What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-02-22 compared with 2020-02-25 · 45 added, 166 removed, 763 unchanged (22% of the section changed)

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Based on this assessment, we have concluded that our internal control over financial reporting was effective as of December 31, 2020.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019 excluded Millis Transfer, as the acquisition occurred on August 26, 2019 and Millis Transfer was previously not subject to SOX 404 requirements.

The results of Millis Transfer have been included in our consolidated financial statements since the date of acquisition and represented 21.1% of consolidated total assets as of December 31, 2019, and represented 8.8% of operating revenue for the twelve months ended December 31, 2019.

This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from the scope in the year of acquisition.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with generally accepted accounting principles.

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The Company’s internal control over financial reporting as of December 31, 2020 has been audited by Grant Thornton LLP, an independent registered public accounting firm as stated in its report which is included herein.

Changes in Internal Control Over Financial Reporting – Except for the acquisition of Millis Transfer noted above, there were no other changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) that occurred during the twelve months ended December 31, 2019 that have materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

Changes in Internal Control Over Financial Reporting – Except for the design, implementation, and testing of Millis Transfer internal controls, there were no other changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) that occurred during the twelve months ended December 31, 2020 that have materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

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In addition, we have adopted a code of ethics known as “Code of Ethics for Senior Financial Officers” that applies to our senior financial officers, including our chief executive officer, chief financial officer, treasurer, controller, and other senior financial officers performing similar functions who have been identified by the chief executive officer.

We make these codes available on our website at www.heartlandexpress.com (and in print to any shareholder who requests them).

We make these codes available on our website at www.heartlandexpress.com (and in print to any shareholder who requests them, free of charge).

Information on our website is not incorporated by reference into this Annual Report.

Environmental and Sustainability

We have adopted an "Environmental and Sustainability Mission".

This document portrays our commitment to the environment and sustainability through our long track record of successful business practices.

Heartland's sustainability efforts are endorsed and overseen by senior management throughout the Company.

EXECUTIVE COMPENSATION

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EXHIBIT INDEX

Stock Purchase Agreement, dated July 6, 2017, by and among Saltchuk Resources, Inc., Interstate Distributor Co., Heartland Express, Inc.

of Iowa, and Heartland Express, Inc., in its capacity as guarantor.

Incorporated by reference to Exhibit 2.1 to the Company’s Form 10-Q, for the quarter ended September 30, 2017.

Acquisition and Merger Agreement, dated August 26, 2019, by and among, Midwest Holding Group, Inc., Millis Real Estate Leasing, LLC, the members of Millis Real Estate Leasing, LLC, Heartland Trucking, Inc., Heartland Express Inc.

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Description of the Registrant's securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.

Incorporated by reference to Exhibit 4.1 to the Company's Form 10-K for the year ended December 31, 2019

Heartland Express, Inc.

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Christopher A.

Vice President of Finance, Treasurer, Secretary,

and Chief Financial Officer

Vice President of Finance, Treasurer, and Chief Financial Officer

(Principal Accounting and Financial Officer)

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/s/ Christopher A.

Strain Vice President of Finance, Treasurer, Secretary and Chief Financial Officer (Principal Accounting and Financial Officer) February 25, 2020

Strain Vice President of Finance, Treasurer, and Chief Financial Officer (Principal Accounting and Financial Officer) February 19, 2021

Christopher A.

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Hira Director February 19, 2021

Millis Director February 19, 2021

/s/ Brenda S.

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We have audited the accompanying consolidated balance sheets of Heartland Express, Inc.

(a Nevada corporation) and subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2019, and the related notes and financial statement schedule II (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 two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

(a Nevada corporation) and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule II (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, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We also have 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, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 19, 2021 expressed an unqualified opinion.

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• We tested management’s process for determining the auto liability and workers’ compensation accrual, including evaluating the reasonableness of the methods and assumptions used in estimating the ultimate claim losses with the assistance of an actuarial specialist.

• We tested the claims data used in the actuarial calculation by selecting samples of historical claims data and inspecting source documents to test key attributes of the claims data.

We have served as the Company’s auditor since 2018.

