What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-04 compared with 2020-08-05 · 154 added, 109 removed, 754 unchanged (26% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets (Unaudited)

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

(In thousands, except per share data)

27 unchanged sentences

Operating lease liabilities – current portion 57,088 80,101

Accounts receivable securitization – current portion 201,878 —

Total current liabilities 1,262,199 993,038

2 unchanged sentences

Operating lease liabilities – less current portion 67,067 96,160

Accounts receivable securitization 164,840 204,762

Accounts receivable securitization – less current portion — 204,762

Claims accruals – less current portion 175,915 196,912

8 unchanged sentences

500,000 shares authorized;

170,162 and 170,688 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.

170,218 and 170,688 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively.

Additional paid-in capital 4,294,504 4,269,043

8 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Quarter-to-Date June 30, Year-to-Date June 30,

Quarter-to-Date September 30, Year-to-Date September 30,

2020 2019 2020 2019

40 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Year-to-Date June 30,

Year-to-Date September 30,

(In thousands)

17 unchanged sentences

Cash flows from investing activities:

Proceeds from maturities of held-to-maturity investments 6,950 12,945

Proceeds from maturities and sales of held-to-maturity investments 9,400 18,695

Purchases of held-to-maturity investments ( 12,644 ) ( 11,410 )

15 unchanged sentences

Net cash used in financing activities ( 243,138 ) ( 139,156 )

Net decrease in cash, restricted cash, and equivalents ( 43,477 ) ( 23,092 )

Net increase in cash, restricted cash, and equivalents 76,279 4,836

Cash, restricted cash, and equivalents at beginning of period 202,228 130,976

4 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited) — Continued

Year-to-Date June 30,

Year-to-Date September 30,

(In thousands)

11 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities through acquisitions 12,356 —

Property and equipment obtained in exchange for financing lease liabilities reclassified from operating lease liabilities 48,659 32,153

Property and equipment obtained in exchange for new finance lease liabilities 68,590 —

Property and equipment obtained in exchange for finance lease liabilities reclassified from operating lease liabilities 67,430 55,230

Reconciliation of Cash, Restricted Cash, and Equivalents:

September 30,

2020 December 31,

2019 June 30,

2019 September 30,

2019 December 31,

3 unchanged sentences

Cash and cash equivalents – restricted 1

36,689 41,331 40,831 46,888

Other long-term assets 1

1,582 1,175 985 1,602

Condensed Consolidated Statements of Cash Flows

22 unchanged sentences

Net income attributable to noncontrolling interest 581 581

Balances – June 30, 2020 170,162 $ 1,701 $ 4,287,293 $ 1,474,466 $ 5,763,460 $ 2,129 $ 5,765,589

Balances – September 30, 2020 170,218 $ 1,702 $ 4,294,504 $ 1,582,814 $ 5,879,020 $ 2,228 $ 5,881,248

Common Stock Additional

15 unchanged sentences

Net income attributable to noncontrolling interest 841 841

Balances – June 30, 2019 170,378 $ 1,703 $ 4,254,297 $ 1,274,067 $ 5,530,067 $ 1,953 $ 5,532,020

Balances – September 30, 2019 170,573 $ 1,705 $ 4,263,039 $ 1,338,374 $ 5,603,118 $ 2,175 $ 5,605,293

See accompanying notes to condensed consolidated financial statements (unaudited).

8 unchanged sentences

(In thousands, except per share data)

Balances – March 31, 2020 169,776 1,698 4,275,834 1,410,527 5,688,059 2,265 5,690,324

Balances – June 30, 2020 170,162 $ 1,701 $ 4,287,293 $ 1,474,466 $ 5,763,460 $ 2,129 $ 5,765,589

Common stock issued to employees 42 1 1,165 1,166 1,166

Common stock issued to the Board 13 — 515 515 515

Common stock issued under ESPP 14 — 574 574 574

5 unchanged sentences

Net income attributable to noncontrolling interest 146 146

Balances – June 30, 2020 170,162 1,701 4,287,293 1,474,466 5,763,460 2,129 5,765,589

Balances – September 30, 2020 170,218 $ 1,702 $ 4,294,504 $ 1,582,814 $ 5,879,020 $ 2,228 $ 5,881,248

Common Stock Additional

4 unchanged sentences

(In thousands, except per share data)

Balances – March 31, 2019 173,066 $ 1,730 4,248,188 $ 1,292,838 $ 5,542,756 $ 1,867 $ 5,544,623

Balances – June 30, 2019 170,378 $ 1,703 $ 4,254,297 $ 1,274,067 $ 5,530,067 $ 1,953 $ 5,532,020

Common stock issued to employees 176 2 4,668 4,670 4,670

Common stock issued to the Board 19 — 531 531 531

Common stock issued under ESPP 19 — 588 588 588

Company shares repurchased ( 2,874 ) ( 29 ) ( 86,863 ) ( 86,892 ) ( 86,892 )

Shares withheld – RSU settlement ( 790 ) ( 790 ) ( 790 )

Employee stock-based compensation expense 3,486 3,486 3,486

3 unchanged sentences

Net income attributable to noncontrolling interest 362 362

Balances – June 30, 2019 170,378 $ 1,703 $ 4,254,297 $ 1,274,067 $ 5,530,067 $ 1,953 $ 5,532,020

Balances – September 30, 2019 170,573 $ 1,705 $ 4,263,039 $ 1,338,374 $ 5,603,118 $ 2,175 $ 5,605,293

See accompanying notes to condensed consolidated financial statements (unaudited).

