What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-24 compared with 2021-02-25 · 638 added, 572 removed, 1268 unchanged (49% of the section changed)

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Consolidated Financial Statements Page

Report of independent registered public accounting firm

Report of independent registered public accounting firm [PCAOB ID Number 248 ]

Consolidated balance sheets as of December 31, 2021 and 2020

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Note 2 Summary of Significant Accounting Policies

Note 3 Recently Adopted Accounting Pronouncements

Note 3 Recently Issued Accounting Pronouncements

Note 4 Acquisitions

Note 6 Restricted Investments, Held-to-Maturity

Note 5 Investments

Note 6 Equity Investments

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Note 10 Goodwill and Other Intangible Assets

Note 12 Accrued Payroll and Purchased Transportation and Accrued Liabilities

Note 11 Accrued Payroll and Purchased Transportation

Note 12 Claims Accruals

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Note 16 Leases

Note 17 Defined Benefit Pension Plan

Note 18 Purchase Commitments

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We have audited the accompanying consolidated balance sheets of Knight-Swift Transportation Holdings Inc.

(an Arizona corporation) and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

(a Delaware corporation) and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

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Goodwill impairment assessment

As described further in Notes 2 and 11 to the consolidated financial statements, management evaluates goodwill on an annual basis as of June 30, or more frequently if impairment indicators exist, at the reporting unit level.

As described further in the footnotes to the consolidated financial statements, management evaluates goodwill on an annual basis as of June 30, or more frequently if impairment indicators exist, at the reporting unit level.

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

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The principal consideration for this determination is that management utilized significant judgment when estimating the fair value of these reporting units.

In turn, auditing management’s judgments regarding forecasts of future revenues and operating expenses, and the discount rates applied, involved a high degree of subjectivity due to the estimation uncertainty of management’s significant judgments.

In turn, auditing management’s judgments regarding forecasts of future revenues and

operating expenses, and the discount rates applied, involved a high degree of subjectivity due to the estimation uncertainty of management’s significant judgments.

Our audit procedures related to the goodwill impairment assessment included the following, among others:

• We tested the effectiveness of controls relating to the goodwill impairment assessment, including the determination of the fair value of the reporting units.

• We tested the operating effectiveness of controls relating to the goodwill impairment assessment, including the determination of the fair value of the reporting units.

• We tested management’s process for determining the fair value of the reporting units.

This included evaluating the appropriateness of the valuation methods, testing the completeness, accuracy and relevance of data used by management, and evaluating the reasonableness of management’s significant assumptions, which included forecasted revenues, operating expenses, and net capital expenditures.

This included evaluating the appropriateness of the valuation methods and testing the completeness, accuracy and relevance of data used by management.

• We evaluated the reasonableness of management’s significant assumptions, which included forecasted revenues and operating expenses.

We tested whether these forecasts were reasonable and consistent with historical performance, third-party market data, and other evidence obtained in other areas of the audit.

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• We tested the Company’s use of the market approach with the assistance of valuation specialists, including the reasonableness of selected multiples.

Indefinite-lived intangible asset impairment assessment - trade names

As described further in Notes 2 and 11 to the consolidated financial statements, management evaluates trade names for impairment on an annual basis as of June 30, unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value.

The impairment test consists of a comparison of the estimated fair value of the trade names to their carrying values.

Indefinite-lived intangible asset impairment assessment – trade name

As described further in the footnotes to the consolidated financial statements, management evaluates the trade names for impairment on an annual basis, or more frequently if impairment indictors exist.

The impairment test consists of a comparison of the carrying amount with the projected discounted cash flows from the use and eventual disposition of the asset group.

The determination of the fair value of the trade names requires management to make significant estimates and assumptions related to forecasts of future revenues, discount rates, and royalty rates.

Changes in these assumptions could materially affect the determination of the fair value of the trade names, the amount of any trade names impairment charge, or both.

We identified the trade names impairment assessment as a critical audit matter.

The principal consideration for this determination is that management used significant judgment when estimating the fair value of the trade names.

In turn, auditing management’s judgments regarding forecasts of future revenue, the discount rates applied, and the royalty rates, involved a high degree of subjectivity due to the estimation uncertainty of management’s significant judgments.

Our audit procedures related to the trade names indefinite-lived intangible asset impairment assessment included the following, among others:

• We tested the effectiveness of controls relating to the trade names’ impairment assessment, including the determination of the fair value of the trade names.

• We tested management’s process for determining the fair value of the trade names.

This included evaluating the appropriateness of the valuation method, testing the completeness, accuracy and relevance of data used by management, and evaluating the reasonableness of management’s significant assumptions, which included forecasted revenues.

We identified the trade name impairment assessment of a certain trade name as a critical audit matter.

The principal consideration for this determination is that management used significant judgment when estimating the fair value of the trade name.

In turn, auditing management’s judgments regarding forecasts of future revenue, the discount rate applied, and the royalty rate, involved a high degree of subjectivity due to the estimation uncertainty of management’s significant judgments.

Our audit procedures related to the trade name indefinite-lived intangible asset impairment assessment included the following, among others:

• We tested the operating effectiveness of controls relating to the trade name impairment assessment, including the determination of the fair value of the trade name.

• We tested management’s process for determining the fair value of the trade name.

This included evaluating the appropriateness of the valuation method, testing the completeness, accuracy and relevance of data used by management.

• We evaluated the reasonableness of management’s significant assumptions, which included forecasted revenues.

We tested whether these forecasts were reasonable and consistent with historical performance, third-party market data, and other evidence obtained in other areas of the audit.

• We tested the reasonableness of the Company’s discount rates and royalty rates with the assistance of valuation specialists.

Auto liability and workers’ compensation claims accrual

As described further in Notes 2 and 13 to the consolidated financial statements, the Company is self-insured for a portion of its risk related to auto liability and workers’ compensation.

The Company accrues for the cost of the self-insured portion of unpaid claims by evaluating the nature and severity of individual claims and by estimating future claims development based upon historical development trends.

• We tested the reasonableness of the Company’s discount rate and royalty rate with the assistance of valuation specialists.

Swift Auto liability and workers’ compensation claims reserve accrual

As described in the footnotes to the consolidated financial statements, the Company is self-insured for a portion of its risk related to auto liability and workers’ compensation.

The Company accrues for the cost of the uninsured portion of pending claims by evaluating the nature and severity of individual claims and by estimating future claims development based upon historical development trends.

The actual cost to settle self-insured claim liabilities may differ from the Company’s reserve estimates due to legal costs, claims that have been incurred but not reported, and various other uncertainties, including the inherent difficulty in estimating the severity of the claims and the potential judgment or settlement amount to dispose of the claim.

We identified the estimation of Swift’s auto liability and workers’ compensation claims accruals, subject to certain self-insured retention, as a critical audit matter.

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These estimates rely on the assumption that historical claim patterns are an accurate representation for future claims that have been incurred but not completely paid.

The principal considerations for assessing auto liability and workers’ compensation claims as a critical audit matter are the high level of estimation uncertainty related to determining the

severity of these types of claims, as well as the inherent subjectivity in management’s judgment in estimating the total costs to settle or dispose of these claims.

Our audit procedures related to the auto liability and workers' compensation claims accrual included the following, among others:

• We tested the effectiveness of controls over auto liability and workers’ compensation claims, including the completeness and accuracy of claim expenses and payments.

The principal considerations for assessing auto liability and workers’ compensation claims as a critical audit matter are the high level of estimation uncertainty related to determining the severity of these types of claims, as well as the inherent subjectivity in management’s judgment in estimating the total costs to settle or dispose of these claims.

Our audit procedures related to this critical audit matter included the following, among others:

• We tested the operating effectiveness of controls over auto liability and workers’ compensation claims, including the completeness and accuracy of claim expenses and payments.

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

• We tested the claims data used in the claims liability calculation by inspecting source documents to test key attributes of the claims data.

Customer relationships acquired with the AAA Cooper Transportation acquisition

As described further in the footnotes to the consolidated financial statements, on July 5, 2021, the Company acquired 100% of AAA Cooper Transportation.

The total purchase price consideration was $1.31 billion, which allocated $406.2 million to separately identified intangible assets, including customer relationships of $250.8 million.

The determination of the fair value of the customer relationships requires management to make significant estimates and assumptions related to forecasts of future revenues, expenses and the discount rate applied.

Changes in these assumptions could materially affect the determination of the fair value of the customer relationships.

We identified the fair value assigned to the customer relationships included on the opening balance sheet as a critical audit matter.

The principal considerations for our determination that the acquired customer relationships are a critical audit matter is that management utilized significant judgment when estimating the fair value assigned to the customer relationships.

In turn, auditing management’s judgments regarding the assigned fair value involved a high degree of subjectivity due to the estimation uncertainty of management’s significant judgments.

Our audit procedures related to the estimated fair value assigned to acquired customer relationships included the following, among others.

• We tested the operating effectiveness of controls relating to the identification of the acquired customer relationships, including the determination of the fair value.

• We tested management’s process for determining the fair value of the acquired customer relationships.

This included evaluating the appropriateness of the valuation method and testing the completeness, accuracy, and relevance of data used by management.

• We evaluated the reasonableness of management’s significant assumptions, which included forecasted revenues and operating expenses.

We tested whether these forecasts were reasonable and consistent with historical performance and third-party market data.

• We tested the reasonableness of the Company’s discount rate applied to the present value of the estimated future cash flows model with the assistance of valuation specialists.

/s/ GRANT THORNTON LLP

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165,980 and 166,553 shares issued and outstanding as of December 31, 2021 and 2020, respectively.

Accumulated other comprehensive loss ( 563 ) —

Additional paid-in capital 4,350,913 4,301,424

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(In thousands, except per share data)

Revenue, excluding trucking fuel surcharge $ 4,369,207 $ 4,395,332 $ 4,809,668

Trucking fuel surcharge 304,656 448,618 534,398

Revenue, excluding truckload and LTL fuel surcharge $ 5,531,890 $ 4,369,207 $ 4,395,332

Truckload and LTL fuel surcharge 466,129 304,656 448,618

Total revenue 5,998,019 4,673,863 4,843,950

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Net income attributable to Knight-Swift $ 743,388 $ 410,002 $ 309,206

Other comprehensive loss ( 563 ) — —

Comprehensive income $ 742,825 $ 410,002 $ 309,206

Earnings per share:

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Consolidated Statements of Stockholders' Equity

Common Stock Additional Paid-in Capital Retained Earnings Total

Common Stock Additional Paid-in Capital Retained Earnings Accumulated

Comprehensive Loss Total

Knight-Swift Stockholders' Equity Noncontrolling Interest Total Stockholders' Equity

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Common stock issued to employees 621 7 10,471 10,478 10,478

Common stock issued to the board of directors 19 — 774 774 774

Common stock issued under employee stock purchase plan 49 1 1,822 1,823 1,823

Common stock issued to the Board 19 — 531 531 531

Common stock issued under ESPP 78 1 2,297 2,298 2,298

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

Shares withheld – restricted stock unit settlement ( 2,550 ) ( 2,550 ) ( 2,550 )

Shares withheld – RSU settlement ( 2,330 ) ( 2,330 ) ( 2,330 )

Employee stock-based compensation expense 13,375 13,375 13,375

Cash dividends paid and dividends accrued ($ 0.24 per share)

( 41,400 ) ( 41,400 ) ( 41,400 )

Net income attributable to Knight-Swift 309,206 309,206 309,206

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Net income attributable to noncontrolling interest 972 972

Net acquisition of remaining ownership interest, previously noncontrolling ( 1,873 ) ( 1,873 ) ( 1,873 )

Net cumulative-effect adjustment from adopting ASC Topic 606 5,301 5,301 5,301

Balances – December 31, 2019 170,688 $ 1,707 $ 4,269,043 $ 1,395,465 $ — $ 5,666,215 $ 2,088 $ 5,668,303

Common stock issued to employees 631 6 10,007 10,013 10,013

Common stock issued to the board of directors 19 — 531 531 531

Common stock issued under employee stock purchase plan 78 1 2,297 2,298 2,298

Common stock issued to the Board 13 — 515 515 515

Common stock issued under ESPP 62 — 2,220 2,220 2,220

Company shares repurchased ( 4,841 ) ( 48 ) ( 179,537 ) ( 179,585 ) ( 179,585 )

Shares withheld – restricted stock unit settlement ( 2,330 ) ( 2,330 ) ( 2,330 )

Shares withheld – RSU settlement ( 4,510 ) ( 4,510 ) ( 4,510 )

Employee stock-based compensation expense 19,639 19,639 19,639

Cash dividends paid and dividends accrued ($ 0.32 per share)

( 54,661 ) ( 54,661 ) ( 54,661 )

Net income attributable to Knight-Swift 410,002 410,002 410,002

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Common stock issued to employees 510 6 5,918 5,924 5,924

Common stock issued to the board of directors 13 — 515 515 515

Common stock issued under employee stock purchase plan 62 — 2,220 2,220 2,220

Common stock issued to the Board 12 — 575 575 575

Common stock issued with ACT Acquisition 219 2 9,998 10,000 10,000

Common stock issued under ESPP 63 1 2,782 2,783 2,783

Company shares repurchased ( 1,377 ) ( 14 ) ( 57,161 ) ( 57,175 ) ( 57,175 )

Shares withheld – restricted stock unit settlement ( 4,510 ) ( 4,510 ) ( 4,510 )

Shares withheld – RSU settlement ( 8,257 ) ( 8,257 ) ( 8,257 )

Employee stock-based compensation expense 33,495 33,495 33,495

Cash dividends paid and dividends accrued ($ 0.38 per share)

( 63,587 ) ( 63,587 ) ( 63,587 )

Net income attributable to Knight-Swift 743,388 743,388 743,388

Other comprehensive income ( 563 ) ( 563 ) ( 563 )

Noncontrolling interest associated with acquisition 10,281 10,281

Distribution to noncontrolling interest ( 64 ) ( 64 )

Net income attributable to noncontrolling interest 360 360

Net acquisition of remaining ownership interest, previously noncontrolling ( 3,279 ) ( 3,279 ) ( 2,471 ) ( 5,750 )

Balances – December 31, 2021 165,980 $ 1,660 $ 4,350,913 $ 2,181,142 $ ( 563 ) $ 6,533,152 $ 10,298 $ 6,543,450

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Net cash, restricted cash, and equivalents invested in acquisitions ( 1,496,208 ) ( 46,811 ) ( 1,885 )

Investment in convertible notes ( 35,000 ) — —

Other cash flows from investing activities ( 5,060 ) ( 42,320 ) ( 4,284 )

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Repayment of finance leases and long-term debt ( 409,889 ) ( 148,910 ) ( 115,642 )

(Repayments) borrowings on revolving lines of credit, net ( 69,000 ) 84,000 70,000

Proceeds from long-term debt 1,200,000 — —

Borrowings (repayments) on revolving lines of credit, net 50,000 ( 69,000 ) 84,000

Borrowings under accounts receivable securitization 80,000 61,000 150,000

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Other cash flows from financing activities ( 14,357 ) ( 13,517 ) ( 2,984 )

Net cash used in financing activities ( 443,884 ) ( 184,636 ) ( 255,442 )

Net (decrease) increase in cash, restricted cash, and equivalents ( 4,951 ) 71,252 ( 20,757 )

Net cash provided by (used in) financing activities 779,326 ( 443,884 ) ( 184,636 )

Net increase (decrease) in cash, restricted cash, and equivalents 152,746 ( 4,951 ) 71,252

Cash, restricted cash, and equivalents at beginning of period 197,277 202,228 130,976

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Transfer from property and equipment to assets held for sale 92,445 75,292 137,391

Noncontrolling interest associated with acquisition 10,281 — —

Contingent consideration associated with acquisition 6,250 16,200 —

Right-of-use assets obtained in exchange for new operating lease liabilities 12,406 9,803 —

Value of common stock issued for acquisition 10,000 — —

Conversion of note receivable to equity investment 37,631 — —

Right-of-use assets obtained in exchange for operating lease liabilities 22,771 12,406 9,803

Right-of-use assets obtained in exchange for new operating lease liabilities through acquisitions 50,988 12,356 —

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

During 2020, the Trucking segment operated an average of 18,448 tractors (comprised of 16,379 company tractors and 2,069 independent contractor tractors) and 57,722 trailers.