• We tested management's claim reserve estimates by inspecting source documents to test key attributes of the claims data.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2018.

Tulsa, Oklahoma

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We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Midwest Holding Group, Inc.

and Millis Real Estate Leasing, LLC, wholly-owned subsidiaries, whose financial statements reflect total assets and revenues constituting 21.1% and 8.8%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2019.

As indicated in Management’s Report, Midwest Holding Group, Inc.

and Millis Real Estate Leasing, LLC were acquired during 2019.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Midwest Holding Group, Inc.

and Millis Real Estate Leasing, LLC.

Definition and limitations of internal control over financial reporting

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February 19, 2021

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

HEARTLAND EXPRESS, INC.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Heartland Express, Inc.

and subsidiaries (the Company) as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2018 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 consolidated 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 consolidated 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 consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

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

Des Moines, Iowa

March 1, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Heartland Express, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Heartland Express, Inc.

and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated March 1, 2018 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s assessment:

• Ineffective a) communication of objectives related to internal control, and b) development and documentation of internal controls impacting financial statement accounts and general controls over technology pertaining to user access and segregation of duties;

• Ineffective assessment of changes that impact internal control, which contributed to ineffective controls over the allocation of the purchase price for IDC to the assets acquired and liabilities assumed.

The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2017 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

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 Annual 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 of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included 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.

Des Moines, Iowa

March 1, 2018

HEARTLAND EXPRESS, INC.

AND SUBSIDIARIES

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Other accruals 18,557 10,051

Income taxes payable 1,475 —

Total current liabilities 71,042 63,407

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Income before income taxes 94,261 97,178 91,917

Federal and state income tax (benefit) expense 24,211 19,240 ( 10,675 )

Federal and state income tax expense 23,455 24,211 19,240

Net income $ 70,806 $ 72,967 $ 72,677

19 unchanged sentences

Dividends on common stock, $0.08 per share — — ( 6,589 ) — ( 6,589 )

Repurchases of common stock — — — ( 25,087 ) ( 25,087 )

Stock-based compensation, net of tax — ( 64 ) — 390 326

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Dividends on common stock, $0.08 per share — — ( 6,563 ) — ( 6,563 )

Repurchases of common stock — — — ( 25,087 ) ( 25,087 )

Issuance of common stock for acquisition — 113 — 637 750

Stock-based compensation, net of tax — 574 — 959 1,533

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Dividends on common stock, $0.08 per share — — ( 6,502 ) — ( 6,502 )

Issuance of common stock for acquisition — 113 — 637 750

Repurchases of common stock — — — ( 26,139 ) ( 26,139 )

Stock-based compensation, net of tax — 189 — 1,321 1,510

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Sold revenue equipment in other current assets $ 3,383 $ 1,282 $ 3,783

Treasury stock acquired in accounts payable $ 485 $ — $ —

Year Ended December 31,

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of Iowa, Heartland Express Services, Inc., Heartland Express Maintenance Services, Inc., Midwest Holding Group, LLC and Millis Transfer, LLC.

On July 6, 2017, Heartland Express, Inc.

of Iowa acquired Interstate Distributor Co.

("IDC"), which was subsequently merged into Heartland Express, Inc.

of Iowa effective October 1, 2017.

On December 31, 2018, A & M Express, Inc.

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These truckload services are primarily asset-based transportation services in the dry van truckload market, and we also offer truckload temperature-controlled transportation services to select dedicated customers, which are not significant to our operations.

We exited our non-asset-based freight brokerage business in the first quarter of 2017, however due to the acquisition of IDC we acquired and again operated a non-asset-based freight brokerage business from the date of acquisition until the termination of this business during the fourth quarter of 2017.

During 2018 and 2019 we did not operate a non-asset-based freight brokerage business.

Our Chief Operating Decision Maker oversees and manages all of our transportation services, on a combined basis, including previously acquired entities.

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As of September 30, 2020, the Company’s assessment of qualitative factors informed its conclusion that a goodwill impairment did not occur.

The significant qualitative factors considered include an increase in the Company’s share price and continued strong cash flow.

The significant qualitative factors considered include an increase in the Company’s revenue and continued strong cash flow.