7 unchanged sentences

Knight-Swift is a transportation solutions provider, headquartered in Phoenix, Arizona.

During the first half of 2020, the Company operated an average of 18,428 tractors (comprised of 16,327 company tractors and 2,101 independent contractor tractors) and 57,456 trailers within the Trucking segment.

During the year-to-date period ended September 30, 2020, the Company operated an average of 18,439 tractors (comprised of 16,347 company tractors and 2,092 independent contractor tractors) and 57,716 trailers within the Trucking segment.

Additionally, the Company operated an average of 573 tractors and 10,522 containers in the Intermodal segment.

15 unchanged sentences

Impact of COVID-19

During the first half of 2020, COVID-19 became a global pandemic, which triggered a significant downturn in the global economy.

COVID-19 became a global pandemic in 2020, which triggered a significant downturn in the global economy.

The Company continues to operate its business through the COVID-19 pandemic and has taken additional precautions to ensure the safety of its employees, customers, vendors, and the communities in which it operates.

During the quarter and year-to-date periods ended June 30, 2020, the Company incurred $ 10.0 million and $ 12.3 million, respectively, of expenses directly attributable to the pandemic, which were incremental to those incurred prior to the outbreak.

These primarily pertained to payroll premiums paid to drivers and shop technicians, additional disinfectants and cleaning supplies, and various other pandemic-specific items.

During the year-to-date period ended September 30, 2020, the Company incurred $ 12.3 million of expenses (all within the first half of the year) directly attributable to the pandemic, which were incremental to those incurred prior to the outbreak.

These primarily pertained to payroll premiums paid to driving associates and shop technicians, additional disinfectants and cleaning supplies, and various other pandemic-specific items.

The costs are clearly separable from normal business operations and are not expected to recur once the pandemic subsides.

34 unchanged sentences

Current Period Impact of Adoption — The Company adopted the amendments in ASU 2018-15 on January 1, 2020 and elected to apply the amendments on a prospective basis to implementation costs incurred after the date of adoption.

Upon review of the Service CCA's entered into during year-to-date June 30, 2020, management has determined that adoption of the amendments has not had a material impact on the Company's financial statements and related accounting policies.

Upon review of the Service CCA's entered into subsequent to the implementation date, management has determined that adoption of the amendments has not had a material impact on the Company's financial statements and related accounting policies.

Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment

15 unchanged sentences

This loss is only limited to the total amount of goodwill allocated to that reporting unit.

There were various other ASUs that became effective during year-to-date June 30, 2020, which did not have a material impact on the Company's results of operations, financial position, cash flows, or disclosures.

There were various other ASUs that became effective during year-to-date September 30, 2020, which did not have a material impact on the Company's results of operations, financial position, cash flows, or disclosures.

Table of Contents Glossary of Terms

3 unchanged sentences

Date Issued Reference Description Adoption Date and Method Financial Statement Impact

August 2020 ASU No.

Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and contracts in an Entity's Own Equity

The amendments in this Update add disclosure requirements to convertible debt instruments and convertible preferred stock, require convertible instruments to be disclosed at fair value, and update the calculation requirements for diluted EPS.

The amendments in this ASU can be applied on a modified or fully retrospective basis and are effective for public entities for years beginning after December 15, 2021.

January 2022, Modified retrospective or fully retrospective No material impact

March 2020 2020-04:

3 unchanged sentences

The amendments in this ASU are effective for any interim period after March 12, 2020 and should be applied on a prospective basis.

March 2020 No material impact 2

March 2020, Prospective No material impact 2

March 2020 2020-03:

11 unchanged sentences

The amendments also codify the SEC Staff's announcement that it would not object to the FASB's update to effective dates for major updates, which were amended within ASU 2019-10.

January 2021, Adoption method varies by amendment Adopted January 1, 2020, no material impact

January 2021, Adoption method varies by amendment No material impact

January 2020 2020-01:

3 unchanged sentences

January 2021, Prospective Currently under evaluation, but not expected to be material

1 Adopted during the first quarter of 2020.

2 As identified within the 2018 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement for LIBOR.

The Company's Term Loan also references LIBOR and management is currently underway with refinancing, as the Term Loan matures in October of 2020.

1 Adopted during the first quarter 2020.

Table of Contents Glossary of Terms

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Note 4 — Acquisition

2 As identified within the 2018 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement for LIBOR.

On October 2, 2020, the 2017 Debt Agreement was amended to extend the maturity date of the Term Loan to October 3, 2022, incorporate language regarding the transition away from LIBOR, and update other regulatory and technical provisions customary for facilities of this type.

Just prior to this extension, the Company paid $ 65.0 million on the outstanding balance of the Term Loan, leaving $ 300.0 million face value outstanding.

