C H ROBINSON WORLDWIDE INC, 10-Q filed on 5/9/2013
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2013
May 2, 2013
Document Documentand Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Mar. 31, 2013 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
CHRW 
 
Entity Registrant Name
C H ROBINSON WORLDWIDE INC 
 
Entity Central Index Key
0001043277 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
160,559,398 
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 159,900 
$ 210,019 
Receivables, net of allowance for doubtful accounts of $35,363 and $34,560
1,469,826 
1,412,136 
Deferred tax asset
9,465 
11,780 
Prepaid expenses and other
51,388 
38,355 
Total current assets
1,690,579 
1,672,290 
Property and equipment, net
150,896 
149,851 
Goodwill
825,201 
822,215 
Other intangible assets, net
132,248 
137,411 
Other assets
31,636 
22,458 
Total assets
2,830,560 
2,804,225 
Current liabilities:
 
 
Accounts payable
701,770 
639,460 
Outstanding checks
56,959 
68,016 
Accrued expenses:
 
 
Compensation and profit-sharing contribution
52,400 
103,343 
Income taxes
9,964 
121,581 
Other accrued liabilities
37,705 
46,171 
Current portion of debt
390,629 
253,646 
Total current liabilities
1,249,427 
1,232,217 
Noncurrent income taxes payable
20,402 
20,590 
Deferred tax liabilities
70,101 
45,113 
Other long term liabilities
945 
1,933 
Total liabilities
1,340,875 
1,299,853 
Commitments and contingencies
   
   
Stockholders’ investment:
 
 
Preferred stock, $ .10 par value, 20,000 shares authorized; no shares issued or outstanding
0 
0 
Common stock, $ .10 par value, 480,000 shares authorized; 178,676 and 178,695 shares issued, 160,565 and 161,327 outstanding
16,057 
16,133 
Additional paid-in capital
292,629 
303,479 
Retained earnings
2,265,084 
2,218,229 
Accumulated other comprehensive loss
(11,574)
(9,345)
Treasury stock at cost (18,111 and 17,368 shares)
(1,072,511)
(1,024,124)
Total stockholders’ investment
1,489,685 
1,504,372 
Total liabilities and stockholders’ investment
$ 2,830,560 
$ 2,804,225 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Mar. 31, 2013
Mar. 31, 2012
Statement of Financial Position [Abstract]
 
 
Receivables, allowance for doubtful accounts
$ 35,363 
$ 34,560 
Preferred stock, par value
$ 0.10 
$ 0.10 
Preferred stock, shares authorized
20,000,000 
20,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value
$ 0.10 
$ 0.10 
Common stock, shares authorized
480,000,000 
480,000,000 
Common stock, shares issued
178,676,000 
178,695,000 
Common stock, shares outstanding
160,565,000 
161,327,000 
Treasury stock, shares
18,111,000 
17,368,000 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Revenues:
 
 
Transportation
$ 2,603,182,000 
$ 2,176,797,000 
Sourcing
387,852,000 
359,730,000 
Payment Services
3,233,000 
15,587,000 
Total revenues
2,994,267,000 
2,552,114,000 
Costs and expenses:
 
 
Purchased transportation and related services
2,181,930,000 
1,809,581,000 
Purchased products sourced for resale
356,006,000 
327,787,000 
Purchased payment services
609,000 
0 
Personnel expenses
212,645,000 
183,438,000 
Selling, general, and administrative expenses
74,371,000 
61,763,000 
Total costs and expenses
2,825,561,000 
2,382,569,000 
Income from operations
168,706,000 
169,545,000 
Investment and other (expense) income
(60,000)
214,000 
Income before provision for income taxes
168,646,000 
169,759,000 
Provision for income taxes
65,303,000 
63,259,000 
Net income
103,343,000 
106,500,000 
Other comprehensive (loss) income
(2,229,000)
227,000 
Comprehensive income
$ 101,114,000 
$ 106,727,000 
Basic net income per share (in dollars per share)
$ 0.64 
$ 0.65 
Diluted net income per share (in dollars per share)
$ 0.64 
$ 0.65 
Basic weighted average shares outstanding
160,637 
162,693 
Dilutive effect of outstanding stock awards
53 
330 
Diluted weighted average shares outstanding
160,690 
163,023 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
OPERATING ACTIVITIES
 