Additionally, the Intermodal segment operated an average of 577 tractors and 10,604 intermodal cont ainers.

The Company's three reportable segments are Trucking, Logistics, and Intermodal.

Segment Realignment

During the first quarter of 2019, the Company reorganized its operating segments to reflect management’s revised reporting structure which is based around the transportation service offerings provided to our customers, as well as the equipment utilized.

The Company aggregated these various operating segments into three reportable segments based on similarities with both their qualitative and economic characteristics.

Under this revised structure, the Company's three reportable segments are as follows:

• The Trucking segment now includes the results of the previously-reported Knight Trucking, Swift Truckload, Swift Dedicated, and Swift Refrigerated segments.

• The Logistics segment now includes the results of the Knight brokerage and Swift logistics businesses which were previously included within the Knight Logistics and Swift non-reportable segments, respectively.

• The Intermodal segment now includes the results of the previously-reported Swift Intermodal segment and the results of the Knight intermodal business, which was previously included in the Knight Logistics segment.

The non-reportable segments include support services that Swift's subsidiaries provide to customers and independent contractors (including repair and maintenance shop services, equipment leasing, and insurance), certain driving academy activities, as well as certain legal settlements and accruals, amortization of intangibles related to the 2017 Merger and select acquisitions, and other corporate expenses.

Additionally, the non-reportable segments now include Knight's equipment leasing and warranty services to independent contractors and trailer parts manufacturing, which were previously reported within the Knight Logistics segment.

During 2021, the Truckload segment operated an average of 18,019 tractors (comprised of 16,166 company tractors and 1,853 independent contractor tractors).

The Company operated 67,606 trailers during the year, including trailers within the Truckload segment and leasing activities within the non-reportable segments.

The LTL segment operated an average 2,735 tractors and 7,413 trailers.

Additionally, the Intermodal segment operated an average of 597 tractors and 10,847 intermo dal cont ainers.

The Company's four reportable segments are Truckload, Logistics, LTL, and Intermodal.

On September 8, 2017, the Company became Knight-Swift Transportation Holdings Inc.

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The shares of Class A common stock commenced trading on the NYSE on a post-reverse split basis under the ticker symbol "KNX" on September 11, 2017.

Abilene Acquisition

On March 16, 2018, the Company acquired all of the issued and outstanding equity interests of Abilene.

Abilene's trucking and logistics businesses are included under the respective segments.

Please refer to Note 5 for more information about the Abilene Acquisition.

Other Acquisitions

On January 1, 2020 the Company acquired a warehousing company to complement its suite of services.

Please refer to Note 5 of this Annual Report for more information about this acquisition.

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Recent Acquisitions

The Company recently acquired the following entities:

• 100.0 % of MME on December 6, 2021 .

The results are included within the LTL segment.

• 100.0 % of ACT on July 5, 2021 .

The results are included within the LTL segment.

• 100.0 % of UTXL on June 1, 2021 .

The results are included within the Logistics segment.

• 79.44 % of Eleos on February 1, 2021 .

The results are included within the non-reportable segments.

The noncontrolling interest is presented as a separate component of the consolidated financial statements.

• 100.0 % of Warehousing Co.

on January 1, 2020 .

The results are included within the non-reportable segments.

Note regarding comparability:

In accordance with the accounting treatment applicable to the transactions, the Company's consolidated results, as reported, do not include the operating results of its ownership interest in the acquired entities prior to the respective acquisition dates.

Accordingly, comparisons between the Company's current and prior period results may not be meaningful.

Additional information regarding the Company's recent acquisitions is included in Note 4 .

Basis of Presentation

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Similarly, references to "quarters", including "first", "second", "third", and "fourth" pertain to calendar quarters.

Note regarding comparability — The reported results do not include the results of operations of Abilene and its subsidiaries on and prior to its acquisition by the Company on March 16, 2018 in accordance with the accounting treatment applicable to the transaction.

Additionally, the reported results do not include the results of operations of the warehousing company prior to its acquisition by the Company on January 1, 2020 in accordance with the accounting treatment applicable to the transaction.

Accordingly, comparisons between the Company's 2020 results and prior periods may not be meaningful.

Joint ventures — The financial activities of the following entities with which the Company has joint ventures are consolidated.

The noncontrolling interest for these entities is presented as a separate component of the consolidated financial statements.

• In 2014, Knight formed an Arizona limited liability company, now known as Kold Trans, LLC, for the purpose of expanding its refrigerated trucking business.

Knight was entitled to 80.0 % of the profits of the entity and has effective control over the management of the entity.

During 2018, the Company purchased the remaining 20.0% of the joint venture, eliminating the related noncontrolling interest.

• In 2010, Knight partnered with a non-related investor to form an Arizona limited liability company for the purpose of sourcing commercial vehicle parts.

Knight acquired a 52.0 % ownership interest in this entity.

Equity method and other equity investments — Refer to Note 7 for basis of presentation disclosures regarding the Company's equity method and other equity investments.

Changes in Presentation

Changes in presentation associated with adopting accounting pronouncements are included in Note 3.

Statement of Comprehensive Income — Beginning in the second quarter of 2019, the Company presents fuel surcharge revenue generated within only its Trucking segment within "Trucking fuel surcharge" in the consolidated statements of comprehensive income.

Fuel surcharge revenue generated within the remaining segments is included in "Revenue, excluding trucking fuel surcharge." Prior period amounts have been reclassified to align with the current period presentation.

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

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

Freight volumes in the first quarter are typically lower due to less consumer demand, customers reducing shipments following the holiday season, and inclement weather.

At the same time, operating expenses generally increase, and tractor productivity of the Company's fleet, independent contractors, and third-party carriers decreases during the winter months due to decreased fuel efficiency, increased cold-weather-related equipment maintenance and repairs, and increased insurance claims and costs attributed to higher accident frequency from harsh weather.

These factors typically lead to lower operating profitability, as compared to other parts of the year.

Additionally, beginning in the latter half of the third quarter and continuing into the fourth quarter, the Company typically experiences surges pertaining to holiday shopping trends toward delivery of gifts purchased over the Internet as well as the length of the holiday season (consumer shopping days between Thanksgiving and Christmas).

However, cyclical changes in the trucking industry, including imbalances in supply and demand, can override the seasonality faced in the industry.

At the same time, operating expenses generally increase, and tractor productivity of the Company's Truckload fleet, independent contractors, and third-party carriers decreases during the winter months due to decreased fuel efficiency, increased cold-weather-related equipment maintenance

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

and repairs, and increased insurance claims and costs attributed to higher accident frequency from harsh weather.

These factors typically lead to lower operating profitability, as compared to other parts of the year.

However, as the Company continues to diversify its business through expansion into the LTL industry, warehousing, and other activities, seasonal volatility is becoming more tempered.

Additionally, macroeconomic trends and cyclical changes in the trucking industry, including imbalances in supply and demand, can override the seasonality faced in the industry.

Impact of COVID-19

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 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.

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

Various uncertainties have arisen from the COVID-19 pandemic.

While management is continuing to monitor the impact of the pandemic on Knight-Swift, including its employees, customers, vendors, independent contractors, stockholders, and other business partners and stakeholders, it is difficult to predict the impact that the pandemic will have on future results of its operations, financial position, and liquidity.

This has caused some uncertainties around various accounting estimates.

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.

There were various ASUs that became effective during 2021, which did not have a material impact on the Company's results of operations, financial position, cash flows, or disclosures.

Note 2 — Summary of Significant Accounting Policies

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• valuation allowances for receivables;

• valuation allowances for inventories;

• valuation of financial instruments.

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The management approach focuses on financial information that management uses to make operating decisions.

The Company's chief operating decision makers use total revenue, operating expense categories, operating ratios, operating income, and key operating statistics to evaluate performance and allocate resources to the Company's operations and is based around the transportation service offerings provided to our customers, as well as the equipment utilized.

Operating income is the measure that management uses to evaluate segment performance and allocate resources.

Operating income should not be viewed as a substitute for GAAP net income (loss).

Management believes the presentation of operating income enhances the understanding of the Company's performance by highlighting the results of operations and the underlying profitability drivers of the business segments.

Operating income should not be viewed as a substitute for GAAP net income.

Management believes the

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presentation of operating income enhances the understanding of the Company's performance by highlighting the results of operations and the underlying profitability drivers of the business segments.

Operating income is defined as "Total revenue" less "Total operating expenses."

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Cash and Cash Equivalents — Cash and cash equivalents are comprised of cash, money market funds, and highly liquid instruments with insignificant interest rate risk and original maturities of three months or less.

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balances with institutions may be in excess of Federal Deposit Insurance Corporation ("FDIC") limits or may be invested in sweep accounts that are not insured by the institution, the FDIC, or any other government agency.

Cash balances with institutions may be in excess of Federal Deposit Insurance Corporation ("FDIC") limits or may be invested in sweep accounts that are not insured by the institution, the FDIC, or any other government agency.

Restricted Cash and Equivalents — The Company's wholly-owned captive insurance companies, Red Rock and Mohave, maintain certain operating bank accounts, working trust accounts, and investment accounts.

The cash and cash equivalents within these accounts are restricted by insurance regulations to fund the insurance claim losses to be paid by the captive insurance companies, and therefore, are classified as "Cash and cash equivalents – restricted" in the consolidated balance sheets.

Restricted Investments — The Company's investments are restricted by insurance regulations to fund the insurance claim losses to be paid by the captive insurance companies.

The Company accounts for its investments in accordance with ASC Topic 320, Investments – Debt Securities .

The Company accounts for its investments in accordance with ASC 320, Investments – Debt Securities .

Management determines the appropriate classification of its investments in debt securities at the time of purchase and re-evaluates the determination on a quarterly basis.

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The assessment of whether impairments have occurred is based on management's case-by-case evaluation of the underlying reasons for the decline in estimated fair value.

Management accounts for other-than-temporary impairments of debt securities in accordance with ASC Topic 320.

Management accounts for other-than-temporary impairments of debt securities in accordance with ASC 320.

This guidance requires the Company to evaluate whether it intends to sell an impaired debt security or whether it is more likely than not that it will be required to sell an impaired debt security before recovery of the amortized cost basis.

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Maintenance and repairs are expensed as incurred.

Net gains on the disposal of property and equipment are presented in the consolidated statements of comprehensive income within "Miscellaneous operating expenses."

Tires on purchased revenue equipment are capitalized along with the related equipment cost when the vehicle is placed in service, and are depreciated over the life of the vehicle.

Depreciation of property and equipment is calculated on a straight-line basis down to the salvage value, as applicable, over the following estimated useful lives:

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Net gains on the disposal of property and equipment are presented in the consolidated statements of comprehensive income within "Miscellaneous operating expenses."

Tires on purchased revenue equipment are capitalized along with the related equipment cost when the vehicle is placed in service, and are depreciated over the life of the vehicle.

Depreciation of property and equipment is calculated on a straight-line basis down to the salvage value, as applicable, over the following estimated useful lives:

Range (in years)

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Factors affecting estimated useful lives of property and equipment may include estimating loss, damage, obsolescence, and Company policies around maintenance and asset replacement.

Management evaluates its property and equipment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC Topic 360, Property, Plant and Equipment .

When such events or changes in circumstances occur, management performs a recoverability test that compares the carrying amount with the projected undiscounted cash flows from the use and eventual disposition of the asset or asset group.

An impairment is recorded for any excess of the carrying amount over the estimated fair value.

Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary.

Estimating fair value includes several significant assumptions, including future cash flow estimates, determination of appropriate discount rates, and other assumptions that management believed reasonable under the circumstances.

Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, when necessary.

Changes in these estimates and assumptions could materially affect the determination of fair value and/or impairment.

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

The Company performs a quantitative analysis on an annual basis, in accordance with ASC Topic 350, Goodwill and Other Intangible Assets .

The Company performs a quantitative analysis on an annual basis, in accordance with ASC 350, Goodwill and Other Intangible Assets .

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

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

Refer to Note 11 for discussion of the results of the Company's annual evaluation as of June 30, 2020.

Refer to Note 10 for the results of the Company's annual evaluation as of June 30, 2021.

On a periodic basis, 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.

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See Notes 4 and 10 for additional disclosures regarding the Company's goodwill.

Intangible Assets other than Goodwill — The Company's intangible assets other than goodwill primarily consist of acquired customer relationships and a trade name from the 2017 Merger, as well as intangibles from other acquisitions.

Intangible Assets other than Goodwill — The Company's intangible assets other than goodwill primarily consist of acquired customer relationships, trade names, and other intangibles from acquisitions.

Amortization of acquired customer relationships, and other intangibles is calculated on a straight-line basis over the estimated useful life, which ranges from 3 years to 20 years.

The trade names have indefinite useful lives and are not amortized, but are tested for impairment at least annually, unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value.

Management reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable, in accordance with ASC Topic 350, Intangibles – Goodwill and Other.

When such events or changes in circumstances occur, management performs a recoverability test that compares the carrying amount with the projected discounted cash flows from the use and eventual disposition of the asset or asset group.

An impairment is recorded for any excess of the carrying amount over the estimated fair value, which is generally determined using discounted future cash flows.

