What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-10 compared with 2022-03-11 · 104 added, 259 removed, 847 unchanged (30% of the section changed)

16 unchanged sentences

Transportation Services, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, 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”).

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders’

equity, and cash flows for each of the three years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 11, 2022 expressed an unqualified opinion.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 10, 2023 expressed an unqualified opinion.

Basis for opinion

10 unchanged sentences

Critical audit matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Claims Liabilities

As described further in Note 6 to the consolidated financial statements, the Company is self-insured for a portion of its risk related to auto liability and workers’

compensation.

Self-insurance results when the Company insures itself by maintaining funds to cover possible losses rather than purchasing an insurance policy.

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.

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.

We identified the estimation of auto liability and workers’

compensation claims accruals, subject to certain self-insured retention, as a critical audit matter.

Auto liability and workers’

compensation unpaid claim liabilities are determined by projecting the estimated ultimate loss related to a claim, less actual costs paid to date.

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 this critical audit matter included the following, among others:

We tested the design and 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 accruals, including evaluating the reasonableness of the methods and assumptions used in estimating the ultimate claim losses.

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

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/S/ GRANT THORNTON LLP

11 unchanged sentences

$ 74,087  

$ 18,509  

Accounts receivable—net:

93 unchanged sentences

Revenue, before fuel surcharge

$ 641,253  

$ 438,987  

$ 439,511  

Fuel surcharge

65,867  

47,838  

74,666  

Total operating revenues

707,120  

486,825  

514,177  

OPERATING EXPENSES AND COSTS:

Salaries, wages and benefits

141,019  

124,098  

129,738  

Operating supplies and expenses

102,228  

84,275  

98,420  

Rents and purchased transportation

279,016  

165,984  

168,399  

55,012  

56,168  

55,107  

Insurance and claims

18,792  

35,622  

12,294  

13,138  

13,761  

(Gain) loss on disposition of equipment

( 1,446 )  

Total operating expenses and costs

606,915  

452,902  

501,630  

OPERATING INCOME

100,205  

33,923  

12,547  

NON-OPERATING INCOME (EXPENSE)

10,339  

( 1,699 )  

INTEREST EXPENSE

( 8,039 )  

( 8,815 )  

INCOME BEFORE INCOME TAXES

102,505  

23,409  

10,115  

FEDERAL & STATE INCOME TAX EXPENSE:

17,832  

Total federal & state income tax expense

25,989  

$ 76,516  

$ 17,827  

$ 7,900  

EARNINGS PER COMMON SHARE:

$ 6.74  

$ 1.55  

$ 0.68  

$ 6.69  

$ 1.55  

$ 0.67  

AVERAGE COMMON SHARES OUTSTANDING:

11,357  

11,504  

11,663  

11,432  

11,536  

11,760  

See notes to consolidated financial statements.

7 unchanged sentences

January 1, 2020

11,914  

$ 82,776  

$ ( 142,552 )  

$ 199,107  

$ 139,447  

Restricted stock issued

Treasury stock repurchases

( 504 )  

( 14,285 )  

Share-based compensation

1 unchanged sentence

December 31, 2020

11,498  

$ 83,688  

$ ( 156,837 )  

$ 207,007  

$ 133,975  

17,827  

Restricted stock issued

Treasury stock repurchases

( 122 )  

( 2,281 )  

Share-based compensation

1 unchanged sentence

December 31, 2021

11,456  

$ 84,148  

$ ( 159,118 )  

$ 224,834  

$ 149,981  

76,516  

( 117 )  

Restricted stock issued

Treasury stock repurchases

( 291 )  

( 10,828 )  

Treasury stock retired

Restricted stock net settlement

Share-based compensation

1 unchanged sentence

December 31, 2022

11,174  

$ 84,472  

$ ( 169,946 )  

$ 301,350  

$ 216,110  

See notes to consolidated financial statements.

