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, 2019 and 2018, 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, 2019, 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, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, 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, 2019, 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 19, 2020, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 13 to the financial statements, effective January 1, 2019, the Company adopted the FASB Accounting Standards Update No. 2016-02, Leases (Topic 842), using the modified retrospective approach.

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 audits 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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition—Refer to Notes 1 and 10 to the financial statements

Critical Audit Matter Description

Transportation and Logistics revenue is recognized for performance obligations identified in the customer contract as they are satisfied over the contract term, which generally represents the transit period. Recognizing revenue at period-end for contracts where the transit period is partially complete at period-end or completed and not yet invoiced, requires management to make judgments that affect the amounts and timing of revenue recognized. At December 31, 2019, the Company recorded revenue of $132.9 million for services it provided while a shipment was still in transit, but for which it had not yet completed its performance obligation or had not yet invoiced the customer.

Auditing the estimate of the Company’s revenue recorded for contracts where the transit period is partially complete or completed and not yet invoiced as of the reporting date required a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s estimate of the revenue recorded for contracts where the transit period is partially complete or completed and not yet invoiced as of the reporting date included the following, among others:

• We tested the effectiveness of controls over revenue recognized over time, including management’s controls over the identification of shipments in transit, the portion of the transit period completed, and the estimate of contracts completed but not yet invoiced.

• We evaluated management’s ability to identify the shipments in transit and to estimate the revenue to be recorded for contracts where the transit period is partially complete or completed and not yet invoiced at the reporting date by:

–Performing a retrospective review of management’s estimate for prior reporting periods

–Testing the accuracy and completeness of the data in the system-generated report utilized in management’s revenue cutoff estimate with the assistance of our information technology specialists

–Assessing the estimate methodology for reasonableness, in light of recent market events or changes within the Company’s operating environment

–Testing the mathematical accuracy of management’s estimate

/s/ DELOITTE & TOUCHE LLP

Minneapolis, Minnesota

February 19, 2020

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, 2019, 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, 2019, 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, 2019, of the Company and our report dated February 19, 2020, expressed an unqualified opinion on those consolidated financial statements and financial statement schedule and included an explanatory paragraph regarding the Company’s adoption of the FASB Accounting Standards Update No. 2016-02, Leases (Topic 842).

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.

/s/ DELOITTE & TOUCHE LLP

Minneapolis, Minnesota

February 19, 2020

C.H. ROBINSON WORLDWIDE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

			December 31,
			2019						2018
ASSETS
Current assets:
Cash and cash equivalents			$	447,858					$	378,615
Receivables, net of allowance for doubtful accounts of $32,838 and $41,131			1,974,381						2,162,438
Contract assets			132,874						159,635
Prepaid expenses and other			85,005						52,386
Total current assets			2,640,118						2,753,074
Property and equipment			489,976						498,847
Accumulated depreciation and amortization			(281,553)						(270,546)
Net property and equipment			208,423						228,301
Goodwill			1,291,760						1,258,922
Other intangible assets, net of accumulated amortization of $156,879 and $156,246			90,931						108,822
Right-of-use lease assets			310,860						—
Deferred tax assets			13,485						9,993
Other assets			85,483						68,300
Total assets			$	4,641,060					$	4,427,412
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable			$	984,604					$	971,023
Outstanding checks			78,231						92,084
Accrued expenses–
Compensation			112,784						153,626
Transportation expense			101,194						119,820
Income taxes			12,354						28,360
Other accrued liabilities			62,706						63,410
Current lease liabilities			61,280						—
Current portion of debt			142,885						5,000
Total current liabilities			1,556,038						1,433,323
Long-term debt			1,092,448						1,341,352
Noncurrent lease liabilities			259,444						—
Noncurrent income taxes payable			22,354						21,463
Deferred tax liabilities			39,776						35,757
Other long-term liabilities			270						430
Total liabilities			2,970,330						2,832,325
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; 179,380 and 179,400 shares issued, 134,895 and 137,284 outstanding			13,490						13,728
Additional paid-in capital			546,646						521,486
Retained earnings			4,144,834						3,845,593
Accumulated other comprehensive loss			(76,149)						(71,935)
Treasury stock at cost (44,485 and 42,116 shares)			(2,958,091)						(2,713,785)
Total stockholders’ investment			1,670,730						1,595,087
Total liabilities and stockholders’ investment			$	4,641,060					$	4,427,412

