. The definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from 5 to 8 years. Definite-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite-lived trademarks are not amortized. Indefinite-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, or annually, at a minimum. See Note 2.

OTHER ASSETS. Other assets include such items as purchased and internally developed software, and the investments related to our nonqualified deferred compensation plan. We amortize software using the straight-line method over 3 years. We recognized the following amortization expense of purchased and internally developed software (in thousands):

2017		$	13,887
2016		11,404
2015		9,624

A summary of our purchased and internally developed software as of December 31 is as follows (in thousands):

	2017				2016
Purchased software	$	25,805			$	23,753
Internally developed software	55,165				51,507
Less accumulated amortization	(54,194		)		(47,957		)
Net software	$	26,776			$	27,303

INCOME TAXES. Income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities using enacted rates.

Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues raised may differ from the amounts accrued.

The financial statement benefits of an uncertain income tax position are recognized when more likely than not, based on the technical merits, the position will be sustained upon examination. Unrecognized tax benefits are, more likely than not, owed to a taxing authority, and the amount of the contingency can be reasonably estimated. Uncertain income tax positions are included in “Noncurrent income taxes payable” in the consolidated balance sheets.

COMPREHENSIVE INCOME. Our only component of other comprehensive income is foreign currency translation adjustment. It is presented on our consolidated statements of operations and comprehensive income gross of related income tax effects for 2017 and 2016, net of related income tax effects for 2015.

STOCK-BASED COMPENSATION. We issue stock awards, including stock options, performance shares, and restricted stock units, to key employees and outside directors. In general, the awards vest over five years, either based on the company’s earnings growth or the passage of time. The related compensation expense for each award is recognized over the appropriate vesting period. The fair value of each share-based payment award is established on the date of grant. For grants of shares and restricted stock units, the fair value is established based on the market price on the date of the grant, discounted for post-vesting holding restrictions. The discounts on outstanding grants vary from 15 percent to 21 percent and are calculated using the Black-Scholes option pricing model-protective put method. Changes in measured stock volatility and interest rates are the primary reason for changes in the discount.

For grants of options, we use the Black-Scholes option pricing model to estimate the fair value of share-based payment awards. The determination of the fair value of share-based awards is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate, and expected dividends.

NOTE 2: GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill was allocated to each segment based on their relative fair value at November 30, 2016 due to the reorganization of our reporting structure. After that date, we allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. The change in the carrying amount of goodwill is as follows (in thousands):

		NAST				Global Forwarding				Robinson Fresh				All Other and Corporate				Total
December 31, 2015 balance		$	815,639			$	142,993			$	125,469			$	24,236			$	1,108,337
Acquisitions		97,727				17,133				15,033				2,904				132,797
Translation		(6,136		)		(1,076		)		(944		)		(182		)		(8,338		)
December 31, 2016 balance		907,230				159,050				139,558				26,958				1,232,796
Acquisitions		3,673				24,918				—				—				28,591
Translation		10,583				1,905				1,627				314				14,429
December 31, 2017 balance		$	921,486			$	185,873			$	141,185			$	27,272			$	1,275,816

Goodwill is tested at least annually for impairment on November 30, or more frequently if events or changes in circumstances indicate that the asset might be impaired. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting units is less than their respective carrying value (“Step Zero analysis”). If the Step Zero analysis indicates it is more likely than not that the fair value of our reporting units is less than their respective carrying value, and additional impairment assessment is performed (“Step One Analysis”). Refer to Critical Accounting Policies and Estimates.

No goodwill impairment has been recorded in any period presented.

Identifiable intangible assets consisted of the following at December 31 (in thousands):

	2017												2016
	Cost				Accumulated Amortization				Net				Cost				Accumulated Amortization				Net
Finite-lived intangibles
Customer relationships	$	263,093			$	(122,103	)		$	140,990			$	244,036			$	(87,199	)		$	156,837
Non-competition agreements	300				(180		)		120				500				(287		)		213
Total finite-lived intangibles	263,393				(122,283		)		141,110				244,536				(87,486		)		157,050
Indefinite-lived intangibles
Trademarks	10,475				—				10,475				10,475				—				10,475
Total intangibles	$	273,868			$	(122,283	)		$	151,585			$	255,011			$	(87,486	)		$	167,525

Amortization expense for other intangible assets was (in thousands):

2017	$	36,273
2016	27,053
2015	24,373

Finite-lived intangible assets, by reportable segment, as of December 31, 2017, will be amortized over their remaining lives as follows (in thousands):

	NAST				Global Forwarding				Robinson Fresh				All Other and Corporate				Total
2018	$	7,820			$	29,297			$	—			$	41			$	37,158
2019	7,820				29,297				—				—				37,117
2020	260				26,593				—				—				26,853
2021	260				13,072				—				—				13,332
2022	260				13,072				—				—				13,332
Thereafter	480				12,838				—				—				13,318
Total																	$	141,110

NOTE 3: FAIR VALUE MEASUREMENT

Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

•	Level 1-Quoted market prices in active markets for identical assets or liabilities.

•	Level 2-Observable market-based inputs or unobservable inputs that are corroborated by market data.

•	Level 3-Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

We had no Level 3 assets or liabilities as of and during the periods ended December 31, 2017, or December 31, 2016. There were no transfers between levels during the period.

NOTE 4: FINANCING ARRANGEMENTS

Senior Unsecured Revolving Credit Facility

On October 29, 2012, we entered into a senior unsecured revolving credit facility for up to $500 million with a $500 million accordion feature (the “Credit Agreement”), with a syndicate of financial institutions led by U.S. Bank. In December 2014, we amended the credit facility to increase the amount available from $500 million to $900 million and to extend the expiration date from October 2017 to December 2019. This facility allows us to continue to fund working capital, capital expenditures, dividends, and share repurchases.