 
Net income
$ 103,343 
$ 106,500 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
13,807 
8,417 
Provision for doubtful accounts
2,293 
4,846 
Stock-based compensation
5,115 
9,766 
Deferred income taxes
27,303 
4,152 
Loss on sale/disposal of assets
35 
18 
Other long-term liabilities
5 
192 
Changes in operating elements, net of effects of acquisitions:
 
 
Receivables
(74,267)
(60,588)
Prepaid expenses and other
(12,158)
800 
Accounts payable and outstanding checks
51,238 
43,138 
Accrued compensation and profit-sharing contribution
(49,920)
(69,664)
Accrued income taxes
(111,805)
37,936 
Other accrued liabilities
(13,039)
(8,429)
Net cash (used for) provided by operating activities
(58,050)
77,084 
INVESTING ACTIVITIES
 
 
Purchases of property and equipment
(8,745)
(9,888)
Purchases and development of software
(1,432)
(3,932)
Other
43 
4 
Net cash used for investing activities
(10,134)
(13,816)
FINANCING ACTIVITIES
 
 
Proceeds from stock issued for employee benefit plans
7,403 
7,628 
Stock tendered for payment of withholding taxes
(46,933)
(7,129)
Payment of contingent purchase price
(927)
(11,613)
Repurchase of common stock
(44,980)
(65,490)
Cash dividends
(56,473)
(54,725)
Excess tax benefit on stock-based compensation
23,554 
5,999 
Proceeds from short-term borrowings
1,008,000 
0 
Payments on short-term borrowings
(871,017)
0 
Net cash provided by (used for) financing activities
18,627 
(125,330)
Effect of exchange rates on cash
(562)
(242)
Net decrease in cash and cash equivalents
(50,119)
(62,304)
Cash and cash equivalents, beginning of period
210,019 
373,669 
Cash and cash equivalents, end of period
$ 159,900 
$ 311,365 
GENERAL (Notes)
GENERAL
NOTE 1: GENERAL
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 276 branch offices operating in North America, Europe, Asia, South America, and Australia. 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.
The condensed consolidated financial statements, which are unaudited, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
Consistent with SEC rules and regulations, we have condensed or omitted certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. You should read the condensed consolidated financial statements and related notes in conjunction with the consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended December 31, 2012.
GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL AND OTHER INTANGIBLE ASSETS
NOTE 2: GOODWILL AND OTHER INTANGIBLE ASSETS
The change in the carrying amount of goodwill is as follows (in thousands): 
 
 
Balance, December 31, 2012
$
822,215

Phoenix Acquisition - measurement period adjustment
3,732

Foreign currency translation
(746
)
Balance, March 31, 2013
$
825,201


A summary of our other intangible assets, with finite lives, which include primarily customer relationships and non-competition agreements, is as follows (in thousands): 
 
March 31, 2013
 
December 31, 2012
Gross
$
149,644

 
$
149,644

Accumulated amortization
(19,271
)
 
(14,108
)
Net
$
130,373

 
$
135,536



Other intangible assets, with indefinite lives, are as follows (in thousands):
 
March 31, 2013
 
December 31, 2012
Trademarks
$
1,875

 
$
1,875



Amortization expense for other intangible assets was (in thousands): 
 
Three months ended March 31,
 
2013
 
2012
Amortization expense
$
5,047

 
$
842




Intangible assets at March 31, 2013 will be amortized over the next eight years, and that expense is as follows (in thousands):
 
 
Remainder of 2013
$
14,995

2014
18,719

2015
16,939

2016
16,922

2017
16,827

Thereafter
45,971

Total
$
130,373

FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT
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.
The following table presents information as of December 31, 2012, about our financial assets and liabilities that are measured at fair value on a recurring basis, according to the valuation techniques we used to determine their fair values (in thousands). 
 
 
Level 1
 
Level 2
 
Level 3
 
Total Fair
Value
December 31, 2012
 
 
 
 
 
 
 
 
Contingent purchase price related to acquisitions
 
—

 
—

 
922

 
922

Total liabilities at fair value
 
$
—

 
$
—

 
$
922

 
$
922



In measuring the fair value of the contingent payment liability, we used an income approach that considers the expected future earnings of the acquired businesses and the resulting contingent payments, discounted at a risk-adjusted rate.
The table below sets forth a reconciliation of our beginning and ending Level 3 financial liability balance (in thousands). We had no Level 3 liabilities as of March 31, 2013.  
 