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,
			2019						2018						2017
Revenues:
Transportation			$	14,322,295					$	15,515,921					$	13,502,906
Sourcing			987,213						1,115,251						1,366,474
Total revenues			15,309,508						16,631,172						14,869,380
Costs and expenses:
Purchased transportation and related services			11,839,433						12,922,177						11,257,290
Purchased products sourced for resale			883,765						1,003,760						1,244,040
Personnel expenses			1,298,528						1,343,542						1,179,527
Other selling, general, and administrative expenses			497,806						449,610						413,404
Total costs and expenses			14,519,532						15,719,089						14,094,261
Income from operations			789,976						912,083						775,119
Interest and other expenses			(47,719)						(31,810)						(46,656)
Income before provision for income taxes			742,257						880,273						728,463
Provision for income taxes			165,289						215,768						223,570
Net income			576,968						664,505						504,893
Other comprehensive (loss) income			(4,214)						(53,475)						42,982
Comprehensive income			$	572,754					$	611,030					$	547,875
Basic net income per share			$	4.21					$	4.78					$	3.59
Diluted net income per share			$	4.19					$	4.73					$	3.57
Basic weighted average shares outstanding			136,955						139,010						140,610
Dilutive effect of outstanding stock awards			780						1,395						772
Diluted weighted average shares outstanding			137,735						140,405						141,382

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, 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
Net income																					576,968																		576,968
Foreign currency translation																											(4,214)												(4,214)
Dividends declared, $2.01 per share																					(277,727)																		(277,727)
Stock issued for employee benefit plans			1,017						102						(13,920)																		61,795						47,977
Issuance of restricted stock			28						3						(3)																								—
Stock-based compensation expense			—						—						39,083																		—						39,083
Repurchase of common stock			(3,434)						(343)																								(306,101)						(306,444)
Balance December 31, 2019			134,895						$	13,490					$	546,646					$	4,144,834					$	(76,149)					$	(2,958,091)					$	1,670,730

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,
			2019						2018						2017
OPERATING ACTIVITIES
Net income			$	576,968					$	664,505					$	504,893
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			100,449						96,729						92,977
Provision for doubtful accounts			5,853						15,634						13,489
Stock-based compensation			39,083						87,791						41,805
Deferred income taxes			(2,407)						(15,315)						(28,096)
Excess tax benefit on stock-based compensation			(8,492)						(10,388)						(13,657)
Other operating activities			(3,830)						1,815						4,491
Changes in operating elements, net of effects of acquisitions:
Receivables			208,312						(190,048)						(364,181)
Contract assets			26,761						(11,871)						—
Prepaid expenses and other			(29,871)						16,029						(9,173)
Accounts payable and outstanding checks			(17,968)						36,083						144,041
Accrued compensation			(40,757)						47,011						7,209
Accrued transportation expense			(18,626)						25,175						—
Accrued income taxes			(12,636)						21,176						18,817
Other accrued liabilities			8,937						7,200						(9,515)
Other assets and liabilities			3,643						1,370						(19,099)
Net cash provided by operating activities			835,419						792,896						384,001
INVESTING ACTIVITIES
Purchases of property and equipment			(36,290)						(45,000)						(40,122)
Purchases and development of software			(34,175)						(18,871)						(17,823)
Acquisitions, net of cash acquired			(59,200)						(5,315)						(49,068)
Other investing activities			16,636						(3,622)						(521)
Net cash used for investing activities			(113,029)						(72,808)						(107,534)
FINANCING ACTIVITIES
Proceeds from stock issued for employee benefit plans			63,092						51,285						38,130
Stock tendered for payment of withholding taxes			(15,115)						(21,264)						(21,557)
Repurchase of common stock			(309,444)						(300,991)						(185,485)
Cash dividends			(277,786)						(265,219)						(258,222)
Proceeds from long-term borrowings			1,298,000						591,012						250,000
Payments on long-term borrowings			(1,505,000)						—						—
Proceeds from short-term borrowings			185,000						2,674,000						8,784,000
Payments on short-term borrowings			(90,000)						(3,384,000)						(8,809,000)
Net cash used for financing activities			(651,253)						(655,177)						(202,134)
Effect of exchange rates on cash and cash equivalents			(1,894)						(20,186)						11,891
Net change in cash and cash equivalents			69,243						44,725						86,224
Cash and cash equivalents, beginning of year			378,615						333,890						247,666
Cash and cash equivalents, end of year			$	447,858					$	378,615					$	333,890
Supplemental cash flow disclosures
Cash paid for income taxes			$	219,029					$	215,644					$	262,861
Cash paid for interest			$	50,854					$	47,544					$	37,871
Accrued share repurchases held in other accrued liabilities			$	—					$	3,000					$	500

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 number of 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 remeasured and translated at the current exchange rate as of the end of the year. Translation adjustments are recorded in other comprehensive (loss) income. Statement of operations items are translated at the average exchange rate during the year.

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 $405.1 million and $320.0 million as of December 31, 2019 and 2018. 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 software maintenance contracts, insurance premiums, other prepaid operating expenses, and inventories, consisting primarily of produce and related products held for resale.

RIGHT-OF-USE LEASE ASSETS. Right-of-use lease assets are recognized upon lease commencement and represent our right to use an underlying asset for the lease term.

LEASE LIABILITIES. Lease liabilities are recognized at commencement date and represent our obligation to make the lease payments arising from a lease, measured on a discounted basis.