5 unchanged sentences

OPERATING ACTIVITIES:

$ 76,516  

$ 17,827  

$ 7,900  

Adjustments to reconcile net income to net cash provided by operating activities:

55,012  

56,168  

55,107  

Bad debt expense

1 unchanged sentence

Provision for deferred income taxes

17,832  

Recognized (gain) loss on marketable equity securities

( 8,197 )  

(Gain) loss on sale or disposal of equipment

( 1,446 )  

Changes in operating assets and liabilities:

Accounts receivable

( 47,132 )  

( 17,835 )  

Prepaid expenses, deposits, inventories, and other assets

( 865 )  

( 1,780 )  

Income taxes refundable

( 60 )  

Income taxes payable

Trade accounts payable

20,880  

Accrued expenses and other liabilities

( 2,365 )  

( 17,798 )  

20,307  

Net cash provided by operating activities

101,740  

67,590  

84,297  

INVESTING ACTIVITIES:

Purchases of property and equipment

( 19,144 )  

( 48,226 )  

Purchase of a business, net of cash acquired

Proceeds from disposition of equipment

31,680  

17,418  

14,263  

Sales of marketable equity securities

Purchases of marketable equity securities, net of return of capital

( 6,395 )  

( 3,923 )  

Net cash provided by (used in) investing activities

( 32,692 )  

Net cash (used in) provided by investing activities

FINANCING ACTIVITIES:

Borrowings under line of credit

654,212  

517,668  

590,902  

Repayments under line of credit

( 672,458 )  

( 516,468 )  

Borrowings of long-term debt

21,408  

26,837  

60,203  

Repayments of long-term debt

( 75,115 )  

( 64,411 )  

Borrowings under margin account

Repayments under margin account

( 16,547 )  

( 3,292 )  

Repurchases of treasury stock

( 10,828 )  

( 2,281 )  

Net cash used in financing activities

( 92,818 )  

( 34,879 )  

Net cash provided by (used in) financing activities

NET INCREASE IN CASH AND CASH EQUIVALENTS

18,172  

CASH AND CASH EQUIVALENTS—Beginning of year

CASH AND CASH EQUIVALENTS—End of year

$ 18,509  

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION—

Cash paid during the period for:

$ 8,144  

$ 8,798  

$ 8,612  

$ 3,870  

NON-CASH INVESTING AND FINANCING ACTIVITIES—

Purchases of revenue equipment included in accounts payable

$ 9,050  

See notes to consolidated financial statements.

3 unchanged sentences

YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

ACCOUNTING POLICIES

4 unchanged sentences

Transport, Inc., P.A.M.

Cartage Carriers, LLC, Overdrive Leasing, LLC, Choctaw Express, LLC, Decker Transport Co., LLC, T.T.X., LLC, Transcend Logistics, Inc., and East Coast Transport and Logistics, LLC.

Cartage Carriers, LLC, Met Express, Inc., Costar Equipment, Inc., Overdrive Leasing, LLC, Choctaw Express, LLC, Decker Transport Co., LLC, T.T.X., LLC, Transcend Logistics, Inc., and East Coast Transport and Logistics, LLC.

The following subsidiaries were inactive during all periods presented:

4 unchanged sentences

The Company periodically reviews these estimates and assumptions.

The most significant estimates that affect our financial statements include accrued liabilities for insurance claims, legal reserves, useful lives and salvage values for property and equipment, current expected credit losses, and estimates for income taxes.

The most significant estimates that affect our financial statements are accrued liabilities for insurance claims, legal reserves, and useful lives and salvage values for property and equipment.

The Company's estimates were based on its historical experience and various other assumptions that management believes to be reasonable under the circumstances.

19 unchanged sentences

Bank overdrafts are classified as changes in accounts payable in the cash flows from operating activities section of the Company’s Consolidated Statement of Cash Flows.

Bank overdrafts as of December 31, 2021 and 2020 were approximately $ 0 and $ 7,638,000 , respectively.

There were no bank overdrafts as of December 31, 2022 or 2021.

Accounts Receivable Other –

76 unchanged sentences

Diluted EPS includes the potential dilution that could occur from stock-based awards and other stock-based commitments using the treasury stock or the as if converted methods, as applicable.

The difference between the Company's weighted-average shares outstanding and diluted shares outstanding is due to the dilutive effect of stock options for all periods presented.

The difference between the Company's weighted-average shares outstanding and diluted shares outstanding is due to the dilutive effect of common stock equivalents for all periods presented.

See Note 14 –

6 unchanged sentences

Fair Value of Financial Instruments.

Reporting Segments –

The Company's operations are all in the motor carrier segment and are aggregated into a single reporting segment in accordance with the aggregation criteria under United States generally accepted accounting principles (“GAAP”).