Three months ended March 31,
 
2013
 
2012
Balance, beginning of period
$
922

 
$
13,070

Payments of contingent purchase price
(927
)
 
(11,613
)
Total unrealized losses included in earnings
5

 
(192
)
Balance, end of period
$
—

 
$
1,265

FINANCING ARRANGEMENTS
FINANCING ARRANGEMENTS

NOTE 4. FINANCING ARRANGEMENTS
On October 29, 2012, we entered into a senior unsecured revolving credit facility for up to $500 million with a $500 million accordion feature (the "Credit Agreement"), with a syndicate of financial institutions led by U. S. Bank. The purpose of this facility was to partially fund the acquisition of Phoenix International Freight Services, Ltd. ("Phoenix") and will allow us to continue to fund working capital, capital expenditures, dividends, and share repurchases. The Credit Agreement expires on October 29, 2017.
As of March 31, 2013, we had $390.0 million in borrowings outstanding under the Credit Agreement which is classified as a current liability on the consolidated balance sheet. We consider these borrowings to be a Level 2 financial liability and therefore, the recorded amount of borrowings outstanding approximates fair value because of the short maturity period of the debt.
Borrowings under the Credit Agreement generally bear interest at a variable rate equal to (i) LIBOR plus 1.00%, or (ii) the base rate (which is the highest of (a) the administrative agent's prime rate, (b) the federal funds rate plus 0.50%, or (c) the sum of 1.00% plus one-month LIBOR plus a specified margin). In addition, there is a commitment fee on the average daily undrawn sated amount under each letter of credit issued under the facility. The weighted average interest rate incurred on borrowings during the quarter ended March 31, 2013 was approximately 1.3% and at March 31, 2013 was approximately 1.2%.
The Credit Agreement contains various restrictions and covenants. Among other requirements, we may not permit our leverage ratio, as of the end of each of our fiscal quarters, of (i) Consolidated Funded Indebtedness to (ii) Consolidated Total Capitalization, to be greater than 0.65 to 1.00. We were in compliance with the debt covenants as of March 31, 2013.
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.
INCOME TAXES
INCOME TAXES
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 2006.
Our effective tax rate for the three months ended March 31, 2013 and 2012 were 38.7% and 37.3%, respectively. The effective income tax rate for both periods is greater than the statutory federal income tax rate primarily due to state income taxes, net of federal benefit.
STOCK AWARD PLANS
STOCK AWARD PLANS
NOTE 6: STOCK AWARD PLANS
Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense as it vests. A summary of our total compensation expense recognized in our consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands):
 
 
Three months ended March 31,

 
2013
 
2012
Stock options
 
$
301

 
$
502

Stock awards
 
3,902

 
8,298

Company expense on ESPP discount
 
912

 
966

Total stock based compensation expense
 
$
5,115

 
$
9,766


Our 1997 Omnibus Stock Plan allows us to grant certain stock awards, including stock options at fair market value and restricted shares and units, to our key employees and outside directors. A maximum of 28,000,000 shares can be granted under this plan; approximately 3,619,013 shares were available for stock awards as of March 31, 2013. Awards that expire or are canceled without delivery of shares generally become available for issuance under the plans. We plan to submit a new equity incentive plan for shareholder approval at our Annual Meeting of Stockholders on May 9, 2013.
Stock Options - We have awarded performance-based stock options to certain key employees. These options are subject to certain vesting requirements over a five-year period, based on the company’s earnings growth. Any options remaining unvested at the end of the five-year vesting period are forfeited to the company. Although participants can exercise options via a stock swap exercise, we do not issue reloads (restoration options) on the grants from 2011 and 2012.
The fair value of these options is established based on the market price on the date of grant, discounted for post-vesting holding restrictions, calculated using the Black-Scholes option pricing model. Changes in measured stock price volatility and interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards. As of March 31, 2013, unrecognized compensation expense related to stock options was $25.8 million. The amount of future expense to be recognized will be based on the company’s earnings growth and certain other conditions.
Restricted Stock Awards - We have awarded performance-based restricted shares and restricted units to certain key employees and non-employee directors. These restricted shares and restricted units are subject to certain vesting requirements over a five-year period, based on the company’s earnings growth. The awards also contain restrictions on the awardees’ ability to sell or transfer vested shares or units for a specified period of time. The fair value of these shares is established based on the market price on the date of grant, discounted for post-vesting holding restrictions. The discounts have varied 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.
We have also awarded restricted shares and units to certain key employees that vest primarily based on their continued employment. The value of these awards is established by the market price on the date of the grant and is being expensed over the vesting period of the award.
We have also issued to certain key employees and non-employee directors restricted units which are fully vested upon issuance. These shares and units contain restrictions on the awardees’ ability to sell or transfer vested shares or units for a specified period of time. The fair value of these shares is established using the same method discussed above. These grants have been expensed during the year they were earned.
As of March 31, 2013, there is unrecognized compensation expense of $141.7 million related to previously granted restricted shares and units. The amount of future expense to be recognized will be based on the company’s earnings growth and certain other conditions.
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):
 