As of December 31, 2017 and 2016, we had $715 million and $740 million in borrowings outstanding under the Credit Agreement, which is classified as a current liability on the consolidated balance sheets. At December 31, 2017, we had borrowing availability of $185 million. The recorded amount of borrowings outstanding approximates fair value because of the short maturity period of the debt; therefore, we consider these borrowings to be a Level 2 financial liability.

Borrowings under the Credit Agreement generally bear interest at a variable rate determined by a pricing schedule or the base rate (which is the highest of (a) the administrative agent’s prime rate, (b) the federal funds rate plus 0.50 percent, or (c) the sum of one-month LIBOR plus a specified margin). As of December 31, 2017, the variable rate equaled LIBOR plus 1.13 percent. In addition, there is a commitment fee on the average daily undrawn stated amount under each letter of credit issued under the facility. The weighted average interest rate incurred on borrowings during 2017 was approximately 2.2 percent and at December 31, 2017, was approximately 2.7 percent. The weighted average interest rate incurred on borrowings during 2016 was approximately 1.5 percent and at December 31, 2016, was approximately 1.9 percent.

The Credit Agreement contains various restrictions and covenants. Among other requirements, we may not permit our leverage ratio, as of the end of each of our fiscal quarters, of (i) Consolidated Funded Indebtedness to (ii) Consolidated Total Capitalization to be greater than 0.65 to 1.00. Additionally, as a result of amending the Note Purchase Agreement in February 2015, the ratio of (i) Consolidated Funded Indebtedness to (ii) EBITDA (earnings before interest, taxes, depreciation, and amortization), as of the end of each of our fiscal quarters, may not exceed 3.00 to 1.00. We were in compliance with the financial debt covenants as of December 31, 2017.

The Credit Agreement also contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then the administrative agent may declare any outstanding obligations under the Credit Agreement to be immediately due and payable. In addition, if we become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency, or similar law, then any outstanding obligations under the Credit Agreement will automatically become immediately due and payable.

Note Purchase Agreement

On August 23, 2013, we entered into a Note Purchase Agreement with certain institutional investors (the “Purchasers”) named therein (the “Note Purchase Agreement”). Pursuant to the Note Purchase Agreement, the Purchasers purchased, on August 27, 2013, (i) $175 million aggregate principal amount of the company’s 3.97 percent Senior Notes, Series A, due August 27, 2023 (the “Series A Notes”), (ii) $150 million aggregate principal amount of the company’s 4.26 percent Senior Notes, Series B, due August 27, 2028 (the “Series B Notes”), and (iii) $175 million aggregate principal amount of the company’s 4.60 percent Senior Notes, Series C, due August 27, 2033 (the “Series C Notes” and, together with the Series A Notes and the Series B Notes, the “Notes”). Interest on the fixed-rate Notes is payable semi-annually in arrears. We applied the proceeds of the sale of the Notes for share repurchases.

The Note Purchase Agreement contains customary provisions for transactions of this type, including representations and warranties regarding the company and its subsidiaries and various covenants, including covenants that require us to maintain specified financial ratios. The Note Purchase Agreement includes the following financial covenants: we will not permit our leverage ratio, as of the end of each of our fiscal quarters, of (i) Consolidated Funded Indebtedness to (ii) Consolidated Total Capitalization to be greater than 0.65 to 1.00; we will not permit the interest coverage ratio, as of the end of each of our fiscal quarters and for the twelve-month period ending, of (i) Consolidated EBIT (earnings before income taxes) to (ii) Consolidated Interest Expense to be less than 2.00 to 1.00; we will not permit, as of the end of each of our fiscal quarters, Consolidated Priority Debt to exceed 15% of Consolidated Total Assets. The Note Purchase Agreement was amended in February 2015 to conform its financial covenants to be consistent with the amended Credit Agreement. As a result of amending the Note Purchase Agreement in February 2015, the ratio of (i) Consolidated Funded Indebtedness to (ii) EBITDA (earnings before interest, taxes, depreciation, and amortization), as of the end of each of our fiscal quarters, may not exceed 3.00 to 1.00. We were in compliance with the financial debt covenants as of December 31, 2017.

The Note Purchase Agreement provides for customary events of default, generally with corresponding grace periods, including, without limitation, payment defaults with respect to the Notes, covenant defaults, cross-defaults to other agreements evidencing indebtedness of the company or its subsidiaries, certain judgments against the company or its subsidiaries, and events of bankruptcy involving the company or its material subsidiaries. The occurrence of an event of default would permit certain Purchasers to declare certain Notes then outstanding to be immediately due and payable.

Under the terms of the Note Purchase Agreement, the Notes are redeemable, in whole or in part, at 100 percent of the principal amount being redeemed together with a “make-whole amount,” and accrued and unpaid interest (as defined in the Note Purchase Agreement) with respect to each Note. The obligations of the company under the Note Purchase Agreement and the Notes are guaranteed by C.H. Robinson Company, a Delaware corporation and a wholly-owned subsidiary of the company, and by C.H. Robinson Company, Inc., a Minnesota corporation and an indirect wholly-owned subsidiary of the company.

The Notes were issued by the company to such initial Purchasers in a private placement in reliance on Section 4(2) of the Securities Act of 1933, as amended. The Notes will not be and have not been registered under the Securities Act and may not be offered or sold in the United States, absent registration or an applicable exemption from registration requirements.

The fair value of long-term debt was approximately $546.6 million at December 31, 2017, and $528.0 million at December 31, 2016. We estimate the fair value of our debt primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities, and considering our own credit risk. If our long-term debt was recorded at fair value, it would be classified as Level 2.