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):

2019						$	45,016
2018						45,155
2017						42,817

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

									2019						2018
Furniture, fixtures, and equipment									$	283,378					$	272,733
Buildings									112,410						130,959
Corporate aircraft									11,461						11,337
Leasehold improvements									61,539						58,929
Land									20,146						23,648
Construction in progress									1,042						1,241
Less: accumulated depreciation and amortization									(281,553)						(270,546)
Net property and equipment									$	208,423					$	228,301

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):

2019						$	17,023
2018						14,688
2017						13,887

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

			2019						2018
Purchased software			$	34,026					$	32,460
Internally developed software			100,894						68,853
Less accumulated amortization			(83,158)						(66,638)
Net software			$	51,762					$	34,675

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 primarily 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 12 percent to 22 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 term, risk-free interest rate, and dividend yield.

NOTE 2: GOODWILL AND OTHER INTANGIBLE ASSETS

The change in the carrying amount of goodwill is as follows (in thousands):

			NAST(1)						Global Forwarding						All Other and Corporate(1)						Total
December 31, 2017 balance			$	1,029,122					$	185,873					$	60,821					$	1,275,816
Acquisitions			(40)						33						—						(7)
Foreign currency translation			(12,298)						(3,877)						(712)						(16,887)
December 31, 2018 balance			1,016,784						182,029						60,109						1,258,922
Acquisitions			—						25,892						7,771						33,663
Foreign currency translation			(1,214)						499						(110)						(825)
December 31, 2019 balance			$	1,015,570					$	208,420					$	67,770					$	1,291,760

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(1) Goodwill was reallocated between the NAST and Robinson Fresh segments due to the reorganization discussed in Note 9, Segment Reporting. Prior period amounts have been reclassified to conform with the current year presentation.

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 One 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):

			2019																														2018
			Cost						Accumulated Amortization						Net						Cost						Accumulated Amortization						Net
Finite-lived intangibles
Customer relationships			$	237,335					$	(156,879)					$	80,456					$	254,293					$	(156,006)					$	98,287
Non-competition agreements			—						—						—						300						(240)						60
Total finite-lived intangibles			237,335						(156,879)						80,456						254,593						(156,246)						98,347
Indefinite-lived intangibles
Trademarks			10,475						—						10,475						10,475						—						10,475
Total intangibles			$	247,810					$	(156,879)					$	90,931					$	265,068					$	(156,246)					$	108,822

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

2019			$	38,410
2018			36,886
2017			36,273

Finite-lived intangible assets, by reportable segment, as of December 31, 2019, will be amortized over their remaining lives as follows (in thousands):

			NAST						Global Forwarding						All Other and Corporate						Total
2020			$	250					$	28,023					$	610					$	28,883
2021			250						14,502						610						15,362
2022			250						14,502						610						15,362
2023			250						11,930						610						12,790
2024			167						3,648						610						4,425
Thereafter			—						2,771						863						3,634
Total																					$	80,456

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, 2019, or December 31, 2018. 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, 2019						December 31, 2018						Maturity						December 31, 2019						December 31, 2018
Revolving credit facility						—		%				3.64		%				October 2023						$	—					$	5,000
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)						2.41		%				3.15		%				December 2020						142,885						249,744
Senior Notes (1)						4.20		%				4.20		%				April 2028						592,448						591,608
Total debt																								1,235,333						1,346,352
Less: Current maturities and short-term borrowing																								(142,885)						(5,000)
Long-term debt																								$	1,092,448					$	1,341,352

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(1) Net of unamortized discounts and issuance costs.

SENIOR UNSECURED REVOLVING CREDIT FACILITY

We have a senior unsecured revolving credit facility (the "Credit Agreement") with a total availability of $1 billion and a maturity date of 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, 2019, 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 3.50 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 $539.3 million at December 31, 2019. 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 and is recorded as a current liability as of December 31, 2019. 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 $659.9 million as of December 31, 2019, based primarily on the market prices quoted from external sources. The carrying value of the Senior Notes was $592.4 million as of December 31, 2019. 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, 2019, we were in compliance with, or have secured waivers of, 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. 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 2012. We are currently under an Internal Revenue Service audit for the 2015-2017 tax years.

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 made 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 (“FDII”). Although enacted more than two years ago, regulatory guidance on the application of FDII has not been finalized. We have included the tax impact of both GILTI and FDII in our income tax expense for the twelve months ended December 31, 2019, based on our understanding of the rules available at the time of this filing. However, our calculations could be impacted by future regulations as guidance is finalized. We will continue to monitor any new guidance related to FDII and determine any impact it may have on our calculations.

In 2019 we removed our assertion, except for regarding the working capital of our largest China subsidiary, that the unremitted earnings of our foreign subsidiaries were permanently reinvested. Following the removal of that assertion, we recorded tax expense of $13.9 million related to foreign withholding taxes paid and accrued during the fourth quarter of 2019. That expense was partially offset by tax benefits of $11.1 million related to excess foreign tax credits, and a tax benefit of $1.8 million related to foreign exchange losses on previously taxed income. If we repatriated all foreign earnings that are still considered to be permanently reinvested, the estimated effect on income taxes payable would be an increase of approximately $3.9 million as of December 31, 2019.

