What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-05 compared with 2020-11-04 · 190 added, 319 removed, 589 unchanged (46% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets (Unaudited)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In thousands, except per share data)

30 unchanged sentences

Revolving line of credit 115,000 210,000

Long-term debt – less current portion 299,063 298,907

Finance lease liabilities – less current portion 127,341 138,243

Operating lease liabilities – less current portion 62,549 69,852

Accounts receivable securitization – less current portion — 204,762

Claims accruals – less current portion 174,766 174,814

8 unchanged sentences

500,000 shares authorized;

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

165,488 and 166,553 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively.

Additional paid-in capital 4,309,792 4,301,424

8 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

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

2020 2019 2020 2019

Quarter Ended March 31,

(In thousands, except per share data)

17 unchanged sentences

Operating income 162,259 102,119

Other income (expenses):

Other (expenses) income:

Interest income 294 832

Interest expense ( 3,486 ) ( 6,107 )

Other income, net 7,484 3,335 9,476 12,575

Total other income (expenses), net 4,578 ( 3,448 ) ( 2,289 ) ( 6,719 )

Other income (expenses), net 16,105 ( 6,507 )

Total other (expenses) income, net 12,913 ( 11,782 )

Income before income taxes 175,172 90,337

15 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Year-to-Date September 30,

Quarter Ended March 31,

(In thousands)

8 unchanged sentences

Other adjustments to reconcile net income to net cash provided by operating activities ( 6,522 ) 14,065

(Decrease) increase in cash resulting from changes in:

Increase (decrease) in cash resulting from changes in:

Trade receivables ( 11,586 ) ( 5,268 )

6 unchanged sentences

Cash flows from investing activities:

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

Proceeds from maturities of held-to-maturity investments 500 4,350

Purchases of held-to-maturity investments ( 512 ) ( 4,301 )

2 unchanged sentences

Expenditures on assets held for sale ( 401 ) ( 352 )

Net cash and equivalents invested in acquisitions ( 46,811 ) ( 1,885 )

Net cash, restricted cash, and equivalents invested in acquisitions ( 39,281 ) ( 46,811 )

Other cash flows from investing activities 9,398 ( 2,793 )

2 unchanged sentences

Repayment of finance leases and long-term debt ( 6,600 ) ( 14,498 )

(Repayments) borrowings on revolving line of credit, net ( 109,000 ) 95,000

Borrowings under accounts receivable securitization 49,000 150,000

(Repayments) borrowings on revolving lines of credit, net ( 95,000 ) 15,000

Repayment of accounts receivable securitization ( 15,000 ) ( 25,000 )

4 unchanged sentences

Net cash used in financing activities ( 185,366 ) ( 71,885 )

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

Net increase (decrease) in cash, restricted cash, and equivalents 46,606 ( 42,124 )

Cash, restricted cash, and equivalents at beginning of period 197,277 202,228

4 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited) — Continued

Year-to-Date September 30,

Quarter Ended March 31,

(In thousands)

3 unchanged sentences

Income taxes 2,199 3,280

Non-cash investing and financing transactions:

Non-cash investing and financing activities:

Equipment acquired included in accounts payable $ 13,860 $ 44,084

Equipment sales receivables — 21,570

Financing provided to independent contractors for equipment sold 462 1,670

Transfers from property and equipment to assets held for sale 59,543 114,011

Transfer from property and equipment to assets held for sale 29,955 15,288

Noncontrolling interest associated with acquisition 10,281 —

Contingent consideration associated with acquisition — 18,654

Right-of-use assets obtained in exchange for new operating lease liabilities 1,871 9,285

Right-of-use assets (forfeited) obtained in exchange for operating lease liabilities ( 2,608 ) 1,704

Right-of-use assets obtained in exchange for new operating lease liabilities through acquisitions 560 12,356

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 28,149 12,286

Reconciliation of Cash, Restricted Cash, and Equivalents:

September 30,

2021 December 31,

2019 September 30,

2020 March 31,

2020 December 31,

21 unchanged sentences

Common stock issued to employees 220 3 2,006 2,009 2,009

Common stock issued to the Board 13 — 515 515 515

Common stock issued under ESPP 18 — 700 700 700

3 unchanged sentences

Cash dividends paid and dividends accrued ($ 0.08 per share)

( 13,345 ) ( 13,345 ) ( 13,345 )

Net income attributable to Knight-Swift 129,790 129,790 129,790

Investment in noncontrolling interest 10,281 10,281

Distribution to noncontrolling interest ( 32 ) ( 32 )

Net income attributable to noncontrolling interest 53 53

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

Balances – March 31, 2021 165,488 $ 1,655 $ 4,309,792 $ 1,625,397 $ 5,936,844 $ 12,494 $ 5,949,338

Common Stock Additional

6 unchanged sentences

Common stock issued to employees 211 2 2,709 2,711 2,711

Common stock issued to the Board 19 — 531 531 531

Common stock issued under ESPP 16 — 546 546 546

3 unchanged sentences

Cash dividends paid and dividends accrued ($ 0.08 per share)

Net income attributable to Knight-Swift 241,762 241,762 241,762

Distribution to noncontrolling interest ( 436 ) ( 436 )

Net income attributable to noncontrolling interest 841 841

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).