Note 4 — Acquisitions

On January 1, 2020 , pursuant to a stock purchase agreement (the "SPA") the Company acquired 100.0 % of the equity interests of a warehousing-related company (the "Warehousing Co.") with locations throughout the Central US.

The total purchase price consideration of $ 66.9 million included $ 48.2 million in cash to the sellers at closing, which was funded through cash-on-hand and borrowing on the Revolver on the transaction date.

At closing, $ 6.8 million of the cash consideration was placed in escrow to secure certain of the sellers' indemnification obligations and remains subject to further adjustments.

At closing, $ 6.8 million of the cash consideration was placed in escrow to secure certain of the sellers' indemnification obligations.

During the third quarter of 2020, the escrow proceeds were released to the sellers pursuant to the SPA.

The purchase price also included contingent consideration consisting of three additional annual payments of up to $ 8.1 million each (or $ 24.3 million in total), representing the maximum possible annual deferred payments to the sellers based on Warehousing Co.'s earnings before interest and taxes ("EBIT") for each of the calendar years ending December 31, 2020, December 31, 2021, and the annualized six-month period ending June 30, 2022.

1 unchanged sentence

Based on the above inputs, the present value of the total contingent consideration, along with the estimated net working capital adjustment equaled $ 18.7 million as of January 1, 2020.

During the second quarter of 2020, the net working capital adjustment, was reduced by $ 0.4 million based on the actual versus estimated net working capital adjustment as of the transaction date.

During the measurement period, the net working capital adjustment was reduced by $ 0.4 million based on the actual versus estimated net working capital adjustment as of the transaction date.

This adjustment resulted in the total estimated contingent consideration and net working capital adjustment decreasing to $ 18.3 million.

14 unchanged sentences

The following table summarizes the fair value of the consideration transferred as of the acquisition date:

January 1, 2020 Opening Balance Sheet as Reported at March 31, 2020 Second Quarter 2020 Adjustments January 1, 2020 Opening Balance Sheet as Reported at June 30, 2020

January 1, 2020 Opening Balance Sheet as Reported at March 31, 2020 Adjustments January 1, 2020 Opening Balance Sheet as Reported at September 30, 2020

(in thousands)

7 unchanged sentences

Identifiable intangible assets 1

55,681 — 55,681

Deferred tax assets 54 — 54

8 unchanged sentences

1 Includes $ 53.8 million in customer relationships, $ 0.7 million in noncompete agreements, $ 0.6 million in internally developed software, and a $ 0.6 million trade name.

On October 1, 2020 , the Company used approximately $ 39.6 million in cash to acquire 21.0 % of the equity interests of a small company, complementary to its suite of services.

Table of Contents Glossary of Terms

3 unchanged sentences

The following tables present the cost or amortized cost, gross unrealized gains and temporary losses, and estimated fair value of the Company's restricted investments, held-to-maturity:

June 30, 2020

September 30, 2020

Gross Unrealized

13 unchanged sentences

Restricted investments, held-to-maturity $ 8,912 $ 4 $ ( 1 ) $ 8,915

As of June 30, 2020, the contractual maturities of the restricted investments, held-to-maturity, were one year or less.

There were three securities and seven securities that were in an unrealized loss position for less than twelve months as of June 30, 2020 and December 31, 2019, respectively.

The Company did no t recognize any impairment losses related to its held-to-maturity investments during the quarter or year-to-date periods ended June 30, 2020 or 2019, respectively.

As of September 30, 2020, the contractual maturities of the restricted investments, held-to-maturity, were one year or less.

There were eight securities and seven securities that were in an unrealized loss position for less than twelve months as of September 30, 2020 and December 31, 2019, respectively.

The Company did no t recognize any impairment losses related to its held-to-maturity investments during the quarter or year-to-date periods ended September 30, 2020 or 2019.

Refer to Note 16 for additional information regarding fair value measurements of the Company's investments.

1 unchanged sentence

The Company expects to sell its assets held for sale, which primarily consist of revenue equipment, within the next twelve months .

Revenue equipment held for sale totaled $ 39.6 million and $ 41.8 million as of June 30, 2020 and December 31, 2019, respectively.

Revenue equipment held for sale totaled $ 38.1 million and $ 41.8 million as of September 30, 2020 and December 31, 2019, respectively.

Net gains on disposals, including disposals of property and equipment classified as assets held for sale, reported in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income, were:

• $ 1.7 million and $ 7.5 million for the quarter-to-date periods ended June 30, 2020 and 2019, respectively.

• $ 4.7 million and $ 19.2 million for the year-to-date periods ended June 30, 2020 and 2019, respectively.

The Company recognized impairment losses related to assets held for sale of approximately $ 0.4 million during the quarter and year-to-date periods ended June 30, 2020.

The Company did no t recognize any impairment losses related to assets held for sale during the quarter or year-to-date periods ended June 30, 2019.

• $ 1.7 million and $ 8.6 million for the quarter-to-date periods ended September 30, 2020 and 2019, respectively.

• $ 6.5 million and $ 27.9 million for the year-to-date periods ended September 30, 2020 and 2019, respectively.