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

			2019						2018						2017
Domestic			$	649,742					$	738,927					$	638,718
Foreign			92,515						141,346						89,745
Total			$	742,257					$	880,273					$	728,463

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

			2019						2018						2017
Unrecognized tax benefits, beginning of period			$	31,515					$	31,806					$	12,268
Additions based on tax positions related to the current year			2,212						—						4,014
Additions for tax positions of prior years			2,148						1,662						16,713
Reductions for tax positions of prior years			—						(263)						—
Lapse in statute of limitations			(1,703)						(1,394)						(1,189)
Settlements			(234)						(296)						—
Unrecognized tax benefits, end of the period			$	33,938					$	31,515					$	31,806

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.

As of December 31, 2019, we had $39.9 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 $3.1 million in the next 12 months due to lapsing of statutes.

We recognize interest and penalties related to uncertain tax positions in the provision for income taxes. During the years ended December 31, 2019, 2018, and 2017, we recognized approximately $1.0 million, $1.0 million, and $0.7 million, respectively, in interest and penalties. We had approximately $6.0 million and $6.5 million for the payment of interest and penalties related to uncertain tax positions accrued within noncurrent income taxes payable as of December 31, 2019 and 2018. 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):

			2019						2018						2017
Tax provision:
Federal			$	106,009					$	152,627					$	189,708
State			25,788						38,626						29,320
Foreign			35,899						39,830						32,638
			167,696						231,083						251,666
Deferred provision (benefit):
Federal			1,554						(11,969)						(21,389)
State			316						(3,176)						(3,048)
Foreign			(4,277)						(170)						(3,659)
			(2,407)						(15,315)						(28,096)
Total provision			$	165,289					$	215,768					$	223,570

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:

			2019						2018						2017
Federal statutory rate			21.0		%				21.0		%				35.0		%
State income taxes, net of federal benefit			2.8						3.3						2.6
Tax Act impact			—						0.4						(1.7)
Section 199 deduction			—						—						(2.8)
Share-based payment awards			(0.9)						(0.7)						(1.9)
Excess foreign tax credits			(1.5)						—						—
Foreign			1.7						0.6						(0.9)
Other			(0.8)						(0.1)						0.4
Effective income tax rate			22.3		%				24.5		%				30.7		%

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

			2019						2018
Deferred tax assets:
Lease liabilities			$	77,879					$	—
Compensation			54,226						57,666
Accrued expenses			23,179						27,683
Receivables			5,086						8,093
Other			7,417						6,004
Deferred tax liabilities:
Right-of-use assets			(75,352)						—
Intangible assets			(73,166)						(77,059)
Accrued revenue			(14,893)						(19,571)
Prepaid assets			(4,660)						(5,798)
Long-lived assets			(15,134)						(15,615)
Other			(10,873)						(7,167)
Net deferred tax liabilities			$	(26,291)					$	(25,764)

We had foreign net operating loss carryforwards with a tax effect of $11.1 million as of December 31, 2019, and $8.1 million as of December 31, 2018. The net operating loss carryforwards will expire at various dates from 2020 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, 2019, and 2018, we have recorded a valuation allowance of $8.5 million and $6.4 million against the deferred tax asset related to the foreign operating loss carryforwards.

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 within personnel expenses in our consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands):

			2019						2018						2017
Stock options			$	16,073					$	23,374					$	10,109
Stock awards			20,170						61,826						29,217
Company expense on ESPP discount			2,840						2,591						2,479
Total stock-based compensation expense			$	39,083					$	87,791					$	41,805

On May 9, 2019, our shareholders approved an amendment and restatement of our 2013 Equity Incentive Plan ("the Plan") to increase the number of shares authorized for award by 4,000,000 shares. The Plan allows us to grant certain stock awards, including stock options at fair market value and performance shares and restricted stock units, to our key employees and outside directors. At the time our shareholders approved adding additional shares to the plan, a maximum of 17,041,803 shares are available to be granted under this plan. Approximately 5,300,634 shares were available for stock awards under this plan as of December 31, 2019. 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 awarded performance-based stock options to certain key employees during years prior to 2015. These options were subject to certain vesting requirements over a five-year period, based on the company’s earnings growth. These awards are no longer eligible for incremental vesting after 2019. 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 following schedule summarizes stock option activity in the plans. All outstanding unvested options as of December 31, 2019, relate to time-based grants from 2015 through 2019.

			Options						Weighted Average Exercise Price						Aggregate Intrinsic Value (in thousands)						Average Remaining Life (years)
Outstanding at December 31, 2018			7,822,514						$	74.42					$	85,222					7.2
Grants			151,040						82.46
Exercised			(725,685)						65.58
Forfeitures			(197,677)						77.87
Outstanding at December 31, 2019			7,050,192						$	75.40					$	44,067					6.4
Vested at December 31, 2019			4,507,070						$	71.17											5.6
Exercisable at December 31, 2019			4,507,070						$	71.17											5.6

As of December 31, 2019, unrecognized compensation expense related to stock options was $40.4 million. The amount of future expense to be recognized will be based on the passage of time and the employees' continued employment.