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) — Continued

Common Stock Additional

Paid-in Capital Retained Earnings Total Knight-Swift Stockholders' Equity Noncontrolling

Interest Total

Stockholders’ Equity

Shares Par Value

(In thousands, except per share data)

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 under ESPP 14 — 574 574 574

Shares withheld – RSU settlement ( 8 ) ( 8 ) ( 8 )

Employee stock-based compensation expense 5,472 5,472 5,472

Cash dividends paid and dividends accrued ($0.08 per share) ( 13,702 ) ( 13,702 ) ( 13,702 )

Net income attributable to Knight-Swift 122,058 122,058 122,058

Distribution to noncontrolling interest ( 47 ) ( 47 )

Net income attributable to noncontrolling interest 146 146

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

Paid-in Capital Retained Earnings Total Knight-Swift Stockholders' Equity Noncontrolling

Interest Total

Stockholders’ Equity

Shares Par Value

(In thousands, except per share data)

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 under ESPP 19 — 588 588 588

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

Cash dividends paid and dividends accrued ($0.06 per share) ( 10,312 ) ( 10,312 ) ( 10,312 )

( 13,774 ) ( 13,774 ) ( 13,774 )

Net income attributable to Knight-Swift 65,426 65,426 65,426

1 unchanged sentence

Net income attributable to noncontrolling interest 357 357

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

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

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 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.

During the quarter ended March 31, 2021, the Company operated an average of 18,224 tractors (comprised of 16,305 company tractors and 1,919 independent contractor tractors) and 59,797 trailers within the Trucking segment.

Additionally, the Company operated an average of 597 tractors and 10,846 containers in the Intermodal segment.

6 unchanged sentences

Similarly, references to quarters pertain to calendar quarters.

Changes in Presentation

Changes in presentation associated with adopting accounting pronouncements are included in Note 2.

In the transportation industry, results of operations generally follow a seasonal pattern.

7 unchanged sentences

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 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.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

There are various uncertainties that have arisen from the COVID-19 pandemic.

2 unchanged sentences

Due to these uncertainties, the Company's accounting estimates may change, as management's assessment of the impacts of the COVID-19 pandemic continues to evolve.

Refer to Part II, Item 1A "Risk Factors" in our Quarterly Report for the quarterly period ended March 31, 2020 for more discussion about potential risks and uncertainties surrounding the COVID-19 pandemic that may impact our business, results of operations, or financial condition.

Note 2 — Recently Adopted Accounting Pronouncements

Financial Instruments – Credit Losses (Topic 326) — Measurements of Credit Losses on Financial Instruments

Summary of the Standard — In June 2016, the FASB issued ASU 2016-13, which, in addition to several clarifying ASUs, established the new ASC Topic 326, Financial Instruments — Credit Losses ("CECL").

The new CECL standard amends the FASB's guidance on the impairment of financial instruments.

Specifically, it adds the CECL impairment model to GAAP which is based on expected losses rather than incurred losses.

This is intended to result in more timely recognition of such losses.

Under the new CECL standard, an entity recognizes as an allowance its estimate of lifetime expected credit losses.

The new CECL standard is also intended to reduce the complexity of GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments.

Further, the new CECL standard makes targeted changes to the impairment model for available-for-sale debt securities and moves the guidance from ASC Topic 320, Investments — Debt and Equity Securities, to ASC Subtopic 326-30.

For public business entities, the new standard was effective for annual and interim reporting periods beginning after December 15, 2019.

For most debt instruments, entities are required to adopt the new CECL standard using a modified retrospective approach, meaning that entities should record a cumulative-effect adjustment to equity as of the beginning of the first reporting period in which the guidance is effective.

Practical Expedient — As permitted under ASU 2016-13 (and related ASUs), management elected to apply the collateral-dependent financial asset practical expedient which allows entities to measure the expected credit losses for the financial asset by comparing the amortized cost basis with the fair value of the collateral at the reporting date, rather than using the fair value of the financial asset.