Certain trade names have indefinite useful lives and are not amortized, but are tested for impairment at least annually, unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value.

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Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as necessary.

Estimating fair value includes several significant assumptions, including future cash flow estimates, determination of appropriate discount rates, royalty rates, and other assumptions that management believed reasonable under the circumstances.

An impairment is recorded for any excess of the carrying amount over the estimated fair value, which is generally determined using discounted future cash flows.

Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals.

Changes in these estimates and assumptions could materially affect the determination of fair value and/or impairment.

See Notes 4 and 10 for additional disclosures regarding the Company's intangible assets.

Claims Accruals — The Company is self-insured for a portion of its risk related to auto liability, workers' compensation, property damage, and cargo damage.

Claims Accruals — The Company is self-insured for a portion of its risk related to auto liability, workers' compensation, property damage, cargo damage, and group health.

Self-insurance results from buying insurance coverage that applies in excess of a retained portion of risk for each respective line of coverage.

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Management’s significant assumptions and judgments include the determination of the discount rate (discussed below), as well as the determination of whether a contract contains a lease.

In accordance with ASC 842, Leases , property and equipment held under operating leases are recorded as right-of-use assets, with a corresponding operating lease liability.

Additionally, property and equipment held under finance leases are recorded as property and equipment with corresponding finance lease liabilities.

All expenses related to operating leases are reflected in our consolidated statements of comprehensive income in "Rental expense." Expenses related to finance leases are reflected in our consolidated statements of comprehensive income in "Depreciation and amortization of property and equipment" and "Interest expense."

• Lease Term — The Company’s leases generally have lease terms corresponding to the useful lives of the underlying assets.

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Drop yards include month-to-month leases, as well as leases with varying lease terms generally ranging from two to five years.

Options to renew or purchase the underlying assets are considered in the determination of the right-of-use asset and lease liability once reasonably certain of exercise.

Options to renew or purchase the underlying assets are considered in the determination of the right-of-use asset and corresponding lease liability once reasonably certain of exercise.

• Portfolio Approach — The Company typically leases its revenue equipment under master lease agreements, which contain general terms, conditions, definitions, representations, warranties, and other general language, while the specific contract provisions are contained within the various individual lease schedules that fall under a master lease agreement.

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Each individual real estate and other lease is accounted for at the individual asset level.

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• Nonlease Components — Management has elected to combine its nonlease components (such as fixed charges for common area maintenance, real estate taxes, utilities, and insurance) with lease components for each class of underlying asset, as applicable, as the nonlease components in the Company’s lease contracts typically are not material.

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To a lesser extent, certain short-term leases for revenue equipment, technology, and other assets are affected.

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• Discount Rate — The Company uses the rate implicit in the lease, when readily determinable.

• Discount Rate — The Company uses the rate implicit in the lease, when readily determinable, which is generally related to the Company's finance leases.

Otherwise the Company’s incremental borrowing rate is applied.

Due to the unique structure of the Company’s revenue equipment leases, management believes that the rate implicit in the lease is readily determinable for such leases and the implicit rate is used.

The Company’s use of the implicit rate (rather than the incremental borrowing rate) for its revenue equipment leases does not materially change the Company’s financial position or financial results either by financial statement caption or in total.

The implicit interest rate is not readily determinable for the Company’s real estate and other leases.

The implicit interest rate is not readily determinable for the Company’s operating leases.

As such, management applies the Company’s incremental borrowing rate, which is defined by GAAP as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The Company's incremental borrowing rate is based on the results of an independent third-party valuation.

• Residual Values — The Company's finance leases are typically structured with balloon payments at the end of the lease term equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers.

• Residual Values — The Company's finance leases for revenue equipment are typically structured with balloon payments at the end of the lease term equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers.

If the Company does not receive proceeds of the contracted residual value from the manufacturer, the Company is still obligated to make the balloon payment at the end of the lease term.

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Although the Company typically owes certain amounts to its lessors at the end of its revenue equipment leases, the Company’s equipment manufacturers have corresponding guarantees back to the Company as to the buyback value of the units.

See Note 17 for additional disclosures regarding the Company's operating leases.

See Note 16 for additional disclosures regarding the Company's leases.

Fair Value Measurements — See Note 23 for accounting policies and financial information relating to fair value measurements.

Contingencies — See Note 19 for accounting policies and financial information related to contingencies.

Revenue Recognition — Management applies the five-step analysis to the Company's three reportable segments (Trucking, Intermodal, and Logistics).

The Company's other streams of revenue within the non-reportable segments (specifically its leasing and captive insurance subsidiaries) were determined to be out of the scope of ASC Topic 606, Revenue from Contracts with Customers .

Revenue Recognition — Management applies the five-step analysis to the Company's four reportable segments (Truckload, Logistics, LTL, and Intermodal).

Contract Identification — Management has identified that a legally enforceable contract with its customers is executed by both parties at the point of pickup at the shipper's location, as evidenced by the bill of lading.

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The Company's delivery, accessorial, and dedicated operations truck capacity in its dedicated operations represent a bundle of services that are highly interdependent and have the same pattern of transfer to the customer.

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These services are not capable of being distinct from one another.

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There is no significant financing component in the transaction price, as the Company's customers generally pay within the contractual payment terms of 30 to 60 days.

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Allocating Transaction Price to Performance Obligations — The transaction price is entirely allocated to the only performance obligation:

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Accordingly, revenue is recognized over time.

Management estimates the amount of revenue in transit at period end based on the number of days completed of the dispatch (which is generally one to three days for the trucking segments, but can be longer for intermodal operations).

Management estimates the amount of revenue in transit at period end based on the number of days completed of the dispatch (which is generally one to three days for the Truckload, Logistics and LTL segments, but can be longer for intermodal operations).

Management believes this to be a faithful depiction of the transfer of services because if a load is dispatched, but terminates mid-route and the load is picked up by another carrier, then that carrier would not need to re-perform the services for the days already traveled.

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Based on these considerations, management determined that revenues should be disaggregated by reportable segment.

The Company recognizes operating lease revenue from leasing tractors and related equipment to independent contractors.

The Company recognizes operating lease revenue from leasing tractors and related equipment to third parties, including independent contractors.

Operating lease revenue from rental operations is recognized as earned, which is straight-lined per the rent schedules in the lease agreements.

Losses from lease defaults are recognized as offsets to revenue.

Stock-based Compensation — The Company accounts for stock-based compensation expense in accordance with ASC Topic 718, Compensation – Stock Compensation.

ASC Topic 718 requires that all share-based payments to employees and non-employee directors, including grants of employee stock options, be recognized in the financial statements based upon a grant-date fair value of an award.

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Stock-based Compensation — The Company accounts for stock-based compensation expense in accordance with ASC 718, Compensation – Stock Compensation.

ASC 718 requires that all share-based payments to employees and non-employee directors, including grants of employee stock options, be recognized in the financial statements based upon a grant-date fair value of an award.

Equity awards settled in cash are remeasured at each reporting period and are recognized as a liability in the consolidated balance sheets during the vesting period until settlement.

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• Vesting — The requisite service period is the specified vesting date in the grant agreement or the date that the employee becomes retirement-eligible, based on the terms of the grant agreement.

The Company calculates

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the number of awards expected to vest as awards granted, less expected forfeitures over the life of the award (estimated at grant date).

The Company calculates the number of awards expected to vest as awards granted, less expected forfeitures over the life of the award (estimated at grant date).

All awards require future service and thus forfeitures are estimated based on historical forfeitures and the remaining term until the related award vests.

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Unless a material deviation from the assumed forfeiture rate is observed during the term in which the awards are expensed, any adjustment necessary to reflect differences in actual experience is recognized in the period the award becomes payable or exercisable.

Determining the appropriate amount to expense in each period is based on likelihood and timing of achievement of the stated targets for performance-based awards, and requires judgment, including forecasting future financial results and market performance.

Determining the appropriate amount to expense in each period is based on the likelihood and timing of achievement of the stated targets for performance-based awards, and requires judgment, including forecasting future financial results and market performance.

The estimates are revised periodically, based on the probability and timing of achieving the required performance targets, and adjustments are made as appropriate.

See Note 21 for additional information relating to the Company's stock compensation plan.

See Note 21 for additional information relating to the Company's stock-based compensation plan.

Income Taxes — Management accounts for income taxes under the asset and liability method.

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Management judgment is necessary in determining the frequency at which the need for a valuation allowance is assessed, the accounting period in which to establish the valuation allowance, as well as the amount of the valuation allowance.

Unrecognized tax benefits are defined as the difference between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to ASC Topic 740, Income Taxes .

The Company does not recognize a tax benefit for uncertain tax positions unless it concludes that it is more likely than not that the benefit will be sustained on audit (including resolutions of any related appeals or litigation processes) by the taxing authority, based solely on the technical merits of the associated tax position.

If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that, in management's judgment, is greater than 50 % likely to be realized.

The Company records expected incurred interest and penalties related to unrecognized tax positions in "Income tax expense" in the consolidated income statements.

The Company records expected incurred interest and penalties related to unrecognized tax positions in "Income tax expense" in the consolidated statements of comprehensive

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To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

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An ultimate result worse than the Company's expectations could adversely affect its results of operations.

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See Note 13 for additional disclosures regarding the Company's income taxes.

Note 3 — 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 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.

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.

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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 in Note 2.

Refer to Note 11 for disclosures about the Company's goodwill balances.

There were various other ASUs that became effective during 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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Note 3 — Recently Issued Accounting Pronouncements

Date Issued Reference Description Expected Adoption Date and Method Financial Statement Impact

October 2021 ASU No.

Business Combinations (ASC 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

The amendments in this ASU require that the acquirer recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC 606 as if the acquirer had originated the contracts.

The amendments in this ASU are applied prospectively to business combinations occurring on or after the effective date of the amendments.

January 2023, Prospective Currently under evaluation, but not expected to be material

August 2021 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

2021-06:Presentation of Financial Statements (ASC 205), Financial Services – Depository and Lending (ASC 942), and Financial Services – Investment Companies (ASC 946) 1

The ASU amends various SEC paragraphs pursuant to the issuance of an SEC release to update disclosure requirements for financial statements from acquired and disposed businesses including changes in tests and thresholds.

Additionally, the ASU amends various SEC paragraphs pursuant to an SEC release to update statistical disclosure requirements for bank and savings and loan registrants.

August 2021, Adoption method varies by amendment No material impact

August 2020 ASU No.

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

The amendments in this ASU 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.

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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 ASU 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), Leases – (Topic 842) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update 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 SEC Staff 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 third quarter of 2021.

Since management is continuing to evaluate the impacts of the above standards, disclosures around these preliminary assessments are subject to change.

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Date Issued Reference Description Expected Adoption Date and Method Financial Statement Impact

December 2019 2019-12:

Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes

The amendments in this update intend to reduce the complexity in accounting standards related to ASC Topic 740.

These changes include removing several exceptions such as requirements related to intraperiod tax allocations, requirements related to foreign subsidiary equity method investments, and changes to interim period income tax calculations.

Additionally, the amendments intend to simplify income tax accounting by updating areas, including but not limited to, franchise taxes, evaluation of goodwill, allocation of current and deferred tax expenses, and various other areas.

January 2021, Adoption method varies by amendment Currently under evaluation, but not expected to be material

1 Adopted during the first quarter 2020.

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

Since management is continuing to evaluate the impacts of the above standards, disclosures around these preliminary assessments are subject to change.

Note 4 — Acquisitions

Abilene Acquisition

On March 16, 2018 , the Company purchased 100.0 % of the equity interests of Abilene.

Abilene is a diversified truckload carrier located in Richmond, Virginia operating throughout the US and Canada.

The total consideration of $ 103.3 million consisted of approximately $ 80.5 million in cash consideration to the sellers, plus approximately $ 22.8 million for debt payoffs.

The Company funded the Abilene Acquisition through cash-on-hand and borrowing on the Revolver on the date of the transaction.

At closing, $ 7.0 million of the purchase price was placed in escrow to secure the sellers' indemnification obligations and an additional $ 4.5 million of the purchase price was placed in escrow in respect of certain tax obligations of the sellers and remains subject to further adjustments.

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

On December 6, 2021 , the Company, through a wholly owned subsidiary, acquired 100.0 % of Bismarck, North Dakota-based MME.

MME provides LTL, full truckload, and specialized and other logistics transportation services to a diverse customer base in its service territory in the upper Midwestern and great Northwestern regions of the US.

The total purchase price consideration of $ 164.4 million, consisted of $ 104.0 million in cash consideration to the sellers, including cash on hand and net working capital adjustments, and approximately $ 60.4 million in debt payoffs.

This was funded through cash-on-hand and borrowing on the 2021 Revolver on the transaction date.

At closing, $ 2.8 million of the cash consideration was placed in escrow to secure certain of the sellers' indemnification obligations and remains subject to further adjustments.

The purchase of the equity interests of MME results in the historical tax basis of MME's assets continuing to be recovered and any intangible assets arising through purchase accounting will result in additional stock basis for tax purposes.

Deferred taxes were established as of the opening balance sheet for purchase accounting fair value adjustments (other than for goodwill).

The SPA contains customary representations, warranties, covenants, and indemnification provisions.

The goodwill recognized represents expected synergies from combining the operations of MME 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 not expected to be deductible for tax purposes.

On July 5, 2021 , the Company acquired 100.0 % of Dothan, Alabama-based ACT.

ACT is a leading LTL carrier that also offers dedicated contract carriage and ancillary services.

The total purchase price consideration of $ 1.31 billion consisted of $ 1.30 billion in cash and $ 10.0 million in Knight-Swift shares issued to sellers at closing.

Additionally, the Company assumed $ 36.5 million in debt, net of cash.

Cash was funded from the July 2021 Term Loan, as well as existing Knight-Swift liquidity.

ACT was an S corporation for tax purposes, and the transaction included an election under Internal Revenue Code Section 338(h)(10).

Accordingly, the book and tax basis of the acquired assets and liabilities are the same as of the purchase date.

The equity purchase agreement contains customary representations, warranties, covenants, and indemnification provisions.

The results of the acquired business have been included in the consolidated financial statements since the date of acquisition and represent 2.2 % in 2020, 2.0 % in 2019, and 1.6 % in 2018 of consolidated total revenue, and 2.8 % in 2020, 2.3 % in 2019, and 2.1 % in 2018 of consolidated net income attributable to Knight-Swift .

The acquired business also represented 1.8 % and 1.6 % of consolidated total assets as of December 31, 2020 and 2019, respectively.

The goodwill recognized represents expected synergies from combining the operations of Abilene with the Company, including enhanced service offerings and sharing best practices in terms of driver recruiting and retention, as well as other intangible assets that did not meet the criteria for separate recognition.