Additional potential dilutive stock options totaling 3,348,501 for 2019 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):

2019			$	15,862
2018			16,209
2017			6,026

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, 2019:

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						1,421,432						$	12.66					280,033
December 31, 2017						December 31, 2021						1,238,090						12.60						484,683
December 31, 2018						December 31, 2022						1,447,294						14.25						855,028
December 31, 2019						December 31, 2023						1,159,662						20.13						923,378
												5,266,478						$	14.73					2,543,122

We granted an additional 1,660,548 options on February 5, 2020. These awards had a weighted average exercise price of $72.74 and a weighted average grant date fair value of $13.88. These awards will vest over a five-year period with a first vesting date of December 31, 2020.

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 determine the risk-free interest rate, dividend yield, expected volatility, and expected term are 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:

			2019 Grants						2018 Grants						2017 Grants
Weighted-average risk-free interest rate			2.1%						3.1%						2.3%
Expected dividend yield			2.0%						2.0%						2.5%
Weighted-average volatility			25%						25%						20%
Expected term (in years)			6.08						6.08						6.20
Weighted average fair value per option			$	17.52					$	20.52					$	14.23

STOCK AWARDS. We have awarded performance-based and time-based restricted shares and restricted stock units to certain key employees and non-employee directors. Performance-based awards are subject to certain vesting requirements over a five-year period, based on the company’s earnings growth. Time-based awards vest primarily based on the passage of time and the employee's continued employment. 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 12 percent to 22 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, 2019:

			Number of Restricted Shares and Restricted Stock Units						Weighted Average Grant Date Fair Value
Unvested at December 31, 2018			846,170						$	68.35
Granted			38,340						68.10
Vested			—						—
Forfeitures			(42,717)						63.24
Unvested at December 31, 2019			841,793						$	68.68

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, 2016						December 31, 2020						388,578						$	51.88					138,268
December 31, 2017						December 31, 2021						338,693						64.91						161,722
December 31, 2018						December 31, 2022						310,713						74.26						176,265
December 31, 2019						December 31, 2023						365,538						73.82						365,538
												1,403,522						$	65.59					841,793

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

We granted an additional 405,776 performance-based restricted shares and restricted stock units on February 5, 2020. These awards had a weighted average grant date fair value of $59.34 and will vest over a five-year period with a first vesting date of December 31, 2020.

The following table summarizes our unvested time-based restricted share and restricted stock unit grants as of December 31, 2019:

			Number of Restricted Shares and Stock Units						Weighted Average Grant Date Fair Value
Unvested at December 31, 2018			926,692						$	67.08
Granted			40,309						72.07
Vested			(291,318)						63.93
Forfeitures			(61,242)						67.66
Unvested at December 31, 2019			614,441						$	68.76

We granted an additional 329,586 time-based restricted shares and restricted stock units on February 5, 2020. These awards had a weighted average grant date fair value of $59.34 and will vest over a five-year period with a first vesting date of December 31, 2020.

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

2019			$	20,170
2018			61,826
2017			29,217

As of December 31, 2019, there was unrecognized compensation expense of $99.3 million related to previously granted stock 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
2019			224,596						$	16,093					$	2,840
2018			191,823						14,682						2,591
2017			215,613						14,048						2,479

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
2017 Repurchases			2,426,407						$	179,985
2018 Repurchases			3,319,077						303,492
2019 Repurchases			3,434,102						306,444

As of December 31, 2019, there were 9,993,683 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):

2019			$	42,491
2018			43,172
2017			27,530

We have committed to a defined contribution match of six percent of eligible compensation in 2020. We contributed a defined contribution match of six percent in 2019 and four percent in both 2018 and 2017. We made a discretionary profit-sharing contribution of two percent of total recognized compensation for eligible participants in 2018. Following the 2018 contribution, we amended the plan and terminated the discretionary profit-sharing program.

LEASE COMMITMENTS. We maintain operating leases for office space, warehouses, office equipment, and a small number of intermodal containers. See Note 11, Leases, for further information.

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, 2019. 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 May 22, 2019, we acquired all of the outstanding shares of Dema Service S.p.A. (“Dema Service”) to strengthen our existing footprint in Italy. Total purchase consideration, net of cash acquired was $14.2 million, which was paid in cash.

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

			Estimated Life (years)
Customer relationships			7						$	4,252

There was $7.8 million of goodwill recorded related to the acquisition of Dema Service. The Dema Service goodwill is a result of acquiring and retaining the Dema Service workforce and expected synergies from integrating its business into ours. Purchase accounting is considered substantially complete. No goodwill was recognized for Italian tax purposes from the acquisition. The results of operations of Dema Service have been included as part of the All Other and Corporate segment in our consolidated financial statements since May 23, 2019.