U.S. Trade Accounts Receivable Securitization

On April 26, 2017, we entered into a receivables purchase agreement and related transaction documents with The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch and Wells Fargo Bank, National Association to provide a receivables securitization facility (the “Receivables Securitization Facility”). The Receivables Securitization Facility is based on the securitization of our U.S. trade accounts receivable and provides funding of up to $250 million. The borrowings outstanding under the Receivables Securitization Facility were $250 million as of December 31, 2017, and are classified as long-term debt on the condensed consolidated balance sheets. The borrowings under the Receivables Securitization Facility were used to pay down amounts previously outstanding on the Credit Agreement. The interest rate on borrowings under the Receivables Securitization Facility is based on the asset-backed commercial paper rate plus a margin or 30 day LIBOR plus a margin for a combined rate of 2.0 percent for the year ended December 31, 2017. The Receivables Securitization Facility expires on April 26, 2019, unless extended by the parties. There is a commitment fee we are required to pay on any unused portion of the facility.

The Receivables Securitization Facility contains various customary affirmative and negative covenants, and it also contains customary default and termination provisions which provide for acceleration of amounts owed under the Receivables Securitization Facility upon the occurrence of certain specified events including, but not limited to, the failure to pay yield, fees, and other amounts due, defaults on certain other indebtedness, failure to discharge certain judgments, insolvency events, change in control, and exceeding certain financial ratios designed to capture events negatively affecting the overall credit quality of the receivables.

The recorded amount of borrowings outstanding on the Receivables Securitization Facility approximates fair value because it can be redeemed on short notice and the interest rate floats, therefore, we consider these borrowings to be a Level 2 financial liability.

As of December 31, 2017, we were in compliance with all of the covenants under the Credit Agreement, Note Purchase Agreement, and Receivables Securitization Facility.

NOTE 5: INCOME TAXES

C.H. Robinson Worldwide, Inc. and its 80 percent (or more) owned U.S. subsidiaries file a consolidated federal income tax return. We file unitary or separate state returns based on state filing requirements.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent and requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries.

The SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under Accounting Standards Codification (“ASC”) 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.

In connection with our initial analysis of the impact of the Tax Act, we have recorded a discrete net tax benefit of $12.1 million in the year ended December 31, 2017. The net benefit consists of a benefit for the revaluation of deferred tax assets and liabilities of $22.9 million, a net expense for one-time impacts of the Tax Act of $6.8 million, and an expense for transition taxes of $4.0 million. We have not yet completed our accounting for the income tax effects of certain elements of the Tax Act but we were able to make reasonable estimates for elements in which our analysis is not complete and have therefore recorded provisional adjustments. These items include our revaluation of deferred tax assets and liabilities and the expense for transition taxes.

During 2017, we recorded a net tax benefit of $19.7 million due to deductions under Section 199 of the Internal Revenue Code.

During the first quarter of 2017, we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718). The adoption of ASU 2016-09 prospectively impacts the recording of income taxes related to share-based payment awards in our consolidated financial position and results of operations, as well as the operating and financing cash flows on the consolidated statements of cash flows. This adoption resulted in a net tax benefit of $13.7 million during the year.

During the first quarter of 2016, we asserted that we will indefinitely reinvest earnings of foreign subsidiaries to support expansion of our international business. In 2017, our indefinite reinvestment strategy, with respect to unremitted earnings of our foreign subsidiaries provided an approximate $3.7 million benefit to our provision for income taxes related to current year earnings. If we repatriated all foreign earnings, the estimated effect on income taxes payable would be an increase of approximately $12.1 million as of December 31, 2017. With few exceptions, we are no longer subject to audits of U.S. federal, state and local, or non-U.S. income tax returns before 2010.

Income before provision for income taxes consisted of (in thousands):

		2017				2016				2015
Domestic		$	638,718			$	710,931			$	729,390
Foreign		89,745				101,019				93,391
Total		$	728,463			$	811,950			$	822,781

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):

	2017				2016				2015
Unrecognized tax benefits, beginning of period	$	12,268			$	13,271			$	18,274
Additions based on tax positions related to the current year	4,014				—				1,520
Additions for tax positions of prior years	16,713				55				—
Reductions for tax positions of prior years	—				(211		)		(810		)
Lapse in statute of limitations	(1,189		)		(847		)		(5,188		)
Settlements	—				—				(525		)
Unrecognized tax benefits, end of the period	$	31,806			$	12,268			$	13,271

As of December 31, 2017, we had $38.6 million of unrecognized tax benefits and related interest and penalties, all of which would affect our effective tax rate if recognized. We are not aware of any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly increase or decrease in the next 12 months.

Income tax expense considers amounts which may be needed to cover exposures for open tax years. We do not expect any material impact related to open tax years; however, actual settlements may differ from amounts accrued.

We recognize interest and penalties related to uncertain tax positions in the provision for income taxes. During the years ended December 31, 2017, 2016, and 2015, we recognized approximately $0.7 million $0.9 million, and $1.2 million in interest and penalties. We had approximately $6.8 million and $6.6 million for the payment of interest and penalties accrued within noncurrent income taxes payable as of December 31, 2017 and 2016. These amounts are not included in the reconciliation above.

The components of the provision for income taxes consist of the following for the years ended December 31 (in thousands):

	2017				2016				2015
Tax provision:
Federal	$	189,708			$	222,685			$	259,793
State	29,320				31,786				37,129
Foreign	32,638				29,086				33,255
	251,666				283,557				330,177
Deferred provision (benefit):
Federal	(21,389		)		13,936				(14,559		)
State	(3,048		)		1,986				(2,074		)
Foreign	(3,659		)		(913		)		(462		)
	(28,096		)		15,009				(17,095		)
Total provision	$	223,570			$	298,566			$	313,082

Our provision for income taxes decreased by $19.7 million due to the benefit of deductions under section 199 of the Internal Revenue Code, by $13.7 million due to our adoption of ASU 2016-09, and $12.1 million due to the impact of the Tax Act.

