Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To 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, 2018 and 2017, 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, 2018, 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, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, 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, 2018, 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 25, 2019, 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 PCAOB. 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 regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Minneapolis, Minnesota

February 25, 2019

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, 2018, 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, 2018, 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, 2018, of the Company and our report dated February 25, 2019, 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that 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 25, 2019

C.H. ROBINSON WORLDWIDE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	December 31,
	2018				2017
ASSETS
Current assets:
Cash and cash equivalents	$	378,615			$	333,890
Receivables, net of allowance for doubtful accounts of $41,131 and $42,409	2,162,438				2,113,930
Contract assets	159,635				—
Prepaid expenses and other	52,386				63,116
Total current assets	2,753,074				2,510,936
Property and equipment	498,847				497,909
Accumulated depreciation and amortization	(270,546		)		(267,583		)
Net property and equipment	228,301				230,326
Goodwill	1,258,922				1,275,816
Other intangible assets, net of accumulated amortization of $156,246 and $122,283	108,822				151,585
Deferred tax assets	9,993				6,870
Other assets	68,300				60,301
Total assets	$	4,427,412			$	4,235,834
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	971,023			$	1,000,305
Outstanding checks	92,084				96,359
Accrued expenses–
Compensation	153,626				105,316
Transportation expense	119,820				—
Income taxes	28,360				12,240
Other accrued liabilities	63,410				58,229
Current portion of debt	5,000				715,000
Total current liabilities	1,433,323				1,987,449
Long-term debt	1,341,352				750,000
Noncurrent income taxes payable	21,463				26,684
Deferred tax liabilities	35,757				45,355
Other long-term liabilities	430				601
Total liabilities	2,832,325				2,810,089
Commitments and contingencies
Stockholders’ investment:
Preferred stock, $0.10 par value, 20,000 shares authorized; no shares issued or outstanding	—				—
Common stock, $0.10 par value, 480,000 shares authorized; 179,400 and 179,103 shares issued, 137,284 and 139,542 outstanding	13,728				13,954
Additional paid-in capital	521,486				444,280
Retained earnings	3,845,593				3,437,093
Accumulated other comprehensive loss	(71,935		)		(18,460		)
Treasury stock at cost (42,116 and 39,561 shares)	(2,713,785		)		(2,451,122		)
Total stockholders’ investment	1,595,087				1,425,745
Total liabilities and stockholders’ investment	$	4,427,412			$	4,235,834

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,
	2018				2017				2016
Revenues:
Transportation	$	15,515,921			$	13,502,906			$	11,704,745
Sourcing	1,115,251				1,366,474				1,439,668
Total revenues	16,631,172				14,869,380				13,144,413
Costs and expenses:
Purchased transportation and related services	12,922,177				11,257,290				9,549,934
Purchased products sourced for resale	1,003,760				1,244,040				1,316,951
Personnel expenses	1,343,542				1,179,527				1,064,936
Other selling, general, and administrative expenses	449,610				413,404				375,061
Total costs and expenses	15,719,089				14,094,261				12,306,882
Income from operations	912,083				775,119				837,531
Interest and other expenses	(31,810		)		(46,656		)		(25,581		)
Income before provision for income taxes	880,273				728,463				811,950
Provision for income taxes	215,768				223,570				298,566
Net income	664,505				504,893				513,384
Other comprehensive (loss) income	(53,475		)		42,982				(23,496		)
Comprehensive income	$	611,030			$	547,875			$	489,888
Basic net income per share	$	4.78			$	3.59			$	3.60
Diluted net income per share	$	4.73			$	3.57			$	3.59
Basic weighted average shares outstanding	139,010				140,610				142,706
Dilutive effect of outstanding stock awards	1,395				772				285
Diluted weighted average shares outstanding	140,405				141,382				142,991

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, 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																(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																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
Net income												664,505												664,505
Cumulative Effect Change - ASU 2014-09												9,239												9,239
Foreign currency translation																(53,475		)						(53,475		)
Dividends declared, $1.88 per share												(265,244		)										(265,244		)
Stock issued for employee benefit plans	764			76				(10,547		)										40,489				30,018
Issuance of restricted stock	297			30				(30		)														—
Stock-based compensation expense	—			—				87,783												8				87,791
Repurchase of common stock	(3,319	)		(332		)														(303,160		)		(303,492		)
Balance December 31, 2018	137,284			$	13,728			$	521,486			$	3,845,593			$	(71,935	)		$	(2,713,785	)		$	1,595,087