The Company did no t recognize impairment losses related to assets held for sale during the quarters ended September 30, 2020 and 2019.

The Company recognized impairment losses related to assets held for sale of $ 0.4 million during year-to-date September 30, 2020, as compared to the same period of last year when the Company did no t recognize any such impairment losses.

Table of Contents Glossary of Terms

7 unchanged sentences

Acquisition 1

Goodwill, balance at June 30, 2020 $ 2,922,970

1 The goodwill associated with the acquisition referenced in Note 4 was allocated to the non-reportable segment, and is net of purchase price accounting adjustments.

The Company did no t record any goodwill impairments during the quarter or year-to-date periods ended June 30, 2020 or 2019.

Goodwill, balance at September 30, 2020 $ 2,922,967

1 The goodwill associated with the Warehousing Co.

acquisition referenced in Note 4 was allocated to the non-reportable segment, and is net of purchase price accounting adjustments.

The Company did no t record any goodwill impairments during the quarter or year-to-date periods ended September 30, 2020 or 2019.

Other Intangible Assets

Other intangible asset balances were as follows:

September 30,

2020 December 31,

10 unchanged sentences

The Company's customer relationship intangible assets related to the 2017 Merger are being amortized over a weighted average amortization period of 19.9 years.

As of June 30, 2020, management anticipates that the composition and amount of amortization associated with intangible assets will be $ 22.9 million for the remainder of 2020, $ 45.9 million in 2021, $ 45.8 million in 2022, and $ 45.2 million for each of the years 2023 and 2024.

As of September 30, 2020, management anticipates that the composition and amount of amortization associated with intangible assets will be $ 11.6 million for the remainder of 2020, $ 46.3 million in 2021, $ 46.1 million in 2022, and $ 45.2 million for each of the years 2023 and 2024.

Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets, and other events.

3 unchanged sentences

Note 8 — Income Taxes

Effective Tax Rate — The quarter-to-date June 30, 2020 and June 30, 2019 effective tax rates were 25.0 % and 24.7 %, respectively.

The Company recognized a discrete item relating to stock compensation deductions during the quarter ended June 30, 2020.

The Company also recognized discrete items relating to stock compensation deductions as well as the partial release of its reserve for uncertain tax positions during the quarter ended June 30, 2019.

The year-to-date June 30, 2020 and June 30, 2019 effective tax rates were 26.0 % and 24.4 %, respectively.

The Company recognized discrete items relating to stock compensation deductions partially offset by unfavorable foreign currency fluctuations for the year-to-date June 30, 2020.

The Company also recognized discrete items relating to stock compensation deductions as well as a partial release of its reserve for uncertain tax positions during the year-to-date period ended June 30, 2019.

Effective Tax Rate — The quarter-to-date September 30, 2020 and September 30, 2019 effective tax rates were 28.1 % and 24.6 %, respectively.

The Company recognized discrete items relating to negative impacts from certain tax-related items within its Mexico operations, which were partially offset by a release of its reserve for uncertain tax positions during the quarter ended September 30, 2020.

The Company also recognized discrete items relating to the partial release of its reserve for uncertain tax positions during the quarter ended September 30, 2019.

The year-to-date September 30, 2020 and September 30, 2019 effective tax rates were 27.0 % and 24.5 %, respectively.

The Company recognized discrete items relating to negative impacts from certain tax-related items within its Mexico operations and foreign currency fluctuations, which were offset by stock compensation deductions and a partial release of its reserve for uncertain tax positions for the year-to-date September 30, 2020.

The Company also recognized a discrete item relating to the partial release of its reserve for uncertain tax positions during the year-to-date period ended September 30, 2019.

Valuation Allowance — The Company has no t established a valuation allowance as it has been determined that, based upon available evidence, a valuation allowance is not required.

Management believes that it is more like ly than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.

Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.

All other deferred tax assets are expected to be realized and utilized by continued profitability in future periods.

Unrecognized Tax Benefits — Management believes it is reasonably possible that a decrease of up to $ 1.0 million in unrecognized tax benefits relating to federal deductions may be necessary within the next twelve months.

Interest and Penalties — Accrued interest and penalties related to unrecognized tax benefits were approximately $ 0.5 million and $ 0.4 million as of June 30, 2020 and December 31, 2019, respectively.

Unrecognized Tax Benefits — During the quarter-to-date and year-to-date periods ended September 30, 2020, the Company reduced its reserve by $ 1.0 million for uncertain tax positions relating to various federal deductions.

Management does no t expect a decrease in unrecognized tax benefits relating to federal deductions to be necessary within the next twelve months.

Interest and Penalties — Accrued interest and penalties related to unrecognized tax benefits were approximately $ 0.3 million and $ 0.4 million as of September 30, 2020 and December 31, 2019, respectively.

Tax Examinations — The Company is currently under examination by the IRS for the 2012 tax year and management does not expect any adjustments that would have a material impact on the Company's effective tax rate.

6 unchanged sentences

The Company's eligible receivables are included in "Trade receivables, net of allowance for doubtful accounts" in the condensed consolidated balance sheets.

As of June 30, 2020, the Company's eligible receivables generally have high credit quality, as determined by the obligor's corporate credit rating.

