UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~Washington,~~WASHINGTON, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, ~~2014~~2017

Commission file number: 001-16853

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 000-22490

FORWARD AIR CORPORATION

(Exact name of ~~registrant~~Registrant as specified in its charter)



~~Tennessee~~	~~62-1120025~~
Tennessee	62-1120025
(State or other jurisdiction of ~~incorporation or organization)~~	(I.R.S. Employer
incorporation or organization)	Identification No.)




~~430 Airport~~1915 Snapps Ferry Road, Building N
Greeneville, Tennessee	37745
(Address of principal executive offices)	(Zip Code)

(423) 636-7000

(Registrant’s telephone number, including area ~~code)~~code

Securities registered pursuant to Section 12(b) of the Act:




Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	The ~~NASDAQ~~Nasdaq Stock Market LLC
~~(Title of class)~~	~~(Name of exchange on which registered)~~

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No þ

Indicate by check mark whether the ~~registrant:~~Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the ~~registrant~~Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ~~(§ 232.405 of this chapter)~~ during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of ~~registrant’s~~Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ~~Yes~~ þ No o

Indicate by check mark whether the ~~registrant~~Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated ~~filer”,~~filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~



Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting Company o	Emerging Growth Company o

~~(Do~~

If an emerging growth company, indicate by checkmark if the registrant has elected not ~~check if a smaller reporting company)~~to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange ~~Act.)~~Act). Yes o No þ

The aggregate market value of the voting stock held by non-affiliates of the ~~registrant~~Registrant was approximately $1,581,907,549 as of June 30, ~~2014~~ ~~was approximately~~ ~~$1,445,406,912~~ based upon the $47.85 closing price of the stock as reported on The NASDAQ Stock Market LLC on that date. For purposes of this computation, all directors and executive officers of the registrant are assumed to be affiliates. This assumption is not a conclusive determination for purposes other than this calculation.2017.

The number of shares outstanding of the ~~registrant’s~~Registrant’s common stock ~~$0.01 par value per share as~~(as of February ~~9, 2015~~ ~~was 30,479,715.~~20, 2018): 29,584,537

~~DOCUMENTS INCORPORATED BY REFERENCE~~Documents Incorporated By Reference

Portions of the proxy statement for the ~~2015~~2018 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.



Table of Contents

	Forward Air Corporation	Page Number
		Page Number
Part I.
Item 1.	Business	3

Item 1A.	Risk Factors	1112

Item 1B.	Unresolved Staff Comments	1619

Item 2.	Properties	1619

Item 3.	Legal Proceedings	1819

Item 4.	Mine Safety Disclosures	1820

Part II.

Item 5.	Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	1820

Item 6.	Selected Financial Data	2122

Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2223

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	5055

Item 8.	Financial Statements and Supplementary Data	5055

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	5056

Item 9A.	Controls and Procedures	5056

Item 9B.	Other Information	5358

Part III.

Item 10.	Directors, Executive Officers and Corporate Governance	5358

Item 11.	Executive Compensation	5459

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	5459

Item 13.	Certain Relationships and Related Transactions, and Director Independence	5459

Item 14.	Principal Accounting Fees and Services	5459

Part IV.

Item 15.	Exhibits, Financial Statement Schedules	5459

Signatures		5560

Index to Financial Statements		F-2

Financial Statement Schedule		S-1

Exhibit Index

~~Table of Contents~~

Introductory Note

This Annual Report on Form 10-K for the fiscal year ended December 31, ~~2014~~2017 (this “Form 10-K”) contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance. In this Form 10-K, forward-looking statements include, but are not limited to, any projections of earnings, revenues, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements regarding future insurance and claims; any statements concerning proposed or intended new services or developments; any statements regarding intended expansion through acquisition or greenfield startups; any statements regarding future economic conditions or performance; and any statements of belief and any statements of assumptions underlying any of the foregoing. Some forward-looking statements may be identified by use of such terms as “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or “expects.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the creditworthiness of our customers and their ability to pay for services rendered, the availability and compensation of qualified independent owner-operators and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, ~~increasing competition and pricing pressure, surplus inventories,~~ loss of a major customer, ~~the creditworthiness of our customers~~increasing competition and ~~their ability to pay for services rendered,~~pricing pressure, our ability to secure terminal facilities in desirable locations at reasonable rates, ~~the~~our inability ~~of our information systems~~ to ~~handle an increased volume of freight moving through our network, changes in fuel prices,~~successfully integrate acquisitions, claims for property damage, personal injuries or workers’ compensation, ~~employment matters including rising health care costs,~~ enforcement of and changes in governmental regulations, environmental and tax matters, and the handling of hazardous materials, the availability and compensation of qualified independent owner-operators and freight handlers as well as contracted, third party carriers needed to serve our customers' transportation needs and our inability to successfully integrate acquisitions.materials. As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations. Except as required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Part I