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,
	2018				2017				2016
OPERATING ACTIVITIES
Net income	$	664,505			$	504,893			$	513,384
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	96,729				92,977				74,669
Provision for doubtful accounts	15,634				13,489				5,136
Stock-based compensation	87,791				41,805				37,565
Deferred income taxes	(15,315		)		(28,096		)		15,009
Excess tax benefit on stock-based compensation	(10,388		)		(13,657		)		(18,462		)
Other operating activities	1,815				4,491				1,907
Changes in operating elements, net of effects of acquisitions:
Receivables	(190,048		)		(364,181		)		(173,211		)
Contract assets	(11,871		)		—				—
Prepaid expenses and other	16,029				(9,173		)		(6,378		)
Other non-current assets	1,370				(19,099		)		(3,934		)
Accounts payable and outstanding checks	36,083				144,041				115,917
Accrued compensation	47,011				7,209				(47,570		)
Accrued transportation expense	25,175				—				—
Accrued income taxes	21,176				18,817				19,921
Other accrued liabilities	7,200				(9,515		)		(4,545		)
Net cash provided by operating activities	792,896				384,001				529,408
INVESTING ACTIVITIES
Purchases of property and equipment	(45,000		)		(40,122		)		(73,452		)
Purchases and development of software	(18,871		)		(17,823		)		(17,985		)
Acquisitions, net of cash acquired	(5,315		)		(49,068		)		(220,203		)
Other investing activities	(3,622		)		(521		)		(1,348		)
Net cash used for investing activities	(72,808		)		(107,534		)		(312,988		)
FINANCING ACTIVITIES
Proceeds from stock issued for employee benefit plans	51,285				38,130				19,271
Stock tendered for payment of withholding taxes	(21,264		)		(21,557		)		(36,678		)
Repurchase of common stock	(300,991		)		(185,485		)		(172,925		)
Cash dividends	(265,219		)		(258,222		)		(245,430		)
Excess tax benefit on stock-based compensation	—				—				18,462
Proceeds from long-term borrowings	591,012				250,000				—
Proceeds from short-term borrowings	2,674,000				8,784,000				6,600,000
Payments on short-term borrowings	(3,384,000		)		(8,809,000		)		(6,310,000		)
Net cash used for financing activities	(655,177		)		(202,134		)		(127,300		)
Effect of exchange rates on cash	(20,186		)		11,891				(9,683		)
Net change in cash and cash equivalents	44,725				86,224				79,437
Cash and cash equivalents, beginning of year	333,890				247,666				168,229
Cash and cash equivalents, end of year	$	378,615			$	333,890			$	247,666
Supplemental cash flow disclosures
Cash paid for income taxes	$	215,644			$	262,861			$	269,187
Cash paid for interest	$	47,544			$	37,871			$	28,908
Accrued share repurchases held in other accrued liabilities	$	3,000			$	500			$	5,988

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, Oceania, 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. At contract inception, we assess the goods and services promised in our contracts with customers and identify our performance obligations to provide distinct goods and services to our customers. We have determined that the following distinct goods and services represent our primary performance obligations.

Transportation and Logistics Services - As a third party logistics provider, our primary performance obligation under our customer contracts is to utilize our relationships with a wide variety of transportation companies to efficiently and cost-effectively transport our customers’ freight. Revenue is recognized for these performance obligations as they are satisfied over the contract term, which generally represents the transit period. The transit period can vary based upon the method of transport, generally a couple days for over the road, rail, and air transportation, or several weeks in the case of an ocean shipment. Determining the transit period and how much of it has been completed as of the reporting date may require management to make judgments that affect the timing of revenue recognized. When the customers’ freight reaches its intended destination our performance obligation is complete. Pricing for our services is generally a fixed amount and is typically due within 30 days upon completion of our performance obligation.

We also provide certain value-added logistics services, such as customs brokerage, fee-based managed services, warehousing services, small parcel, and supply chain consulting and optimization services. These services may include one or more performance obligations which are generally satisfied over the service period as we perform our obligations. The service period may be a very short duration, in the case of customs brokerage and small parcel, or it may be longer in the case of warehousing, managed services and supply chain consulting and optimization services. Pricing for our services is established in the customer contract and is dependent upon the specific needs of the customer but may be agreed upon at a fixed fee per transaction, labor hour, or service period. Payment is typically due within 30 days upon completion of our performance obligation.

Sourcing Services - We contract with grocery retailers, restaurants, foodservice distributors, and produce wholesalers to provide sourcing services under the trade name Robinson Fresh. Our primary service obligation under these contracts is the buying, selling, and/or marketing of produce including fresh fruits, vegetables, and other value-added perishable items. Revenue is recognized when our performance obligations under these contracts is satisfied at a point in time, generally when the produce is received by our customer. Pricing under these contracts is generally a fixed amount and is typically due within 30 days upon completion of our performance obligation.

In many cases, as additional performance obligations, we contract to arrange logistics and transportation of the products we buy, sell, and/or market. These performance obligations are satisfied over the contract term consistent with our other transportation and logistics services. The contract period is typically less than one year. Pricing for our services is generally a fixed amount and is typically due within 30 days upon completion of our performance obligation.

Total revenues represent the total dollar value of revenue recognized from contracts with customers for the goods and services we provide. Substantially all of our revenue is attributable to contracts with our 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. 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 primarily responsible for fulfilling the promise to provide the specified good or service to our customer and we have discretion in establishing the price for the specified good or service. Additionally, in our sourcing business, in some

cases we take inventory risk before the specified good has been transferred to our customer. Customs brokerage, managed services, freight forwarding, and sourcing managed procurement transactions 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.

CONTRACT ASSETS. Contract assets represent amounts for which we have the right to consideration for the services we have provided while a shipment is still in-transit but for which we have not yet completed our performance obligation or have not yet invoiced our customer. Upon completion of our performance obligations, which can vary in duration based upon the method of transport, and billing our customer these amounts become classified within accounts receivable and are then typically due within 30 days.