On February 28, 2019, we acquired all of the outstanding shares of The Space Cargo Group (“Space Cargo”) for the purpose of expanding our presence and capabilities in Spain and Colombia. Total purchase consideration, net of cash acquired, was $45.0 million, which was paid in cash.

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

			Estimated Life (years)
Customer relationships			7						$	16,439

There was $25.9 million of goodwill recorded related to the acquisition of Space Cargo. The Space Cargo goodwill is a result of acquiring and retaining the Space Cargo workforce and expected synergies from integrating its business into ours. Purchase accounting is considered substantially complete. No goodwill was recognized for Spanish tax purposes from the acquisition. The results of operations of Space Cargo have been included as part of the Global Forwarding segment in our consolidated financial statements since March 1, 2019.

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 primarily within our Global Forwarding segment in our consolidated financial statements since September 1, 2017.

On January 28, 2020, we entered into a definitive agreement to acquire Prime Distribution Services, a leading provider of retail consolidation services in North America for approximately $225 million in cash. The agreement is subject to certain customary closing conditions, including regulatory approval.

NOTE 9: SEGMENT REPORTING

On January 1, 2019, we reorganized our enterprise transportation services structure to combine our NAST and Robinson Fresh transportation networks. The newly combined transportation network will be managed by and reported under the NAST reportable segment. We have determined that the remaining Robinson Fresh segment no longer meets the requirements of a reportable segment and will be included in the All Other and Corporate reportable segment. Prior period information has been reclassified to conform with this presentation. 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 two 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 are truckload, less than 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.

• All Other and Corporate:** All Other and Corporate includes our Robinson Fresh and Managed Services segments, as well as Other Surface Transportation outside of North America and other miscellaneous revenues and unallocated corporate expenses. Robinson Fresh provides sourcing services including the buying, selling, and marketing of fresh fruits, vegetables, and other perishable items. Managed Services provides Transportation Management Services, or Managed TMS®. Other Surface Transportation revenues are primarily earned by our Europe Surface Transportation segment. 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 ("CODM"), our Chief Executive Officer. The accounting policies of our reporting segments are the same as those described in the summary of significant accounting policies. We do not report our intersegment revenues by reportable segment to our CODM and do not believe they are a meaningful metric for evaluating the performance of our reportable segments.

Reportable segment information as of, and for the years ended, December 31, 2019, 2018, and 2017 is as follows (dollars in thousands):

			NAST						Global Forwarding						All Other and Corporate						Consolidated
Twelve Months Ended December 31, 2019
Total Revenues			$	11,283,692					$	2,327,913					$	1,697,903					$	15,309,508
Net Revenues			1,797,369						533,976						254,965						2,586,310
Income (loss) from operations			722,763						80,527						(13,314)						789,976
Depreciation and amortization			24,508						36,720						39,221						100,449
Total assets (1)			2,550,010						1,021,592						1,069,458						4,641,060
Average headcount			7,354						4,766						3,431						15,551

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

			NAST(1)						Global Forwarding						All Other and Corporate(1)						Consolidated
Twelve Months Ended December 31, 2018
Total Revenues			$	12,346,757					$	2,487,744					$	1,796,671					$	16,631,172
Net Revenues			1,906,261						543,906						255,068						2,705,235
Income (loss) from operations			821,844						91,626						(1,387)						912,083
Depreciation and amortization			25,290						35,148						36,291						96,729
Total assets(2)			2,567,120						969,736						890,556						4,427,412
Average headcount			7,387						4,711						3,106						15,204

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(1) Amounts have been reclassified to reflect the segment reorganization announced in the first quarter of 2019.

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

			NAST(1)						Global Forwarding						All Other and Corporate(1)						Consolidated
Twelve Months Ended December 31, 2017
Total Revenues			$	10,728,835					$	2,140,987					$	1,999,558					$	14,869,380
Net Revenues			1,626,174						485,280						256,596						2,368,050
Income from operations			661,108						91,842						22,169						775,119
Depreciation and amortization			23,866						33,308						35,803						92,977
Total assets (2)			2,506,137						821,182						908,515						4,235,834
Average headcount			7,316						4,310						3,061						14,687

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(1) Amounts have been reclassified to reflect the segment reorganization announced in the first quarter of 2019.

(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,
			2019						2018						2017
Total revenues
United States			$	13,143,522					$	14,370,454					$	12,865,087
Other locations			2,165,986						2,260,718						2,004,293
Total revenues			$	15,309,508					$	16,631,172					$	14,869,380

			As of December 31,
			2019(1)						2018						2017
Long-lived assets
United States			$	489,129					$	321,766					$	335,072
Other locations			206,567						83,657						107,140
Total long-lived assets			$	695,696					$	405,423					$	442,212

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(1) Includes $216.4 million and $94.4 million of right-of-use lease assets within the United States and other locations, respectively.