Item 1. Business

Overview

Forward Air is a leading asset-light freight and logistics company. We ~~were~~provide less-than-truckload (“LTL”), truckload, intermodal and pool distribution services across the United States and in Canada. We utilize an asset-light strategy to minimize our investments in equipment and facilities and to reduce our capital expenditures. Forward Air was formed as a corporation under the laws of the State of Tennessee on October 23, 1981. Our ~~operations can be broadly~~common stock is listed on the Nasdaq Global Select Market under the symbol “FWRD”.

Services Provided

Our services are classified into ~~three~~four principal reportable segments: ~~Forward Air~~Expedited LTL, Truckload Premium Services (“~~Forward Air”~~TLS”), ~~Forward Air Solutions (“FASI”)~~Intermodal and ~~Total Quality ("TQI").~~ Pool Distribution. For financial information relating to each of our business segments, see Note 10, “Segment Reporting,” in the Notes to consolidated Financial Statements included in this Form 10-K.

~~Through our Forward Air segment we~~Expedited LTL. We operate a comprehensive national network to provide ~~time-definite surface transportation~~expedited regional, inter-regional and related logistics services to the North American expedited ground freight market. Our licensed property broker utilizes qualified motor carriers, including our own, and other third-party transportation companies, to offer ournational LTL services. Expedited LTL offers customers local pick-up and delivery (Forward Air Complete®) and scheduled surface transportation of cargo as a cost-effective, reliable alternative to air transportation. We transport cargo that must be delivered at a specific time but is less time-sensitive than traditional air freight. This type of cargo is frequently referred to in the transportation industry as deferred air freight. We also offer our customers an array of logistics and other services ~~including: expedited full truckload (“TLX”); dedicated fleets; warehousing; customs brokerage; and~~including shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling. ~~Also included~~Because of our roots in serving the deferred air freight market, our terminal network is located at or near airports in the ~~Forward Air segment are~~United States and Canada. During the services performed by Central States Trucking Co. and Central States Logistics, Inc. (“CST”) which we acquired in 2014. CST provides intermodal drayage, devanning, transloading and warehousing services.year ended December 31, 2017, Expedited LTL accounted for 56.3% of our consolidated revenue.

~~FASI, which~~TLS. We provide expedited truckload brokerage, dedicated fleet services, as well as high security and temperature-controlled logistics services in the United States and Canada. During the year ended December 31, 2017, TLS accounted for 16.3% of our consolidated revenue.

Intermodal. We provide first- and last-mile high value intermodal container drayage services both to and from seaports and railheads. Intermodal also offers dedicated contract and Container Freight Station (“CFS”) warehouse and handling services.

Today, Intermodal operates primarily in the Midwest and Southeast, with a smaller operational presence in the Southwest. We plan to grow Intermodal’s geographic footprint through acquisitions as well as greenfield start-ups where we ~~formed in July 2007, provides pool~~do not have an acceptable acquisition target. During the year ended December 31, 2017, Intermodal accounted for 13.5% of our consolidated revenue.

Pool Distribution. We provide high-frequency handling and distribution ~~services~~of time sensitive product to numerous destinations within a specific geographic region. We offer this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest ~~continental~~ United States. During the year ended December 31, 2017, Pool ~~distribution involves managing high-frequency, last mile handling and distribution~~Distribution accounted for 14.9% of time-sensitive product to numerous destinations in specific geographic regions. Our primary customers for pool distribution are regional and nationwide distributors and specialty retailers, such as mall, strip mall and outlet-based retail chains.

TQI, which we acquired in March 2013, provides maximum security and temperature-controlled logistics services, primarily truckload services, to the life sciences sector (pharmaceutical and biotechnology products). In addition to core pharmaceutical services and other cold chain services, TQI provides truckload and less-than-truckload brokerage transportation services.our consolidated revenue.