Three months ended March 31, 2013
Shares purchased
by employees
 
Aggregate cost
to employees
 
Expense recognized
by the company
102,244

 
$
5,168

 
$
912

LITIGATION (Notes)
LITIGATION
NOTE 7: 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 eight contingent auto liability cases. For such 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.
ACQUISITIONS
ACQUISITIONS AND DIVESTITURES
NOTE 8: ACQUISITIONS AND DIVESTITURES
On November 1, 2012, we acquired all of the outstanding stock of Phoenix International Freight Services, Ltd. for the purpose of expanding our current market presence and service offerings in international freight forwarding. Total purchase consideration was $676.4 million, net of estimated post-closing cash and working capital adjustments, in accordance with the purchase agreement. The acquisition price was financed with $60.2 million in newly-issued common stock (representing 1.1 million shares), borrowings under the revolving credit facility of approximately $173.0 million discussed in Note 4, and the remainder with cash on-hand.
The following is a preliminary summary of the allocation of purchase consideration to the estimated fair value of net assets for the acquisition of Phoenix (in thousands):
Cash and cash equivalents
$
75,372

Receivables
125,595

Other current assets
8,929

Property and equipment
12,160

Identifiable intangible assets
130,000

Goodwill
451,609

Other noncurrent assets
15,596

Total assets
$
819,261

 
 
Accounts payable
$
(45,367
)
Accrued expenses
(14,340
)
Other liabilities
(83,155
)
Estimated net assets acquired
$
676,399


Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):
 
 
 
Estimated Life (years)
Customer relationships
$
129,800

 
8
Noncompete agreements
200

 
5
Total identifiable intangible assets
$
130,000

 
 