NOTE 10: REVENUE FROM CONTRACTS WITH CUSTOMERS

We adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, as of January 1, 2018 using the modified retrospective transition method. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a customer contract are satisfied which changed the timing of revenue recognition for our transportation business from at delivery to over the transit period as our performance obligations are completed. The comparative information for the year ended December 31, 2017 has not been restated and continues to be reported under ASC 605, Revenue Recognition.

The impact of adoption of ASU 2014-09 on our consolidated statements of operations for the years ended December 31, 2019 and 2018, was as follows (dollars in thousands).

			Twelve Months Ended December 31, 2019
			As reported						Balances without adoption of ASU 2014-09						Effect of change higher / (lower)
Income Statement
Revenues:
Transportation			$	14,322,295					$	14,336,820					$	(14,525)
Sourcing (1)			987,213						1,128,208						(140,995)
Total revenues			15,309,508						15,465,028						(155,520)
Costs and expenses:
Purchased transportation and related services			11,839,433						11,848,665						(9,232)
Purchased products sourced for resale (1)			883,765						1,024,760						(140,995)
Personnel expenses			1,298,528						1,299,087						(559)
Other selling, general, and administrative expenses			497,806						497,806						—
Total costs and expenses			14,519,532						14,670,318						(150,786)
Income from operations			789,976						794,710						(4,734)
Interest and other expense			(47,719)						(47,719)						—
Income before provision for income taxes			742,257						746,991						(4,734)
Provision for income taxes			165,289						166,502						(1,213)
Net income			$	576,968					$	580,489					$	(3,521)

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(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.

			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

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(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.

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, 2019 and 2018, and revenue recognized in the twelve months ended December 31, 2019 and 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 and the timing of customer invoicing.

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 December 31, 2019 and 2018, as follows (dollars in thousands):

			Twelve Months Ended December 31, 2019
			NAST						Global Forwarding						All Other and Corporate						Total
Major service lines:
Transportation and logistics services(1)			$	11,283,692					$	2,327,913					$	710,690					$	14,322,295
Sourcing(2)			—						—						987,213						987,213
Total			$	11,283,692					$	2,327,913					$	1,697,903					$	15,309,508
			Twelve Months Ended December 31, 2018
			NAST						Global Forwarding						All Other and Corporate						Total
Major service lines:
Transportation and logistics services(1)			$	12,346,757					$	2,487,744					$	681,420					$	15,515,921
Sourcing(2)			—						—						1,115,251						1,115,251
Total			$	12,346,757					$	2,487,744					$	1,796,671					$	16,631,172

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(1) Transportation and logistics services performance obligations are completed over time.

(2) Sourcing performance obligations are completed at a point in time.

Approximately 92 percent and 91 percent of our total revenues for the twelve months ended December 31, 2019 and 2018, respectively, 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 six percent and seven percent of our total revenues for the twelve months ended December 31, 2019 and 2018, respectively, are attributable to buying, selling, and/or marketing of produce including fresh fruits, vegetables, and other value-added perishable items. Total revenues for these transactions 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, 2019 and 2018, respectively, 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. Total revenues for these services 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.

NOTE 11: LEASES

We adopted ASU 2016-02, Leases (Topic 842), as of January 1, 2019. Prior period information was not restated and continues to be presented under ASC 840, Leases. We elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to not reassess existing contracts to determine if they contain a lease and to carry forward their historical lease classification upon transition. In addition, we have made a policy election to not apply the guidance of ASC 842 to leases with a term of 12 months or less as allowed by the standard. These leases are recognized as expense on a straight-line basis over the lease term.

Adoption of the new standard resulted in the recording of right-of-use lease assets and lease liabilities of $265.4 million and $273.3 million, respectively, as of January 1, 2019. The adoption of this standard did not materially impact our consolidated statements of operations or consolidated statements of cash flows.

We determine if our contractual agreements contain a lease at inception. A lease is identified when a contract allows us the right to control an identified asset for a period of time in exchange for consideration. Our lease agreements consist primarily of operating leases for office space, warehouses, office equipment, and a small number of intermodal containers. We do not have material financing leases. Frequently, we enter into contractual relationships with a wide variety of transportation companies for freight capacity, and utilize those relationships to efficiently and cost-effectively arrange the transport of our customers’ freight. These contracts typically have a term of 12 months or less and do not allow us to direct the use or obtain substantially all of the economic benefits of a specifically identified asset. Accordingly, these agreements are not considered leases.

Our operating leases are included on the consolidated balance sheets as right-of-use lease assets and lease liabilities. A right-of-use lease asset represents our right to use an underlying asset over the term of a lease, while a lease liability represents our obligation to make lease payments arising from the lease. Current and noncurrent lease liabilities are recognized at

commencement date at the present value of lease payments, including non-lease components, which consist primarily of common area maintenance charges. Right-of-use lease assets are also recognized at commencement date as the total lease liability plus prepaid rents and less any deferred rent liability that existed under ASC 840, Leases, upon transition. As our leases typically do not provide an implicit rate, we use our fully collateralized incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is influenced by market interest rates, our credit rating, and lease term and as such, may differ for individual leases.