As of September 30, 2020, the Company's eligible receivables generally have high credit quality, as determined by the obligor's corporate credit rating.

The 2018 RSA is subject to fees, various affirmative and negative covenants, representations and warranties, and default and termination provisions customary for facilities of this type.

The Company was in compliance with these covenants as of June 30, 2020.

The Company was in compliance with these covenants as of September 30, 2020.

Collections on the underlying receivables by the Company are held for the benefit of SRCII and the various purchasers and are unavailable to satisfy claims of the Company and its subsidiaries.

4 unchanged sentences

Effective date July 11, 2018

Final maturity date July 9, 2021

Final maturity date 1

Borrowing capacity $ 325,000

Accordion option 2

Unused commitment fee rate ² 20 to 40 basis points

Program fees on outstanding balances ³ one-month LIBOR + 80 to 100 basis points

Unused commitment fee rate 3

20 to 40 basis points

Program fees on outstanding balances 4

one-month LIBOR + 80 to 100 basis points

1 The Company intends to refinance prior to the maturity date.

2 The accordion option increases the maximum borrowing capacity, subject to participation of the purchasers.

3 unchanged sentences

Availability under the 2018 RSA is calculated as follows:

September 30,

2020 December 31,

2 unchanged sentences

outstanding borrowings 1

( 202,000 ) ( 205,000 )

outstanding letters of credit ( 67,281 ) ( 70,841 )

Availability under accounts receivable securitization facilities $ 15,719 $ 23,259

1 Outstanding borrowings are included in "Accounts receivable securitization" in the condensed consolidated balance sheets, offset by $ 0.2 million of deferred loan costs as of June 30, 2020 and December 31, 2019 .

Interest accrued on the aggregate principal balance at a rate of 1.1 % and 2.6 % as of June 30, 2020 and December 31, 2019 , respectively.

1 Outstanding borrowings are included in the condensed consolidated balance sheets, within "Accounts receivable securitization – current portion" as of September 30, 2020 and within "Accounts receivable securitization – less current portion" as of December 31, 2019.

Outstanding borrowings were offset by $ 0.1 million and $ 0.2 million of deferred loan costs as of September 30, 2020 and December 31, 2019, respectively .

Interest accrued on the aggregate principal balance at a rate of 1.0 % and 2.6 % as of September 30, 2020 and December 31, 2019 , respectively.

Program fees and unused commitment fees are recorded in "Interest expense" in the condensed consolidated statements of comprehensive income.

The Company incurred accounts receivable securitization program fees of $ 0.7 million and $ 1.9 million during the quarter-to-date June 30, 2020 and 2019 periods, respectively.

The Company incurred accounts receivable securitization program fees of $ 2.1 million and $ 3.9 million during the year-to-date June 30, 2020 and 2019 periods, respectively.

The Company incurred accounts receivable securitization program fees of $ 0.7 million and $ 1.8 million during the quarter-to-date September 30, 2020 and 2019 periods, respectively.

The Company incurred accounts receivable securitization program fees of $ 2.8 million and $ 5.6 million during the year-to-date September 30, 2020 and 2019 periods, respectively.

Refer to Note 16 for information regarding the fair value of the 2018 RSA.

4 unchanged sentences

Purchase Commitments

As of June 30, 2020, the Company had outstanding commitments to purchase revenue equipment of $ 317.9 million in the remainder of 2020 ($ 224.0 million of which were tractor commitments) and none thereafter.

As of September 30, 2020, the Company had outstanding commitments to purchase revenue equipment of $ 134.5 million in the remainder of 2020 ($ 82.6 million of which were tractor commitments) and none thereafter.

These purchases may be financed through any combination of operating leases, finance leases, debt, proceeds from sales of existing equipment, and cash flows from operations.

As of June 30, 2020, the Company had outstanding commitments to purchase facilities and non-revenue equipment of $ 19.2 million in the remainder of 2020, $ 1.8 million in the two-year period 2021 through 2022, $ 0.2 million in the two-year period 2023 through 2024, and none thereafter.

As of September 30, 2020, the Company had outstanding commitments to purchase facilities and non-revenue equipment of $ 20.4 million in the remainder of 2020, $ 3.0 million in the two-year period 2021 through 2022, $ 0.6 million in the two-year period 2023 through 2024, and $ 0.2 million thereafter.

Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.

As of September 30, 2020, the Company had outstanding commitments for bulk fuel purchases of $ 10.1 million in the remainder of 2020, $ 35.4 million in 2021, and none thereafter.

TRP Commitments

1 unchanged sentence

In these agreements, Knight committed to invest in return for an ownership percentage.

During the first quarter of 2020, Knight entered into a $ 20.0 million commitment to invest in the newly formed TRP Capital Partners V, LP with $ 16.8 million outstanding as of June 30, 2020.

There were no other material changes related to the previously disclosed TRP commitments during the quarter ended June 30, 2020.

During the first quarter of 2020, Knight entered into a $ 20.0 million commitment to invest in the newly formed TRP Capital Partners V, LP with $ 16.5 million outstanding as of September 30, 2020.