The Phoenix goodwill is a result of acquiring and retaining the Phoenix existing workforce and expected synergies from integrating their business into C.H. Robinson. The goodwill will not be deductible for tax purposes. Purchase accounting is considered preliminary, subject to revision, mainly with respect to certain working capital accounts, taxes, and goodwill, as final information was not available as of March 31, 2013. We do not expect any revisions to the preliminary allocation of purchase price to have a material impact on our consolidated financial statements.
The measurement period adjustments during the first quarter of 2013 to the previously recorded opening balances relate primarily to changes in the allocation of purchase consideration to certain accounts based on continued resolution of certain working capital adjustments with the selling shareholders. The adjustments in first quarter of 2013 resulted in a $1.5 million increase in receivables, a $3.7 million increase in goodwill, and a $10.6 million increase in other assets. The measurement period adjustments were recorded prospectively as they are not considered material to the consolidated financial statements at December 31, 2012.
On an unaudited pro forma basis, assuming the Phoenix acquisition had closed January 1, 2011, the combined results of C.H. Robinson and Phoenix would have resulted in revenues of $11.2 billion for the year ended December 31, 2011, and $12.1 billion for the year ended December 31, 2012, operating income of $729.6 million and $707.4 million, and net income of $445.8 million and $610.7 million during those same periods, respectively.
The 2012 pro forma financial information includes adjustments for additional amortization expense on identifiable intangible assets of $13.6 million and incremental interest expense of $2.2 million, eliminating non-recurring transactional professional fees of $18.5 million and contractual changes in compensation of $6.5 million, and tax effect impact of $6.9 million based on our consolidated effective tax rate.
The 2011 pro forma financial information includes adjustments for additional amortization expense on identifiable intangible assets of $16.3 million and incremental interest expense of $2.6 million, eliminating non-recurring contractual changes in compensation related expenses of $4.1 million, and tax effect impact of $1.8 million based on our consolidated effective tax rate.
For the quarter ended March 31, 2012, on an unaudited pro forma basis, assuming the Phoenix acquisition had closed on January 1, 2011, the combined results of C.H. Robinson and Phoenix would have resulted in revenues of $2.2 billion, operating income of $173.9 million, and net income of $107.7 million. The first quarter 2012 pro forma financial information includes adjustments including additional amortization expense on identifiable intangible assets of $4.1 million and incremental interest expense of $0.7 million, and tax effect impact of $1.3 million based on our consolidated effective tax rate.
The pro forma consolidated financial information was prepared for comparative purposes only and includes certain adjustments, as noted above. The adjustments are estimates based on currently available information and actual amounts may have differed materially from these estimates. They do not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred at the beginning of each period presented or of future results of the consolidated entity. The results of operations and financial condition of Phoenix has been included in our consolidated financial statements since the acquisition date of November 1, 2012.
On October 16, 2012, we sold substantially all of the operations of our subsidiary, T-Chek Systems, Inc. ("T-Chek"), which represented a majority of our Payment Services business, to Electronic Funds Source, LLC ("EFS") for $302.5 million in cash, subject to post-closing adjustments. EFS acquired the assets and assumed certain liabilities of T-Chek.
For the quarter ended March 31, 2012, on an unaudited pro forma basis, assuming the T-Chek divestiture had closed on January 1, 2011, the results of C.H. Robinson excluding T-Chek would have resulted in revenues of $2.5 billion, operating income of $163.9 million, and net income of $103.0 million.
We recorded a gain on the sale of the assets and liabilities of approximately $281.6 million during the fourth quarter of 2012. In conjunction with the sale, we entered into two ten-year agreements with EFS: a money transfer services agreement and a MasterCard services agreement. These agreements for ongoing activities between us and EFS are expected to result in significant continuing cash outflows. Consequently, the sale of T-Chek's assets and liabilities did not result in the operating results of T-Chek being accounted for as a discontinued operation.
On October 1, 2012, we acquired all of the outstanding stock of the operating subsidiaries of Apreo Logistics S.A. ("Apreo"), a leading freight forwarder based in Warsaw, Poland, for the purpose of expanding our current market presence and service offerings in Europe. The total purchase price of Apreo was approximately $26.5 million, which was paid in cash and is subject to post-closing adjustments. We recorded $17.4 million of goodwill and other intangible assets related to this acquisition. The goodwill will not be deductible for tax purposes. The results of operations and financial condition of Apreo have been included in our consolidated financial statements since its acquisition date. The results of our operations for 2012 were not materially impacted by this acquisition.
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Notes)
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS
NOTE 9: CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss is included in the Stockholders' investment on our condensed consolidated balance sheet.  The recorded balance, net of taxes, at March 31 , 2013 and December 31, 2012 was $11.6 million and $9.3 million, respectively. Accumulated other comprehensive loss is comprised solely of foreign currency translation adjustment at March 31, 2013 and December 31, 2012.

In February 2013, the Financial Accounting Standards Board issued guidance on the reporting of amounts reclassified out of accumulated other comprehensive income (loss). This guidance requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required to be reclassified in its entirety to net income. Entities may present this information either on the face of the statement where net income is presented or in the notes. This guidance was effective for the Company on January 1, 2013, and is to be applied prospectively. The guidance required additional disclosures, however it did not impact our results of operations, financial position or cash flows. During the quarter ended March 31, 2013, no amounts of accumulated other comprehensive loss were reclassified into net income.
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)
Schedule of Goodwill 
The change in the carrying amount of goodwill is as follows (in thousands): 
 
 
Balance, December 31, 2012
$
822,215

Phoenix Acquisition - measurement period adjustment
3,732

Foreign currency translation
(746
)
Balance, March 31, 2013
$
825,201

Schedule of Finite-Lived Intangible Assets by Major Class 
A summary of our other intangible assets, with finite lives, which include primarily customer relationships and non-competition agreements, is as follows (in thousands): 
 
March 31, 2013
 
December 31, 2012
Gross
$
149,644

 
$
149,644

Accumulated amortization
(19,271
)
 