Current Period Impact of Adoption — The Company adopted ASC Topic 326 on January 1, 2020 using the modified retrospective approach.

Upon adoption of the standard management assessed the potential impact of the CECL model on each type of the Company's financial assets and determined that there was no material impact on the Company's financial statements or accounting policies.

Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40):

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

Summary of the Standard — In August 2018, the FASB issued ASU 2018-15, which amended ASC Subtopic 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract ("Service CCA").

The amendments in ASU 2018-15 align the accounting for costs incurred to implement a Service CCA with previously codified guidance on capitalizing costs associated with developing or obtaining internal-use software.

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1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Specifically, the ASU amends ASC Subtopic 350-40 to include in its scope implementation costs incurred with a Service CCA.

This addition clarifies that a customer should apply the guidance from ASC Paragraph 350-40-25 to determine which stage the project is in before assessing whether implementation costs should be capitalized in a Service CCA that is considered a service contract.

These capitalized items should be recorded within the same balance sheet line item as a prepayment for any fees.

Any capitalized costs from the Service CCA should be expensed over the term of the hosting arrangement, which includes the noncancelable period and any options to extend that are reasonably certain to be exercised and recorded in the same line item as fees associated with the hosting element of the arrangement.

The amendments in this ASU were effective for public business entities for fiscal years beginning after December 15, 2019 and could be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

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 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

Summary of the Standard — In January 2017, the FASB issued ASU 2017-04, which amends ASC Topic 350 by simplifying the goodwill impairment test.

The amendments in this ASU are intended to simplify subsequent measurement of goodwill.

The key amendment in the ASU eliminates Step 2 from the goodwill impairment test, in which entities measured a goodwill impairment loss by comparing the implied fair value to the carrying amount of a reporting unit's goodwill.

Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value with the carrying amount of a reporting unit and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.

The amendments also require companies to disclose the amounts of goodwill allocated to each reporting unit with a zero or negative carrying amount of assets.

The amendments were effective for public business entities for fiscal years beginning after December 15, 2019 and should be applied on a prospective basis.

Current Period Impact of Adoption — The Company adopted the amendments in ASU 2017-14 on January 1, 2020 on a prospective basis.

Management has updated the Company's accounting policy to incorporate the amendments in the ASU and has included the revised disclosure requirements below.

Refer to Note 7 for disclosures about the Company's goodwill balances.

Accounting Policy Update

Goodwill — Management evaluates goodwill on an annual basis as of June 30 th , or more frequently if indicators of impairment exist.

The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount.

If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company conducts a quantitative goodwill impairment test.

Management estimates the fair values of its reporting units using a combination of the income and market approaches.

If the carrying amount of a reporting unit exceeds the fair value, then management recognizes an impairment loss of the same amount.

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 September 30, 2020, which did not have a material impact on the Company's results of operations, financial position, cash flows, or disclosures.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Note 2 — Recently Issued Accounting Pronouncements

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:

Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting 1

The amendments in this Update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

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, Prospective No material impact 2

March 2020 2020-03:

Codification Improvements to Financial Instruments 1

The amendments within this ASU updated several sections of the Codification and how various topics and subtopics interacted due to new guidance on financial instruments.

This includes addressing issues related to fair value option disclosures, line-of-credit or revolving-debt arrangements and leases among others.

The amendments should be applied prospectively and have varying effective dates, which were all in effect for public business entities prior to issuance of the ASU.

March 2020, Prospective No material impact

February 2020 2020-02:

Financial Instruments – Credit Losses (Topic 326) and Leases – (Topic 842) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No.

2016-02, Leases (Topic 842) 1

The amendments in this ASU incorporate discussion from SEC Staff Accounting Bulletin No.

119 about expected implementation practices related to ASC Topic 326.

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 No material impact

January 2020 2020-01:

Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force)

The amendments clarify that an entity should consider observable transactions when determining to apply or discontinue the equity method for the purposes of applying the measurement alternative.

The amendments also clarify that an entity would not consider whether a purchased option would be accounted for under the equity method when applying ASC 815-10-15-141(a).

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

1 Adopted during the first quarter 2020.

No material ASUs issued since the 2020 annual report.

Note 3 — Acquisitions

Eleos Acquisition

On February 1, 2021 , pursuant to a membership interest purchase agreement ("MIPA"), the Company, through a wholly owned subsidiary, acquired 79.44 % of the issued and outstanding membership interests of Eleos Technologies, LLC ("Eleos"), a Greenville, South Carolina based software provider, specializing in mobile driving platforms, which complement the Company's suite of services.