Reportable Segments –

The Company's operations are all in the motor carrier segment and are aggregated into a single reportable segment in accordance with the aggregation criteria under United States generally accepted accounting principles (“GAAP”).

The Company provides truckload transportation services as well as brokerage and logistics services to customers throughout the United States and portions of Canada and Mexico.

6 unchanged sentences

Subsequent Events –

On March 8, 2022, the Company retired 12,268,395 shares of its treasury stock.

When treasury shares are retired, we allocate the excess of the repurchase price over the par value of shares acquired to both retained earnings and paid-in capital.

The portion allocated to paid-in capital is determined by applying the average paid-in capital per share, and the remaining portion is recorded to retained earnings.

There was no effect on the Company’s overall equity position as a result of the retirement.      

On March 8, 2022, the Company’s Board of Directors declared a 2 -for- 1 forward stock split of its common stock in the form of a 100% stock dividend, payable on March 29, 2022, to stockholders of record on March 18, 2022.

Under the terms of the stock split, the Company’s stockholders will receive a dividend of one share for every share held on the record date. The dividend will be paid in authorized but unissued shares of common stock of the Company. The additional shares will be distributed by the Company’s transfer agent, Computershare, and the per share price of the Company’s common stock will adjust accordingly on The Nasdaq Stock Market.   

We have evaluated subsequent events for recognition and disclosure through the date these financial statements were filed with the United States Securities and Exchange Commission and concluded that no subsequent events or transactions have occurred that require recognition or disclosure in our financial statements.

Risks and Uncertainties (COVID- 19 ) –

12 unchanged sentences

Any resulting exchange gain or loss from the remeasurement process is included in non-operating income in the Company’s consolidated statements of operations.

Business Combinations –

The purchase price of an acquired businesses, or the purchase of substantially all of the assets of a business, is allocated to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition.

The calculation of the fair value of assets acquired, liabilities assumed and the potential value of any intangible assets involves many factors, some of which require estimates and judgement. In certain cases, valuation specialists may be engaged to assist in the determination of the fair value calculations.

During 2022, we engaged valuation specialists to assist us in fair value determination for our acquisition of substantially all of the assets of Metropolitan Trucking, Inc.

and related entities.

Recent Accounting Pronouncements –

9 unchanged sentences

December 31, 2022 .

 The Company has evaluated the provisions of this standard and determined that it is applicable to our line of credit and investment margin account.

The London Interbank Offered Rate (“LIBOR”) is the basis for interest charges on outstanding borrowings for our line of credit.

During the year 2021, the index for interest charges on the Company’s investment margin accounts was transitioned to the Secured Overnight Financing Rate (“SOFR”).

The new index rate did not vary materially from LIBOR at the time of transition.

The scheduled discontinuation of LIBOR is not expected to materially alter any provisions of either of these debt instruments, except for the identification of a replacement reference rate for our line of credit.

The Company has evaluated the new guidance and does not expect it to have a material impact on its financial condition, results of operations, or cash flows.

 The adoption of this guidance on 

January 1, 2022 

did not  have a material impact on the Company’s financial condition, results of operations, or cash flows.

REVENUE RECOGNITION

9 unchanged sentences

The Company also has other revenue categories that are not discussed in this note or broken out in our consolidated statements of operations due to their immaterial amounts.

In fulfilling the Company’s obligation to transport freight from a specified origin to a specified destination, control of freight is transferred to us at the point it has been loaded into the driver’s trailer, the doors are sealed and the driver has signed a bill of lading, which is the basic transportation agreement that establishes the nature, quantity and condition of the freight loaded, responsibility for invoice payment, and pickup and delivery locations.

Our revenue is generated, and our customer receives benefit, as the freight progresses towards delivery locations.

In the event our customer cancels the shipment at some point prior to the final delivery location and re-consigns the shipment to an alternate delivery location, we are entitled to receive payment for services performed for the partial shipment.

In fulfilling the Company’s obligation to transport freight from a specified origin to a specified destination, control of freight is transferred to the Company at the point it has been loaded into the driver’s trailer, the doors are sealed and the driver has signed a bill of lading, which is the basic transportation agreement that establishes the nature, quantity and condition of the freight loaded, responsibility for invoice payment, and pickup and delivery locations.