A reconciliation of the provision for income taxes using the statutory federal income tax rate to our effective income tax rate for the years ended December 31 is as follows:

	2017			2016			2015
Federal statutory rate	35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit	2.6			2.7			2.8
Tax Act impact	(1.7	)		—			—
Section 199 deduction	(2.8	)		—			—
ASU 2016-09 adoption	(1.9	)		—			—
Other	(0.5	)		(0.9	)		0.3
Effective income tax rate	30.7	%		36.8	%		38.1	%

Deferred tax assets (liabilities) are comprised of the following at December 31 (in thousands):

	2017				2016
Deferred tax assets:
Compensation	$	52,538			$	80,338
Receivables	8,819				13,471
Other	7,892				11,433
Deferred tax liabilities:
Intangible assets	(81,932		)		(131,698		)
Prepaid assets	(8,247		)		(14,540		)
Long-lived assets	(15,465		)		(21,268		)
Other	(2,090		)		(608		)
Net deferred tax liabilities	$	(38,485	)		$	(62,872	)

The Tax Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Consequently, we have recorded a provisional decrease related to deferred tax assets and deferred tax liabilities of $34.4 million and $57.3 million, respectively.

We had foreign net operating loss carryforwards with a tax effect of $10.9 million as of December 31, 2017, and $9.0 million as of December 31, 2016. The net operating loss carryforwards will expire at various dates from 2018 to 2025, with certain jurisdictions having indefinite carryforward terms. A full valuation allowance has been established for these net operating loss carryforwards due to the uncertainty of the use of the tax benefit in future periods.

NOTE 6: CAPITAL STOCK AND STOCK AWARD PLANS

PREFERRED STOCK. Our Certificate of Incorporation authorizes the issuance of 20,000,000 shares of preferred stock, par value $0.10 per share. There are no shares of preferred stock outstanding. The preferred stock may be issued by resolution of our Board of Directors at any time without any action of the stockholders. The Board of Directors may issue the preferred stock in one or more series and fix the designation and relative powers. These include voting powers, preferences, rights, qualifications, limitations, and restrictions of each series. The issuance of any such series may have an adverse effect on the rights of holders of common stock and may impede the completion of a merger, tender offer, or other takeover attempt.

COMMON STOCK. Our Certificate of Incorporation authorizes 480,000,000 shares of common stock, par value $.10 per share. Subject to the rights of preferred stock which may from time to time be outstanding, holders of common stock are entitled to receive dividends out of funds legally available, when and if declared by the Board of Directors, and to receive their share of the net assets of the company legally available for distribution upon liquidation or dissolution.

For each share of common stock held, stockholders are entitled to one vote on each matter to be voted on by the stockholders, including the election of directors. Holders of common stock are not entitled to cumulative voting. The stockholders do not have preemptive rights. All outstanding shares of common stock are fully paid and nonassessable.

STOCK AWARD PLANS. Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense as it vests. A summary of our total compensation expense recognized in our consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands):

	2017				2016				2015
Stock options	$	10,109			$	9,178			$	14,607
Stock awards	29,217				25,912				40,785
Company expense on ESPP discount	2,479				2,475				2,269
Total stock-based compensation expense	$	41,805			$	37,565			$	57,661

On May 12, 2016, our shareholders approved an amendment to and restatement of our 2013 Equity Incentive Plan, which allows us to grant certain stock awards, including stock options at fair market value and restricted shares and restricted stock units, to our key employees and outside directors. A maximum of 13,041,803 shares can be granted under this plan. Approximately 2,920,099 shares were available for stock awards under this plan as of December 31, 2017. Shares subject to awards that expire or are canceled without delivery of shares or that are settled in cash, generally become available again for issuance under the plan.

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

The fair value of these options is established based on the market price on the date of grant, discounted for post-vesting holding restrictions, calculated using the Black-Scholes option pricing model. Changes in measured stock price volatility and interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards. As of December 31, 2017, unrecognized compensation expense related to stock options was $58.4 million. The amount of future expense to be recognized will be based on the company’s earnings growth and certain other conditions.

The following schedule summarizes stock option activity in the plans. All outstanding unvested options as of December 31, 2017, relate to performance-based grants from 2013 and 2014 and time-based grants from 2015 through 2017.

	Options			Weighted Average Exercise Price				Aggregate Intrinsic Value (in thousands)				Average Remaining Life (years)
Outstanding at December 31, 2016	7,007,923			$	67.00			$	43,875			7.7
Grants	1,452,765			87.11
Exercised	(388,135	)		63.81
Terminated	(690,481	)		62.17
Outstanding at December 31, 2017	7,382,072			$	71.58			$	129,295			7.6
Vested at December 31, 2017	2,990,514			$	65.79							6.3
Exercisable at December 31, 2017	2,990,514			$	65.79							6.3

Additional potential dilutive stock options totaling 1,357,290 for 2017 have been excluded from our diluted net income per share calculations because these securities’ exercise prices were anti-dilutive (e.g., greater than the average market price of our common stock).