Our lease agreements typically do not contain variable lease payments, residual value guarantees, purchase options, or restrictive covenants. Many of our leases include the option to renew for a period of months to several years. The term of our leases may include the option to renew when it is reasonably certain that we will exercise that option although these occurrences are seldom. We have lease agreements with lease components (e.g., payments for rent) and non-lease components (e.g., payments for common area maintenance and parking), which are all accounted for as a single lease component.

In February 2020, we entered into a lease for warehouse space in Los Angeles, California which commences in February 2020 and is expected to result in a right-of-use lease asset and lease liability of approximately $38.7 million. There were no other material lease agreements that have not yet commenced that are expected to create significant rights or obligations as of December 31, 2019.

Information regarding lease expense, remaining lease term, discount rate, and other select lease information is presented below as of December 31, 2019, and for the twelve months ended December 31, 2019 (dollars in thousands):

Lease Costs						Twelve Months Ended December 31, 2019
Operating lease expense						$	68,489
Short-term lease expense						11,440
Total lease expense						$	79,929

Other Lease Information			Twelve Months Ended December 31, 2019
Operating cash outflows from operating leases			$	66,489
Right-of-use lease assets obtained in exchange for new lease liabilities(1)			101,966

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(1) The company obtained approximately $35.5 million of right-of-use lease assets in exchange for new lease liabilities related to a warehouse lease in Australia in the fourth quarter of 2019.

Lease Term and Discount Rate			As of December 31, 2019
Weighted average remaining lease term (in years)(1)			7.8
Weighted average discount rate			3.4%

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(1) The weighted average remaining lease term is significantly impacted by a 15-year lease related to office space in Chicago, IL, that commenced in 2018. Excluding this lease, the weighted average remaining lease term of our agreements is 5.2 years.

The maturity of lease liabilities as of December 31, 2019, were as follows (in thousands):

Maturity of Lease Liabilities						Operating Leases
2020						$	70,995
2021						60,839
2022						49,717
2023						36,722
2024						25,457
Thereafter						125,163
Total lease payments						368,893
Less: Interest						(48,169)
Present value of lease liabilities						$	320,724

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 lease payments						$	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. Under ASC 842 we have elected to account for non-lease components such as common area maintenance and parking as a single lease component.

NOTE 12: 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, 2019, and December 31, 2018, was $76.1 million and $71.9 million, respectively, and is comprised solely of foreign currency adjustments.

NOTE 13: RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

RECENTLY ADOPTED ACCOUNTING STANDARDS

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. 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 were not restated. We adopted Topic 842 during 2019 using the modified retrospective approach and recognizing right-of-use assets and lease liabilities of $265.4 million and $273.3 million, respectively, on January 1, 2019. The adoption of this standard did not have a significant impact on our consolidated results of operations or consolidated statements of cash flows. Refer to Note 11, Leases, for further information.

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 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. This amendment became effective for us on January 1, 2019. The adoption of this standard did not have a material impact on our consolidated financial statements and disclosures.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and in November 2018 issued a subsequent amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. This update significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The update will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. The update will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope of this amendment that have the contractual right to receive cash. We adopted this standard effective January 1, 2020. Prior period balances will not be restated. The adoption of this standard will impact our accounting policy for the allowance for doubtful accounts, which is a significant accounting policy, but the impact of adoption is not expected to have a material impact to our consolidated financial position, results of operations, or cash flows.

NOTE 14: SUPPLEMENTARY DATA (UNAUDITED)

Our unaudited results of operations for each of the quarters in the years ended December 31, 2019 and 2018, are summarized below (in thousands, except per share data).

2019			March 31						June 30						September 30						December 31
Revenues:
Transportation			$	3,504,932					$	3,638,612					$	3,608,346					$	3,570,405
Sourcing			246,278						270,228						247,786						222,921
Total revenues			3,751,210						3,908,840						3,856,132						3,793,326
Costs and expenses:
Purchased transportation and related services			2,853,256						2,972,998						2,999,979						3,013,200
Purchased products sourced for resale			219,154						240,626						222,722						201,263
Personnel expenses			340,098						338,886						320,563						298,981
Other selling, general, and administrative expenses			114,152						128,795						111,783						143,076
Total costs and expenses			3,526,660						3,681,305						3,655,047						3,656,520
Income from operations			224,550						227,535						201,085						136,806
Net income			$	161,788					$	169,180					$	146,894					$	99,106
Basic net income per share			$	1.17					$	1.23					$	1.08					$	0.73
Diluted net income per share			$	1.16					$	1.22					$	1.07					$	0.73
Basic weighted average shares outstanding			137,854						137,185						136,380						135,997
Dilutive effect of outstanding stock awards			1,101						1,071						1,096						624
Diluted weighted average shares outstanding			138,955						138,256						137,476						136,621

2018						March 31						June 30						September 30						December 31
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