The Company’s revenue is generated, and our customer receives benefit, as the freight progresses towards delivery locations.

In the event the Company’s customer cancels the shipment at some point prior to the final delivery location and re-consigns the shipment to an alternate delivery location, the Company is entitled to receive payment for services performed for the partial shipment.

Shipments are generally conducted over a relatively short time span, generally one to three days;

however, freight is sometimes stored temporarily in our trailer at one of our drop yard locations or at a location designated by a customer.

Our revenue is categorized as either Freight Revenue or Fuel Surcharge Revenue, and both are earned by performing the same freight transportation services, as discussed further below.

The Company’s revenue is categorized as either Freight Revenue or Fuel Surcharge Revenue, and both are earned by performing the same freight transportation services, as discussed further below.

Freight Revenue –

31 unchanged sentences

Provision for bad debts

( 62 )  

Balance—end of year

2 unchanged sentences

$ 3,482  

MARKETABLE EQUITY SECURITIES

28 unchanged sentences

$ 10,039  

For the years ended December 31, 2021, 2020 and 2019, the Company recognized dividends of approximately $ 1,448,000 , $ 1,266,000 , and $ 1,309,000 in non-operating income in its statements of operations, respectively.

For the years ended December 31, 2022, 2021 and 2020, the Company recognized dividends of approximately $ 1,539,000 , $ 1,448,000 , and $ 1,266,000 in non-operating income in its consolidated statements of operations, respectively.

The following table shows the Company’s net realized (losses) gains during 2022, 2021 and 2020 on certain marketable equity securities.

4 unchanged sentences

$ 2,039  

$ 2,984  

Cost of securities sold

1 unchanged sentence

$ ( 90 )  

$ ( 177 )  

$ 1,055  

At December 31, 2022, the Company’s investments’

5 unchanged sentences

The interest rates on margin account borrowings were 4.92 % and 0.68 % as of December 31, 2022 and 2021, respectively.

ACCRUED EXPENSES AND OTHER LIABILITIES

7 unchanged sentences

Margin account borrowings

11,251  

Self-insurance claims and legal reserves

22,709  

Current portion of Right-of-Use liability

Other liabilities

Total accrued expenses and other liabilities

19 unchanged sentences

compensation claims.

The Company self-insures for employee health claims with a stop loss of $ 400,000 per covered employee per year and estimates its liability for claims outstanding and claims incurred but not reported.

The Company self-insures for employee health claims with a stop loss of $ 0.4 million per covered employee per year and estimates its liability for claims outstanding and claims incurred but not reported.

See Note 5 –

4 unchanged sentences

Line of credit with a bank—due July 1, 2024, and collateralized by accounts receivable (1)

18,246  

Equipment financing (2)

13 unchanged sentences

Line of credit agreement with a bank provides for maximum borrowings of $ 60.0 million and contains certain restrictive covenants that must be maintained by the Company on a consolidated basis.

Borrowings on the line of credit are at an interest rate of LIBOR as of the first day of the month (with a floor of 0.5 %) plus 1.25 %, ( 1.75 % at December 

Borrowings on the line of credit are at an interest rate of Term SOFR as of the first day of the month plus 1.35 %, ( 5.65 % at December 

31, 2022 ) and are secured by our trade accounts receivable.

6 unchanged sentences

Equipment financings consist of installment obligations for revenue equipment purchases, payable in various monthly installments with various maturity dates through March 2028, at a weighted average interest rate of 3.16 % as of December 31, 2022 and collateralized by revenue equipment.

Real estate financing consisting of an installment obligation for the purchase of real estate in Laredo, TX, payable in 120 installments at an interest rate of 3.02 % and maturing in August 2030.

This obligation is collateralized by the underlying real estate and any rental income generated by the underlying real estate.

The Company has provided letters of credit to third parties totaling approximately $ 310,000 and $ 310,000 at December 31, 2021 and December 31, 2020, respectively.

Real estate financing consisting of an installment obligation for the purchase of real estate in Laredo, TX, payable in 120 installments at an interest rate of 3.02 % and maturing in August 2030, and an installment obligation for the financing of various company-owned terminals and office buildings payable in 120 installments at an interest rate of 3.62 % and maturing in March 2032.