The SPA contains customary representations, warranties, and covenants.

The Company's consolidated financial statements for 2021 include ACT's operating results beginning July 5, 2021 (closing of the acquisition) through December 31, 2021.

During 2021, the Company's consolidated operating results included ACT's total revenue of $ 386.8 million and net income of $ 23.1 million.

ACT's net income during 2021 included $ 7.0 million related to the amortization of intangible assets acquired in the ACT Acquisition.

The goodwill recognized represents expected synergies from combining the operations of ACT 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 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 March 16, 2018 acquisition date.

Pro Forma Information (Unaudited) — The following unaudited pro forma information combines the historical operations of the Company and ACT giving effect to the ACT Acquisition, and related transactions as if consummated on January 1, 2020, the beginning of the comparative period presented.

(in thousands, except per share data)

Total revenue $ 6,387,329 $ 5,374,934

Net income attributable to Knight-Swift 763,393 437,835

Earnings per share – diluted 4.57 2.57

The unaudited pro forma condensed combined financial information has been presented for comparative purposes only and includes certain adjustments such as recognition of assets acquired at estimated fair values and related depreciation and amortization, elimination of transaction costs incurred by Knight-Swift and ACT during the periods presented that were directly related to the ACT Acquisition, and related income tax effects of these items.

As a result of the ACT Acquisition, the Company incurred certain acquisition-related expenses totaling $ 2.9 million in 2021.

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The following table summarizes the fair value of the consideration transferred as of the acquisition date, including any adjustments during the measurement period:

March 16, 2018 Opening Balance Sheet Adjustments Adjusted

March 16, 2018 Opening Balance Sheet

(in thousands)

Fair value of the consideration transferred $ 103,223 $ 124 $ 103,347

Cash 1,654 — 1,654

Trade receivables 11,745 1,265 13,010

Other assets 7,785 842 8,627

Property and equipment 41,403 ( 41 ) 41,362

Identifiable intangible assets ¹ 23,000 ( 400 ) 22,600

Total assets 85,587 1,666 87,253

Accounts payable 1,959 1,577 3,536

Accrued liabilities 2,419 4,942 7,361

Claims accruals 230 179 409

Total liabilities 4,608 6,698 11,306

Goodwill $ 22,244 $ 5,156 $ 27,400

1 Includes $ 17.9 million in customer relationships and a $ 4.7 million trade name.

The above adjustments were related to the completion of an independent valuation of certain acquired intangible assets, the identification of liabilities associated with capital expenditures incurred prior to the acquisition, adjustments for Abilene’s adoption of ASC Topic 606, and the associated deferred tax asset impact of these adjustments.

No material statement of comprehensive income effects were identified with these adjustments.

Other Acquisition

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.

These expenses were eliminated in the presentation of the unaudited pro forma "Net income attributable to Knight-Swift" presented above.

The unaudited pro forma condensed combined financial information does not purport to represent the actual results of operations that Knight-Swift and ACT would have achieved had the companies been combined during the periods presented in the unaudited pro forma condensed combined financial statements and is not intended to project the future results of operations that the combined company may achieve after the identified transactions.

The unaudited pro forma condensed combined financial information does not reflect any cost savings that may be realized as a result of the ACT Acquisition and also does not reflect any restructuring or integration-related costs to achieve those potential cost savings.

On June 1, 2021 , pursuant to an SPA, the Company, through a wholly owned subsidiary, acquired 100.0 % of the equity interests of UTXL, a premier third-party logistics company which specializes in over-the-road full truckload and multi-stop loads.

The total purchase price consideration of $ 37.2 million, including cash-on-hand and net working capital adjustments, consisted of $ 32.2 million in cash to the sellers at closing, which was funded through cash-on-hand and borrowing on the 2017 Revolver on the transaction date.

At closing $ 2.25 million of the cash consideration was placed in escrow to secure certain of the sellers' indemnification obligations and remains subject to further adjustments.

The purchase price also included contingent consideration consisting of two additional annual payments of up to $ 2.5 million each ($ 5.0 million in total), representing the maximum possible annual deferred payments to the sellers based on operating ratio and revenue growth targets for each of the twelve-month periods ending May 31, 2022 and May 31, 2023.

As of December 31, 2021, $ 2.5 million is included in "Accrued liabilities" and $ 2.5 million is included in "Other long-term liabilities" in the Company's consolidated balance sheets, depending on the expected payment dates.

For income tax purposes, the sale of UTXL's equity interests to the Company is intended to be treated as a sale and purchase of assets.

Accordingly, the book and tax basis of the acquired assets and liabilities are the same as of the purchase date.

The SPA contains customary representations, warranties, covenants, and indemnification provisions.

The goodwill recognized represents expected synergies from combining the operations of UTXL 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.

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, 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 2017 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.

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Warehousing Co.

On January 1, 2020 , pursuant to a SPA the Company acquired 100.0 % of the equity interests of Warehousing Co.

with locations throughout the central US.

The total purchase price consideration of $ 66.9 million consisted of $ 48.2 million in cash to the sellers at closing, which was funded through cash-on-hand and borrowing on the 2017 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.

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.

The purchase price also included contingent consideration consisting of three additional annual payments of up to $ 8.1 million each ($ 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.

In order to estimate Warehousing Co.'s future performance, the Company utilized the Monte Carlo simulation method using certain inputs, including Warehousing Co.'s forecasted EBIT, discount rate, dividend yields, expected volatility, and expected stock returns during the above measurement periods.

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

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

The total purchase price consideration, as if adjusted at the January 1, 2020 transaction date, is identified in the "Purchase Price Allocations" table within this footnote.

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.

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of the deferred earnout, which was recorded in “Miscellaneous operating expenses” in the consolidated statement of comprehensive income.

As such, as of 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 December 31, 2021 and the annualized six-month period ending June 30, 2022.

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.

During the fourth quarter of 2021, the Company paid the second annual payment of $ 8.1 million as a result of the achievement of Warehousing Co.’s EBIT performance target for the calendar year 2021.

As of December 31, 2021, the remaining estimated contingent consideration was $ 8.1 million representing the fair value of the remaining annual deferred payments for the annualized six-month period ending June 30, 2022, all of which was recorded in "Accrued liabilities" in the consolidated balance sheets.

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

As of December 31, 2020, $ 8.1 million of the total was recorded in "Accrued liabilities" in the consolidated balance sheets and the remaining $ 8.1 million was recorded in "Other long-term liabilities" in the consolidated balance sheets.

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

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The goodwill is expected to be deductible for tax purposes.

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 December 31, 2020

(in thousands)

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Purchase Price Allocations

The purchase price allocations for the Company's acquisitions are preliminary, except for Warehousing Co., and have been allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition dates, and among other things may be 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 applicable.

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

Any future adjustments to the preliminary purchase price allocations, 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 periods, which are not to exceed one year from the respective acquisition dates.

MME ACT UTXL Eleos Warehousing Co.

December 6, 2021 Opening Balance Sheet as Reported at December 31, 2021 July 5, 2021 Opening Balance Sheet as Reported at December 31, 2021 June 1, 2021 Opening Balance Sheet as Reported at December 31, 2021 February 1, 2021 Opening Balance Sheet as Reported at December 31, 2021 January 1, 2020 Opening Balance Sheet as Reported at December 31, 2021

Fair value of the consideration transferred $ 164,382 $ 1,306,214 $ 37,230 $ 41,518 $ 66,444

Cash and cash equivalents 14,716 17,477 8,206 2,237 1,388

Trade and other receivables 3,301 — 3,301

Trade receivables 21,915 104,220 9,451 545 3,301

Prepaid expenses 2,067 15,803 — 47 608

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52,960 406,160 22,121 15,850 55,681

Deferred tax assets 54 — 54

Other noncurrent assets 139 1,739 — — 458

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Accounts payable ( 7,681 ) ( 19,386 ) ( 14,183 ) ( 156 ) ( 347 )

Accrued payroll and payroll-related expenses ( 7,106 ) ( 33,411 ) ( 247 ) ( 605 ) —

Accrued liabilities ( 544 ) ( 9,302 ) ( 69 ) ( 1,391 ) ( 644 )

Operating lease liabilities – current portion ( 4,451 ) — ( 4,451 )

Operating lease liabilities – less current portion ( 7,905 ) — ( 7,905 )

Claims accruals – current and noncurrent portions ( 1,090 ) ( 40,958 ) ( 418 ) — —

Operating lease liabilities – current and noncurrent portions ( 46,375 ) ( 4,052 ) — ( 560 ) ( 12,356 )

Long-term debt – current and noncurrent portions — ( 54,024 ) — — —

Deferred tax liabilities ( 19,009 ) — — — —

Other long-term liabilities ( 568 ) ( 4,243 ) — ( 475 ) —

Total liabilities ( 82,373 ) ( 165,376 ) ( 14,917 ) ( 3,187 ) ( 13,347 )

Noncontrolling interest — — — ( 10,281 ) —

Total stockholders' equity — — — ( 10,281 ) —

Goodwill $ 53,239 $ 490,879 $ 12,315 $ 35,747 $ 3,983

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 February 1, 2021 , the Company used $ 41.3 million in cash to acquire 79.4 % of the equity interest in Eleos, a Greenville, South Carolina based software provider, specializing in mobile driving workflow platforms to help complement its suite of services.

The acquisition is not considered significant and does not require separate reporting.

1 See above for a description of the working capital adjustments made to Warehousing Co.'s purchase price allocation during the measurement period.

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Note 6 — Restricted Investments, Held-to-Maturity

2 Includes $ 372.2 million in customer relationships ($ 250.8 million attributed to ACT), $ 2.0 million in noncompete agreements ($ 0.8 million attributed to ACT), $ 10.5 million in internally developed software ($ 6.5 million attributable to ACT), and $ 168.0 million in trade names ($ 148.1 million attributed to ACT).

Note 5 — Investments

The following table presents the cost or amortized cost, gross unrealized gains and temporary losses, and estimated fair value of the Company's restricted investments:

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As of December 31, 2021, the contractual maturities of the restricted investments were one year or less.

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

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

The Company did no t recognize any impairment losses related to restricted investments during 2021, 2020, or 2019.

Refer to Note 2 for accounting policy and Note 23 for additional information regarding fair value measurements of restricted investments.

Refer to Note 2 for the related accounting policy and Note 23 for additional information regarding fair value measurements of restricted investments.

Note 6 — Equity Investments

Transportation Resource Partners

Since 2003, Knight has entered into partnership agreements with entities that make privately-negotiated equity investments, including Transportation Resource Partners III, LP ("TRP III"), TRP Capital Partners, LP ("TRP IV"), TRP Capital Partners V, LP ("TRP V"), TRP CoInvest Partners, (NTI) I, LP ("TRP IV Coinvestment NTI"), TRP CoInvest Partners, (QLS) I, LP ("TRP IV Coinvestment QLS"), TRP Coinvest Partners, FFR I, LP ("TRP IV Coinvestment FFR"), and TRP Coinvest Partners V (PW) I, LP ("TRP V Coinvest").

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

The following table presents ownership and commitment information for Knight's investments in TRP partnerships:

Since 2003, the Company has entered into partnership agreements with entities that make privately-negotiated equity investments, including Transportation Resource Partners III, LP ("TRP III"), TRP Capital Partners, LP ("TRP IV"), TRP Capital Partners V, LP ("TRP V"), TRP CoInvest Partners, (NTI) I, LP ("TRP IV Coinvestment NTI"), TRP CoInvest Partners, (QLS) I, LP ("TRP IV Coinvestment QLS"), TRP Coinvest Partners, FFR I, LP ("TRP IV Coinvestment FFR"), and TRP Coinvest Partners V (PW) I, LP ("TRP V Coinvest").

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

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The following table presents ownership and commitment information for the Company's investments in TRP partnerships:

December 31, 2021

Knight's Ownership

Total Commitment (All Partners) Knight's Contracted Commitment Knight's Remaining Commitment

Knight-Swift's Ownership Interest 1

Total Commitment (All Partners) Knight-Swift's Contracted Commitment Knight-Swift's Remaining Commitment

(Dollars in thousands)

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1 The Company's share of the results is included within "Other income, net" in the consolidated statements of comprehensive income.

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2 In accordance with ASC Topic 321, Investments – Equity Securities , these investments are recorded at cost minus impairment.

2 In accordance with ASC 321, Investments – Equity Securities , these investments are recorded at cost minus impairment.

3 Management anticipates that $ 1.7 million will be due in 2022.

4 Management anticipates that the following amounts will be due:

$ 0.1 million in 2021, $ 0.2 million from 2022 through 2023, $ 0.4 million from 2024 through 2025, and none thereafter .

5 The TRP III, TRP IV Coinvestments, and TRP V Coinvest are unconsolidated majority interests.

Management considered the criteria set forth in ASC Topic 323, Investments – Equity Method and Joint Ventures , to establish the appropriate accounting treatment for these investments.

$ 0.1 million in 2022, $ 0.1 million from 2023 through 2024, $ 0.5 million in 2025, and none thereafter .

5 The TRP III, TRP IV Coinvestments, TRP V, and TRP V Coinvest are unconsolidated majority interests.

Management considered the criteria set forth in ASC 323, Investments – Equity Method and Joint Ventures , to establish the appropriate accounting treatment for these investments.

This guidance requires the use of the equity method for recording investments in limited partnerships where the "so minor" interest is not met.

As such, the investments are being accounted for under the equity method.

Knight's ownership interest reflects its ultimate ownership of the portfolio companies underlying the TRP III, TRP IV Coinvestment NTI, TRP IV Coinvestment FFR, TRP V, and TRP V Coninvest legal entities.

6 The Company entered into the agreement in 2020.

Knight's ownership interest reflects its ultimate ownership of the portfolio companies underlying the TRP III, TRP IV Coinvestment NTI, TRP IV Coninvestment QLS, TRP IV Coinvestment FFR, TRP V, and TRP V Coninvest legal entities.

6 Management anticipates that the following amounts will be due:

$ 7.2 million in 2022, $ 7.2 million from 2023 through 2024, $ 0.9 million from 2025 through 2026, and $ 2.5 million thereafter.

During the second quarter of 2021, the Company invested $ 25.0 million in Embark in exchange for a convertible note.

The terms of the agreement provided that the amount outstanding on the convertible note would be automatically converted into a number of shares of Embark'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 Embark.

In November 2021, Embark and Northern Genesis Acquisition Corp II, a publicly-traded special purpose acquisition company, completed a business combination agreement entered into on June 22, 2021, resulting in Embark becoming a publicly-traded company.

In association with this transaction, the Company's convertible note automatically converted into a number of shares of Embark's common stock as outlined above.