The total purchase price consideration, including cash on hand and net working capital adjustments, consisted of $ 41.5 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, $ 4.1 million of the cash consideration was placed in escrow to secure certain of the sellers' indemnification obligations and other items.

The MIPA included that both the buyer and sellers would file an election under the Internal Revenue Code Section 754 to adjust the tax basis of the Company's assets and liabilities, with respect to the buyer's purchase of the equity.

The MIPA contains customary representations, warranties, covenants, and indemnification provisions for transactions of this nature.

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

The goodwill is expected to be deductible for tax purposes.

The purchase price allocation for the acquisition is preliminary and has been allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date, pending the completion of the valuation of acquired tangible assets, an independent valuation of certain acquired intangible assets, assessment of lease agreements, assessment of certain liabilities, the calculation of deferred taxes based upon the underlying tax basis of assets acquired and liabilities assumed, and assessment of other tax related items.

As the Company obtains more information, the preliminary purchase price allocation disclosed below is subject to change.

Any future adjustments to the preliminary purchase price allocation, including changes within identifiable intangible assets or estimation uncertainty impacted by market conditions, may impact future net earnings.

The purchase price allocation adjustments can be made through the end of the measurement period, which is not to exceed one year from the acquisition date.

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1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

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

February 1, 2021 Opening Balance Sheet as Reported at March 31, 2021

Fair value of the consideration transferred $ 41,518

Cash and cash equivalents 2,237

Trade and other receivables 545

Prepaid expenses and other assets 47

Operating lease right-of-use assets 560

Identifiable intangible assets 1

Total assets 19,239

Accounts payable ( 156 )

Accrued payroll and payroll-related expenses ( 605 )

Accrued liabilities ( 1,391 )

Operating lease liabilities – current and noncurrent portions ( 560 )

Other long-term liabilities ( 475 )

Total liabilities ( 3,187 )

Noncontrolling interest ( 10,281 )

Total stockholders' equity ( 10,281 )

Goodwill $ 35,747

1 Includes $ 8.8 million in customer relationships, $ 0.2 million in noncompete agreements, $ 3.5 million in internally-developed software, and a $ 3.4 million trade name.

Warehousing Co.

On January 1, 2020 , pursuant to a stock purchase agreement (the "SPA") the Company, through a wholly owned subsidiary, 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.

7 unchanged sentences

The total purchase price consideration, as if adjusted at the January 1, 2020 transaction date, is identified in the table below.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

During the fourth quarter of 2020, the Company paid the first annual payment of $ 8.1 million as a result of the achievement of Warehousing Co.’s EBIT performance target for the calendar year December 31, 2020.

Additionally, during the fourth quarter of 2020, the Company increased the estimated fair value of the remaining contingent consideration representing the final two annual payments, resulting in a $ 6.7 million fair value adjustment of the deferred earnout, which was recorded in “Miscellaneous operating expenses” in the consolidated statement of comprehensive income.

As such, as of March 31, 2021 and December 31, 2020, the remaining estimated contingent consideration was $ 16.2 million representing the fair value of the remaining annual deferred payments for the calendar year ending December 31, 2021 and the annualized six-month period ending June 30, 2022.

The SPA included an election under the Internal Revenue Code Section 338(h)(10).

4 unchanged sentences

The goodwill is expected to be deductible for tax purposes.

As the Company obtains more information, the preliminary purchase price allocation disclosed below is subject to change.

The purchase price allocation adjustments can be made through the end of the measurement period, which is not to exceed one year from the acquisition date.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

The purchase price was allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

The purchase price allocation was open for adjustments through the end of the measurement period, which closed one year from the January 1, 2020 acquisition date.

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

(in thousands)

January 1, 2020 Opening Balance Sheet as Reported at March 31, 2020 Adjustments January 1, 2020 Opening Balance Sheet as Reported at March 31, 2021

Fair value of the consideration transferred $ 66,854 $ ( 410 ) $ 66,444

17 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.

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1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Note 5 — Restricted Investments, Held-to-Maturity

Note 4 — Investments

Restricted Investments, Held-to-Maturity

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:

September 30, 2020

March 31, 2021

Gross Unrealized

13 unchanged sentences

Restricted investments, held-to-maturity $ 9,001 $ 2 $ ( 8 ) $ 8,995

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.

As of March 31, 2021, the contractual maturities of the restricted investments, held-to-maturity, were one year or less.

There were sixteen securities that were in an unrealized loss position for less than twelve months as of March 31, 2021 and December 31, 2020.

The Company did no t recognize any impairment losses related to its held-to-maturity investments during the quarters ended March 31, 2021 or 2020.

Other Investments

On April 16, 2021, the Company agreed to pay $ 25.0 million in cash in exchange for a convertible promissory note.