There were no other material changes related to the previously disclosed TRP commitments during the quarter ended September 30, 2020.

Note 11 — Contingencies and Legal Proceedings

4 unchanged sentences

The Company has made accruals with respect to its legal matters where appropriate, which are included in "Accrued liabilities" in the condensed consolidated balance sheets.

The Company has recorded an aggregate accrual of approximately $ 27.9 million, relating to the Company's outstanding legal proceedings as of June 30, 2020.

The Company has recorded an aggregate accrual of approximately $ 34.4 million, relating to the Company's outstanding legal proceedings as of September 30, 2020.

Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on the Company's overall financial position, operating results, or cash flows after taking into account any existing accruals.

16 unchanged sentences

Both parties have appealed the court’s decision.

The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of June 30, 2020.

The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of September 30, 2020.

California Wage, Meal, and Rest Class Actions

17 unchanged sentences

In January 2020, the court granted final approval of the settlement.

The plaintiff appealed the court’s decision granting final approval of the settlement.

The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of June 30, 2020.

Two objectors appealed the court’s decision granting final approval of the settlement.

The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of September 30, 2020.

Arizona Minimum Wage Class Action

11 unchanged sentences

In December 2019, the court awarded damages for failure to pay minimum wage for 16 hours per day.

The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of June 30, 2020.

In August 2020, the parties reached settlement in this matter.

The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of September 30, 2020.

1 Individually and on behalf of all others similarly situated.

14 unchanged sentences

In March 2020, the Company paid the settlement amount approved by the court.

As of June 30, 2020, the Company has a reserve accrued for anticipated costs associated with finalizing this matter.

As of September 30, 2020, the Company has a reserve accrued for anticipated costs associated with finalizing this matter.

1 Individually and on behalf of all others similarly situated.

1 unchanged sentence

Automobile Liability, General Liability, and Excess Liability — Effective November 1, 2019, the Company has $ 130.0 million in excess auto liability ("AL") coverage.

For prior years, Swift and Knight maintained separately varying excess AL and general liability limits.

For prior years, Swift and Knight separately maintained varying excess AL and general liability limits.

During prior policy periods, Swift AL claims were subject to a $ 10.0 million self-insured retention ("SIR") per occurrence and Knight AL claims were subject to a $ 1.0 million to $ 3.0 million SIR per occurrence.

Additionally, Knight carries a $ 2.5 million aggregate deductible for any loss or losses within the $ 5.0 million excess of $ 5.0 million layer of coverage.

Additionally, Knight carried a $ 2.5 million aggregate deductible for any loss or losses within the $ 5.0 million excess of $ 5.0 million layer of coverage.

Effective March 1, 2020, Knight and Swift retain the same $ 10.0 million SIR per occurrence.

3 unchanged sentences

Effective March 1, 2019, Knight maintains statutory coverage limits, subject to a $ 2.0 million SIR for each accident or disease.

Prior to March 1, 2019, the Knight SIR was $ 1.0 million per occurrence.

Medical — Knight maintains primary and excess coverage for employee medical expenses, with a $ 0.3 million self-insured retention per claimant.

Prior to March 1, 2019, the Knight SIR was $ 1.0 million per each accident or disease.

Medical — Knight maintains primary and excess coverage for employee medical expenses, with a $ 0.3 million SIR per claimant.

Through December 31, 2019, Swift was fully insured on its medical benefits (subject to contributed premiums).

8 unchanged sentences

The following table presents the Company's repurchases of its common stock under the respective share repurchase plans, excluding advisory fees:

Share Repurchase Plan Quarter-to-Date June 30, 2020 Year-to-Date June 30, 2020

Share Repurchase Plan Quarter-to-Date September 30, 2020 Year-to-Date September 30, 2020

Board Approval Date Authorized Amount Shares Amount Shares Amount

2 unchanged sentences

$ 250,000 — $ — 1,139 $ 34,630

Share Repurchase Plan Quarter-to-Date June 30, 2019 Year-to-Date June 30, 2019

— $ — 1,139 $ 34,630

Share Repurchase Plan Quarter-to-Date September 30, 2019 Year-to-Date September 30, 2019

Board Approval Date Authorized Amount Shares Amount Shares Amount

3 unchanged sentences

$ 250,000 — — 559 16,392

1 $ 199.0 million and $ 233.6 million remained available under the 2019 Knight-Swift Share Repurchase Plan as of June 30, 2020 and December 31, 2019 , respectively.

— $ — 2,874 $ 86,892

1 $ 199.0 million and $ 233.6 million remained available under the 2019 Knight-Swift Share Repurchase Plan as of September 30, 2020 and December 31, 2019 , respectively.

Subsequent to September 30, 2020, the Company repurchased 1.1 million shares for $ 43.3 million under the 2019 Knight-Swift Share Repurchase Plan, leaving $ 155.7 million available as of November 2, 2020.

Note 13 — Weighted Average Shares Outstanding

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The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:

Quarter-to-Date June 30, Year-to-Date June 30,

Quarter-to-Date September 30, Year-to-Date September 30,

2020 2019 2020 2019

4 unchanged sentences

Anti-dilutive shares excluded from diluted earnings per share 1

8 408 187 829

1 Shares were excluded from the dilutive-effect calculation because the outstanding awards' exercise prices were greater than the average market price of the Company's common stock for the periods presented.