Further, the Company acquired an additional $ 25.0 million in Embark's common stock pursuant to a common stock subscription agreement between the Company and Embark.

As of December 31, 2021, the fair value of the combined investment in Embark was $ 54.5 million, resulting in a net unrealized gain of $ 4.5 million recognized during 2021 in "Operating income, net" in the consolidated statements of comprehensive income.

Other Equity Method Investments

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and therefore has recorded the transaction as an equity method investment.

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The carrying amount of the Company's initial investment in Holdings Co.

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– equity method investment 2

38,821 40,335

Embark – equity investment $ 54,467 $ —

Total carrying value $ 130,236 $ 77,562

1 In accordance with ASC Topic 321, Investments – Equity Securities , these investments are recorded at cost minus impairment.

2 In accordance with ASC Topic 323, Investments – Equity Method and Joint Ventures, the net investment balance includes accretion of amortization of certain definite-lived intangibles.

1 In accordance with ASC 321, Investments – Equity Securities , these investments are recorded at cost minus impairment.

2 In accordance with ASC 323, Investments – Equity Method and Joint Ventures, the net investment balance includes accretion of amortization of certain definite-lived intangibles.

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Note 7 — Trade Receivables, net

Trade receivables balances were as follows:

Trade receivables, net balances were comprised of the following:

(In thousands)

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Equipment manufacturers 11,923 5,680

Other 24,281 20,092

Insurance premiums 1

30,316 18,477

Trade receivables 932,999 600,572

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Trade receivables, net $ 911,336 $ 578,479

1 Prior year amounts within the table above have been reclassified to conform to current year presentation.

The following is a rollforward of the allowance for doubtful accounts for trade receivables:

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Beginning balance $ 22,093 $ 18,178 $ 16,355

Provision (reduction) 17,267 16,925 ( 3,092 )

Provision 10,900 17,267 16,925

Write-offs directly against the reserve ( 776 ) ( 902 ) ( 2,652 )

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Ending balance $ 21,663 $ 22,093 $ 18,178

1 Represents allowance for doubtful trade accounts receivables assumed in 2018 from the Abilene Acquisition.

See Note 5 for further details regarding this transaction.

1 Represents allowance for doubtful trade accounts receivables assumed in 2021 from the Company's acquisitions.

See Note 4 for further details regarding these acquisitions.

See Note 14 for a discussion of the Company's accounts receivable securitization program and the related accounting treatment.

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Notes receivable from independent contractors $ 5,969 $ 7,291

Notes receivable from third parties 3,034 6,164

Convertible note receivable from third party 10,141 —

Notes receivable from other third parties 994 3,034

Gross notes receivable 17,104 10,325

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Long-term portion $ 14,760 $ 6,877

Convertible Note

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

The following is a rollforward of the allowance for doubtful notes receivable:

2020 2019 2018

(In thousands)

Beginning balance $ 503 $ 1,051 $ 1,040

Provision (reduction) 464 ( 137 ) ( 100 )

Write-offs ( 365 ) ( 411 ) ( 103 )

Ending balance $ 602 $ 503 $ 1,051

1 Represents allowance for doubtful notes receivable assumed in 2018 from the Abilene Acquisition.

See Note 5 for further details regarding this transaction.

During the fourth quarter of 2021, the Company invested $ 10.0 million in a third-party company in exchange for a convertible note.

The convertible note accrues simple interest on the unpaid principal balance at a rate of 12.0 % and is payable on demand any time after August 27, 2023, unless earlier converted into shares of the third-party company's common stock.

The amount outstanding on the convertible note is converted into a number of shares of the third-party company's common stock upon either the closing of a qualified financing, or at the Company's election in connection with a non-qualified financing, a change of control, or at maturity, subject to discounted conversion pricing per share based on a valuation of the third-party company.

Note 9 — Assets Held for Sale

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Net gains on disposals, including disposals of property and equipment classified as assets held for sale, reported in "Miscellaneous operating expenses" in the consolidated statements of comprehensive income were $ 74.8 million during 2021, $ 9.7 million during 2020, and $ 32.9 million during 2019.

The Company's net carrying value of land and facilities classified as held for sale in the consolidated balance sheets as of December 31, 2020 and December 31, 2019 was zero .

During 2021 , the Company incurred impairment losses of $ 0.3 million, primarily related to certain legacy trailer models.

During 2020, t he Company incurred impairment losses of $ 0.5 million, primarily related to certain tractors and trailers as a result of a softer used equipment market.

During 2019, the Company incurred impairment losses of $ 0.4 million primarily related to certain Swift legacy trailer models as a result of a softer used equipment market.

The Company did no t recognize any impairment losses related to assets held for sale during 2018.

During 2019 , the Company incurred impairment losses of $ 0.4 million primarily related to certain legacy trailer models as a result of a softer used equipment market.

Note 10 — Goodwill and Other Intangible Assets

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592,180 3,983 48

Goodwill related to 2017 Merger 2

Goodwill at end of period $ 3,515,135 $ 2,922,964 $ 2,918,992

1 The goodwill associated with the Warehousing Co.

acquisition and Abilene Acquisition was allocated to the non-reportable and Trucking segments, respectively.

1 The goodwill associated with the ACT and MME acquisitions was allocated to the LTL segment.

The goodwill associated with the UTXL acquisition was allocated to the Logistics segment.

The goodwill associated with the Warehousing Co, and Eleos acquisitions was allocated to the non-reportable segments.

See Note 4 regarding the amount attributed to adjustments to the opening balance sheets.

2 The goodwill adjustment associated with the 2017 Merger was allocated to the Trucking segment.

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The following presents the components of goodwill by reportable segment as of December 31, 2021 and 2020:

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(In thousands)

Trucking $ 2,658,095 $ 2,658,106

Intermodal 175,594 175,594

Truckload $ 2,658,086 $ 2,658,095

Logistics 54,827 42,512

LTL 544,118 —

Intermodal 175,594 175,594

Non-reportable 82,510 46,763

Goodwill $ 3,515,135 $ 2,922,964

1 Except for the net accumulated amortization related to deferred tax assets in the Trucking segment, the net carrying amount and gross carrying amount are equal since there are no accumulated impairment losses.

1 Except for the net accumulated amortization related to deferred tax assets in the Truckload segment, the net carrying amount and gross carrying amount are equal since there are no accumulated impairment losses.

There were no impairments identified during annual goodwill impairment testing in 2021, 2020, or 2019.

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Other Intangible Assets

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Definite-lived intangible assets, net 1,026,491 748,745

Indefinite-lived trade names:

Gross carrying amount 804,558 640,500

Intangible assets, net $ 1,831,049 $ 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.

The following table presents amortization of intangible assets related to the 2017 Merger and intangible assets related to various acquisitions:

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.

Intangible assets related to acquisitions other than the 2017 Merger are amortized over a weighted-average amortization period of 19.0 years.

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.

The following table presents amortization of intangible assets related to the 2017 Merger and various acquisitions:

2021 2020 2019

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Amortization of intangibles $ 55,299 $ 45,895 $ 42,876

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

Intangible assets related to acquisitions other than the 2017 Merger are amortized over a weighted-average amortization period of 18.9 years.

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 December 31, 2020, management anticipates that the composition and amount of amortization associated with intangible assets will be $ 45.9 million in 2021, $ 45.8 million in 2022, $ 45.2 million for each of the years 2023 and 2024, and $ 45.1 million in 2025.

As of December 31, 2021, management anticipates that the composition and amount of amortization associated with intangible assets will be $ 64.7 million in 2022, $ 64.2 million for each of the years 2023 and 2024, $ 64.1 million in 2025, and $ 62.7 million in 2026.

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.

See Note 2 for accounting policies regarding goodwill and other intangible assets.

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Note 12 — Accrued Payroll and Purchased Transportation and Accrued Liabilities

Note 11 — Accrued Payroll and Purchased Transportation

The following table presents the composition of accrued payroll and purchased transportation:

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1 Accrued payroll includes accruals related to the various 401(k) plans the Company offers to its employees.

In order to qualify for these plans, employees must meet the minimum age requirement ( 18 years) and have completed ninety days of service with the Company.

Employees' rights to employer contributions are fully vested after five years from their date of employment.

The plans offer discretionary matching contributions of the greater of 100% up to 3.0 % of an employee's eligible compensation or $ 2,000 .

Depending on the plan, employees must meet the minimum age requirement ( 18 – 21 years) and have completed ninety days or one year of service with the Company in order to qualify.

Employees' rights to employer contributions are fully vested after three or five years from their date of employment.

The plans offer discretionary matching contributions of the greater of 100% up to 3.0 % or 6.0 % of an employee's eligible compensation or $ 2,000 .

The Company's employee benefits expense for matching contributions related to the 401(k) plans was approximately $ 16.2 million, $ 13.6 million, and $ 8.8 million in 2021, 2020, and 2019, respectively.

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As of December 31, 2021 and 2020, the balance above in accrued payroll included $ 14.5 million and $ 12.8 million, respectively, in matching contributions for the 401(k) plans.

The following table presents the composition of accrued liabilities:

(In thousands)

Accrued legal 1

$ 20,206 $ 121,312

Other 68,688 53,910

Accrued liabilities $ 88,894 $ 175,222

1 See Note 19 for details regarding the Company's legal accruals.

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Note 12 — Claims Accruals

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The current portion reflects the amount of claims expected to be paid in the following year.

The Company's insurance program for workers' compensation, auto and collision liability, physical damage, independent contractor claims, cargo damage, and medical involves self-insurance with varying risk retention levels.

The Company's insurance programs for workers' compensation, auto and collision liability, physical damage, third-party carrier and independent contractor claims, cargo damage, and medical involves self-insurance with varying risk retention levels.

Claims accruals were comprised of the following:

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Workers’ compensation reserves 90,481 94,609

Third-party carrier claims reserves 31,524 40

Independent contractor claims reserves 6,285 7,112

Cargo damage reserves 5,409 2,494

Employee medical reserves 13,612 4,279

Employee medical and other reserves 20,531 13,612

Claims accruals 417,321 349,742

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Claims accruals, less current portion $ 210,714 $ 174,814

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Self Insurance

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

Cargo Damage and Loss — The Company is insured against cargo damage and loss with liability limits of $ 1.0 million per truck or trailer with a $ 10.0 million limit per occurrence.

Workers' Compensation and Employers' Liability — The Company is self-insured for workers' compensation coverage.

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

Cargo Damage and Loss — The Company is insured against cargo damage and loss with liability limits of $ 2.0 million per truck or trailer with a $ 15.0 million limit per occurrence.

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

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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.

ACT — ACT maintains SIRs for claims on cargo losses, employee health and welfare, bodily injury and property, general liability and workers’ compensation.

Losses under the employee health and welfare, BIPD, and workers’ compensation programs are typically limited on a per claim and aggregate basis through stop-loss and excess insurance policies.

Risk retention amounts per occurrence are as follows:

• Workers' compensation - $ 1.0 million

• Auto liability - $ 2.0 million (ACT maintains a $ 5.0 million annual corridor deductible subject to a $ 10.0 million three-year policy term aggregate cap.)

• Employee medical - $ 1.0 million.

See Note 2 for accounting policy regarding the Company's claims accruals.

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Note 13 — Income Taxes

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State income taxes, net of federal income tax benefit 23,063 22,423 17,803

Statutory rate change effect on deferred taxes — — 452

Other 3,151 9,588 ( 940 )

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Operating lease liabilities 34,260 29,278

29,278 44,231

Other 20,562 10,687

Total deferred tax assets 159,537 152,771

152,771 176,543

Valuation allowance — —

Total deferred tax assets, net 159,537 152,771

152,771 176,543

Deferred tax liabilities:

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Operating lease right-of-use assets ( 34,016 ) ( 28,259 )

( 28,259 ) ( 41,018 )

Other ( 11,089 ) ( 6,857 )

Total deferred tax liabilities ( 1,034,414 ) ( 968,712 )

( 968,712 ) ( 948,262 )

Deferred income taxes $ ( 874,877 ) $ ( 815,941 )

1 Prior year amounts within the table above have been reclassified to conform to current year presentation.

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

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Unrecognized tax benefits at end of year $ 1,735 $ 2,950 $ 4,083

Increases for tax positions are related to the benefit received for federal deductions taken on the Company's subsidiary amended returns.

Decreases for tax positions are related to federal deductions, which were reserved according to ASC 740-10.

Management expects a decrease of $ 0.3 million in unrecognized tax benefits during the next twelve months.

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Increases for tax positions are related to the benefit received for federal deductions taken on the Company's subsidiary amended returns.

Decreases for tax positions are related to federal deductions, which were reserved according to ASC 740-10.

Management does not expect a decrease in unrecognized tax benefits during the next twelve months.

Interest and Penalties — Accrued interest and penalties was approximately $ 0.3 million and $ 0.4 million for the years ended December 31, 2020 and December 31, 2019, 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 .

Interest and Penalties — Accrued interest and penalties were approximately $ 0.1 million and $ 0.3 million as of December 31, 2021 and December 31, 2020, respectively.

Tax Examinations — Certain of the Company's subsidiaries are currently under examination by federal and various state jurisdictions for tax years ranging from 2014 to 2020 .

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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Note 14 — Accounts Receivable Securitization

On April 23, 2021, the Company entered into the 2021 RSA which further amended the 2018 RSA.

The 2021 RSA is a secured borrowing that is collateralized by the Company's eligible receivables, for which the Company is the servicing agent.

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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.

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

Effective July 11, 2018

Final maturity date 1

The following table summarizes the key terms of the 2021 RSA and 2018 RSA (dollars in thousands):

2021 RSA 2018 RSA

(Dollars in thousands)

Effective April 23, 2021 July 11, 2018

Final maturity date April 23, 2024 July 9, 2021

Borrowing capacity $ 400,000 $ 325,000

Accordion option 1

$ 100,000 $ 175,000

Unused commitment fee rate 2

20 to 40 basis points

20 to 40 basis points 20 to 40 basis points

Program fees on outstanding balances 3 4

one month LIBOR + 80 to 100 basis points

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

one month LIBOR + 82.5 basis points one month LIBOR + 80 to 100 basis points

1 The accordion option increases the maximum borrowing capacity, subject to participation by the purchasers.

3 The 2018 RSA commitment fee rate is based on the percentage of the maximum borrowing capacity utilized.

4 The 2018 RSA program fee is based on the Company's consolidated total net leverage ratio.

2 The 2021 RSA and 2018 RSA commitment fee rates are based on the percentage of the maximum borrowing capacity utilized.

3 Only the rate for the 2018 RSA program fee is subject to the Company's consolidated total net leverage ratio.

4 As identified within the 2021 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement index for LIBOR.

Availability under the 2018 RSA is calculated as follows:

Availability under the 2021 RSA and 2018 RSA is calculated as follows:

(In thousands)

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Availability under accounts receivable securitization facilities $ 55,700 $ 21,419

1 Outstanding borrowings are included in "Accounts receivable securitization – current portion" at December 31, 2020 and in "Accounts receivable securitization – less current portion" at December 31, 2019.