ACCRUED TRANSPORTATION EXPENSE. Accrued transportation expense represents amounts we owe to vendors, primarily transportation providers, for the services they have provided while a shipment is still in-transit as of the reporting date.

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. We have asserted that we will indefinitely reinvest earnings of foreign subsidiaries to support expansion of our international businesses and accordingly translation adjustments are recorded gross of any related income tax effects.

CASH AND CASH EQUIVALENTS. Cash and cash equivalents consist primarily of bank deposits and highly liquid investments with an original maturity of three months or less from the time of purchase. Cash and cash equivalents held outside the United States totaled $320.0 million and $275.3 million as of December 31, 2018 and 2017. The majority of our cash and cash equivalents balance is denominated in U.S. dollars although these balances are frequently held in locations where the U.S. dollar is not the functional currency.

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):

2018		$	45,155
2017		42,817
2016		36,212

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

	Useful Lives (in years)		2018				2017
Furniture, fixtures, and equipment	3 to 12		$	272,733			$	277,014
Buildings	3 to 30		130,959				130,712
Corporate aircraft	10		11,337				11,334
Leasehold improvements	3 to 15		58,929				50,616
Land			23,648				23,658
Construction in progress			1,241				4,575
Less: accumulated depreciation and amortization			(270,546		)		(267,583		)
Net property and equipment			$	228,301			$	230,326

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, Goodwill and Other Intangible Assets.

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 five to eight 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, Goodwill and Other Intangible Assets.

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

2018		$	14,688
2017		13,887
2016		11,404

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

	2018				2017
Purchased software	$	32,460			$	25,805
Internally developed software	68,853				55,165
Less accumulated amortization	(66,638		)		(54,194		)
Net software	$	34,675			$	26,776

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 “Accrued income taxes” or “Noncurrent income taxes payable” in the consolidated balance sheets.

COMPREHENSIVE INCOME (LOSS). Comprehensive income (loss) consists of foreign currency translation adjustments. It is presented on our consolidated statements of operations and comprehensive income gross of related income tax effects.

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, 2016 balance		$	907,230			$	159,050			$	139,558			$	26,958			$	1,232,796
Acquisitions		3,673				24,918				—				—				28,591
Foreign currency 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
Acquisitions		(40		)		33				—				—				(7		)
Foreign currency translation		(11,038		)		(3,877		)		(1,653		)		(319		)		(16,887		)
December 31, 2018 balance		$	910,408			$	182,029			$	139,532			$	26,953			$	1,258,922

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, an additional impairment assessment is performed (“Step One Analysis”). Based on our Step Zero Analysis, we determined that the more likely than not criteria had not been met, and therefore a Step 1 Analysis was not required.

No goodwill or intangible asset impairment has been recorded in any period presented.

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

	2018												2017
	Cost				Accumulated Amortization				Net				Cost				Accumulated Amortization				Net
Finite-lived intangibles
Customer relationships	$	254,293			$	(156,006	)		$	98,287			$	263,093			$	(122,103	)		$	140,990
Non-competition agreements	300				(240		)		60				300				(180		)		120
Total finite-lived intangibles	254,593				(156,246		)		98,347				263,393				(122,283		)		141,110
Indefinite-lived intangibles
Trademarks	10,475				—				10,475				10,475				—				10,475
Total intangibles	$	265,068			$	(156,246	)		$	108,822			$	273,868			$	(122,283	)		$	151,585

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

2018	$	36,886
2017	36,273
2016	27,053

Finite-lived intangible assets, by reportable segment, as of December 31, 2018, will be amortized over their remaining lives as follows (in thousands):

	NAST				Global Forwarding				Robinson Fresh				All Other and Corporate				Total
2019	$	7,800			$	28,413			$	—			$	—			$	36,213
2020	240				25,710				—				—				25,950
2021	240				12,188				—				—				12,428
2022	240				12,188				—				—				12,428
2023	240				9,595				—				—				9,835
Thereafter	219				1,274				—				—				1,493
Total																	$	98,347

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, 2018, or December 31, 2017. There were no transfers between levels during the period.

NOTE 4: FINANCING ARRANGEMENTS

The components of our short-term and long-term debt and the associated interest rates were as follows (dollars in thousands):

		Average interest rate as of								Carrying value as of
		December 31, 2018			December 31, 2017			Maturity		December 31, 2018				December 31, 2017
Revolving credit facility		3.64	%		2.70	%		October 2023		$	5,000			$	715,000
Senior Notes, Series A		3.97	%		3.97	%		August 2023		175,000				175,000
Senior Notes, Series B		4.26	%		4.26	%		August 2028		150,000				150,000
Senior Notes, Series C		4.60	%		4.60	%		August 2033		175,000				175,000
Receivables securitization facility (1)		3.15	%		2.00	%		December 2020		249,744				250,000
Senior Notes (1)		4.20	%		N/A			April 2028		591,608				—
Total debt										1,346,352				1,465,000
Less: Current maturities and short-term borrowing										(5,000		)		(715,000		)
Long-term debt										$	1,341,352			$	750,000

(1) Net of unamortized discounts and issuance costs.

SENIOR UNSECURED REVOLVING CREDIT FACILITY

We have a senior unsecured revolving credit facility (the "Credit Agreement"). On October 24, 2018, the Credit Agreement was amended to increase the total availability from $900 million to $1 billion and extend the maturity date from December 31, 2019, to October 24, 2023. 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, 2018, 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 ranging from 0.075 percent to 0.200 percent. 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.