4 unchanged sentences

The following table presents Knight-Swift's transactions with companies controlled by and/or affiliated with its related parties:

Quarter-to-Date June 30, Year-to-Date June 30,

Quarter-to-Date September 30, Year-to-Date September 30,

2020 2019 2020 2019

3 unchanged sentences

Central Freight Lines 1

$ 1 $ — $ 6,830 $ — $ 7,837 $ — $ 13,789 $ —

SME Industries 1

28 — 54 — 56 — 271 —

Total $ 29 $ — $ 6,884 $ — $ 7,893 $ — $ 14,060 $ —

1 unchanged sentence

Central Freight Lines 1

$ 25 $ 92 $ — $ 92 $ 48 $ 277 $ 322 $ 277

Other Affiliates 1

2 37 5 — 11 146 14 —

Total $ 27 $ 129 $ 5 $ 92 $ 59 $ 423 $ 336 $ 277

1 unchanged sentence

Central Freight Lines 1

DPF Mobile ¹ — 19 — 54 $ — 31 — 98

$ 412 $ — $ 817 $ — $ 427 $ — $ 1,359 $ —

— 2 — 50 — 33 — 148

Other Affiliates 1

13 — 9 600 32 — 31 1,832

Total $ 425 $ 2 $ 826 $ 650 $ 459 $ 33 $ 1,390 $ 1,980

3 unchanged sentences

• Freight Services Provided by Knight-Swift — The Company charges each of these companies for transportation services.

• Freight Services Received by Knight-Swift — Transportation services received from Central Freight represent less-than-truckload freight services rendered to haul parts and equipment to Company shop locations.

• Freight Services Received by Knight-Swift — Transportation services received from Central Freight Lines represent less-than-truckload freight services rendered to haul parts and equipment to Company shop locations.

• Other Services Provided by Knight-Swift — Other services provided by the Company to the identified related parties include equipment sales and miscellaneous services.

• Other Services Received by Knight-Swift — Consulting fees, diesel particulate filter cleaning, sales of various parts and tractor accessories, and certain third-party payroll and employee benefits administration services from the identified related parties are included in other services received by the Company.

During the quarter ended September 30, 2020, the ownership percentage of Jerry Moyes and related affiliates fell below the threshold requiring related party disclosure.

The amounts included in this Note 14 pertain to transactions that occurred prior to the date that the ownership percentage changed.

Receivables and payables pertaining to related party transactions were:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Payable Receivable Payable

33 unchanged sentences

The following tables present the Company's financial information by segment:

Quarter-to-Date June 30, Year-to-Date June 30,

Quarter-to-Date September 30, Year-to-Date September 30,

2020 2019 2020 2019

7 unchanged sentences

Total revenue $ 1,210,406 $ 1,200,522 $ 3,395,902 $ 3,647,140

Quarter-to-Date June 30, Year-to-Date June 30,

Quarter-to-Date September 30, Year-to-Date September 30,

2020 2019 2020 2019

7 unchanged sentences

Operating income $ 165,461 $ 102,953 $ 369,747 $ 327,845

Quarter-to-Date June 30, Year-to-Date June 30,

Quarter-to-Date September 30, Year-to-Date September 30,

2020 2019 2020 2019

8 unchanged sentences

Geographical Information

In the aggregate, total revenue from the Company's foreign operations was less than 5.0 % of consolidated total revenue for the quarter and year-to-date periods ended June 30, 2020 and 2019.

Additionally, long-lived assets on the Company's foreign subsidiary balance sheets were less than 5.0 % of consolidated total assets as of June 30, 2020 and December 31, 2019.

In the aggregate, total revenue from the Company's foreign operations was less than 5.0 % of consolidated total revenue for the quarter and year-to-date periods ended September 30, 2020 and 2019.

Additionally, long-lived assets on the Company's foreign subsidiary balance sheets were less than 5.0 % of consolidated total assets as of September 30, 2020 and December 31, 2019.

Table of Contents Glossary of Terms

7 unchanged sentences

Changes in assumptions could significantly affect these estimates.

Because the fair value is estimated as of June 30, 2020 and December 31, 2019, the amounts that will actually be realized or paid at settlement or maturity of the instruments in the future could be significantly different.

Because the fair value is estimated as of September 30, 2020 and December 31, 2019, the amounts that will actually be realized or paid at settlement or maturity of the instruments in the future could be significantly different.

The estimated fair values of the Company's financial instruments represent management's best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date.

19 unchanged sentences

The following table presents the carrying amounts and estimated fair values of the Company's major categories of financial assets and liabilities:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Value Estimated

4 unchanged sentences

Restricted investments, held-to-maturity 1

$ 9,052 $ 9,057 $ 8,912 $ 8,915

TRP Investments 2

37,547 37,547 30,878 30,878

Investments in equity securities 2

21,859 21,859 8,722 8,722

Financial Liabilities:

Term Loan, due October 2020 3

$ 365,000 $ 365,000 $ 364,825 $ 365,000

2018 RSA, due July 2021 4

1 unchanged sentence

Revolver, due October 2022

170,000 170,000 279,000 279,000

Contingent consideration associated with acquisition 5

2 unchanged sentences

2 The investments are carried at fair value and are included in "Other long-term assets" on the condensed consolidated balance sheets.