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

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1 As of December 31, 2021, outstanding borrowings are included in "Accounts receivable securitization – less current portion" in the consolidated balance sheets and are offset by $ 0.5 million of deferred loan costs.

As of December 31, 2020, outstanding borrowings are included in "Accounts receivable securitization – current portion" in the consolidated balance sheets and are offset by $ 0.1 million of deferred loan costs.

Interest accrued on the aggregate principal balance at a rate of 0.9 % and 1.0 %, as of December 31, 2021 and 2020, respectively.

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

The Company's accounts receivable securitization incurred program fees of $ 3.1 million in 2021, $ 3.5 million in 2020, and $ 7.2 million in 2019.

Refer to Note 23 for information regarding the fair value of the 2018 RSA.

Refer to Note 23 for information regarding the fair value of the 2021 RSA and 2018 RSA.

Note 15 — Debt and Financing

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(In thousands)

Term Loan, due October 2022, net 1 2

2021 Term Loan A-1, due December 3 2022, net 1 2

$ 199,676 $ —

2021 Term Loan A-2, due September 3, 2024, net 1 2

2021 Term Loan A-3, due September 3, 2026, net 1 2

2017 Term Loan, due October 2022, net 1 3

Prudential Notes, net 1

Other 5,069 —

Total long-term debt, including current portion 1,249,969 298,907

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Total long-term debt, including current portion $ 1,249,969 $ 298,907

2021 Revolver, due September 3, 2026 1 4

2017 Revolver, due October 2022 1 5

210,000 279,000

Long-term debt, including revolving line of credit $ 1,509,969 $ 508,907

1 Refer to Note 23 for information regarding the fair value of debt.

2 Net of $ 1.1 million and $ 0.2 million deferred loan costs at December 31, 2020 and 2019, respectively.

3 The Company also had outstanding letters of credit under the Revolver, primarily related to workers' compensation and self-insurance liabilities of $ 29.3 million and $ 28.3 million at December 31, 2020 and 2019, respectively.

Credit Agreements

2017 Debt Agreement — On September 29, 2017, Knight-Swift entered into the $ 1.2 billion 2017 Debt Agreement (which is an unsecured credit facility), with a group of banks, replacing Swift's previous secured Fourth Amended and Restated Credit Agreement, and Knight's unsecured credit facility.

The 2017 Debt Agreement included an $ 800.0 million Revolver maturing October 2022, $ 85.0 million of which was drawn at closing, and a $ 400.0 million Term Loan which matured on October 2, 2020.

On October 2, 2020 , Knight-Swift amended t he 2017 Debt Agreement to extend the maturity date of the Term Loan, 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.

There are no scheduled principal payments on the Term Loan until its maturity.

2 The carrying amounts of the 2021 Term Loan A-1, 2021 Term Loan A-2, and 2021 Term Loan A-3 are net of $ 0.3 million, $ 0.4 million, and $ 1.6 million in deferred loan costs as of December 31, 2021, respectively.

3 Net of $ 1.1 million in deferred loan costs at December 31, 2020.

4 The Company also had outstanding letters of credit of $ 64.0 million under the 2021 Revolver, primarily related to workers' compensation and self-insurance liabilities, at December 31, 2021.

5 The Company also had outstanding letters of credit of $ 29.3 million under the 2017 Revolver, primarily related to workers' compensation and self-insurance liabilities, at December 31, 2020.

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The following table presents the key terms of the 2017 Debt Agreement (as amended):

Term Loan Revolver 3

2017 Debt Agreement Terms (as amended):

(Dollars in thousands)

Credit Agreements

2021 Debt Agreement — On September 3, 2021, the Company entered into the $ 2.3 billion 2021 Debt Agreement (an unsecured credit facility), with a group of banks, replacing the 2017 Debt Agreement and the July 2021 Term Loan (described below).

The following table presents the key terms of the 2021 Debt Agreement:

2021 Term Loan A-1 2021 Term Loan A-2 2021 Term Loan A-3 2021 Revolver 2

2021 Debt Agreement Terms (Dollars in thousands)

Maximum borrowing capacity $ 200,000 $ 200,000 $ 800,000 $ 1,100,000

Final maturity date October 3, 2022 October 3, 2022

Interest rate minimum margin 1

Final maturity date December 3, 2022 September 3, 2024 September 3, 2026 September 3, 2026

Interest rate margin reference rate BSBY BSBY BSBY BSBY

Interest rate minimum margin 1

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Minimum principal payment — amount $ — $ — $ 10,000 $ —

Minimum principal payment — frequency Once Once

Minimum principal payment — commencement date October 3,

2022 October 3,

1 The 2020 Amendment allows the lender to trigger an amendment after identifying and deciding upon a replacement index for LIBOR.

Minimum principal payment — frequency Once Once Quarterly Once

Minimum principal payment — commencement date December 3, 2022 September 3, 2024 September 30, 2024 September 3, 2026

1 The interest rate margin for the 2021 Term Loan and 2021 Revolver is based on the Company's consolidated leverage ratio.

As of December 31, 2020, interest accrued at 1.277 % on the Term Loan and 1.026 % on the Revolver.

As of December 31, 2019, interested accrued at 2.792 % on the Term Loan and 2.770 % on the Revolver.

As of December 31, 2021, interest accrued at 1.022 % on the 2021 Term Loans and 1.064 % on the 2021 Revolver.

2 The commitment fee for the unused portion of the 2021 Revolver is based on the Company's consolidated leverage ratio, and ranges from 0.07 % to 0.20 %.

As of December 31, 2020 and 2019, commitment fees on the unused portion of the Revolver accrued at 0.100 % and outstanding letter of credit fees accrued at 1.000 %.

Pursuant to the 2017 Debt Agreement, the Revolver and the Term Loan contain certain financial covenants with respect to a maximum net leverage ratio and a minimum consolidated interest coverage ratio.

As of December 31, 2021, commitment fees on the unused portion of the 2021 Revolver accrued at 0.100 % and outstanding letter of credit fees accrued at 1.000 %.

Pursuant to the 2021 Debt Agreement, the 2021 Revolver and the 2021 Term Loans contain certain financial covenants with respect to a maximum net leverage ratio and a minimum consolidated interest coverage ratio.

The 2021 Debt Agreement provides flexibility regarding the use of proceeds from asset sales, payment of dividends, stock repurchases, and equipment financing.

In addition to the financial covenants, the 2021 Debt Agreement includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the 2021 Debt Agreement may be accelerated, and the lenders' commitments may be terminated.

The 2017 Debt Agreement contains certain usual and customary restrictions and covenants relating to, among other things, dividends (which would be restricted only if a default or event of default had occurred and was continuing or would result therefrom), liens, affiliate transactions, and other indebtedness.

As of December 31, 2020 and 2019, the Company was in compliance with the debt covenants that the 2017 Debt Agreement was subject to.

Borrowings under the 2017 Debt Agreement are guaranteed by Knight-Swift Transportation Holdings Inc., and certain of the Company's domestic subsidiaries (other than its captive insurance subsidiaries, driving academy subsidiary, and bankruptcy-remote special purpose subsidiary).

See Note 23 for fair value disclosures regarding the Company's debt instruments.

The 2021 Debt Agreement contains certain usual and customary restrictions and covenants relating to, among other things, dividends (which are restricted only if a default or event of default occurs and is continuing or would result therefrom), liens, affiliate transactions, and other indebtedness.

As of December 31, 2021, the Company was in compliance with the covenants under the 2021 Debt Agreement.

Borrowings under the 2021 Debt Agreement, are made by Knight-Swift Transportation Holdings Inc., and are guaranteed by certain of the Company's material domestic subsidiaries (other than its captive insurance subsidiaries, driving academy subsidiary, and bankruptcy-remote special purpose subsidiary).

July 2021 Term Loan — On July 6, 2021, Knight-Swift entered into a $ 1.2 billion term loan with Bank of America, N.A (the "July 2021 Term Loan").

The July 2021 Term Loan was incremental to, and was separate from, the 2017 Debt Agreement.

The July 2021 Term Loan was fully funded on July 6, 2021 and there were no scheduled principal payments prior to its scheduled maturity in October 2022.

The interest rate applicable to the July 2021 Term Loan was subject to a leverage-based grid and equaled the BSBY rate plus 1.000 % at closing.

The July 2021 Term Loan was paid off and terminated using the proceeds of the 2021 Term Loans, discussed above.

The July 2021 Term Loan contained similar terms to the 2017 Debt Agreement, including the financial covenants, usual and customary events of default for a facility of this nature, and certain usual and customary restrictions and covenants.

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ACT Credit Agreement

Prudential Notes — Through the acquisition of ACT, the Company assumed the S econd Amended and Restated Note Purchase and Private Shelf Agreement with Prudential Capital Group ("2014 Prudential Notes").

On September 3, 2021, ACT entered into the 2021 Prudential Notes, replacing the 2014 Prudential Notes.

The 2021 Prudential Notes have interest rates ranging from 4.05 % to 4.40 % and various maturity dates ranging from October 2023 through January 2028.

The 2021 Prudential Notes allow ACT to borrow up to $ 125.0 million, less amounts then currently outstanding with Prudential Capital Group, provided that certain financial ratios are maintained.

The 2021 Prudential Notes are unsecured and contain usual and customary restrictions on, among other things, the ability to make certain payments to stockholders, similar to the provisions of the Company's 2021 Debt Agreement.

As of December 31, 2021 , ACT had $ 77.6 million available under the agreement.

See Note 23 for fair value disclosures regarding the Company's debt instruments.

Note 16 — Leases

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1 Short-term lease cost includes leases with a term of twelve months or less, as well as month-to-month leases and variable lease costs.

Lease Liability Calculation Assumptions — The assumptions underlying the calculation of the Company's right-of-use assets and lease liabilities are disclosed below.

Lease Liability Calculation Assumptions — The assumptions underlying the calculation of the Company's right-of-use assets and corresponding lease liabilities are disclosed below.

Operating Finance Operating Finance

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Weighted average discount rate 3.0 % — % 3.7 % — %

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Maturity Analysis of Lease Liabilities (as Lessee) — Future minimum lease payments for all noncancelable leases were:

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Lease liabilities – less current portion $ 107,614 $ 256,166

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Supplemental Cash Flow Lease Disclosures — The following table sets forth cash paid for amounts included in the measurement of lease liabilities:

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Lessor Disclosures

The Company's wholly-owned financing subsidiaries lease revenue equipment to the Company's independent contractors under operating leases, which generally have terms between three and four years, and include renewal and purchase options.

The Company leases revenue equipment to independent contractors and other third parties under operating leases, which generally have terms between three and four years, and include renewal and purchase options.

These leases also include variable charges associated with miles driven in excess of the stipulated allowable miles in the contract, which are accounted for separately and presented in the table below.

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As such, future lease receipts reflect original leases and re-leases.

The Company's leases to third parties, some of which are subleases, are generally short-term, and may include renewal options.

The owned assets underlying the Company's leases as lessor primarily consist of revenue equipment.

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Depreciation is calculated on a straight-line basis down to the residual value, as applicable, over the estimated useful life of the equipment.

Depreciation expense for these assets was $ 20.6 million and $ 16.4 million for 2020 and 2019, respectively.

Additionally, the Company periodically leases out real estate for use by third parties, some of which are subleases.

Depreciation expense for these assets was $ 20.6 million for 2021 and 2020.

Additionally, the Company periodically leases or subleases out real estate for use by third parties.

These leases have varying terms, and may include renewal options.

Management’s significant assumptions and judgments include the determination of the amount the Company expects to derive from the underlying asset at the end of the lease term, as well as whether a contract contains a lease.

Lease Revenue and Rental Income — The components of the Company's lease revenue are included in "Revenue, excluding trucking fuel surcharge" and the Company's rental income is included in "Other income, net" in the consolidated statements of comprehensive income.

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Lease Revenue and Rental Income — The components of the Company's lease revenue are included in "Revenue, excluding truckload and LTL fuel surcharge" and the Company's rental income is included in "Other income, net" in the consolidated statements of comprehensive income.

These amounts are disclosed in the table below.

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$ 10,375 $ 10,365

1 Primarily represents operating revenue earned by the Company's financing subsidiaries for leasing equipment to third-party independent contractors.

1 Represents operating revenue earned by the Company for leasing equipment to independent contractors and other third-parties.

2 Represents non-operating income earned from leasing real estate to third parties.

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Maturity Analysis of Future Lease Revenues (as Lessor) — Future minimum lease revenues for all noncancelable leases were:

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Refer to Note 24 for information regarding the leasing transactions between the Company and related parties.

Note 18 — Purchase Commitments

As of December 31, 2020, the Company had outstanding commitments to acquire revenue equipment of $ 704.0 million in 2021 ($ 455.3 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 December 31, 2020, the Company had outstanding purchase commitments to acquire facilities and non-revenue equipment of $ 25.9 million in 2021, $ 2.0 million in the two-year period 2022 through 2023 , and $ 0.5 million in the two-year period 2024 though 2025, and none thereafter.

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

As of December 31, 2020, the Company had outstanding commitments for fuel purchases of $ 35.4 million in 2021 and no ne thereafter.

Note 17 — Defined Benefit Pension Plan

Through the ACT Acquisition, the Company assumed a defined benefit pension plan covering ACT's drivers, drivers' helpers, warehousemen, warehousemen's helpers, mechanics, and mechanics' helpers.

The plan provides normal retirement benefits based on years of credited service and applicable benefit units as defined by the plan.

Provision is also made for early and defined retirements.

The pension plan was amended such that benefit accrual and plan participation for the plan were effectively frozen as of January 1, 1997, resulting in a curtailment on that date.

The net pension liability recognized is as follows:

December 31, 2021

(In thousands)

Projected benefit obligation $ 71,440

fair value of plan assets 70,467

Unfunded status

Accrued pension liability recognized 1

1 The pension liability is included in "Other long-term liabilities" in the consolidated balance sheets.

"Other comprehensive loss" in the consolidated statements of comprehensive income included a $ 0.6 million loss from pension plan adjustments during 2021.

The provisions of the plan do not require compensation levels to be considered in determining the plan’s benefit obligation.

As such, the accumulated benefit obligation and projected benefit obligation are the same.

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Other information concerning the defined benefit pension plan is summarized below:

(In thousands)

Net periodic pension income $ 1,483

Benefits paid 2,981

A weighted-average discount rate of 2.53 % was used to determine benefit obligations as of December 31, 2021.