The cash was paid on May 4, 2021.

The convertible promissory note accrues simple interest on the unpaid principal balance at a rate of 10.0 % and is payable on demand any time after April 16, 2022, unless earlier converted into shares of the borrower's common stock.

The amount outstanding on the promissory note is automatically converted into a number of shares of the borrower's common stock upon either the closing of a qualified financing or upon a public event, subject to discounted conversion pricing per share based on a valuation of the borrower.

Refer to Note 15 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 $ 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 $ 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.

Revenue equipment held for sale totaled $ 20.8 million and $ 29.8 million as of March 31, 2021 and December 31, 2020, respectively.

The increase in net gains on disposals was primarily due to a stronger market for used revenue equipment during the quarter ended March 31, 2021, as compared to the same period in 2020.

The Company did no t recognize impairment losses related to assets held for sale during the quarter ended March 31, 2021, as compared to the same period last year when the Company recognized impairment losses related to assets held for sale of $ 0.1 million.

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(In thousands)

Goodwill, balance at December 31, 2019 $ 2,918,992

Goodwill at beginning of period $ 2,922,964

Adjustments relating to deferred tax assets ( 2 )

Acquisition 1

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.

Goodwill at end of period $ 2,958,709

1 The goodwill associated with the Eleos acquisition referenced in Note 3 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 quarters ended March 31, 2021 or 2020.

Other Intangible Assets

Other intangible asset balances were as follows:

September 30,

2020 December 31,

March 31, 2021 December 31,

(In thousands)

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Gross carrying amount

$ 910,447 $ 894,597

Accumulated amortization ( 157,601 ) ( 145,852 )

Definite-lived intangible assets, net 752,846 748,745

Indefinite-lived trade names:

Gross carrying amount

640,500 640,500

Intangible assets, net $ 1,393,346 $ 1,389,245

1 The major categories of the Company's definite-lived intangible assets include customer relationships, non-compete agreements, internally-developed software, and others.

1 The major categories of the Company's definite-lived intangible assets include customer relationships, non-compete agreements, internally-developed software, trade names, and others.

Identifiable intangible assets subject to amortization have been recorded at fair value.

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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 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.

As of March 31, 2021, management anticipates that the composition and amount of amortization associated with intangible assets will be $ 35.7 million for the remainder of 2021, $ 47.4 million in 2022, $ 46.9 million for each of the years 2023 and 2024, and $ 46.8 million in 2025.

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.

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Note 7 — Income Taxes

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.

Effective Tax Rate — The quarter-to-date March 31, 2021 and March 31, 2020 effective tax rates were 25.9 % and 27.2 %, respectively.

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 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 — 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.

Certain of the Company's subsidiaries are also currently under examination by various state jurisdictions for tax years ranging from 2013 to 2018 .

Unrecognized Tax Benefits — Management believes it is reasonably possible that a decrease of up to $ 0.7 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 $ 0.4 million and $ 0.3 million as of March 31, 2021 and December 31, 2020, respectively.

Tax Examinations — Certain of the Company's subsidiaries are currently under examination by various state jurisdictions for tax years ranging from 2013 to 2019 .

At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company's effective tax rate.

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

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

As of March 31, 2021, 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 September 30, 2020.

The Company was in compliance with these covenants as of March 31, 2021.

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.

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The following table summarizes the key terms of the 2018 RSA (dollars in thousands):

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one-month LIBOR + 80 to 100 basis points

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

1 On April 23, 2021, the Company entered into a new accounts receivable securitization agreement which extends the maturity date to April 23, 2024.

See below for more details.

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

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

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Availability under the 2018 RSA is calculated as follows:

September 30,

2020 December 31,

March 31, 2021 December 31, 2020

(In thousands)

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Availability under accounts receivable securitization facilities $ 2,919 $ 21,419

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.

1 Outstanding borrowings are included in "Accounts receivable securitization – current portion" in the condensed consolidated balance sheets, offset by $ 43.0 thousand and $ 0.1 million of deferred loan costs as of March 31, 2021 and December 31, 2020 , respectively .

Interest accrued on the aggregate principal balance at a rate of 1.0 % as of March 31, 2021 and December 31, 2020.

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 $ 1.8 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.

The Company incurred accounts receivable securitization program fees of $ 0.7 million and $ 1.4 million during the quarters ended March 31, 2021 and 2020, respectively.

Refer to Note 15 for information regarding the fair value of the 2018 RSA.

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Subsequent Event

On April 23, 2021 , the Company entered into the Fifth Amendment to the Amended and Restated Receivables Sales Agreement ("2021 RSA").