The Credit Agreement contains various restrictions and covenants that require us to maintain certain financial ratios, including a maximum leverage ratio of 3.00 to 1.00. 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”). On August 27, 2013, the Purchasers purchased an aggregate principal amount of $500 million of our Senior Notes, Series A, Senior Notes Series B, and Senior Notes Series C, collectively (the “Notes”). Interest on the Notes is payable semi-annually in arrears. The fair value of the Notes approximated $484.7 million at December 31, 2018. We estimate the fair value of the Notes 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 risk. If the Notes were recorded at fair value, they would be classified as Level 2.

The Note Purchase Agreement contains various restrictions and covenants that require us to maintain certain financial ratios, including a maximum leverage ratio of 3.00 to 1.00, a minimum interest coverage ratio of 2.00 to 1.00, and a maximum consolidated priority debt to consolidated total asset ratio of 15 percent.

The Note Purchase Agreement provides for customary events of default. 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” (as defined in the Note Purchase Agreement), and accrued and unpaid interest 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.

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, N.A. to provide a receivables securitization facility (the “Receivables Securitization Facility”). On December 17, 2018, we entered into an amendment on the Receivables Securitization Facility which changed the lending parties to Wells Fargo Bank, N.A. and Bank of America, N.A. and extended the maturity date from April 26, 2019, to December 17, 2020. 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 interest rate on borrowings under the Receivables Securitization Facility is based on 30 day LIBOR plus a margin. There is also a commitment fee we are required to pay on any unused portion of the facility. The Receivables Securitization Facility expires on December 17, 2020, unless extended by the parties. 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. We consider these borrowings to be a Level 2 financial liability.

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.

SENIOR NOTES

On April 9, 2018, we issued senior unsecured notes ("Senior Notes") through a public offering. The Senior Notes bear an annual interest rate of 4.20 percent payable semi-annually on April 15 and October 15, until maturity on April 15, 2028. The proceeds from the Senior Notes were utilized to pay down the balance on our Credit Agreement. Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, the Senior Notes have an effective yield to maturity of approximately 4.39 percent per annum. The fair value of the Senior Notes, excluding debt discounts and issuance costs, approximated $587.2 million as of December 31, 2018, based primarily on the market prices quoted from external sources. The carrying value of the Senior Notes was $591.6 million as of December 31, 2018. If the Senior Notes were measured at fair value in the financial statements, they would be classified as Level 2 in the fair value hierarchy.

We may redeem the Senior Notes, in whole or in part, at any time and from time to time prior to their maturity at the applicable redemption prices described in the Senior Notes. Upon the occurrence of a “change of control triggering event” as defined in the Senior Notes (generally, a change of control of us accompanied by a reduction in the credit rating for the Senior Notes), we will generally be required to make an offer to repurchase the Senior Notes from holders at 101 percent of their principal amount plus accrued and unpaid interest to the date of repurchase.

The Senior Notes were issued under an indenture that contains covenants imposing certain limitations on our ability to incur liens, enter into sales and leaseback transactions and consolidate, merge or transfer substantial all of our assets and those of our subsidiaries on a consolidated basis. It also provides for customary events of default (subject in certain cases to customary grace and cure periods), which include among other things nonpayment, breach of covenants in the indenture, and certain events of bankruptcy and insolvency. If an event of default occurs and is continuing with respect to the Senior Notes, the trustee or holders of at least 25 percent in principal amount outstanding of the Senior Notes may declare the principal and the accrued and unpaid interest, if any, on all of the outstanding Senior Notes to be due and payable. These covenants and events of default are subject to a number of important qualifications, limitations, and exceptions that are described in the indenture. The indenture does not contain any financial ratios or specified levels of net worth or liquidity to which we must adhere.

As of December 31, 2018, we were in compliance with all of the covenants under the Credit Agreement, Note Purchase Agreement, Receivables Securitization Facility, and Senior Notes.

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 and adding new rules for Global Intangible Low-tax Income (“GILTI”) and Foreign Derived Intangible Income. We have elected to treat tax on GILTI as a period cost and therefore have included it in our annual effective tax rate.

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 connection with our initial analysis of the impact of the Tax Act, we recorded a discrete net tax benefit of $12.1 million in the year ended December 31, 2017. During 2018, we completed our accounting for the income tax effects of the Tax Act. We recorded an additional net tax expense of $4.0 million related to an increase in 2017 transition taxes and recorded additional net tax benefits of $0.6 million, resulting in a revised tax benefit of $8.7 million.

In 2018, our indefinite reinvestment strategy, with respect to unremitted earnings of our foreign subsidiaries provided an approximate $3.4 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 $14.8 million as of December 31, 2018. 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):

		2018				2017				2016
Domestic		$	738,927			$	638,718			$	710,931
Foreign		141,346				89,745				101,019
Total		$	880,273			$	728,463			$	811,950

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

	2018				2017				2016
Unrecognized tax benefits, beginning of period	$	31,806			$	12,268			$	13,271
Additions based on tax positions related to the current year	—				4,014				—
Additions for tax positions of prior years	1,662				16,713				55
Reductions for tax positions of prior years	(263		)		—				(211		)
Lapse in statute of limitations	(1,394		)		(1,189		)		(847		)
Settlements	(296		)		—				—
Unrecognized tax benefits, end of the period	$	31,515			$	31,806			$	12,268

As of December 31, 2018, we had $38.0 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. The total liability for unrecognized tax benefits is expected to decrease by approximately $2.1 million in the next 12 months due to lapsing of statutes.