Information on the intrinsic value of options exercised is as follows (in thousands):

2017	$	6,026
2016	981
2015	400

The following table summarizes performance based options by vesting period:

First Vesting Date		Last Vesting Date		Options Granted, Net of Forfeitures			Weighted Average Grant Date Fair Value				Unvested Options
December 31, 2014		December 31, 2018		1,412,773			11.83				403,149
December 31, 2015		December 31, 2019		1,271,223			14.17				682,926
				2,683,996			$	12.94			1,086,075

We issued no performance-based options in 2015, 2016, or 2017. We have awarded stock options to certain key employees that vest primarily based on their continued employment. The value of these awards is established by the market price on the date of the grant and is being expensed over the vesting period of the award. The following table summarizes these unvested stock option grants as of December 31, 2017:

First Vesting Date		Last Vesting Date		Options Granted, Net of Forfeitures			Weighted Average Grant Date Fair Value				Unvested Options
December 31, 2016		December 31, 2020		1,423,053			$	12.66			855,984
December 31, 2017		December 31, 2021		1,253,169			$	12.60			1,003,429
December 31, 2018		December 31, 2022		1,446,070			$	14.24			1,446,070
				4,122,292			$	13.20			3,305,483

Determining Fair Value

We estimated the fair value of stock options granted using the Black-Scholes option pricing model. We estimate the fair value of restricted shares and units using the Black-Scholes option pricing model-protective put method. A description of significant assumptions used to estimate the expected volatility, risk-free interest rate, and expected terms is as follows:

Expected Volatility-Expected volatility was determined based on implied volatility of our traded options and historical volatility of our stock price.

Risk-Free Interest Rate-The risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term.

Expected Term-Expected term represents the period that our stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards.

The fair value per option was estimated using the Black-Scholes option pricing model with the following assumptions:

	2017 Grants				2016 Grants				2015 Grants
Risk-free interest rate	2.27-2.28%				2.13-2.14%				1.95-1.96%
Dividend per share (quarterly amounts)	$0.45-0.46				$0.43-0.45				$0.38-0.43
Expected volatility factor	19.0-21.5%				20.0-21.5%				22.0-24.0%
Expected option term	6.20 years				6.26 years				6.29 years
Weighted average fair value per option	$	14.23			$	12.60			$	12.68

FULL VALUE AWARDS. We have awarded performance-based restricted shares and restricted stock units to certain key employees and non-employee directors. These awards are subject to certain vesting requirements over a five-year period, based on the company’s earnings growth. The awards also contain restrictions on the awardees’ ability to sell or transfer vested awards for a specified period of time. The fair value of these awards is established based on the market price on the date of grant, discounted for post-vesting holding restrictions. The discounts on outstanding grants vary from 15 percent to 21 percent and are calculated using the Black-Scholes option pricing model-protective put method. Changes in measured stock price volatility and interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards.

The following table summarizes our unvested performance based restricted shares and restricted stock unit grants as of December 31, 2017:

	Number of Shares and Restricted Stock Units			Weighted Average Grant Date Fair Value
Unvested at December 31, 2016	1,245,175			$	55.90
Granted	310,071			74.14
Vested	(121,030	)		55.77
Forfeitures	(218,757	)		49.51
Unvested at December 31, 2017	1,215,459			$	61.71

The following table summarizes performance based restricted shares and restricted stock units by vesting period:

First Vesting Date		Last Vesting Date		Performance Shares and Stock Units Granted, Net of Forfeitures			Weighted Average Grant Date Fair Value (1)				Unvested Performance Shares and Restricted Stock Units
December 31, 2014		December 31, 2018		387,587			$	46.50			109,784
December 31, 2015		December 31, 2019		329,596			60.80				175,904
December 31, 2016		December 31, 2020		392,990			51.88				309,300
December 31, 2017		December 31, 2021		343,014			64.91				312,142
December 31, 2018		December 31, 2022		308,329			74.19				308,329
				1,761,516			$	58.71			1,215,459

---

(1)	Amount shown is the weighted average grant date fair value of performance shares and restricted stock units granted, net of forfeitures.

We have also awarded time-based restricted shares and restricted stock units to certain key employees that vest primarily based on their continued employment. The value of these awards is established by the market price on the date of the grant and is being expensed over the vesting period of the award. The following table summarizes these unvested restricted share and restricted stock unit grants as of December 31, 2017:

	Number of Restricted Shares and Stock Units			Weighted Average Grant Date Fair Value
Unvested at December 31, 2016	1,240,156			$	56.70
Granted	280,097			74.17
Vested	(386,859	)		54.39
Forfeitures	(75,944	)		56.41
Unvested at December 31, 2017	1,057,450			$	62.20

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

A summary of the fair value of full value awards vested (in thousands):

2017	$	29,217
2016	25,912
2015	40,785

As of December 31, 2017, there was unrecognized compensation expense of $140.8 million related to previously granted full value awards. The amount of future expense to be recognized will be based on the company’s earnings growth and the continued employment of certain key employees.

EMPLOYEE STOCK PURCHASE PLAN. Our 1997 Employee Stock Purchase Plan allows our employees to contribute up to $10,000 of their annual cash compensation to purchase company stock. Purchase price is determined using the closing price on the last day of the quarter discounted by 15 percent. Shares are vested immediately. The following is a summary of the employee stock purchase plan activity (dollar amounts in thousands):

		Shares Purchased By Employees			Aggregate Cost to Employees				Expense Recognized By the Company
2017		215,613			$	14,048			$	2,479
2016		225,241			14,032				2,475
2015		228,103			13,045				2,269

SHARE REPURCHASE PROGRAMS. During 2013, our Board of Directors increased the number of shares authorized to be repurchased by 15,000,000 shares (the “2013 Program”). The activity under this authorization is as follows (dollar amounts in thousands):

		Shares Repurchased			Total Value of Shares Repurchased
2013 Program
2013 Repurchases		930,075			$	57,689
2014 Repurchases		3,763,583			239,037
2015 Repurchases		3,420,681			232,113
2016 Repurchases		2,467,097			176,676
2017 Repurchases		2,426,407			179,985

As of December 31, 2017, there were 1,992,157 shares remaining for repurchase under the 2013 authorization.