These obligations are collateralized by the underlying real estate and any rental income generated by the underlying real estate.

The Company has provided letters of credit to third parties totaling approximately $ 310,000 at December 31, 2022 and December 31, 2021, respectively.

The letters are held by these third parties to assist such parties in collection of any amounts due by the Company should the Company default in its commitments to the parties.

30 unchanged sentences

The Company accounted for the repurchase of these shares as treasury stock on the Company’s consolidated balance sheet as of December 31, 2022.

In May 2019, our Board of Directors authorized the repurchase of up to 200,000 shares of our common stock through a Dutch auction tender offer (the “2019 tender offer”).

Subject to certain limitations and legal requirements, the Company could repurchase up to an additional 2 % of its outstanding shares, which totaled 118,996 shares.

The 2019 tender offer commenced on May 13, 2019 and expired on June 11, 2019.

Through this tender offer, the Company’s shareholders had the opportunity to tender some or all of their shares at a price within the range of $ 55.00 to $ 60.00 per share.

Upon expiration, 192,743 shares were purchased through this offer at a final purchase price of $ 60.00 per share for a total of approximately $ 11.6 million, including fees and commission.

The repurchase was settled on June 13, 2019.

The Company accounted for the repurchase of these shares as treasury stock on the Company’s consolidated balance sheet as of December 31, 2019.

The Company’s stock repurchase program has been extended and expanded several times, most recently in November 2021, when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011 authorization.

15 unchanged sentences

Shipments to or from Canada

Total Operating Revenues

$ 946,862  

24 unchanged sentences

Current expected credit losses

Tax credit carryforwards

Compensated absences

Self-insurance allowances

Marketable equity securities

Net operating loss carryover

32,031  

Total deferred tax assets

37,032  

Net deferred tax liability

9 unchanged sentences

Nondeductible per diem and meals

Other nondeductible expenses, net

State income taxes/other, net

( 251 )  

Total income tax expense

8 unchanged sentences

13,794  

12,920  

13,720  

Total deferred income tax provision

14,541  

17,832  

Total income tax provision expense

2 unchanged sentences

$ 5,582  

In March 2020, the President of the United States signed the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), to stabilize the economy during the coronavirus pandemic.

The CARES Act temporarily suspends and modifies certain tax laws established by the TCJA, including, but not limited to, modifications to net operating loss limitations, business interest limitations and alternative minimum tax.

The CARES Act did not have a material impact on the Company’s prior year provision or the Company’s consolidated financial statements.

In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of ASC 740 - 10 - 30, weighs all available evidence, both positive and negative to determine whether, based on the weight of that evidence, a valuation allowance is necessary.

11 unchanged sentences

On March 13, 2014, the Company’s Board of Directors adopted, and on May 29, 2014 our shareholders approved, the 2014 Amended and Restated Stock Option and Incentive Plan (the “Plan”) which amended and restated the Company’s 2006 Stock Option Plan.

Under the Plan, 1,500,000 shares (as adjusted for the Company’s 2 -for- 1 forward split of its common stock paid in August 2021) are reserved for the issuance of stock awards to directors, officers, key employees, and others.

Under the Plan, 3,000,000 shares (as adjusted for the Company’s 2 -for- 1 forward split of its common stock paid in August 2021 and the Company’s 2 -for- 1 forward split of its common stock paid in March 2022) are reserved for the issuance of stock awards to directors, officers, key employees, and others.

The stock option exercise price and the restricted stock purchase price under the 2014 Plan shall not be less than 85 % of the fair market value of the Company’s common stock on the date the award is granted.

1 unchanged sentence

The Company granted unrestricted shares of its common stock to its non-employee directors and granted restricted shares of common stock to certain key employees during all periods presented.

All share and per share amounts set forth below have been adjusted to reflect the impact of the 2 -for- 1 forward stock split in August 2021.

All share and per share amounts set forth below have been adjusted to reflect the impact of the 2 -for- 1 forward stock split in both August 2021 and March 2022.

During February 2022, the Company granted 29,120 shares of common stock to certain key employees.

These stock awards had grant date fair values of $ 38.80 per share, based on the closing price of the Company’s stock on the date of grant, and vest in 25 % increments over four years, beginning one year from the anniversary date of the grant.