The following weighted-average assumptions were used to determine net periodic pension cost:

Discount rate 2.55 %

Expected long-term rate of return on pension plan assets 6.00 %

ACT's assumptions for the expected long-term rate of return on pension plan assets are based on a periodic review of the plan’s asset allocation over a long-term period.

Expectations of returns for each asset class are based on comprehensive reviews of historical data and economic/financial market theory.

The expected long-term rate of return on pension plan assets was selected from within the reasonable range of rates determined by (1) historical real returns, net of inflation, for the asset classes covered by the investment policy and (2) projections of inflation over the long-term period during which benefits are payable to plan participants.

The defined benefit pension plan weighted-average asset allocations, by asset category, are as follows:

Asset category:

Equity securities 30 %

Debt securities 68 %

Cash and cash equivalents

Pension plan assets

The target allocation by asset category, is as follows:

Asset category:

Equity securities 30 %

Debt securities 70 %

The investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner necessary to meet expected future benefit payments.

The investment guidelines consider a broad range of economic conditions.

Central to the policy are target allocation percentages (shown above) by major asset categories.

The objectives of the target allocation percentages are to maintain investment portfolios that diversify risk through prudent asset allocation parameters and achieve asset returns that meet or exceed the plan’s actuarial assumptions.

Refer to Note 23 for additional information regarding fair value measurements of the Company's investments.

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ACT did no t contribute to the pension plan during 2021.

ACT is no t expecting to recognize any net loss within "Other comprehensive loss" in the consolidated statements of comprehensive income during 2022.

The following benefit payments are expected to be paid in each of the fiscal years as follows:

December 31, 2021

(In thousands)

2027 through 2030 20,543

Total $ 39,698

Note 18 — Purchase Commitments

As of December 31, 2021, the Company had outstanding commitments to acquire revenue equipment of $ 858.0 million in 2022 ($ 585.8 million of which were tractor commitments), $ 58.6 million in 2023 ($ 50.4 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 December 31, 2021, the Company had outstanding purchase commitments to acquire facilities and non-revenue equipment of $ 53.4 million in 2022, $ 4.5 million in the two-year period 2023 through 2024 , and $ 1.2 million in the two-year period 2025 through 2026, and none thereafter.

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

Note 19 — Contingencies and Legal Proceedings

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Moreover, management's views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop.

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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 consolidated balance sheets.

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However, actual outcomes could be material to the Company's financial position, operating results, or cash flows for any particular period.

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EMPLOYEE COMPENSATION AND PAY PRACTICES MATTERS

CRST Expedited

Plaintiff alleges tortious interference with contract and unjust enrichment related to non-competition agreements entered into with certain of its drivers.

The plaintiff alleges tortious interference with contract and unjust enrichment related to non-competition agreements entered into with certain of its drivers.

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

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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 December 31, 2020.

On August 6, 2021 a three-judge panel of the 8th Circuit Court of Appeals issued an opinion reversing the trial court’s decision.

On October 4, 2021 the 8th Circuit Court of Appeals denied a petition for rehearing.

The likelihood that a loss has been incurred is no longer probable, and the accrual for this lawsuit has accordingly been reversed as of December 31, 2021.

California Wage, Meal, and Rest Class Actions

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

The Court order granting final approval of the settlement has been appealed to the 9 th Circuit.

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 December 31, 2021.

Arizona Minimum Wage Class Action

The plaintiffs generally allege one or more of the following:

1) failure to 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 a settlement in this matter.

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

INDEPENDENT CONTRACTOR MATTERS

Ninth Circuit Independent Contractors Misclassification Class Action

Ninth Circuit Independent Contractor Misclassification Class Action

The putative class alleges that Swift misclassified independent contractors as independent contractors, instead of employees, in violation of the FLSA and various state laws.

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

As of December 31, 2020 the Company has a reserve accrued for anticipated cost associated with finalizing this matter.

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

1 Individually and on behalf of all others similarly situated.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

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 the 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 December 31, 2021, the Company's estimate for its total legal liability for all such clean-up and remediation costs was approximately $ 1.1 million in the aggregate for all current and prior year claims.

Note 20 — Share Repurchase Plans

On June 1, 2018, the Board approved the repurchase of up to $ 250.0 million of the Company's outstanding common stock (the "2018 Knight-Swift Share Repurchase Plan").

With the adoption of the 2018 Knight-Swift Share Repurchase Plan, the Company terminated the previous share repurchase plan (the "Swift Share Repurchase Plan").

This Swift Share Repurchase Plan was authorized in February 2016, by Swift's board of directors for the repurchase of up to $ 150.0 million of Swift common stock.

When terminated, the Swift Share Repurchase Plan had approximately $ 62.9 million in remaining authorized purchases.

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 2018 Knight-Swift Share Repurchase Plan.

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

With the adoption of the 2019 Knight-Swift Share Repurchase Plan, the Company terminated the previous share repurchase plan.

There was approximately $ 0.2 million of authorized purchases remaining under the previous 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").

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(in thousands)

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

May 30, 2019 1

$ 250,000 — — 4,841 179,585

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1,377 $ 57,175 4,841 $ 179,585

1 As of December 31, 2019, $ 233.6 million remained available under the 2019 Knight-Swift Share Repurchase Plan.

2 As of December 31, 2020, $ 250.0 million remained available under the 2020 Knight-Swift Share Repurchase Plan.

1 $ 192.8 million and $ 250.0 million remained available under the 2020 Knight-Swift Share Repurchase Plan as of December 31, 2021 and December 31, 2020, respectively .

Subsequent to December 31, 2021, the Company repurchased 0.7 million shares for $ 36.9 million under the 2020 Knight-Swift Share Repurchase Plan, leaving $ 155.9 million available as of February 22, 2022.

Refer to Note 24 for a discussion of share repurchase transactions conducted with related parties.

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Note 21 — Stock-based Compensation

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As of December 31, 2021, the aggregate number of shares remaining available under the 2014 Stock Plan was approximately 4.7 million.

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Legacy Plans — In connection with the 2017 Merger, the registered securities under the Knight Amended and Restated 2003 Stock Option Plan, the Knight 2012 Equity Compensation Plan, the Knight Amended and Restated 2015 Omnibus Incentive Plan, and the Swift 2007 Omnibus Incentive Plan (collectively, the "Legacy Plans") were deregistered.

As such, no future awards may be granted under these Legacy Plans.

Outstanding awards granted under the Legacy Plans were assumed by the combined company and continue to be governed by such Legacy Plans until such awards have been exercised, forfeited, canceled, or have otherwise expired or terminated.

Outstanding awards granted under the Legacy Plans were assumed by Knight-Swift and continue to be governed by such Legacy Plans until such awards have been exercised, forfeited, canceled, or have otherwise expired or terminated.

See Note 2 regarding the Company's accounting policy for stock-based compensation.

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Stock options $ 232 $ 567 $ 1,149

Restricted stock units and restricted stock awards 13,496 9,734 8,019

Restricted stock units 18,190 13,496 9,734

Performance units 15,073 5,576 2,492

Stock-based compensation expense – equity awards $ 33,495 $ 19,639 $ 13,375

Stock-based compensation expense – liability awards 1

Stock-based compensation (benefit) expense – liability awards 1

( 5,364 ) 6,955 2,663

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$ 8,357 $ 4,949 $ 3,344

1 Includes awards granted to executive management in November of 2019 and 2018 that ultimately settle in cash upon fulfilling a requisite service period (for restricted stock units) and fulfilling a requisite service period and achieving performance targets (for performance units) .

2 The income tax benefit is calculated by applying the effective tax rate to stock-based compensation expense for equity awards, as the expense associated with liability awards is not tax deductible.

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1 Includes awards granted to executive management in November 2019 that, per the original agreement, would ultimately settle in cash upon fulfilling a requisite service period (for restricted stock units) and fulfilling a requisite service period and achieving performance targets (for performance units).

During 2021, the Company amended the agreements for outstanding awards to ultimately settle in shares after each requisite service period.

2 The income tax benefit is calculated by applying the statutory tax rate to stock-based compensation expense for equity awards, as the expense associated with liability awards is not tax deductible.

Unrecognized Stock-based Compensation Expense

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(In thousands) (In years)

Equity awards – Stock options $ 230 0.4

Equity awards – Restricted stock units and restricted stock awards 41,782 2.4

Equity awards – Restricted stock units 49,704 2.2

Equity awards – Performance units 14,306 2.4

Liability awards – Restricted stock units and performance units 3,181 1.3

Total unrecognized stock-based compensation expense $ 64,010 2.3

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2021 2020 2019

Restricted stock units and restricted stock awards 722,499 588,819 420,014

Restricted stock units 562,021 722,499 588,819

Performance units 112,690 146,036 102,776

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Liability awards granted 1 2

— 80,927 91,268

Total stock awards granted 674,711 868,535 772,522

1 Includes 48,556 , and 54,761 performance units in 2019 and 2018, respectively.

2 Includes 32,371 , and 36,507 restricted stock units in 2019 and 2018, respectively.

1 Includes 48,556 performance units in 2019.

2 Includes 32,371 restricted stock units in 2019.

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Stock Options

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Most stock options granted by the Company cannot be exercised until at least one year after the grant date and have a five to ten-year contractual term.

Stock options are forfeited upon termination of employment for reasons other than death, disability, or retirement.

Stock options are generally forfeited upon termination of employment for reasons other than death, disability, or retirement.

A summary of 2021 stock option activity follows:

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Aggregate number of stock options expected to vest at a future date as of December 31, 2021 — $ — 0.0 $ —

86,409 $ 33.35 1.4 $ 732

Exercisable at December 31, 2021 85,007 $ 31.95 0.6 $ 2,464

1 The aggregate intrinsic value was computed using the closing share price on December 31, 2021 of $ 60.94 and on December 31, 2020 of $ 41.82 , as applicable.

2 Includes 4,223 swapped shares which were excluded from the "Common stock issued to employees" activity on the Consolidated Statements of Stockholders' Equity.

3 Net of the applied, estimated forfeiture rate.

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The following table summarizes stock option exercise information for the years presented:

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The total fair value of the shares vested during 2021, 2020, and 2019 was $ 0.6 million, $ 1.0 million, and $ 1.5 million, respectively.

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Restricted Stock Units

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Restricted stock unit recipients do not have voting rights with respect to the shares underlying unvested awards.

Employees forfeit their units if their employment terminates before the vesting date.

Employees generally forfeit their units if their employment terminates before the vesting date, with the exception of death, disability or retirement.

The following table is a rollforward of unvested restricted stock units, including restricted stock units classified as equity and those classified as liabilities:

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1 The fair value of each restricted stock unit is based on the closing market price on the grant date.

2 Includes 123,069 shares withheld for taxes and 13,039 net units settled in cash which were excluded from the "Common stock issued to employees" activity on the Consolidated Statements of Stockholders' Equity.

2 Includes 170,280 shares withheld for taxes and 18,697 net units settled in cash which were excluded from the "Common stock issued to employees" activity within the consolidated statements of stockholders' equity.

Performance Units

The Company issues performance units to selected key employees, that may be earned based on achieving performance targets approved by the compensation committee annually.

The Company issues performance units to select key employees, that may be earned based on achieving performance targets approved by the compensation committee annually.

The initial award is subject to an adjustment determined by the Company's performance achieved over a three-year performance period when compared to the objective performance standards adopted by the compensation committee.

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Granted 112,690 $ 60.55

Shares earned above target 45,409 $ 37.89

( 136,225 ) $ 45.02

Unvested performance units at December 31, 2021 2

571,604 $ 44.22

1 Includes 63,815 shares withheld for taxes and 39,225 net units settled in cash which were excluded from the "Common stock issued to employees" activity within the consolidated statements of stockholders' equity.

2 The performance measurement period for performance units granted in 2018 is January 1, 2019 to December 31, 2021 (three full calendar years).

The performance measurement period for performance units granted in 2019 is January 1, 2020 to December 31, 2022 (three full calendar years).

The performance measurement period for performance units granted in

The performance measurement period for performance units granted in 2020 is January 1, 2021 to December 31, 2023 (three full calendar years).

The performance measurement period for units granted in 2021 is January 1, 2022 to December 31, 2024 (three full calendar years).

All performance units will vest one month following the expiration of the performance measurement period.

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2020 is January 1, 2021 to December 31, 2023 (three full calendar years).

All performance units will vest one month following the expiration of the performance measurement period.

The following table presents the weighted average assumptions used in the fair value computation for performance units, including performance units classified as equity and those classified as liabilities:

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Non-compensatory Stock Plan:

In 2012, Swift's board of directors adopted, and its stockholders approved, the 2012 ESPP.

The 2012 ESPP continues to be administered by the Company following the 2017 Merger, is intended to qualify under Section 423 of the Internal Revenue Code, and is considered noncompensatory.

The Company's 2012 ESPP is administered by the Company, is intended to qualify under Section 423 of the Internal Revenue Code, and is considered noncompensatory.

Pursuant to the 2012 ESPP, the Co mpany is authorized to issue up to 1.4 million shares of its common stock to eligible employees who participate in the plan.

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There are four three-month offering periods corresponding to the calendar quarters.

Each eligible employee is restricted to purchasing a maximum of $ 6,250 of common stock during an offering period, determined by the fair market value of the common stock as of the first day of the offering period, and $ 25,000 of common stock during a calendar year.

Each eligible employee is restricted to purchasing a maximum of $ 6,250 of common stock during an offering period, determined by the fair market value of the common stock as of the last day of the offering period, and $ 25,000 of common stock during a calendar year.

Officers or employees who own 5 % or more of the total voting power or value of common stock are restricted from participating in the 2012 ESPP.

The 2012 ESPP was amended and restated in January 2018 to be a Knight-Swift plan, thus permitting Knight employees to participate in the plan in addition to Swift employees.

The terms and definitions of the amended and restated 2012 ESPP remain substantially the same as the original 2012 ESPP.

The plan was amended effective January 1, 2019 to align with new federal tax legislation that lifted the restriction on contributing to the ESPP if the participant had a hardship withdrawal on the 401(k) plan.

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Note 23 — Fair Value Measurement

ASC Topic 820, Fair Value Measurements and Disclosures, requires that the Company disclose estimated fair values for its financial instruments.

ASC 820, Fair Value Measurements and Disclosures, requires that the Company disclose estimated fair values for its financial instruments.

The estimated fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for the asset or liability.

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See Note 5 for additional investments disclosures regarding restricted investments, held-to-maturity.

Convertible Notes — The estimated fair value of the Company's convertible note is based on probability weighted discounted cash flow analysis of the corresponding pay-off/redemption.