Our reporting unit had fair value significantly in excess of its carrying value.

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New Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which continues to require an entity to review indicators for impairment, perform qualitative assessments, and analyze the fair value of a reporting unit as compared to the carrying value of goodwill for potential impairment, but eliminates or replaces additional tests and assessments within the prior guidance.

The provisions of this update are effective for fiscal years beginning after December 15, 2019, with early adoption permitted for impairment measurement tests occurring after January 1, 2017.

We adopted the provisions of this standard in 2019 as part of our annual impairment test that occurred in September 2019.

The adoption of this standard did not have material impact on our impairment analysis.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326):

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We have adopted this standard effective January 1, 2020 and the impact of adoption of the standard did not have a material impact on our financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)".

This update seeks to increase the transparency and comparability among entities by requiring public entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements.

To satisfy the standard’s objective, a lessee will recognize a right-of-use asset representing its right to use the underlying asset for the lease term and a lease liability for the obligation to make lease payments.

Both the right-of-use asset and lease liability will initially be measured at the present value of the lease payments, with subsequent measurement dependent on the classification of the lease as either a finance or an operating lease.

For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities.

If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term.

In July 2018, the FASB issued ASU 2018-10, "Leases (Topic 842) - Codification Improvements" which contains several FASB Codification improvements for ASC Topic 842, including several implementation issues and ASU 2018-11, "Leases (Topic 842) - Targeted Improvements" which provides entities with an additional transition method for implementing ASC Topic 842.

Entities have the option to apply the new standard at the adoption date, recognizing a cumulative-effect adjustment to the opening balance of retained earnings along with the modified retrospective approach previously identified, both of which include a number of practical expedients that companies may elect to apply.

Under the cumulative-effect adjustment comparative periods would not be restated, and would instead be presented under the legacy ASC Topic 840 guidance.

Under the modified retrospective approach leases are recognized and measured under the noted guidance at the beginning of the earliest period presented.

The new standard is effective for public companies for annual periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted.

We have adopted this guidance as of January 1, 2019 and the effect of the adoption was not material to our financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

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however, early adoption is permitted.

We are currently evaluating the impact of this standard on our consolidated financial statements.

We have adopted this standard effective January 1, 2021 and the impact of adoption of the standard did not have a material impact on our financial statements.

Concentrations of Credit Risk and Major Customers

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Our five largest customers accounted for approximately 30 % and 30 % of gross accounts receivable as of December 31, 2020 and 2019, respectively.

There was one customer that accounted for more than 10 % of operating revenues for the year ended December 31, 2019 at 10.9 %.

This customer had accounts receivable of $ 5.8 million and $ 6.7 million as of December 31, 2019 and 2018, respectively.

One customer accounted for more than 10 % of operating revenues at 12.5 % and 12.6 % for the same periods ended 2018 and 2017, respectively.

There was no single customer that accounted for more than 10 % of operating revenues for the year ended December 31, 2020.

During the years ended December 31, 2019 and December 31, 2018, there was one customer that accounted for more than 10 % of operating revenues at 10.9 % and 12.5 %, respectively.

This customer had accounts receivable of $ 5.8 million as of December 31, 2019.

Revenue Recognition

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Accessorial and other revenues recorded in the consolidated statements of comprehensive income collectively represented $ 14.3 million, $ 13.5 million, and $ 14.9 million for the twelve months ended December 31, 2020, 2019, and 2018, respectively.

Acquisitions of Millis Transfer and Interstate Distributor Co.

Acquisition of Millis Transfer

On August 26, 2019, Heartland Express, Inc.

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Millis Transfer is a truckload carrier headquartered in Black River Falls, Wisconsin, providing asset-based dry van truckload transportation services, including local, regional, and dedicated services.

On July 6, 2017, Heartland Express Inc., of Iowa, (the "Buyer"), a wholly owned subsidiary of the "Company”, acquired IDC, a Washington corporation.

In accordance with Internal Revenue Code Section 1361(b)(3)(C)(ii)(I) and (II), the transaction was treated for tax purposes as a sale of the assets of IDC by the seller to the Buyer, immediately followed by the Buyer’s contribution of such assets to IDC under Internal Revenue Code Section 351.