During May 2022, the Company granted 1,855 shares of common stock to non-employee directors.

These stock awards had a grant date fair value of $ 29.60 per share, based on the closing price of the Company’s stock on the date of grant, and vested immediately.

During June 2022, the Company granted 3,500 shares of common stock to a key employee.

This stock award had a grant date fair value of $ 27.68 per share, based on the closing price of the Company’s stock on the date of grant, and vests in 25 % increments over four years, beginning one year from the anniversary date of the grant.

In March 2021, the Company granted 5,216 shares of common stock to non-employee directors.

1 unchanged sentence

In April 2021, the Company granted 10,000 shares of common stock to a certain key employee.

These stock awards have a grant date fair value of $ 30.17 per share, based on the closing price of the Company’s stock on the date of grant, and vest on the four year anniversary date of the award.

These stock awards have a grant date fair value of $ 15.09 per share, based on the closing price of the Company’s stock on the date of grant, and vests in 25% increments over four years, beginning one year from the anniversary date of the grant.

In January 2020, the Company granted 28,000 shares of common stock to certain key employees.

8 unchanged sentences

These restricted stock awards have a grant date fair value of $ 7.56 per share, based on the closing price of the Company’s stock on the date of grant, and vest on the four year anniversary date of the award.

In April 2019, the Company granted 3,690 shares of common stock to non-employee directors.

These stock awards have a grant date fair value of $ 24.47 per share, based on the closing price of the Company’s stock on the date of grant, and vested immediately.

In May 2019, the Company granted 426 shares of common stock to a non-employee director.

These stock awards have a grant date fair value of $ 23.53 per share, based on the closing price of the Company’s stock on the date of grant, and vested immediately.

During 2022 and 2021, there were no grants of stock options and there were no outstanding stock options at December 31, 2022 or December 31, 2021.

1 unchanged sentence

The grant date fair value of stock and stock options vested during 2022, 2021 and 2020 was approximately $ 392,000 , $ 203,000 and $ 759,000 , respectively.

Total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits was approximately $ 441,000 during 2021 and includes approximately $ 80,000 recognized as a result of the grant of 326 shares of stock to eight non-employee directors during the first quarter of 2021.

Total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits was approximately $ 715,000 during 2022 and includes approximately $ 55,000 recognized as a result of the grant of a total of 1,855 shares of stock to four non-employee directors during the second quarter of 2022.

The Company recognized a total income tax benefit of approximately $ 170,000 related to stock-based compensation expense during 2022.

8 unchanged sentences

$ 111,000  

Total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits was approximately $ 461,000 during 2020 and includes approximately $ 90,000 recognized as a result of the grant of 652 shares of stock to eight non-employee directors during the first quarter of 2020 and 484 shares of stock to one non-employee director during the second quarter of 2020.

Total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits was approximately $ 441,000 during 2021 and includes approximately $ 80,000 recognized as a result of the grant of 652 shares of stock to eight non-employee directors during the first quarter of 2021.

The Company recognized a total income tax benefit of approximately $ 110,000 related to stock-based compensation expense during 2021.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $ 0.06 during 2020.

Total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits was approximately $ 912,000 during 2019 and included approximately $ 100,000 recognized as a result of the grant of 410 shares of stock to each non-employee director during the first quarter of 2019.

The recognition of stock-based compensation expense decreased diluted earnings per common share by $ 0.03 and basic earnings per common share by approximately $ 0.02 during 2021.

Total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits was approximately $ 461,000 during 2020 and includes approximately $ 90,000 recognized as a result of the grant of 1,304 shares of stock to eight non-employee directors during the first quarter of 2020 and 968 shares of stock to one non-employee director during the second quarter of 2020.

The Company recognized a total income tax benefit of approximately $ 100,000 related to stock-based compensation expense during 2020.

3 unchanged sentences

Restricted Stock

Average Grant Date Fair Value

Average Grant

Date Fair Value

Nonvested—January 1, 2022

1 unchanged sentence

$ 9.25  

Canceled/forfeited/expired

34,475  

Canceled/forfeited/expired

( 37,855 )  

27 unchanged sentences

$ 0.77  

As adjusted for the Company’s 2 -for- 1 forward stock split paid in August 2021

( 1 ) As adjusted for the Company’s 2 -for- 1 forward stock splits paid in August 2021 and March 2022, respectively.