The 2021 RSA, among other things, extends the maturity date to April 23, 2024 , increases the maximum borrowing capacity to $ 400.0 million, decreases the accordion option to $ 100.0 million, and changes the program fee to one-month LIBOR plus 82.5 basis points .

Note 9 — Commitments

Purchase Commitments

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.

As of March 31, 2021, the Company had outstanding commitments to purchase revenue equipment of $ 654.8 million in the remainder of 2021 ($ 419.2 million of which were tractor commitments) and no ne 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 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.

As of March 31, 2021, the Company had outstanding commitments to purchase facilities and non-revenue equipment of $ 37.5 million in the remainder of 2021, $ 2.1 million in the two-year period 2022 through 2023, $ 0.5 million in the two-year period 2024 through 2025, and no ne 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.

As of March 31, 2021, the Company had outstanding commitments for fuel purchases of $ 25.0 million in the remainder of 2021, and no ne thereafter.

TRP Commitments

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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 $ 16.5 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.

During the first quarter of 2021, Knight entered into a $ 10.0 million commitment to invest in TRP Capital Partners V, LP with $ 10.0 million outstanding as of March 31, 2021.

There were no other material changes related to the previously disclosed TRP commitments during the quarter ended March 31, 2021.

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Note 10 — Contingencies and Legal Proceedings

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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 $ 34.4 million, relating to the Company's outstanding legal proceedings as of September 30, 2020.

The Company has recorded an aggregate accrual of approximately $ 21.8 million, relating to the Company's outstanding legal proceedings as of March 31, 2021.

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.

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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 September 30, 2020.

The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of March 31, 2021.

California Wage, Meal, and Rest Class Actions

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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

The plaintiffs generally allege one or more of the following:

1) failure to pay minimum wage for the first day of orientation;

2) failure to pay minimum wage for time spent studying;

3) failure to pay minimum wage for 16 hours per day;

and 4) failure to pay minimum wage for the first eight hours of sleeper berth time.

Plaintiff(s) Defendant(s) Date instituted Court or agency currently pending in

Pamela Julian 1

Swift Transportation Co., Inc.

and Swift Transportation Co.

of Arizona LLC December 29, 2015 United States District Court for the District of Arizona

Recent Developments and Current Status

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

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.

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The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of March 31, 2021.

INDEPENDENT CONTRACTOR MATTERS

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

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

As of March 31, 2021, the Company has accrued for anticipated costs associated with finalizing this matter.

1 Individually and on behalf of all others similarly situated.

Other Environmental

The Company's tractors and trailers are involved in motor vehicle accidents, experience damage, mechanical failures and cargo issues as an incidental part of its normal ordinary course of operations.

From time to time, these matters result in the discharge of diesel fuel, motor oil or other hazardous materials into the environment.

Depending on local regulations and who is determined to be at fault, the Company is sometimes responsible for the clean-up costs associated with these discharges.

As of March 31, 2021, the Company's estimate for its total legal

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liability for all such clean-up and remediation costs was approximately $ 0.7 million in the aggregate for all current and prior year claims.

Self Insurance

Automobile Liability, General Liability, and Excess Liability — Effective November 1, 2020, the Company has $ 100.0 million in excess auto liability ("AL") coverage.

Effective November 1, 2019, the Company had $ 130.0 million in excess auto liability ("AL") coverage.

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

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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 each accident or disease.

Medical — Knight maintains primary and excess coverage for employee medical expenses, with a $ 0.4 million SIR per claimant.

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

Effective January 1, 2020, Swift provides primary and excess coverage for employee medical expenses, with an SIR of $ 0.5 million per claimant to all employees.

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Note 11 — Share Repurchase Plan

On May 31, 2019, the Company announced that the Board approved the repurchase of up to $ 250.0 million worth of the Company's outstanding common stock (the "2019 Knight-Swift Share Repurchase Plan").

With the adoption of the 2019 Knight-Swift Share Repurchase Plan, the Company terminated the $ 250.0 million repurchase plan previously approved by the Board in June 2018 (the "2018 Knight-Swift Share Repurchase Plan").

There was approximately $ 0.2 million remaining under the 2018 Knight-Swift Share Repurchase Plan upon termination.

On November 30, 2020, the Company announced that the Board approved the repurchase of up to $ 250.0 million worth of the Company's outstanding common stock (the "2020 Knight-Swift Share Repurchase Plan").

With the adoption of the 2020 Knight-Swift Share Repurchase Plan, the Company terminated the previous share repurchase plan, which had approximately $ 54.1 million of authorized purchases remaining upon termination.