The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions.

IDC was subsequently merged into the Buyer effective October 1, 2017.

Pursuant to the Acquisition and Merger Agreement of the Millis Transfer acquisition, the Buyer acquired all of Millis Transfer’s outstanding equity (the “Transaction”).

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The Acquisition and Merger Agreement contains customary representations, warranties, covenants, escrow, and indemnification provisions.

Pursuant to the acquisition of IDC in July of 2017, the company paid $ 93.0 million in cash, net of approximately $ 6.3 million of cash acquired.

The following unaudited pro forma financial information for the years ended December 31, 2018 and December 31, 2019, assume that the acquisition of Millis occurred as of January 1, 2018.

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The Millis pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition had occurred at the beginning of the periods presented or that may be obtained in the future.

The following unaudited pro forma financial information for the year ended December 31, 2017, assumes that the acquisition of IDC occurred as of January 1, 2017.

Pro forma adjustments reflected in the financial information below relate to accounting policy changes such as changes in depreciation expense of revenue equipment, amortization of intangible assets, and accounting for certain operations and maintenance costs, along with other adjustments for terminal rent expense to align IDC results with those of the Company and income tax effects for the periods presented.

The net effect of these pro forma adjustments increased net income by $ 5.7 million for the year ended December 31, 2017.

December 31, 2017

(in thousands)

Operating revenue $ 756,498

Net income $ 72,752

The IDC pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition had occurred at the beginning of the periods presented or that may be obtained in the future.

The results of the acquired businesses have been included in the consolidated financial statements since the date of acquisition.

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Millis acquisition related expenses of $ 0.5 million are included in the consolidated statement of comprehensive income within the other operating expenses line item for the twelve months ended December 31, 2019.

IDC acquisition related expenses of $ 0.9 million are included in the consolidated statement of comprehensive income for the year ended December 31, 2017.

The allocation of the Millis purchase price is detailed in the tables below.

The final purchase price allocation remains subject to other purchase accounting adjustments which may be identified, such as the final valuation of intangible assets, working capital adjustments, and income taxes, and therefore may differ materially from that reflected below.

The goodwill recognized represents expected synergies from combining the operations of the Company with Millis Transfer, as well as other intangible assets that did not meet the criteria for separate recognition.

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The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows.

There was a $ 15.3 million change in the gross amount of identifiable intangible assets during the twelve months ended December 31, 2019, related to the acquisition of Millis Transfer.

There was no change in the gross amount of identifiable intangible assets during the twelve months ended December 31, 2020.

Amortization expense of $ 2.4 million, $ 2.7 million and $ 2.5 million for the twelve months ended December 31, 2020, 2019 and 2018, respectively, was included in depreciation and amortization in the consolidated statements of comprehensive income.

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Auto Liability and Workers’ Compensation Insurance Accruals

We act as a self-insurer for auto liability, defined as including property damage, personal injury, or cargo based on defined insurance retention of $ 0.1 million under our Millis policy or $ 2.0 million under our Heartland policy, for any individual claim based on the insured party, accident date, and circumstances of the loss event.

We act as a self-insurer for auto liability, defined as including property damage, personal injury, or cargo based on defined insurance retention of $ 0.1 million under our Millis policy prior to April 1, 2020 and $ 1.0 million subsequent to April 1, 2020, or $ 2.0 million under our Heartland policy, for any individual claim based on the insured party, accident date, and circumstances of the loss event.

Within the Heartland policy, there is an additional $ 1.0 million aggregate self-insurance corridor for claims between $ 2.0 million and $ 3.0 million.

For the Heartland policy claims, liabilities in excess of these amounts are covered by insurance up to $ 100.0 million.

For the Millis policy claims, we retain liability for claims between $ 3.0 million and $ 10.0 million, while liabilities in excess of these amounts are covered by insurance up to $ 100.0 million.

For both Heartland and Millis claims, liabilities in excess of these deductibles are covered by insurance up to $ 60.0 million including retention of 50% of exposure from $ 5.0 million to $ 10.0 million.