NOTE 7: COMMITMENTS AND CONTINGENCIES

EMPLOYEE BENEFIT PLANS. We offer a defined contribution plan, which qualifies under section 401(k) of the Internal Revenue Code and covers all eligible U.S. employees. We can also elect to make matching contributions to the plan. Annual discretionary contributions may also be made to the plan. Defined contribution plan expense, including matching contributions, was approximately (in thousands):

2017	$	27,530
2016	25,740
2015	46,507

We have committed to a defined contribution match of four percent of eligible compensation in 2018. We contributed a defined contribution match of four percent in 2017, 2016, and 2015.

NONQUALIFIED DEFERRED COMPENSATION PLAN. All restricted shares vested but not yet delivered, as well as a deferred share award granted to our CEO, are held within this plan.

LEASE COMMITMENTS. We lease certain facilities and equipment under operating leases. Information regarding our lease expense is as follows (in thousands):

2017	$	60,864
2016	55,170
2015	56,210

Minimum future lease commitments under noncancelable lease agreements in excess of one year as of December 31, 2017, are as follows (in thousands):

2018	$	51,273
2019	46,172
2020	39,825
2021	29,851
2022	22,807
Thereafter	92,797
Total	$	282,725

In addition to minimum lease payments, we are typically responsible under our lease agreements to pay our pro rata share of maintenance expenses, common charges, and real estate taxes of the buildings in which we lease space.

LITIGATION. We are not subject to any pending or threatened litigation other than routine litigation arising in the ordinary course of our business operations, including 16 contingent auto liability cases as of December 31, 2017. For some legal proceedings, we have accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to our consolidated financial position, results of operations, or cash flows. Because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the inconsistent treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings, we are not able to estimate an amount or range of any reasonably possible additional losses. However, based upon our historical experience, the resolution of these proceedings is not expected to have a material effect on our consolidated financial position, results of operations, or cash flows.

NOTE 8: ACQUISITIONS

On August 31, 2017, we acquired all of the outstanding shares of Milgram & Company Ltd. ("Milgram") for the purpose of expanding our global presence and bringing additional capabilities and expertise to our portfolio. Total purchase consideration, net of cash acquired, was $47.3 million, which was paid in cash. We used advances under the Credit Agreement to fund part of the cash consideration.

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

	Estimated Life (years)
Customer relationships	7		$	14,004

There was $28.6 million of goodwill recorded related to the acquisition of Milgram. The Milgram goodwill is a result of acquiring and retaining the Milgram existing workforce and expected synergies from integrating its business into ours. Purchase accounting is considered preliminary, subject to revision primarily related to certain income tax related balances expected to be finalized in 2018. The goodwill is not deductible for tax purposes. The results of operations of Milgram have been included in our consolidated financial statements since September 1, 2017. Pro forma financial information for prior periods is not presented because we believe the acquisition to be not material to our consolidated results.

On September 30, 2016, we acquired all of the outstanding stock of APC Logistics (“APC”) for the purpose of expanding our global presence and bringing additional capabilities and expertise to the company’s portfolio. Total purchase consideration was $229.4 million, which was paid in cash. We used advances under the Credit Agreement to fund part of the cash consideration. The following is a summary of the allocation of purchase price consideration to the estimated fair value of net assets for the acquisition of APC (in thousands):

Cash and cash equivalents	$	10,181
Receivables	37,190
Other current assets	2,609
Property and equipment	1,696
Identifiable intangible assets	78,842
Goodwill	132,797
Other noncurrent assets	70
Long term deferred tax asset	814
Total assets	264,199
Accounts payable	(22,147		)
Accrued expenses	(12,700		)
Net assets acquired	$	229,352

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

	Estimated Life (years)
Customer relationships	7		$	78,842

The APC goodwill is a result of acquiring and retaining the APC existing workforce and expected synergies from integrating their business into ours. Purchase accounting is considered final. The goodwill will not be deductible for tax purposes. The results of operations of APC have been included in our consolidated financial statements since October 1, 2016. Pro forma financial information for prior periods is not presented because we believe the acquisition to be not material to our consolidated results.

On January 1, 2015, we acquired all of the outstanding stock of Freightquote.com, Inc., (“Freightquote”) for the purpose of enhancing our less than truckload (“LTL”) and truckload businesses and expanding our ecommerce capabilities. Total purchase consideration was $398.6 million, which was paid in cash. We used advances under the Credit Agreement to fund part of the cash consideration. The following is a summary of the allocation of purchase consideration to the estimated fair value of net assets for the acquisition of Freightquote (in thousands):

Cash and cash equivalents	$	29,302
Receivables	56,228
Other current assets	2,395
Property and equipment	43,687
Identifiable intangible assets	37,800
Goodwill	287,220
Trademarks	8,600
Other noncurrent assets	3,421
Total assets	468,653
Accounts payable	(44,622		)
Accrued expenses	(5,485		)
Other liabilities	(19,939		)
Net assets acquired	$	398,607

Following are the details of the purchase price allocated to the intangible assets acquired (dollars in thousands):

	Estimated Life (years)
Customer relationships	5		$	37,500
Noncompete agreements	5		300
Total identifiable intangible assets			$	37,800

We also acquired a trademark valued at $8.6 million, which has been determined to be indefinite-lived. The Freightquote goodwill is a result of acquiring and retaining the Freightquote existing workforce and expected synergies from integrating their business into ours. Purchase accounting is considered final. The goodwill will not be deductible for tax purposes. The results of operations of Freightquote have been included in our consolidated financial statements since the acquisition date of January 1, 2015.

NOTE 9: SEGMENT REPORTING

Our reportable segments are based on our method of internal reporting, which generally segregates the segments by service line and the primary services they provide to our customers. We identify three reportable segments as follows:

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

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

•

Robinson Fresh: Robinson Fresh provides sourcing services under the trade name of Robinson Fresh. Our sourcing services primarily include the buying, selling, and marketing of fresh fruits, vegetables, and other perishable items. Robinson Fresh sources products from around the world and has a physical presence in North America, Europe, Asia, and South America. This segment often provides the logistics and transportation of the products they sell, in addition to temperature controlled transportation services for its customers.