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 September 30, 2020 Year-to-Date September 30, 2020

Board Approval Date Authorized Amount Shares Amount Shares Amount

(in thousands)

May 30, 2019 1

$ 250,000 — $ — 1,139 $ 34,630

— $ — 1,139 $ 34,630

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

Share Repurchase Plan Quarter-to-Date March 31, 2021 Quarter-to-Date March 31, 2020

Board Approval Date Authorized Amount Shares Amount Shares Amount

(in thousands)

June 1, 2018 $ 250,000 — $ — 2,315 $ 70,500

May 30, 2019 $ 250,000 — $ — 1,139 $ 34,630

November 24, 2020 1

$ 250,000 1,303 $ 53,661 — $ —

1,303 $ 53,661 1,139 $ 34,630

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.

1 $ 196.3 million and $ 250.0 million remained available under the 2020 Knight-Swift Share Repurchase Plan as of March 31, 2021 and December 31, 2020, respectively.

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Note 12 — 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 September 30, Year-to-Date September 30,

2020 2019 2020 2019

Quarter Ended March 31,

(In thousands)

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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.

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Note 13 — Related Party Transactions

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

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

2020 2019 2020 2019

Provided by Knight-Swift Received by Knight-Swift Provided by Knight-Swift Received by Knight-Swift Provided by Knight-Swift Received by Knight-Swift Provided by Knight-Swift Received by Knight-Swift

Quarter Ended March 31,

Provided by Knight-Swift Received by Knight-Swift Provided by Knight-Swift Received by Knight-Swift

(In thousands)

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$ — $ — $ 6,816 $ —

SME Industries 1

28 — 54 — 56 — 271 —

Total $ — $ — $ 6,816 $ —

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Other Affiliates 1

2 37 5 — 11 146 14 —

Total $ — $ 57 $ 5 $ 165

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$ — $ — $ 15 $ —

— 2 — 50 — 33 — 148

Other Affiliates 1

13 — 9 600 32 — 31 1,832

Total $ 6 $ 9 $ 24 $ 12

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• 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.

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

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Receivables and payables pertaining to related party transactions were:

September 30, 2020 December 31, 2019

Payable Receivable Payable

March 31, 2021 December 31, 2020

Receivable Payable Receivable Payable

(In thousands)

Central Freight Lines $ — $ — $ 133 $ —

SME Industries 2 — 17 —

DPF Mobile — — — 41

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Based on how economic factors affect the nature, amount, timing, and uncertainty of revenue or cash flows, the Company disaggregates revenues by reportable segment for the purposes of applying the ASC Topic 606 guidance.

The Company's twenty operating segments are structured around the types of transportation service offerings provided to our customers, as well as the equipment utilized.

The Company's twenty-one operating segments are structured around the types of transportation service offerings provided to our customers, as well as the equipment utilized.

In addition, the operating segments may be further distinguished by the Company’s respective brands.

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Non-reportable

The non-reportable segments include four operating segments that consist of support services provided to the Company's customers and independent contractors (including repair and maintenance shop services, equipment leasing, warranty services, and insurance), trailer parts manufacturing, warehousing, and certain driving academy activities, as well as certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).

The non-reportable segments include five operating segments that consist of support services provided to the Company's customers and independent contractors (including repair and maintenance shop services, equipment leasing, warranty services, and insurance), trailer parts manufacturing, warehousing, and certain driving academy activities, as well as certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).

Intersegment Eliminations

Certain operating segments provide transportation and related services for other affiliates outside of their reportable segments.

Certain operating segments provide transportation and related services for other affiliates outside of their segments.

For certain operating segments, such services are billed at cost, and no profit is earned.

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

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

2020 2019 2020 2019

Quarter Ended March 31,

(In thousands)

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Total revenue $ 1,223,014 $ 1,124,798

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

2020 2019 2020 2019

Quarter Ended March 31,

Operating income (loss):

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Operating income $ 162,259 $ 102,119

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

2020 2019 2020 2019

Quarter Ended March 31,

Depreciation and amortization of property and equipment:

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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 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.

In the aggregate, total revenue from the Company's foreign operations was less than 5.0 % of consolidated total revenue for the quarters ended March 31, 2021 and 2020.

Additionally, long-lived assets on the Company's foreign subsidiary balance sheets were less than 5.0 % of consolidated total assets as of March 31, 2021 and December 31, 2020.

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Changes in assumptions could significantly affect these estimates.

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.

Because the fair value is estimated as of March 31, 2021 and December 31, 2020, 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.

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See Note 4 for additional disclosures regarding restricted investments, held-to-maturity.

Transportation Resource Partners — The estimated fair value of the Company's investments with Transportation Resource Partners are privately negotiated equity investments.