(14,108
)
Net
$
130,373

 
$
135,536

Schedule of Indefinite-lived Intangible Assets by Major Class 
Other intangible assets, with indefinite lives, are as follows (in thousands):
 
March 31, 2013
 
December 31, 2012
Trademarks
$
1,875

 
$
1,875

Schedule of Amortization Expense 
Amortization expense for other intangible assets was (in thousands): 
 
Three months ended March 31,
 
2013
 
2012
Amortization expense
$
5,047

 
$
842

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense 
Intangible assets at March 31, 2013 will be amortized over the next eight years, and that expense is as follows (in thousands):
 
 
Remainder of 2013
$
14,995

2014
18,719

2015
16,939

2016
16,922

2017
16,827

Thereafter
45,971

Total
$
130,373

FAIR VALUE MEASUREMENT (Tables)
Fair Value, by Balance Sheet Grouping 
The following table presents information as of December 31, 2012, about our financial assets and liabilities that are measured at fair value on a recurring basis, according to the valuation techniques we used to determine their fair values (in thousands). 
 
 
Level 1
 
Level 2
 
Level 3
 
Total Fair
Value
December 31, 2012
 
 
 
 
 
 
 
 
Contingent purchase price related to acquisitions
 
—

 
—

 
922

 
922

Total liabilities at fair value
 
$
—

 
$
—

 
$
922

 
$
922

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation 
The table below sets forth a reconciliation of our beginning and ending Level 3 financial liability balance (in thousands). We had no Level 3 liabilities as of March 31, 2013.  
 
Three months ended March 31,
 
2013
 
2012
Balance, beginning of period
$
922

 
$
13,070

Payments of contingent purchase price
(927
)
 
(11,613
)
Total unrealized losses included in earnings
5

 
(192
)
Balance, end of period
$
—

 
$
1,265

STOCK AWARD PLANS (Tables)
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs 
A summary of our total compensation expense recognized in our consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands):
 
 
Three months ended March 31,

 
2013
 
2012
Stock options
 
$
301

 
$
502

Stock awards
 
3,902

 
8,298

Company expense on ESPP discount
 
912

 
966

Total stock based compensation expense
 
$
5,115

 
$
9,766

Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity 
The following is a summary of the employee stock purchase plan activity (dollar amounts in thousands):
 
Three months ended March 31, 2013
Shares purchased
by employees
 
Aggregate cost
to employees
 
Expense recognized
by the company
102,244

 
$
5,168

 
$
912

ACQUISITIONS (Tables)
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed
The following is a preliminary summary of the allocation of purchase consideration to the estimated fair value of net assets for the acquisition of Phoenix (in thousands):
Cash and cash equivalents
$
75,372

Receivables
125,595

Other current assets
8,929

Property and equipment
12,160

Identifiable intangible assets
130,000

Goodwill
451,609

Other noncurrent assets
15,596

Total assets
$
819,261

 
 
Accounts payable
$
(45,367
)
Accrued expenses
(14,340
)
Other liabilities
(83,155
)
Estimated net assets acquired
$
676,399


Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands):
 
 
 
Estimated Life (years)
Customer relationships
$
129,800

 
8
Noncompete agreements
200

 
5
Total identifiable intangible assets
$
130,000

 
 
GENERAL (Details)
Mar. 31, 2013
Location
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Branch Offices
276 
Change in the Carrying Amount of Goodwill (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Goodwill [Roll Forward]
 
Balance, December 31, 2012
$ 822,215 
Phoenix Acquisition - measurement period adjustment
3,732 
Foreign currency translation
(746)
Balance, March 31, 2013
$ 825,201 
Summary of Other Intangible Assets, with Finite Lives (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
 
 
Net
$ 130,373 
 
Other Intangible Assets
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
149,644 
149,644 
Accumulated amortization
(19,271)
(14,108)
Net
$ 130,373 
$ 135,536 
Other Intangible Assets, with Indefinite Lives (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Trademarks
$ 1,875 
$ 1,875 
Amortization Expense of Other Intangible Assets (Detail) (Other Intangible Assets, USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Other Intangible Assets
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Amortization expense
$ 5 
$ 842 
Estimated Amortization Expense on Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Estimated amortization expense
 