•

All Other and Corporate: All Other and Corporate includes our Managed Services segment, as well as Other Surface Transportation outside of North America and other miscellaneous revenues and unallocated corporate expenses. Managed Services provides Transportation Management Services, or Managed TMS®. Other Surface Transportation revenues are primarily earned by Europe Surface Transportation. Europe Surface Transportation provides services similar to NAST across Europe.

The internal reporting of segments is defined, based in part, on the reporting and review process used by our chief operating decision maker, our Chief Executive Officer. The accounting policies of our reporting segments are the same as those described in the summary of significant accounting policies. Segment information for prior years has been retroactively recast to align with current year presentation. Segment information as of, and for the years ended, December 31, 2017, 2016, and 2015 is as follows (dollars in thousands):

Twelve months ended December 31, 2017
	NAST				Global Forwarding				Robinson Fresh				All Other and Corporate				Eliminations				Consolidated
Revenues	$	9,728,810			$	2,140,987			$	2,415,740			$	583,843			$	—			$	14,869,380
Intersegment revenues (1)	462,390				30,198				167,292				18,174				(678,054		)		—
Total Revenues	$	10,191,200			$	2,171,185			$	2,583,032			$	602,017			$	(678,054	)		$	14,869,380
Net Revenues	$	1,525,064			$	485,280			$	226,059			$	131,647			$	—			$	2,368,050
Operating Income	628,110				91,842				53,374				1,793				—				775,119
Depreciation and amortization	23,230				33,308				4,730				31,709				—				92,977
Total assets (2)	2,277,252				821,182				434,080				703,320				—				4,235,834
Average headcount	6,907				4,310				957				2,513				—				14,687
Twelve months ended December 31, 2016
	NAST				Global Forwarding				Robinson Fresh				All Other and Corporate				Eliminations				Consolidated
Revenues	$	8,737,716			$	1,574,686			$	2,344,131			$	487,880			$	—			$	13,144,413
Intersegment revenues (1)	298,438				30,311				119,403				2,211				(450,363		)		—
Total Revenues	$	9,036,154			$	1,604,997			$	2,463,534			$	490,091			$	(450,363	)		$	13,144,413
Net Revenues	$	1,524,355			$	397,537			$	234,794			$	120,842			$	—			$	2,277,528
Operating Income	674,436				80,931				75,757				6,407				—				837,531
Depreciation and amortization	22,126				23,099				3,782				25,662				—				74,669
Total assets (2)	2,088,611				703,741				376,654				518,752				—				3,687,758
Average headcount	6,773				3,673				942				2,282				—				13,670
Twelve months ended December 31, 2015
	NAST				Global Forwarding				Robinson Fresh				All Other and Corporate				Eliminations				Consolidated
Revenues	$	8,968,349			$	1,639,944			$	2,395,440			$	472,351			$	—			$	13,476,084
Intersegment revenues (1)	271,557				19,102				89,033				2,107				(381,799		)		—
Total Revenues	$	9,239,906			$	1,659,046			$	2,484,473			$	474,458			$	(381,799	)		$	13,476,084
Net Revenues	$	1,564,917			$	365,467			$	235,334			$	102,762			$	—			$	2,268,480
Operating Income/(Loss)	718,329				76,081				81,332				(17,432		)		—				858,310
Depreciation and amortization	21,846				20,790				2,927				20,846				—				66,409
Total assets (2)	1,878,203				556,606				346,728				402,821				—				3,184,358
Average headcount	6,575				3,381				892				2,054				—				12,902

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(1) Intersegment revenues represent the sales between our segments and are eliminated to reconcile to our consolidated results.

(2) All cash and cash equivalents and certain owned properties are included in All Other and Corporate.

The following table presents our total revenues (based on location of the customer) and long-lived assets (including intangible and other assets) by geographic regions (in thousands):

	For the year ended December 31,
	2017				2016				2015
Total revenues
United States	$	12,865,087			$	11,749,602			$	12,097,633
Other locations	2,004,293				1,394,811				1,378,451
Total revenues	$	14,869,380			$	13,144,413			$	13,476,084

	As of December 31,
	2017				2016				2015
Long-lived assets
United States	$	335,072			$	348,299			$	320,445
Other locations	107,140				96,311				24,878
Total long-lived assets	$	442,212			$	444,610			$	345,323

NOTE 10: CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss is included in the Stockholders’ investment on our consolidated balance sheets. The recorded balance at December 31, 2017, and December 31, 2016, was $18.5 million and $61.4 million, respectively, and is comprised solely of foreign currency translation adjustment.

NOTE 11: RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” and in August 2015 issued ASU 2015-14, which amended the standard as to effective date. The new comprehensive revenue recognition standard will supersede all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this new standard effective January 1, 2018 under the modified retrospective transition method with a cumulative adjustment to retained earnings of approximately $10 million.

The adoption of this standard will change the timing of revenue recognition for most of our transportation business from at delivery to over the transit period as our performance obligation is completed. Due to the short transit period of many of our performance obligations, we do not expect this change to have a material impact on our results of operations, financial position, or cash flows once implemented.