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, 2018, 2017, and 2016, we recognized approximately $1.0 million, $0.7 million, and $0.9 million in interest and penalties. We had approximately $6.5 million and $6.8 million for the payment of interest and penalties accrued within noncurrent income taxes payable as of December 31, 2018 and 2017. 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):

	2018				2017				2016
Tax provision:
Federal	$	152,627			$	189,708			$	222,685
State	38,626				29,320				31,786
Foreign	39,830				32,638				29,086
	231,083				251,666				283,557
Deferred provision (benefit):
Federal	(11,969		)		(21,389		)		13,936
State	(3,176		)		(3,048		)		1,986
Foreign	(170		)		(3,659		)		(913		)
	(15,315		)		(28,096		)		15,009
Total provision	$	215,768			$	223,570			$	298,566

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:

	2018			2017			2016
Federal statutory rate	21.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit	3.3			2.6			2.7
Tax Act impact	0.4			(1.7	)		—
Section 199 deduction	—			(2.8	)		—
Share-based payment awards	(0.7	)		(1.9	)		—
Other	0.5			(0.5	)		(0.9	)
Effective income tax rate	24.5	%		30.7	%		36.8	%

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

	2018				2017
Deferred tax assets:
Compensation	$	57,666			$	52,538
Accrued expenses	27,683				3,155
Receivables	8,093				8,819
Other	6,004				4,737
Deferred tax liabilities:
Intangible assets	(77,059		)		(81,932		)
Accrued revenue	(19,571		)		—
Prepaid assets	(5,798		)		(8,247		)
Long-lived assets	(15,615		)		(15,465		)
Other	(7,167		)		(2,090		)
Net deferred tax liabilities	$	(25,764	)		$	(38,485	)

We had foreign net operating loss carryforwards with a tax effect of $8.1 million as of December 31, 2018, and $10.9 million as of December 31, 2017. The net operating loss carryforwards will expire at various dates from 2019 to 2025, with certain jurisdictions having indefinite carryforward terms. We continually monitor and review the foreign net operating loss carryforwards to determine the ability to realize the deferred tax assets associated with the foreign net operating loss carryforwards. As of December 31, 2017, a full valuation allowance was established for the foreign net operating loss carryforwards due to the uncertainty of the use of the tax benefit in future periods. During 2018, we determined that a portion of the foreign net operating loss carryforwards would be able to be utilized and as such have reduced the valuation allowance recorded against the deferred tax asset related to the foreign operating loss carryforwards in the amount of $1.7 million.

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 $0.10 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):

	2018				2017				2016
Stock options	$	23,374			$	10,109			$	9,178
Stock awards	61,826				29,217				25,912
Company expense on ESPP discount	2,591				2,479				2,475
Total stock-based compensation expense	$	87,791			$	41,805			$	37,565

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 1,571,347 shares were available for stock awards under this plan as of December 31, 2018. 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, 2018, unrecognized compensation expense related to stock options was $56.1 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, 2018, relate to performance-based grants from 2014 and time-based grants from 2015 through 2018.

	Options			Weighted Average Exercise Price				Aggregate Intrinsic Value (in thousands)				Average Remaining Life (years)
Outstanding at December 31, 2017	7,382,072			$	71.58			$	129,295			7.6
Grants	1,074,665			88.92
Exercised	(578,467	)		65.13
Terminated	(55,756	)		73.92
Outstanding at December 31, 2018	7,822,514			$	74.42			$	85,222			7.2
Vested at December 31, 2018	4,191,118			$	68.35							5.9
Exercisable at December 31, 2018	4,191,118			$	68.35							5.9

Additional potential dilutive stock options totaling 5,296 for 2018 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):

2018	$	16,209
2017	6,026
2016	981

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, 2015		December 31, 2019		1,253,443			$	14.17			136,781

We have issued no performance-based options since 2014. 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, discounted for post-vesting holding restrictions, calculated using the Black-Scholes option pricing model and is being expensed over the vesting period of the award. The following table summarizes these unvested stock option grants as of December 31, 2018:

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		1,421,933			$	12.66			561,579
December 31, 2017		December 31, 2021		1,246,480			12.60				735,744
December 31, 2018		December 31, 2022		1,470,606			14.25				1,162,504
December 31, 2019		December 31, 2023		1,034,788			20.52				1,034,788
				5,173,807			$	14.67			3,494,615

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:

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.

Dividend Yield-The dividend yield assumption is based on our history of dividend payouts.