We retain any liability in excess of $ 60.0 million.

We act as a self-insurer for property damage to our tractors and trailers.

We act as a self-insurer for workers’ compensation liability of $ 0.5 million or $ 1.0 million for any individual claim based on the insured party, accident date, and circumstances of the loss event.

Liabilities in excess of this amount are covered by insurance.

Prior to April 1, 2020, Heartland and Millis claims in excess of insurance retention had different coverage features.

For the Heartland policy, claims in excess of the deductible are covered up to $ 100.0 million.

For the Millis policy, claims subsequent to August 26, 2019 and prior to April 1, 2020, we retain liability between $ 3.0 million and $ 10.0 million, while liabilities in excess of these amounts are covered by insurance up to $ 100.0 million.

For both policies prior to April 1, 2020, we retain any liability in excess of $ 100.0 million.

We act as a self-insurer for workers’ compensation based on defined insurance retention of $1.0 million under our Heartland policy, which includes Millis, effective July 1, 2020.

Millis had defined insurance retention of $ 0.5 million from August 26, 2019 through July 1, 2020.

Liabilities in excess of insurance retention limits are covered by insurance.

The State of Iowa initially required us to deposit $ 0.7 million into a trust fund as part of the self-insurance program.

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Estimated claim payments to be made within one year of the balance sheet date have been classified as insurance accruals within current liabilities as of December 31, 2020 and 2019.

On December 22, 2017, the US Congress enacted the Tax Act, which made significant changes to U.S.

federal income tax law, including a reduction in the federal corporate tax rate from 35.0 % to 21.0 % effective January 1, 2018.

Management has evaluated the relevant provisions of the Tax Act to the Company and accounted for the federal and state impacts in the financial statements and have therefore finalized the accounting for the tax effects of the Tax Act in 2018.

Deferred tax assets and liabilities as of December 31 are as follows:

(in thousands)

Deferred income tax assets:

(in thousands)

Allowance for doubtful accounts $ 258 $ 262

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Uncertain income tax penalties and interest, net ( 73 ) 289 ( 1,067 )

Enacted federal tax rate change — — ( 32,789 )

Other 224 ( 193 ) ( 276 )

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Of this amount, $ 3.9 million and $ 4.0 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate as of December 31, 2020 and December 31, 2019, respectively.

Unrecognized tax benefits were a net increase of $ 0.4 million and a net decrease of $ 1.3 million during the years ended December 31, 2019 and 2018, respectively, due mainly to the expiration of certain statutes of limitation net of additions and settlements with respective states.

This had the effect of increasing the effective state tax rate in 2019 and reducing the effective state rate during 2018.

Unrecognized tax benefits were a net decrease of $ 0.1 million and a net increase of $ 0.4 million during the years ended December 31, 2020 and 2019, respectively, due mainly to the expiration of certain statutes of limitation net of additions and settlements with respective states.

This had the effect of decreasing the effective state tax rate in 2020 and increasing the effective state rate during 2019.

The total net amount of accrued interest and penalties for such unrecognized tax benefits was $ 0.9 million and $ 0.9 million at December 31, 2020 and December 31, 2019, respectively, and is included in income taxes payable in the consolidated balance sheets.

Net interest and penalties included in income tax expense for the years ended December 31, 2019, 2018 and 2017 was approximately zero , a benefit of $ 1.4 million, and a benefit of $ 0.9 million, respectively.

Net interest and penalties included in income tax expense for the years ended December 31, 2020, 2019 and 2018 was approximately $ 0.1 million, zero , and a benefit of $ 1.4 million, respectively.

Income tax expense is increased each period for the accrual of interest on outstanding positions and penalties when the uncertain tax position is initially recorded.

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Additions for tax positions of prior years — 124

Reductions for tax positions of prior years ( 216 ) —

Reductions due to lapse of applicable statute of limitations ( 428 ) ( 701 )

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Tax years 2010 and forward are subject to audit by state tax authorities depending on the tax code and administrative practice of each state.

Operating Leases

We had operating leases for certain revenue equipment during the periods presented related to the IDC acquisition.