The new standard will expand our existing revenue recognition disclosures upon adoption beginning in the first quarter of 2018. In addition, we have identified certain customer contracts in our sourcing business that will change from a principal to an agent relationship under the new standard. This will cause the revenue associated with these contracts to be recognized at the net amount we charge our customers but will have no impact on income from operations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing, and uncertainty of cash flows arising from leases. This update is effective for annual and interim periods beginning after December 15, 2018, which will require us to adopt these provisions in the first quarter of 2019 using a modified retrospective approach. Early adoption is permitted, although we do not plan to adopt early. We have obligations under lease agreements for facilities and equipment, which are classified as operating leases under the existing lease standard. While we are still evaluating the impact ASU 2016-02 will have on our consolidated results of operations, financial condition, and cash flows, our financial statements will reflect an increase in both assets and liabilities due to the requirement to recognize right-of-use assets and lease liabilities on the consolidated balance sheets for our facility and equipment leases. See Note 7 to our consolidated financial statements which presents our operating lease commitments as of December 31, 2017.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718). This update was issued as part of the FASB’s simplification initiative and affects all entities that issue share-based payment awards to their employees. The amendments in this update cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, and accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification, and the classification of those taxes paid on the statement of cash flows. This update is effective for annual and interim periods beginning after December 15, 2016. During the first quarter of 2017, we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718). The adoption of ASU 2016-09 prospectively impacts the recording of income taxes related to share-based payment awards in our consolidated statement of financial position and results of operations, as well as the operating and financing cash flows on the consolidated statements of cash flows. The magnitude of such impacts are dependent on our future grants of stock-based compensation, our future stock price in relation to the fair value of awards on grant date, and the exercise behavior of our option holders. We prospectively adopted these provisions in the first quarter of 2017. This adoption resulted in a decrease in our provision for income taxes for the year ended December 31, 2017 of $13.7 million.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and other (Topic 350). This update simplifies the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, any impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. Early adoption is permitted for interim and annual goodwill impairment tests performed after January 1, 2017. We early adopted this ASU for our annual impairment test performed on November 30, 2017. There was no impact resulting from this adoption on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This update amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under Topic 718. We adopted this new standard effective January 1, 2018. The amendments in this update will be applied prospectively to awards modified on or after January 1, 2018. The future impact of ASU 2017-09 will depend on the nature of future stock award modifications.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income, which amends existing guidance for reporting comprehensive income to reflect changes resulting from the 2017 Tax Act. The amendment provides the option to reclassify stranded tax effects resulting from the 2017 Tax Act and within accumulated other comprehensive income (AOCI) to retained earnings. New disclosures will be required upon adoption, including the accounting policy for releasing income tax effects from AOCI, whether reclassification of stranded income tax effects is elected, and information about other income tax effect reclassifications. The amendment will become effective for us on January 1, 2019, though early adoption is permitted. We are currently evaluating the impact of adopting this standard on our consolidated financial statements and disclosures.

NOTE 12: SUPPLEMENTARY DATA (UNAUDITED)

Our unaudited results of operations for each of the quarters in the years ended December 31, 2017 and 2016, are summarized below (in thousands, except per share data).

2017		March 31 (a)				June 30				September 30				December 31 (b)
Revenues:
Transportation		$	3,102,043			$	3,319,995			$	3,433,701			$	3,647,167
Sourcing		313,082				390,023				350,750				312,619
Total revenues		3,415,125				3,710,018				3,784,451				3,959,786
Costs and expenses:
Purchased transportation and related services		2,563,885				2,781,355				2,869,616				3,042,434
Purchased products sourced for resale		282,674				354,874				320,989				285,503
Personnel expenses		290,504				284,220				293,204				311,599
Other selling, general, and administrative expenses		90,104				107,749				106,177				109,374
Total costs and expenses		3,227,167				3,528,198				3,589,986				3,748,910
Income from operations		187,958				181,820				194,465				210,876
Net income		$	122,080			$	111,071			$	119,186			$	152,556
Basic net income per share		$	0.86			$	0.79			$	0.85			$	1.09
Diluted net income per share		$	0.86			$	0.78			$	0.85			$	1.08
Basic weighted average shares outstanding		141,484				141,061				140,422				139,572
Dilutive effect of outstanding stock awards		374				526				600				1,152
Diluted weighted average shares outstanding		141,858				141,587				141,022				140,724
Market price range of common stock:
High		$	81.16			$	78.31			$	76.16			$	89.89
Low		$	72.17			$	66.33			$	63.41			$	74.30

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(a) Our provision for income taxes decreased in the first quarter of 2017 by $13.7 million due to our adoption of ASU 2016-09.

(b) Our provision for income taxes decreased in the fourth quarter by $19.7 million due to the benefit of deductions under section 199 of the Internal Revenue Code and $12.1 million due to the impact of the Tax Act.

2016		March 31				June 30				September 30				December 31
Revenues:
Transportation		$	2,713,688			$	2,881,496			$	2,998,583			$	3,110,978
Sourcing		360,255				418,245				357,171				303,997
Total revenues		3,073,943				3,299,741				3,355,754				3,414,975
Costs and expenses:
Purchased transportation and related services		2,179,622				2,324,995				2,469,939				2,575,378
Purchased products sourced for resale		330,986				380,531				327,353				278,081
Personnel expenses		277,497				270,251				256,883				260,305
Other selling, general, and administrative expenses		86,886				90,217				90,312				107,646
Total costs and expenses		2,874,991				3,065,994				3,144,487				3,221,410
Income from operations		198,952				233,747				211,267				193,565
Net income		$	118,963			$	143,090			$	129,028			$	122,303
Basic net income per share		$	0.83			$	1.00			$	0.90			$	0.86
Diluted net income per share		$	0.83			$	1.00			$	0.90			$	0.86
Basic weighted average shares outstanding		143,525				142,998				142,611				141,711
Dilutive effect of outstanding stock awards		133				218				272				453
Diluted weighted average shares outstanding		143,658				143,216				142,883				142,164
Market price range of common stock:
High		$	75.11			$	76.10			$	75.69			$	77.89
Low		$	60.31			$	69.84			$	66.62			$	65.57