Remainder of 2013
$ 14,995 
2014
18,719 
2015
16,939 
2016
16,922 
2017
16,827 
Thereafter
45,971 
Net
$ 130,373 
Financial Assets and Liabilities at Fair Value on a Recurring Basis (Detail) (Fair Value, Measurements, Recurring, USD $)
In Thousands, unless otherwise specified
Mar. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Contingent purchase price related to acquisitions
$ 922 
Total liabilities at fair value
922 
Level 1
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Contingent purchase price related to acquisitions
0 
Total liabilities at fair value
0 
Level 2
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Contingent purchase price related to acquisitions
0 
Total liabilities at fair value
0 
Level 3
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Contingent purchase price related to acquisitions
922 
Total liabilities at fair value
$ 922 
Reconciliation of Beginning and Ending Level 3 Financial Liability Balances (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, beginning of period
$ 922 
$ 13,070 
Payments of contingent purchase price
(927)
(11,613)
Total unrealized losses included in earnings
5 
(192)
Balance, end of period
$ 0 
$ 1,265 
FINANCING ARRANGEMENTS (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Oct. 29, 2012
Unsecured Debt |
Senior Unsecured Revolving Credit Facility 2017 Term Loan
 
 
Debt Instrument [Line Items]
 
 
Line of credit facility, maximum borrowing capacity
 
$ 500 
Additional borrowing capacity credit facility
 
500 
Debt Instrument, Interest Rate During Period
1.30% 
 
Debt, weighted average interest rate
1.20% 
 
Debt Instrument, Covenant, Leverage Ratio, Minimum
0.65 
 
Debt instrument, covenant, leverage ratio, maximum
1.00 
 
Current Liability
 
 
Debt Instrument [Line Items]
 
 
Borrowing outstanding
$ 390.0 
 
London Interbank Offered Rate (LIBOR) |
Unsecured Debt |
Senior Unsecured Revolving Credit Facility 2017 Term Loan
 
 
Debt Instrument [Line Items]
 
 
Debt instrument, basis spread on variable rate
 
1.00% 
Federal Funds Rate |
Unsecured Debt |
Senior Unsecured Revolving Credit Facility 2017 Term Loan
 
 
Debt Instrument [Line Items]
 
 
Debt instrument, basis spread on variable rate
 
0.50% 
LIBOR Rate Option |
Unsecured Debt |
Senior Unsecured Revolving Credit Facility 2017 Term Loan
 
 
Debt Instrument [Line Items]
 
 
Debt instrument, basis spread on variable rate
 
1.00% 
Debt instrument, description of variable rate basis
One-month LIBOR 
 
Effective Income Tax Rate (Detail)
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Income Tax Disclosure [Abstract]
 
 
Effective income tax
38.70% 
37.30% 
Summary of Total Compensation Expense Recognized in Statements of Operations for Stock-Based Compensation (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
$ 5,115 
$ 9,766 
Stock options
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
301 
502 
Stock awards
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
3,902 
8,298 
Company expense on ESPP discount
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
$ 912 
$ 966 
STOCK AWARD PLANS - Additional Information (Detail) (USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Compensation Related Costs Share Based Payments Disclosure [Line Items]
 
 
Maximum shares that can be granted under stock plan
28,000,000 
 
Shares available for stock awards
3,619,013 
 
Stock award, vesting period
5 years 
 
Restricted stock awards, discount for post-vesting holding restriction, lower limit
12.00% 
 
Restricted stock awards, discount for post-vesting holding restriction, upper limit
22.00% 
 
Maximum employee contribution to purchase company stock
$ 10,000 
 
Discount rate used to determine the purchase price
 
15.00% 
Restricted Stock Awards
 
 
Compensation Related Costs Share Based Payments Disclosure [Line Items]
 
 
Stock award, vesting period
5 years 
 
Unrecognized compensation expense
141,700,000 
 
Stock Option
 
 
Compensation Related Costs Share Based Payments Disclosure [Line Items]
 
 
Unrecognized compensation expense
$ 25,800,000 
 
Summary of Employee Stock Purchase Plan Activity (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Shares purchased by employees
102,244 
 
Aggregate cost to employees
$ 5,168 
 
Expense recognized by the company
5,115 
9,766 
Company expense on ESPP discount
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expense recognized by the company
$ 912 
$ 966 
Acquisitions - Additional Information (Detail) (USD $)
Share data in Millions, unless otherwise specified
0 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended
Nov. 1, 2012
Phoenix
Mar. 31, 2013
Phoenix
Mar. 31, 2012
Phoenix
Dec. 31, 2012
Phoenix
Dec. 31, 2011
Phoenix
Oct. 2, 2012
Apreo
Dec. 31, 2012
T-Chek
Mar. 31, 2012
T-Chek
Oct. 16, 2012
T-Chek
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
Business acquisition, purchase price
$ 676,399,000 
 
 
 
 
 
 
 
 
Business acquisition, equity interest issued or issuable, value assigned
60,200,000 
 
 
 
 
 
 
 
 
Business acquisition, equity interest issued or issuable, number of shares
1.1 
 
 
 
 
 
 
 
 
Business acquisition, acquisition price financed with debt
173,000,000 
 
 
 
 
 
 
 
 
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Financial Assets
 
1,500,000 
 
 
 
 
 
 
 
Business Combination, Segment Reporting, Assignment of Goodwill Not Complete
 
3.7 
 
 
 
 
 
 
 
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Intangibles
 
10,600,000 
 
 
 
 
 
 
 
Business acquisition, pro forma revenue
 
 
2,200,000,000 
12,100,000,000 
11,200,000,000 
 
 
 
 
Business acquisition, pro forma operating income
 
 
173,900,000 
707,400,000 
729,600,000 
 
 
 
 
Business acquisition, pro forma net income
 
 
107,700,000 
610,700,000 
445,800,000 
 
 
 
 
Business Divestiture, Pro Forma Net Income (Loss)
 
 
 
 
 
 
 
103,000,000 
 
Business acquisition, pro forma amortization expense
 
 
4,100,000 
13,600,000 
16,300,000 
 
 
 
 
Business acquisition, pro forma interest expense
 
 
700,000 
2,200,000 
2,600,000 
 
 
 
 
Business Acquisition, Tax Impact on Pro Forma Adjustments
 
 
1,300,000 
6,900,000 
1,800,000 
 
 
 
 
Business acquisition, pro forma professional fees
 
 
 
18,500,000 
 
 
 
 
 
Business acquisition, pro forma compensation related expenses
 
 
 
6,500,000 
4,100,000 
 
 
 
 
Long lived assets held-for-sale, proceeds from sale
 
 
 
 
 
 
 
 
302,500,000 
Business Divestiture, Pro Forma Revenue
 
 
 
 
 
 
 
2,500,000,000 
 
Business Divestiture, Pro Forma Operating Income (Loss)
 
 
 
 
 
 
 
163,900,000 
 
Gain on sale of T-Chek
 
 
 
 
 
 
281,600,000 
 
 
Number of Ten Year Agreements with EFS
 
 
 
 
 
 
0 
 
 
Business acquisition, cash paid
 
 
 
 
 
26,500,000 
 
 
 
Business acquisition, goodwill and other intangible assets
 
 
 
 
 
$ 17,400,000 
 
 
 
ACQUISITIONS Acquisitions - Business Combination (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Nov. 1, 2012
Phoenix
Business Acquisition [Line Items]
 
 
 
Cash and cash equivalents
 
 
$ 75,372 
Receivables
 
 
125,595 
Other current assets
 
 
8,929 
Property and equipment
 
 
12,160 
Identifiable intangible assets
 
 
130,000 
Goodwill
825,201 
822,215 
451,609 
Other noncurrent assets
 
 
15,596 
Total assets
 
 
819,261 
Accounts payable
 
 
(45,367)
Accrued expenses
 
 
(14,340)
Other liabilities
 
 
(83,155)
Estimated net assets acquired
 
 
$ 676,399 
ACQUISITIONS Acquisitions - Identifiable Intangible Assets and Estimated Useful Lives (Details) (Phoenix, USD $)
In Thousands, unless otherwise specified
0 Months Ended
Nov. 1, 2012
Business Acquisition [Line Items]
 
Identifiable intangible assets
$ 130,000 
Customer Relationships [Member]
 
Business Acquisition [Line Items]
 
Estimated Life (years)
8 years 
Identifiable intangible assets
129,800 
Noncompete Agreements [Member]
 
Business Acquisition [Line Items]
 
Estimated Life (years)
5 years 
Identifiable intangible assets
$ 200 
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Accumulated other comprehensive loss [Abstract]
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
$ (11,574)
$ (9,345)