Equity Method Investments — The estimated fair value of the Company's equity method investments are privately negotiated investments.

The carrying amount of these investments approximates the fair value.

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Value Estimated

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$ 8,954 $ 8,950 $ 9,001 $ 8,995

TRP Investments 2

Equity method investments 2

80,891 80,891 77,562 77,562

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1 Refer to Note 4 for the differences between the carrying amounts and estimated fair values of the Company's restricted investments, held-to-maturity.

2 Net equity method investment balances included in "Other long-term assets" in the condensed consolidated balance sheets.

3 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 $ 0.2 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.

4 The carrying amount of the Term Loan is included in "Finance lease liabilities and long-term debt – less current portion," on the condensed consolidated balance sheets and is net of $ 0.9 million and $ 1.1 million in deferred loan costs as of March 31, 2021 and December 31, 2020, respectively.

5 The carrying amount of the 2018 RSA is included in " Accounts receivable securitization – current portion ," on the condensed consolidated balance sheets and is net of $ 43.0 thousand and $ 0.1 million in deferred loan costs as of March 31, 2021 and December 31, 2020 , respectively.

6 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 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:

Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Gain (Loss)

Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Gain

(In thousands)

As of September 30, 2020

As of March 31, 2021

Investments in equity securities 1

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$ 18,675 $ 18,675 $ — $ — $ 3,553

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 September 30, 2020 and 2019.

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.

1 The Company recognized $ 10.4 million of unrealized gains on these assets for the quarter-ended March 31, 2021.

Additionally, the Company sold $ 6.4 million in equity investments during the quarter ended March 31, 2021 and realized a gain of $ 3.5 million.

The activity for these investments is included within "Other (expense) income, net" within the condensed consolidated statement of comprehensive income for the quarter ended March 31, 2021.

2 The Company recognized $ 3.6 million of unrealized gains during the year-ended December 31, 2020.

The Company recognized $ 5.3 million in unrealized losses during the quarter-ended March 31, 2020.

The Company did not sell any equity investments during the quarter ended March 31, 2020 and therefore did no t realize any gains (losses) on these investments.

The activity for these investments is included within "Other (expense) income, net" within the condensed consolidated statement of comprehensive income for the quarter ended March 31, 2020.

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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 September 30, 2020:

Fair Value Measurements at Reporting Date Using:

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(In thousands)

As of September 30, 2020

As of March 31, 2021

Contingent consideration associated with acquisition 1

$ 16,200 $ — $ — $ 16,200 $ —

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 September 30, 2020 and December 31, 2019:

As of December 31, 2020

Contingent consideration associated with acquisition 2

$ 16,200 $ — $ — $ 16,200 $ ( 6,730 )

1 The Company did no t recognize any gains (losses) during the quarter-ended March 31, 2021 related to the revaluation of these liabilities.

2 Refer to Note 3 for information regarding the adjustments made to the contingent consideration associated with the acquisition.

During the year-ended December 31, 2020, the Company recognized $ 6.7 million in losses related to the revaluation of these liabilities.

The Company did no t recognize any losses during the quarter-ended March 31, 2020 .

Nonrecurring Fair Value Measurements (Assets) — As of March 31, 2021, the Company had no major categories of assets estimated at fair value that were measured on a nonrecurring basis.

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 December 31, 2020:

Fair Value Measurements at Reporting Date Using:

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(In thousands)

As of September 30, 2020

$ 5,099 $ — $ 5,099 $ — $ ( 1,255 )

As of December 31, 2020

Leasehold improvements 2

5,851 — 5,851 — ( 5,335 )

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.

2 During the second quarter of 2019, the Company incurred an impairment of leasehold improvements related to the early termination of a lease on one of its operating properties.

This impairment was recorded in the Trucking segment.

3 During the fourth quarter of 2019, the Company incurred impairment charges which were associated with certain revenue equipment technology, warehousing equipment no longer in use, and certain Swift legacy trailer models as a result of a softer used equipment market.

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

4 During the fourth quarter of 2019, the Company incurred impairment charges related to discontinued use of software systems.

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 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.

1 Reflects the non-cash impairment of certain alternative fuel technology (within the non-reportable segments) and certain revenue equipment held for sale (within the Trucking segment).

During the year-ended December 31, 2020, the Company recognized $ 5.3 million of impairments related to these assets.

The Company recognized $ 0.9 million of impairments during the quarter-ended March 31, 2020.

Nonrecurring Fair Value Measurements (Liabilities) — As of March 31, 2021 and December 31, 2020, 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

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What changed 10-Q

Item 1. Financial Statements