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

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Equity Securities — The estimated fair value of the Company's investments in equity securities is based on quoted prices in active markets that are readily and regularly obtainable.

Pension Plan Assets — The estimated fair value of ACT's pension plan assets are based on quoted prices in active markets that are readily and regularly obtainable.

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Debt Instruments and Leases — For notes payable under the Revolver and the Term Loan, fair value approximates the carrying value due to the variable interest rate.

The carrying value of the 2018 RSA approximates fair value, as the underlying receivables are short-term in nature and only eligible receivables (such as those with high credit ratings) are qualified to secure the borrowed amounts.

For finance and operating leases, the carrying value approximates the fair value, as the Company's finance and operating leases are structured to amortize in a manner similar to the depreciation of the underlying assets.

Contingent Consideration — The estimated fair value of the Company's contingent consideration owed to Warehousing Co.'s seller is calculated using a Monte Carlo simulation model based on the acquiree's earnings before interest and taxes.

Debt Instruments and Leases — For notes payable under the 2021 Revolver, the 2021 Term Loans, the 2021 Prudential Notes, the 2017 Revolver, and the 2017 Term Loan, fair value approximates the carrying value due to the variable interest rate.

The carrying values of the 2021 RSA and 2018 RSA approximate fair value, as the underlying receivables are short-term in nature and only eligible receivables (such as those with high credit ratings) are qualified to secure the borrowed amounts.

For finance and operating lease liabilities, the carrying value approximates the fair value, as the Company's finance and operating lease liabilities are structured to amortize in a manner similar to the depreciation of the underlying assets.

Contingent Consideration — The estimated fair value of the Company's contingent consideration owed to sellers is calculated using applicable models and inputs for each acquired entity.

Other — Cash and cash equivalents, restricted cash, net accounts receivable, income tax refund receivable, and accounts payable represent financial instruments for which the carrying amount approximates fair value, as they are short-term in nature.

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All remaining balance sheet amounts excluded from the below are not considered financial instruments, subject to this disclosure.

Fair Value Hierarchy — ASC Topic 820 establishes a framework for measuring fair value in accordance with GAAP and expands financial statement disclosure requirements for fair value measurements.

ASC Topic 820 further specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable.

Fair Value Hierarchy — ASC 820 establishes a framework for measuring fair value in accordance with GAAP and expands financial statement disclosure requirements for fair value measurements.

ASC 820 further specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable.

The hierarchy follows:

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Unobservable inputs are valuation technique inputs that reflect the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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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:

December 31, 2021 December 31, 2020

Consolidated Balance Sheets Caption Carrying

Value Estimated

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Restricted investments, held-to-maturity 1

$ 9,001 $ 8,995 $ 8,912 $ 8,915

Restricted investments, held-to-maturity, amortized cost $ 5,866 $ 5,859 $ 9,001 $ 8,995

Equity method investments

77,562 77,562 30,878 30,878

Other long-term assets 75,769 75,769 77,562 77,562

Investments in equity securities

18,675 18,675 8,722 8,722

Other long-term assets 74,201 74,201 18,675 18,675

Convertible note Other long-term assets 10,141 10,141 — —

Financial Liabilities:

2021 Term Loan A-1, due December 2022 2

Long-term debt – less current portion 199,676 200,000 — —

2021 Term Loan A-2, due September, 2024 2

Long-term debt – less current portion 199,607 200,000 — —

2021 Term Loan A-3, due September 2026 2

Long-term debt – less current portion 798,352 800,000 — —

2021 Revolver, due September 2026 Revolving line of credit 260,000 260,000 — —

2021 Prudential Notes 3

Finance lease liabilities and long-term debt

– current portion,

Long-term debt – less current portion 47,265 47,354 — —

2021 RSA, due April 2024 4

Accounts receivable securitization

– less current portion 278,483 279,000 — —

Contingent consideration associated with acquisition Accrued liabilities, Other long-term liabilities 13,100 13,100 16,200 16,200

2017 Term Loan, due October 2022 5

$ 298,907 $ 300,000 $ 364,825 $ 365,000

2018 RSA, due July 2021 5

213,918 214,000 204,762 205,000

Long-term debt – less current portion $ — $ — $ 298,907 $ 300,000

2017 Revolver, due October 2022

210,000 210,000 279,000 279,000

Contingent consideration associated with acquisition 6

16,200 16,200 — —

Revolving line of credit — — 210,000 210,000

2018 RSA, due July 2021 6

Accounts receivable securitization

– current portion — — 213,918 214,000

1 Refer to Note 5 for the differences between the carrying amounts and estimated fair values of the Company's restricted investments, held-to-maturity.

2 Refer to Note 7 for more discussion about the Company's equity method investments.

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

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

The carrying amount of the Term Loan is included in "Long-term debt – current portion" and is net of $ 0.2 million of deferred loan costs as of December 31, 2019.

3 The carrying amount of the 2021 Prudential Notes is net of $0.1 million in deferred loan costs and $ 2.4 million in fair value adjustments as of December 31, 2021 .

4 The carrying amount of the 2021 RSA is net of $ 0.5 million in deferred loan costs as of December 31, 2021.

5 The carrying amount of the 2017 Term Loan is net of $ 1.1 million in deferred loan costs as of December 31, 2020

6 The carrying amount of the 2018 RSA is net of $ 0.1 million in deferred loan costs as of December 31, 2020.

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5 The carrying amount of the 2018 RSA is included in "Accounts receivable securitization – current portion" and is net of $ 0.1 million in deferred loan costs as of December 31, 2020.

The carrying amount of the 2018 RSA is included in "Accounts receivable securitization – less current portion" and is net of $ 0.2 million in deferred loan costs as of December 31, 2019.

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 consolidated balance sheets based on the due date of the payments.

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 December 31, 2021 and 2020:

Fair Value Measurements at Reporting Date Using

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

Estimated Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Unrealized Gain Position

(In thousands)

As of December 31, 2021

Convertible note 1

$ 10,141 $ — $ — $ 10,141 $ 141

Investments in equity securities 2

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18,675 18,675 — — 3,553

1 Total unrealized gains (losses) for these investments are included within "Other income, net" within the consolidated statements of comprehensive income.

The Company did not sell any equity investments during 2020 or 2019 and therefore did not realize any gains or losses on these investments.

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 December 31, 2020.

1 The Company recognized $ 0.1 million of unrealized gains on the convertible note during 2021, which is included within "Other income, net" within the consolidated statements of comprehensive income.

The fair value of the note was determined using a discounted cash flow analysis based on the probability of exit event options and exit event dates.

2 Fair value activity from the investments in equity securities is recorded in "Other income, net" within the consolidated statements of comprehensive income.

During 2021, the Company recognized $ 16.4 million in gains on these investments in equity securities, consisting of $ 10.9 million in unrealized gains and $ 5.5 million in realized gains.

3 Fair value activity from the investments in equity securities is recorded in "Other income, net" within the consolidated statements of comprehensive income.

During 2020, the Company recognized $ 3.7 million in unrealized gains on these investments in equity securities.

Fair Value Measurements at Reporting Date Using

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$ 13,100 $ — $ — $ 13,100 $ —

1 Refer to Note 5 for information regarding the adjustments made to the contingent consideration associated with the acquisition.

As of December 31, 2019, there were no major categories of liabilities on the 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 December 31, 2020 and 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 2021 related to the revaluation of these liabilities.

Refer to Note 4 for information regarding the components of these liabilities.

2 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.

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Nonrecurring 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 nonrecurring basis as of December 31, 2021 and 2020:

Fair Value Measurements at Reporting Date Using

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

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.

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

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

The Company recognized $ 5.3 million of impairments during 2020.

Nonrecurring Fair Value Measurements (Liabilities) — As of December 31, 2021 and 2020 there were no liabilities included in the Company's consolidated balance sheets at estimated fair value that were measured on a nonrecurring basis.

Fair Value of Pension Plan Assets — The following table sets forth the level within the fair value hierarchy of ACT's pension plan financial assets accounted for at fair value on a recurring basis.

Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

ACT's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of these assets and their placement within the fair value hierarchy levels.

Fair Value Measurements at Reporting Date Using:

Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs

(In thousands)

As of December 31, 2021

US equity funds $ 14,877 $ 14,877 $ — $ —

International equity funds 6,304 6,304 — —

Fixed income funds 47,873 47,873 — —

Cash and cash equivalents 1,413 1,413 — —

Total pension plan assets $ 70,467 $ 70,467 $ — $ —

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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 Trucking and Logistics segments based on each segment’s use of the assets.

Nonrecurring Fair Value Measurements (Liabilities) — As of December 31, 2020 and 2019 there were no liabilities included in the Company's consolidated balance sheets at estimated fair value that were measured on a nonrecurring basis.

Note 24 — Related Party Transactions

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Total $ 31 $ 35 $ 442 $ 68 $ 1,873 $ 2,652

1 Entities affiliated with former Board member Jerry Moyes include Central Freight Lines, SME Industries, Compensi Services, and DPF Mobile.

1 Entities affiliated with former Board member Jerry Moyes include Central Freight Lines, SME Industries, and DPF Mobile.

"Other affiliates" includes entities that are associated with various board members and executives and require approval by the Board prior to completing transactions.

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The amounts included in this Note 24 pertain to transactions that occurred prior to the date that the ownership percentage changed.

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Receivables and payables pertaining to related party transactions were:

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Central Freight Lines $ — $ — $ 133 $ —

SME Industries — — 17 —

DPF Mobile — — — 41

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Total $ 14 $ 44 $ 135 $ 51

Land Purchase — In November 2018, the Company purchased land in Perris, California for $ 7.7 million from former Board member Jerry Moyes.

Share Repurchase — On December 27, 2018, the Company purchased 1,173,680 shares of the Company’s common stock from an entity controlled by Jerry Moyes, a former Board member of the Company.

The shares were purchased for an aggregate purchase price of $ 29.3 million, or $24.98 per share.

The per share purchase price represents a three cent per share discount from the closing price of the Company’s common stock on December 26, 2018.

The Company purchased the shares under the 2018 Knight-Swift Share Repurchase Plan.

Note 25 — Information by Segment, Geography, and Customer Concentration

Segment Information

The Company has three reportable segments:

Trucking, Logistics, and Intermodal, as well as the non-reportable segments, discussed below.

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.

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

The Company aggregated these various operating segments into the three reportable segments discussed below based on similarities with both their qualitative and economic characteristics.

The Trucking reportable segment is comprised of nine trucking operating segments that provide similar transportation services to our customers utilizing similar transportation equipment over both irregular (one-way movement) and/or dedicated routes.

The Trucking reportable segment consists of irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border operations.

The Logistics reportable segment is comprised of five logistics operating segments that provide similar transportation services to our customers and primarily consist of brokerage and other freight management services utilizing third-party transportation providers and their equipment.

The Intermodal reportable segment is comprised of two intermodal operating segments that provide similar transportation services to our customers.

These transportation services include arranging the movement of customers' freight through third-party intermodal rail services on the Company’s trailing equipment (trailers on flat cars and rail containers), as well as drayage services to transport loads between the railheads and customer locations.

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Note 25 — Information by Segment, Geography, and Customer Concentration

Segment Information

The Company has four reportable segments:

Truckload, Logistics, LTL, and Intermodal, as well as the non-reportable segments, discussed below.

The Company's twenty-four 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.

The Company aggregated these various operating segments into the four reportable segments discussed below based on similarities with both their qualitative and economic characteristics.

The Truckload reportable segment is comprised of nine full truckload operating segments that provide similar transportation services to the Company's customers utilizing similar transportation equipment over both irregular (one-way movement) and/or dedicated routes.

The Truckload reportable segment consists of irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border operations.

The Logistics reportable segment is comprised of six logistics operating segments that provide similar transportation services to the Company's customers and primarily consist of brokerage and other freight management services utilizing third-party transportation providers and their equipment.

Our LTL segment, established in 2021 through the ACT and MME acquisitions, is comprised of two operating segments and provides our customers with regional LTL transportation services through a network of approximately 100 service centers in the Company's geographical footprint.

The Company's LTL service also includes national coverage to customers by utilizing partner carriers for areas outside of the Company's direct network.

The Intermodal reportable segment is comprised of two intermodal operating segments that provide similar transportation services to the Company's customers.

These transportation services include arranging the movement of customers' freight through third-party intermodal rail services on the Company’s trailing equipment (containers and trailers on flat cars), as well as drayage services to transport loads between the railheads and customer locations.

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 their reportable segment.

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

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

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Such intersegment revenues and expenses are eliminated in Knight-Swift's consolidated results.

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

2020 2019 2018 (recast)

2021 2020 2019

Total revenue:

(Dollars in thousands)

Trucking $ 3,786,030 81.0 % $ 3,952,866 81.6 % $ 4,290,254 80.3 %

Truckload $ 4,098,005 68.3 % $ 3,786,030 81.0 % $ 3,952,866 81.6 %

Logistics $ 817,003 13.6 % $ 375,841 8.0 % $ 352,988 7.3 %

LTL $ 396,308 6.6 % $ — — % $ — — %

Intermodal $ 458,867 7.7 % $ 391,462 8.4 % $ 455,466 9.4 %

3 unchanged sentences

Total revenue $ 5,998,019 100.0 % $ 4,673,863 100.0 % $ 4,843,950 100.0 %

2020 2019 2018 (recast)

2021 2020 2019

Operating income (loss):

(Dollars in thousands)

Trucking $ 578,512 102.5 % $ 468,749 109.7 % $ 550,818 96.8 %

Truckload $ 784,436 81.2 % $ 578,512 102.5 % $ 468,749 109.7 %

Logistics $ 93,920 9.7 % $ 20,245 3.6 % $ 21,869 5.1 %

LTL $ 31,169 3.2 % $ — — % $ — — %

Intermodal $ 42,060 4.4 % $ ( 943 ) ( 0.2 %) $ 4,501 1.1 %

2 unchanged sentences

Operating income $ 965,697 100.0 % $ 564,438 100.0 % $ 427,438 100.0 %

2020 2019 2018 (recast)

2021 2020 2019

Depreciation and amortization of property and equipment:

(Dollars in thousands)

Trucking $ 390,417 84.7 % $ 355,270 84.6 % $ 319,210 82.4 %

Truckload $ 422,558 80.9 % $ 390,417 84.7 % $ 355,270 84.6 %

Logistics $ 1,357 0.3 % $ 829 0.2 % $ 728 0.2 %

LTL $ 24,844 4.8 % $ — — % $ — — %

Intermodal $ 15,345 2.9 % $ 14,377 3.1 % $ 13,506 3.2 %

5 unchanged sentences

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

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

Customer Concentration

2 unchanged sentences

No other customer accounted for 10.0 % or more of total revenue in 2021, 2020 , or 2019 .

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data