The Company sponsors a benefit plan for the benefit of all eligible employees.

3 unchanged sentences

COMMITMENTS AND CONTINGENCIES

We are a defendant in a lawsuit which was filed on August 6, 2021, in the United States District Court for the Western District of Arkansas.

The plaintiff is a former driver and is seeking class certification.

The Complaint alleges failure to pay minimum wage under the Fair Labor Standards Act and the Arkansas Minimum Wage Act, violations of the Electronic Funds Transfer Act (EFTA), violations of the Arkansas Wage Payment Law (discharge pay and unlawful, usurious advance fees), violations of the Arkansas Common Law, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). 

Should this lawsuit be certified as a class action, to include similarly situated drivers as the Plaintiff, the class will seek actual and liquated damages to include court costs and legal fees associated with the lawsuit.

The class, if certified, will include any company driver employed from January 1, 2020 through the present and ongoing.

A mediation was held on January 14, 2022 in an attempt to resolve the case but was unsuccessful.

We were named a defendant in a putative class action lawsuit filed on August 6, 2021, in the United States District Court for the Western District of Arkansas.

The complaint alleged failure to pay over-the-road drivers minimum wage under the Fair Labor Standards Act and the Arkansas Minimum Wage Act, violations of the Electronic Funds Transfer Act (EFTA), violations of the Arkansas Wage Payment Law (discharge pay and unlawful, usurious advance fees), violations of the Arkansas Common Law, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). 

We denied liability on all claims. 

On August 5, 2022, the parties filed a Joint Motion for Preliminary Approval of a Collective and Class Action Settlement. 

On October 7, 2022, the parties submitted to the court an executed Settlement Agreement and Release, to resolve and release all claims asserted in the litigation from January 1, 2020 through July 31, 2022 for $ 4,750,000 . 

We did not admit liability for any claim. 

The District Court granted preliminary approval of the settlement on November 14, 2022. 

Notice of the settlement has been sent to class and collective action members. 

A final fairness hearing on the settlement is scheduled to be held by the District Court on April 5, 2023.

Management has determined that any losses under this claim will not be covered by existing insurance policies.

We were a defendant in a collective- and class-action lawsuit which was filed on December 9, 2016, in the United States District Court for the Western District of Arkansas.

The plaintiffs, who included current and former employee drivers who worked for the Company during the period of December 9, 2013, through December 31, 2019, alleged violations under the Fair Labor Standards Act and the Arkansas Minimum Wage Law including “failure to pay minimum wage during orientation, failure to pay minimum wage to team drivers after initial orientation, failure to pay minimum wage to solo-drivers after initial orientation, failure to pay for compensable travel time, Comdata card fees, unlawful deductions, and breach of contract.”

The plaintiffs were seeking actual and liquidated damages to include court costs and legal fees.

During July 2020, the United States District Court for the Western District of Arkansas granted final approval of a $ 16.5 million settlement reached with the plaintiffs and the settlement payment was disbursed by the Company during August 2020.

This claim was not covered by existing insurance policies.

On March 31, 2020, the United States District Court for the Western District of Arkansas dismissed the collective- and class-action lawsuit filed against the Company on May 29, 2019 by plaintiffs who were independent contractors alleging violations under the Fair Labor Standards Act and the Arkansas Minimum Wage Law.

The plaintiffs, through their attorneys, alleged “misclassification as independent contractors, payment on the basis of miles without regard to the number of hours worked, improper deductions, and failure to pay minimum wage.”

The dismissal of this lawsuit resulted when the Company and plaintiffs reached a settlement agreement and the Company paid approximately $ 421,000 , plus legal fees.

Legal reserve accruals in excess of the amount outlined in the settlement agreement were reversed during the first nine months of 2020, resulting in a reduction in accrued expenses and other liabilities in the Company’s consolidated balance sheets.

This loss has been accrued and is included in Insurance and Claims in our consolidated statement of operations.

We are involved in certain claims and pending litigation arising from the ordinary conduct of business.

27 unchanged sentences

Other Information

Weighted-average remaining lease term for operating leases

Weighted-average remaining lease term for operating leases (in years)

Weighted-average discount rate for operating leases

11 unchanged sentences

The Company has a lease-purchase program whereby we offer independent contractors the opportunity to lease a Company-owned truck.