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

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:

	2018 Grants				2017 Grants				2016 Grants
Weighted-average risk-free interest rate	3.1		%		2.3		%		2.1		%
Expected dividend yield	2.0		%		2.5%				2.4%
Weighted-average volatility	25%				20%				20%
Expected term (in years)	6.08				6.20				6.26
Weighted average fair value per option	$	20.52			$	14.23			$	12.60

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, 2018:

	Number of Shares and Restricted Stock Units			Weighted Average Grant Date Fair Value
Unvested at December 31, 2017	1,215,459			$	61.71
Granted	340,287			74.54
Vested	(687,463	)		60.14
Forfeitures	(22,113	)		60.50
Unvested at December 31, 2018	846,170			$	68.35

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, 2015		December 31, 2019		323,442			$	61.75			34,572
December 31, 2016		December 31, 2020		389,644			51.88				139,431
December 31, 2017		December 31, 2021		339,808			64.91				162,955
December 31, 2018		December 31, 2022		312,797			74.26				178,294
December 31, 2019		December 31, 2023		330,918			74.48				330,918
				1,696,609			$	64.91			846,170

---

(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 discount for post-vesting holding restrictions 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, 2018:

	Number of Restricted Shares and Stock Units			Weighted Average Grant Date Fair Value
Unvested at December 31, 2017	1,057,450			$	62.20
Granted	279,679			74.54
Vested	(324,965	)		58.46
Forfeitures	(85,472	)		62.57
Unvested at December 31, 2018	926,692			$	67.08

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):

2018	$	61,826
2017	29,217
2016	25,912

As of December 31, 2018, there was unrecognized compensation expense of $120.0 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
2018		191,823			$	14,682			$	2,591
2017		215,613			14,048				2,479
2016		225,241			14,032				2,475

SHARE REPURCHASE PROGRAMS. During 2013, our Board of Directors authorized a share repurchase program that allows the Company to repurchase 15,000,000 shares. That program was completed in September 2018. In May 2018, the Board of Directors authorized a share repurchase program that allows the Company to repurchase 15,000,000 shares of our common stock. The activity under these authorizations is as follows (dollar amounts in thousands):

		Shares Repurchased			Total Value of Shares Repurchased
2016 Repurchases		2,467,097			$	176,676
2017 Repurchases		2,426,407			179,985
2018 Repurchases		3,319,077			303,492

As of December 31, 2018, there were 13,673,080 shares remaining for repurchase under the current 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):

2018	$	43,172
2017	27,530
2016	25,740

We have committed to a defined contribution match of six percent of eligible compensation in 2019. We contributed a defined contribution match of four percent in 2018, 2017, and 2016.

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):

2018	$	72,327
2017	60,864
2016	55,170

Minimum future lease commitments under noncancelable lease agreements in excess of one year as of December 31, 2018, are as follows (in thousands):

2019	$	53,675
2020	47,680
2021	36,832
2022	27,644
2023	19,406
Thereafter	81,465
Total	$	266,702

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 certain contingent auto liability cases as of December 31, 2018. 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 $28.3 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 final. No goodwill was recognized for Canadian tax purposes from the acquisition. 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
Deferred tax assets	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.

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, Oceania, 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, 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 as of, and for the years ended, December 31, 2018, 2017, and 2016 is as follows (dollars in thousands):

Twelve months ended December 31, 2018
	NAST				Global Forwarding				Robinson Fresh				All Other and Corporate				Eliminations				Consolidated
Revenues	$	11,247,900			$	2,487,744			$	2,268,900			$	626,628			$	—			$	16,631,172
Intersegment revenues (1)	545,177				48,343				211,286				20,951				(825,757		)		—
Total Revenues	$	11,793,077			$	2,536,087			$	2,480,186			$	647,579			$	(825,757	)		$	16,631,172
Net Revenues	$	1,788,498			$	543,906			$	234,046			$	138,785			$	—			$	2,705,235
Income (loss) from operations	773,846				91,626				59,735				(13,124		)		—				912,083
Depreciation and amortization	24,510				35,148				4,506				32,565				—				96,729
Total assets (2)	2,345,455				969,736				401,561				710,660				—				4,427,412
Average headcount	6,938				4,711				903				2,652				—				15,204

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
Income from operations	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

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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.

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
Income from operations	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

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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,
	2018				2017				2016
Total revenues
United States	$	14,370,454			$	12,865,087			$	11,749,602
Other locations	2,260,718				2,004,293				1,394,811
Total revenues	$	16,631,172			$	14,869,380			$	13,144,413

	As of December 31,
	2018				2017				2016
Long-lived assets
United States	$	321,766			$	335,072			$	348,299
Other locations	83,657				107,140				96,311
Total long-lived assets	$	405,423			$	442,212			$	444,610

NOTE 10: REVENUE FROM CONTRACTS WITH CUSTOMERS

In 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a customer contract are satisfied. The standard also requires new and expanded disclosures regarding revenue recognition. We adopted the new standard on January 1, 2018, using the modified retrospective transition method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the January 1, 2018 opening balance of retained earnings. The comparative information for previous periods has not been restated and continues to be reported under ASC 605, Revenue Recognition.