3 The carrying amount of the Term Loan is included in "Finance lease liabilities and long-term debt – current portion," on the condensed consolidated balance sheets and is net of $ 0.1 million and $ 0.2 million in deferred loan costs as of June 30, 2020 and December 31, 2019, respectively.

4 The carrying amount of the 2018 RSA is included in "Accounts receivable securitization," on the condensed consolidated balance sheets and is net of $ 0.2 million in deferred loan costs as of June 30, 2020 and December 31, 2019.

3 The carrying amount of the Term Loan is included in "Finance lease liabilities and long-term debt – current portion," on the condensed consolidated balance sheets and is net of $ 0.2 million in deferred loan costs as of December 31, 2019.

Just prior to this extension, the Company paid $ 65.0 million on the outstanding balance of the Term Loan, leaving $ 300.0 million face value outstanding.

4 The carrying amount of the 2018 RSA is included in " Accounts receivable securitization – current portion ," on the condensed consolidated balance sheets as of September 30, 2020 and within "Accounts receivable securitization – less current portion" as of December 31, 2019.

The carrying amount is net of $ 0.1 million and $ 0.2 million in deferred loan costs as of September 30, 2020 and December 31, 2019, respectively.

5 The carrying amount of the contingent consideration associated with the acquisition is included in both the "Accrued liabilities" and "Other long-term liabilities" line items on the condensed consolidated balance sheets.

Recurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate fair value of assets measured on a recurring basis as of June 30, 2020 and December 31, 2019:

Recurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of assets measured on a recurring basis as of September 30, 2020 and December 31, 2019:

Fair Value Measurements at Reporting Date Using:

1 unchanged sentence

(In thousands)

As of June 30, 2020

As of September 30, 2020

Investments in equity securities 1

$ 21,859 $ 21,859 $ — $ — $ 6,737

As of December 31, 2019

Investments in equity securities 1

1 Total unrealized gains (losses) for these investments are included within "Other (expense) income, net" within the condensed consolidated statements of comprehensive income for the quarter and year-to-date periods ended June 30, 2020.

The Company did not sell any equity investments during the quarter and year-to-date periods ended June 30, 2020 or 2019 and therefore did not realize any losses on these investments.

$ 8,722 $ 8,722 $ — $ — $ ( 184 )

The Company did not sell any equity investments during the quarter and year-to-date periods ended September 30, 2020 or 2019 and therefore did not realize any gains (losses) on these investments.

Table of Contents Glossary of Terms

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Recurring Fair Value Measurements (Liabilities) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of liabilities measured on a recurring basis as of June 30, 2020:

Fair Value Measurements at Reporting Date Using:

1 unchanged sentence

(In thousands)

As of June 30, 2020

As of September 30, 2020

Contingent consideration associated with acquisition 1

1 There were no material adjustments to the contingent consideration made during the quarter and year-to-date periods ended June 30, 2020 .

$ 17,570 $ — $ — $ 17,570 $ —

1 There were no material adjustments to the contingent consideration made during the quarter and year-to-date periods ended September 30, 2020 .

As of December 31, 2019, there were no major categories of liabilities on the condensed consolidated balance sheets estimated at fair value that were measured on a recurring basis.

Nonrecurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate fair value of assets measured on a nonrecurring basis as of June 30, 2020 and December 31, 2019:

Fair Value Measurements at Reporting Date Using:

1 unchanged sentence

(In thousands)

As of June 30, 2020

Equipment ¹ $ 5,099 $ — $ 5,099 $ — $ ( 1,255 )

As of September 30, 2020

$ 5,099 $ — $ 5,099 $ — $ ( 1,255 )

As of December 31, 2019

Leasehold improvements 2

Equipment ³ 1,380 — 1,380 — ( 870 )

$ — $ — $ — $ — $ ( 2,182 )

1,380 — 1,380 — ( 870 )

— — — — ( 434 )

1 Reflects the non-cash impairment of certain tractors (within the Trucking segment) and certain legacy trailers (within the non-reportable segments) as a result of a softer used equipment market during the second quarter of 2020, as well as impairment charges of trailer tracking equipment (within the Trucking segment) during the first quarter of 2020.

5 unchanged sentences

These impairments were allocated between the Logistics and non-reportable segments based on each segment's use of the assets.

Nonrecurring Fair Value Measurements (Liabilities) — As of June 30, 2020 and December 31, 2019, the Company had no major categories of liabilities estimated at fair value that were measured on a nonrecurring basis.

Nonrecurring Fair Value Measurements (Liabilities) — As of September 30, 2020 and December 31, 2019, the Company had no major categories of liabilities estimated at fair value that were measured on a nonrecurring basis.

Table of Contents Glossary of Terms

1 unchanged sentence

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-Q

Item 1. Financial Statements