The terms associated with these leases require weekly lease payments over the term of the leases which range from 5 to 60 months.

The terms associated with these operating eases require weekly lease payments over the term of the leases which range from 5 to 60 months.

The cost and carrying amount of Company-owned trucks in this program at December 31, 2022 were approximately $ 58,227,000 and $ 22,960,000 , respectively.

2 unchanged sentences

Leases in our lease-purchase program expire at various dates through 2026.

Future minimum lease receipts related to these leases at December 31, 2021 and 2020 were approximately $ 15,907,000 and $ 15,242,000 , respectively.

Future minimum lease receipts related to these operating leases at December 31, 2022 and 2021 were approximately $ 11,549,000 and $ 15,907,000 , respectively.

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

4 unchanged sentences

At December 31, 2022, the cost and carrying amount of the facilities leased were approximately $ 13,738,000 and $ 11,674,000 , respectively.

Future minimum lease receipts related to this lease at December 31, 2021 are approximately $ 173,000 .

Future minimum lease receipts related to this operating lease at December 31, 2022 are approximately $ 32,100 .

See Note 19 –

58 unchanged sentences

In the normal course of business, transactions for transportation and repair services, equipment, property leases and other services are conducted between the Company and companies affiliated with our Chairman and controlling stockholder.

The Company recognized approximately $ 8,085,000 , $ 9,897,000 and $ 2,691,000 in operating revenue and approximately $ 11,103,000 , $ 6,791,000 and $ 9,190,000 in operating expenses in 2021, 2020, and 2019, respectively.

The Company recognized approximately $ 1,363,000 , $ 8,085,000 and $ 9,897,000 in operating revenue and approximately $ 21,438,000 , $ 11,103,000 and $ 6,791,000 in operating expenses in 2022, 2021, and 2020, respectively from related party transactions.

The Company purchased auto liability and workers’

compensation insurance through an unaffiliated insurance broker which was written by an insurance company affiliated with our Chairman and controlling stockholder.

compensation insurance through an insurance company affiliated with our Chairman and controlling stockholder.

Premiums for auto liability coverage during 2022, 2021, and 2020 were approximately $ 11,437,000 , $ 9,851,000 , and $ 8,516,000 , respectively.

4 unchanged sentences

Amounts payable to affiliates at December 31, 2022 and 2021 were approximately $ 1,290,000 and $ 1,276,000 respectively.

Acquisition of Assets from Metropolitan Trucking, Inc.

On June 14, 2022, subsidiaries of the Company, Met Express, Inc.

and Costar Equipment, Inc.

(collectively, the “Buyer”), entered into an Asset Purchase Agreement with Metropolitan Trucking, Inc., and related subsidiaries.

Metropolitan Trucking, Inc.

was a truckload carrier headquartered in Saddle Brook, New Jersey, providing asset-based dry van truckload transportation services, including local, regional, and dedicated services.

The acquisition has been determined to be a business combination.

Pursuant to the Asset Purchase Agreement, the Buyer acquired substantially all the assets and assumed certain specified liabilities of Metropolitan Trucking, Inc., and its related entities (the “Transaction”).

The Buyer paid $ 79.9 million of total consideration, including cash and certain assumed indebtedness of Metropolitan Trucking, Inc., and its related entities.

The Transaction closed on June 14, 2022., subject to working capital adjustments.

Total cash paid of $ 64.3 million was funded out of the Company’s available cash.

The Transaction included the assumption of $ 12.6 million of indebtedness and $ 2.9 million of other current liabilities.

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

The results of the acquired business have been included in the consolidated financial statements since the date of acquisition and represented 14.1 % of consolidated total assets as of December 31, 2022 and represented 5.7 % of revenues excluding fuel surcharge for the year ended December 31, 2022.

Acquisition related expenses of $ 0.4 million are included in the condensed consolidated statements of operations for the year ended December 31, 2022.

The assets and liabilities associated with the acquisition were recorded at their fair values as of the acquisition date and the amounts are as follows:

(in thousands)

Trade and other accounts receivable

$ 10,821  

Other current assets

Property and equipment

68,722  

79,859  

Accounts payable

Long-term debt

Total cash paid

$ 64,317  

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