The cumulative effect of the changes made to our January 1, 2018 consolidated balance sheet for the adoption of ASU 2014-09 were as follows (dollars in thousands):

		Balance at December 31, 2017				Adjustments				Balance at January 1, 2018
Balance Sheet
Assets:
Receivables, net of allowance for doubtful accounts		$	2,113,930			$	(101,718	)		$	2,012,212
Contract assets		—				147,764				147,764
Prepaid expenses and other		63,116				4,021				67,137
Liabilities:
Accounts payable		1,000,305				(56,493		)		943,812
Accrued expenses - compensation		105,316				1,964				107,280
Accrued expenses - transportation expense		—				94,811				94,811
Accrued expenses - other accrued liabilities		58,229				(2,752		)		55,477
Deferred tax liabilities		45,355				3,298				48,653
Equity:
Retained earnings		3,437,093				9,239				3,446,332

The impact of adoption of ASU 2014-09 on our consolidated statements of operations and consolidated balance sheets were as follows (dollars in thousands). The adoption of ASU 2014-09 did not have a material impact upon our consolidated statements of cash flows.

		Twelve Months Ended December 31, 2018
		As reported				Balances without adoption of ASU 2014-09				Effect of change higher / (lower)
Income Statement
Revenues:
Transportation		$	15,515,921			$	15,462,328			$	53,593
Sourcing (1)		1,115,251				1,235,713				(120,462		)
Total revenues		16,631,172				16,698,041				(66,869		)
Costs and expenses:
Purchased transportation and related services		12,922,177				12,875,875				46,302
Purchased products sourced for resale (1)		1,003,760				1,124,222				(120,462		)
Personnel expenses		1,343,542				1,343,159				383
Other selling, general, and administrative expenses		449,610				449,610				—
Total costs and expenses		15,719,089				15,792,866				(73,777		)
Income from operations		912,083				905,175				6,908
Interest and other expense		(31,810		)		(31,810		)		—
Income before provision for income taxes		880,273				873,365				6,908
Provision for income taxes		215,768				213,882				1,886
Net income		$	664,505			$	659,483			$	5,022

(1) We have identified certain customer contracts in our sourcing managed procurement business that changed from a principal to an agent relationship under the new standard. This change resulted in these contracts being recognized at the net amount we charge our customers but had no impact on income from operations.

		As of December 31, 2018
		As reported				Balances without adoption of ASU 2014-09				Effect of change higher / (lower)
Balance Sheet
Assets:
Receivables, net of allowance for doubtful accounts		$	2,162,438			$	2,223,632			$	(61,194	)
Contract assets		159,635				—				159,635
Prepaid expenses and other		52,386				50,683				1,703
Liabilities:
Accounts payable		$	971,023			$	1,009,758			$	(38,735	)
Accrued expenses - compensation		153,626				151,280				2,346
Accrued expenses - transportation expense		119,820				—				119,820
Accrued expenses - other accrued liabilities		63,410				66,116				(2,706		)
Deferred tax liabilities		35,757				30,599				5,158
Equity:
Retained earnings		$	3,845,593			$	3,831,332			$	14,261

We typically do not receive consideration and amounts are not due from our customer prior to the completion of our performance obligations and as such contract liabilities as of December 31, 2018, and revenue recognized in the twelve months ended months ended December 31, 2018, resulting from contract liabilities were not significant. Contract assets and accrued expenses - transportation expense fluctuate from period to period primarily based upon shipments in-transit at period end.

A summary of our total revenues disaggregated by major service line and timing of revenue recognition is presented below for each of our reportable segments for the twelve months ended months ended December 31, 2018, as follows (dollars in thousands):

	Twelve Months Ended December 31, 2018
	NAST				Global Forwarding				Robinson Fresh				All Other and Corporate				Total
Major service lines:
Transportation and logistics services	$	11,247,900			$	2,487,744			$	1,153,649			$	626,628			$	15,515,921
Sourcing	—				—				1,115,251				—				1,115,251
Total	$	11,247,900			$	2,487,744			$	2,268,900			$	626,628			$	16,631,172
Timing of revenue recognition:
Performance obligations completed over time	$	11,247,900			$	2,487,744			$	1,153,649			$	626,628			$	15,515,921
Performance obligations completed at a point in time	—				—				1,115,251				—				1,115,251
Total	$	11,247,900			$	2,487,744			$	2,268,900			$	626,628			$	16,631,172

Approximately 91 percent of our total revenues for the twelve months ended December 31, 2018 are attributable to arranging for the transportation of our customers’ freight for which we transfer control and satisfy our performance obligation over the requisite transit period. A days in transit output method is used to measure the progress of our performance as of the reporting date. We determine the transit period based upon the departure date and the delivery date, which may be estimated if delivery has not occurred as of the reporting date. Determining the transit period and how much of it has been completed as of the reporting date may require management to make judgments that affect the timing of revenue recognized. We have determined that revenue recognition over the transit period provides a faithful depiction of the transfer of goods and services to our customer as our obligation is performed over the transit period. The transaction price for our performance obligation under these arrangements is generally fixed and readily determinable upon contract inception and is not contingent upon the occurrence or non-occurrence of another event.

Approximately seven percent of our total revenues for the twelve months ended December 31, 2018 are attributable to buying, selling, and/or marketing of produce including fresh fruits, vegetables, and other value-added perishable items. Of these transactions, nearly all of our gross revenues are recognized at a point in time upon completion of our performance obligation, which is generally when the produce is received by our customer. The transaction price for our performance obligation under these arrangements is generally fixed and readily determinable upon contract inception and is not contingent upon the occurrence or non-occurrence of another event.

Approximately two percent of our total revenues for the twelve months ended December 31, 2018 are attributable to value-added logistics services, such as customs brokerage, fee-based managed services, warehousing services, small parcel, and supply chain consulting and optimization services. Of these services, nearly all are recognized over time as we complete our performance obligation. Transaction price is determined and allocated to these performance obligations at their fixed fee or agreed upon rate multiplied by their associated measure of progress, which may be transactional volumes, labor hours, or time elapsed.

Practical Expedients - Upon the adoption of ASU 2014-09, we have determined that we qualify for certain practical expedients to facilitate the adoption of the standard. We have elected to expense incremental costs of obtaining customer contracts (i.e., sales commissions) due to the short duration of our arrangements as the amortization period of such amounts is expected to be less than one year. These amounts are included within personnel expenses in our consolidated statements of operations and comprehensive income. In addition, we do not disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied as of the end of the period as our contracts have an expected length of one year or less. Finally, for certain of our performance obligations such as fee-based managed services, supply chain consulting and optimization services, and warehousing services we have recognized revenue in the amount for which we have the right to invoice our customer as we have determined this amount corresponds directly with the value provided to the customer for our performance completed to date.

Critical Accounting Policies and Estimates - We have updated our revenue recognition critical accounting policy to reflect the adoption of ASU 2014-09.

NOTE 11: 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, 2018, and December 31, 2017, was $71.9 million and $18.5 million, respectively, and is comprised solely of foreign currency adjustments.

NOTE 12: 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 its effective date. The new comprehensive revenue recognition standard supersedes 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 applied to contracts that were not completed as of the date of initial application resulting in a $9.2 million cumulative adjustment to retained earnings.

We have updated our revenue recognition critical accounting policy due to the adoption of this standard and expanded the summary of significant accounting policies included in Note 1, Summary of Significant Accounting Policies, as a result of the adoption. The adoption of this standard changed the timing of revenue recognition for our transportation businesses from at delivery to over the transit period as our performance obligations are completed. Due to the short transit period of many of our performance obligations, this change did not have a material impact on our results of operations or cash flows.

The new standard expanded our existing revenue recognition disclosures upon adoption. In addition, we have identified certain customer contracts in our sourcing business that changed from a principal to an agent relationship under the new standard. This change resulted in these contracts being recognized at the net amount we charge our customers but had no impact on income from operations. The expanded disclosures required by ASU 2014-09 have been included in Note 10, Revenue Recognition.

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 August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This update aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted this new standard in 2018, using a prospective approach. The adoption did not have a material impact on our consolidated financial statements.

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 on January 1, 2019. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides another transition method no longer requiring application to previously reported periods. Therefore, prior period balances will not be restated. We have taken the necessary steps to be compliant as well as designed the necessary internal controls to facilitate the adoption of the new standard.

We have obligations under lease agreements for facilities and equipment, which are classified as operating leases under both the existing and new lease standard. We have adopted Topic 842 effective January 1, 2019, by recognizing right-of-use assets and lease liabilities of approximately $265.4 million and $273.3 million, respectively. The adoption of this standard is not expected to have a significant impact on our consolidated results of operations.

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 Tax Cuts and Jobs Act of 2017 ("Tax Act"). The amendment provides the option to reclassify stranded tax effects resulting from the Tax Act 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. We do not expect this standard to have a material impact on our consolidated financial statements and disclosures.

NOTE 13: SUPPLEMENTARY DATA (UNAUDITED)

Our unaudited results of operations for each of the quarters in the years ended December 31, 2018 and 2017, are summarized below (in thousands, except per share data).

2018		March 31 (1)				June 30 (1)				September 30 (1)				December 31 (1)
Revenues:
Transportation		$	3,637,640			$	3,953,139			$	4,028,392			$	3,896,750
Sourcing		287,687				322,898				263,508				241,158
Total revenues		3,925,327				4,276,037				4,291,900				4,137,908
Costs and expenses:
Purchased transportation and related services		3,041,602				3,313,196				3,359,520				3,207,859
Purchased products sourced for resale		257,800				291,358				238,336				216,266
Personnel expenses		328,297				340,630				335,299				339,316
Other selling, general, and administrative expenses		106,043				111,845				112,772				118,950
Total costs and expenses		3,733,742				4,057,029				4,045,927				3,882,391
Income from operations		191,585				219,008				245,973				255,517
Net income		$	142,297			$	159,163			$	175,895			$	187,150
Basic net income per share		$	1.02			$	1.14			$	1.27			$	1.36
Diluted net income per share		$	1.01			$	1.13			$	1.25			$	1.34
Basic weighted average shares outstanding		140,032				139,464				138,797				137,797
Dilutive effect of outstanding stock awards		1,238				1,147				1,363				1,385
Diluted weighted average shares outstanding		141,270				140,611				140,160				139,182

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(1) The adoption of ASU 2014-09, Revenue from Contracts with Customers, resulted in an increase to our net income of $2.1 million, $6.6 million, $0.5 million, and reduced our net income by $4.2 million for the quarters ended March 31, June 30, September 30, and December 31, respectively, compared to the accounting standards in effect for 2017.

2017		March 31 (1)				June 30				September 30				December 31 (2)
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

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(1) Our provision for income taxes decreased in the first quarter of 2017 by $13.7 million due to our adoption of ASU 2016-09, Compensation - Stock Compensation (Topic 718).

(2) 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.