Rent expense for these leases, including lease termination payments, was $ 0.3 million, $ 5.0 million, and $ 8.0 million, for the years ended December 31, 2019, 2018, and 2017, respectively, and were included in rent and purchased transportation in the consolidated statements of comprehensive income.

The last remaining leases from the acquisition were terminated March 31, 2019.

These expenses were included in rent and purchased transportation in the consolidated statements of comprehensive income.

We lease certain terminal facilities under operating leases.

Historically, a portion of these leases were with limited liability companies, whose members included one of our board members, and a commercial tractor dealership whose owners included one of our board members.

The related-party rental payments were entered into as a result of a previous acquisition and these leases ended in 2018.

Rent expense for terminal facilities was $ 2.5 million (including no related-party rental expense) for the year ended December 31, 2019 and expected to be reduced further upon completion of the purchase of the Tacoma, WA terminal facility which is expected to be completed in 2020.

Rent expense for terminal facilities was $ 4.8 million, and $ 3.9 million, (including related-party rental expense totaling $ 0.8 million, and $ 1.6 million), for the years ended December 31, 2018, and 2017, respectively, and was included in rent and purchased transportation in the consolidated statements of comprehensive income.

The various leases remaining are month-to-month or expire in 2020.

We are responsible for all taxes, insurance, and utilities related to the terminal leases.

See Note 13 for additional information regarding related party transactions.

We have a stock repurchase program with 5.4 million shares remaining authorized for repurchase as of December 31, 2020.

There were no shares repurchased in the open market during the year ended December 31, 2019, 1.4 million in 2018, and none in 2017.

There were 1.5 million shares repurchased in the open market during the year ended December 31, 2020, none in 2019, and 1.4 million in 2018.

Repurchases are expected to continue from time to time, as determined by market conditions, cash flow requirements, securities law limitations, and other factors, until the number of shares authorized have been repurchased, or until the authorization is terminated.

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The Millis Transfer Plan has the aforementioned characteristics of the Heartland Plan, but is for Millis Transfer employees.

Also, we acquired the Retirement Saving Plan providing for discretionary matching contributions to driver and non-driver employees in our acquisition of IDC ("IDC Plan").

The IDC Plan was merged into the Heartland Plan on January 1, 2018.

Our profit sharing contributions to the Retirement Savings Plans totaled approximately $ 1.6 million, $ 1.0 million, and $ 1.8 million, for the years ended December 31, 2019, 2018 and 2017, respectively.

Related Party Transactions

We historically leased terminal facilities for operations under operating leases from certain limited liability companies, whose members include one of our board members, and a commercial tractor dealership whose owners include one of our board members until the leases ended in November 2018.

We purchased parts and services from the commercial tractor dealership noted above.

We owed this commercial tractor dealership zero and $ 0.1 million, included in accounts payable and accrued liabilities in the consolidated balance sheet at December 31, 2019 and 2018, respectively.

The payments (receipts) with related parties for the years ended December 31, 2019, 2018, and 2017 were as follows:

2019 2018 2017

(in thousands)

Receipts for trailer sales $ — $ — $ ( 12 )

Payments for parts and services 310 551 650

Terminal lease payments — 713 1,625

$ 310 $ 1,264 $ 2,263

Our contributions to the Retirement Savings Plans totaled approximately $ 2.3 million, $ 1.6 million, and $ 1.0 million, for the years ended December 31, 2020, 2019 and 2018, respectively.

Commitments and Contingencies

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In the opinion of management, our potential exposure under pending legal proceedings is adequately provided for in the accompanying consolidated financial statements.

The total estimated purchase commitments for tractors (net of tractor sale commitments), trailer equipment and an exercised terminal purchase option at December 31, 2019, was $ 113.3 million.

The total estimated purchase commitments for tractors (net of tractor sale commitments) and trailer equipment at December 31, 2020, was $ 121.9 million.

Quarterly Financial Information (Unaudited)

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Subsequent Events

No events occurred requiring additional disclosure.

No events occurred requiring disclosure other than the repurchase of 0.7 million shares of our common stock for $ 12.9 million subsequent to December 31, 2020.

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures