ACQUISITIONS AND DIVESTITURES

12 Months Ended

Dec. 31, 2014

Notes To Financial Statements [Abstract]

ACQUISITIONS AND DIVESTITURES

ACQUISITIONS AND DIVESTITURES

On November 1, 2012, we acquired all of the outstanding stock of Phoenix International Freight Services, Ltd. (“Phoenix”) for the purpose of expanding our current market presence and service offerings in international freight forwarding. Total purchase consideration was $677.3 million, net of 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 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	7,209
Property and equipment	12,160
Identifiable intangible assets	130,000
Goodwill	453,208
Other noncurrent assets	13,542
Total assets	$	817,086
Accounts payable	$	(45,367	)
Accrued expenses	(14,340		)
Other liabilities	(80,106		)
Estimated net assets acquired	$	677,273

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

	Estimated Life (years)
Customer relationships	8	$	129,800
Noncompete agreements	5	200
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 is not deductible for tax purposes.

The measurement period adjustments during the year ended December 31, 2013, to the previously recorded opening balances related primarily to changes in the allocation of purchase consideration to certain accounts, based on resolution of certain working capital adjustments with the selling shareholders. The adjustments during 2013 resulted in a $1.5 million increase in receivables, a $5.3 million increase in goodwill, a $1.7 million decrease in current deferred taxes, a $2.1 million decrease in non-current deferred assets, a $3.0 million decrease in taxes payable, and a $10.6 million increase in other assets. The other asset recorded is an indemnification asset that approximates the estimated contingencies related to uncertain tax positions. Any subsequent changes in the indemnification asset will be recorded in interest and other (expense) income in our consolidated statement of operations and comprehensive income. The offset to these adjustments was a reduction in the estimated receivable amount from the selling shareholders. The measurement period adjustments were recorded prospectively, as they are not considered material to the financial statements for the year ended December 31, 2013.

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. EFS acquired the assets and assumed certain liabilities of T-Chek. We recorded a gain on the sale of the assets and liabilities of approximately $281.6 million during the fourth quarter of 2012.

On an unaudited pro forma basis, assuming the T-Chek divestiture and the Phoenix acquisition had closed on January 1, 2012, the results of C.H. Robinson excluding T-Chek and including Phoenix would have resulted in the following (in thousands):

	December 31, 2012
	C.H. Robinson As Reported		T-Chek Operations			Phoenix Operations		Combined Pro Forma
Total revenues	$	11,359,113	$	(41,623	)	$	692,836	$	12,010,326
Income from operations	675,320		(20,578		)	24,131		678,873
Net income	593,804		(12,804		)	11,976		592,976

Phoenix pro forma financial information includes the following adjustments for the twelve months ended December 31 (in thousands):

	2012
Eliminate personnel costs from purchased transportation and related services	$	(24,422	)
Eliminate personnel costs from selling, general, and administrative services	(50,065		)
Reclassify costs to personnel expenses	74,487
Contractual changes in compensation	(5,080		)
Additional amortization expense on identifiable intangible assets	13,555
Rent expense for new lease agreements	280
Depreciation on acquired building	123
Incremental interest expense	(2,127		)
Additional bonus paid by sellers	(1,400		)
Third party advisory fees paid by sellers	(582		)
Elimination of variable interest entities not acquired	215
Tax effect	(1,487		)

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.

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. 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 our operations for 2012 were not materially impacted by this acquisition.

The results of operations and financial condition of these acquisitions have been included in our consolidated financial statements since their acquisition dates.