~~Growth~~ Strategy

Our strategy is to take advantage of our ~~competitive strengths~~core competencies to provide asset-light freight and logistics services in order to ~~increase our profits and shareholder returns. Our goal is to use our established businesses as~~grow in the ~~base from which to expand and launch new services that will allow us to grow and provide shareholder returns in any economic environment.~~premium or high service level segments of the markets we serve. Principal components of our efforts include:

~~Table of Contents~~

~~Increase Freight Volume from Existing Customers.~~Expand Service Offerings. ~~Many of our customers currently use us for only a portion of their overall transportation needs.~~ We believe we can increase freight volumes ~~from existing customers~~and revenues by offering ~~more~~new and enhanced ~~and comprehensive~~ services that address all of the customer’s transportation needs, such as Forward Air Complete® ("Complete"), our direct to door pick-up and delivery service and customer label integration. By offering additional services that can be integrated with our existing services, we believe we will attract additional business from existing customers.

~~Expand Service Offerings.~~ ~~We continue to expand our offered services to increase revenue and improve utilization~~more of our terminal facilities and labor force. Because of the timing of the arrival and departure of cargo, our facilities are under-utilized during certain portions of the day, allowing us to add logistics services without significantly increasing our costs. Therefore, we have added a number of additional services incustomers’ premium transportation needs. In the past few years, ~~such as TLX, pool distribution,~~we have added or enhanced LTL pickup and delivery, customer label integration, expedited truckload, temperature-controlled shipments, warehousing, drayage, customs brokerage and shipment consolidation and handling services. These services ~~directly~~ benefit our existing customers and increase our ability to attract new customers, particularly those customers that cannot justify providing the services directly. These services are not offered by many transportation providers with whom we compete and are attractive to customers who prefer to use one provider for all of their transportation needs.customers.

Enhance Information Systems. We are committed to the ~~continued~~ development and enhancement of our information systems in ~~ways that will continue~~order to provide us competitive service advantages and increased productivity. We believe our ~~enhanced~~information systems have and will assist us in capitalizing on new business opportunities with existing ~~customers~~ and ~~developing relationships with~~ new customers.

Pursue Strategic Acquisitions.We continue to evaluate and pursue acquisitions that can increase our penetration of a geographic ~~area,~~area; add new customers, ~~add new~~ business verticals and services; and increase freight volume. ~~In addition,~~For example, we ~~expect to explore acquisitions, such as TQI, that enable us to offer additional services. Further,~~acquired Central States Trucking Co. (“CST”) in 2014, we completed the acquisition of CST which later in 2014 acquired substanially all the assets of Recob Great Lakes Express, Inc. ("RGL") and Multi-Modal Trucking, Inc. and Multi-Modal Services, Inc. (together referred to as "MMT").2014. CST provides ~~industry leading~~industry-leading container and intermodal drayage services ~~primarily~~ within the Midwest, ~~region~~Southeast and Southwest regions of the United States. CST also provides linehaul service within the ~~airport-to-airport~~LTL space as well as dedicated contract and ~~Container Freight Station~~CFS warehouse services. ~~Acquisitions may affect~~Since our ~~short-term cash flow~~acquisition of CST in 2014, CST has completed six acquisitions. In 2017, CST acquired certain assets of Atlantic Trucking Company, Inc., Heavy Duty Equipment Leasing, LLC, Atlantic Logistics, LLC and ~~net income~~Transportation Holdings, Inc. (together referred to as ~~we expend funds, potentially increase indebtedness~~“Atlantic”) and ~~incur additional expenses.~~certain assets of Kansas City Logistics, LLC ("KCL").

~~Competitive Advantages~~

~~We believe that the following competitive advantages are critical to our success:~~Operations

~~Focus on Specific Freight Markets and Concentrated Marketing Strategy.~~ Our Forward Air segment focuses on providing time-definite surface transportation and related logistics services to the North American expedited ground freight market. Forward Air provides our expedited ground freight services mainly to freight forwarders, integrated air cargo carriers, and passenger and cargo airlines rather than directly serving shippers. We believe that Forward Air customers prefer to purchase their transportation services from us because, among other reasons, we generally do not market Forward Air’s services to their shipper customers and, therefore, do not compete directly with them for customers. Our FASI segment focuses on providing high-quality pool distribution services to retailers and nationwide distributors of retail products. Our TQI segment focuses on providing maximum security and temperature-controlled logistics services to the pharmaceutical and life science industries. This focused approach enables us to provide a higher level of service across all our business segments in a more cost-effective manner than our competitors.

~~Expansive Network of Terminals and Facilities.~~ We have developed a network of terminals and facilities throughout the United States and Canada. We believe it would be difficult for a competitor to duplicate our network of facilities with the expertise and strategic facility locations we have acquired without expending significant capital and management resources. We believe that through our network of terminals and facilities we can offer our customers a variety of comprehensive, high-quality, consistent service across the majority of the continental United States.

~~Superior Service Offerings.~~ Forward Air’s published expedited ground freight schedule for transit times with specific cut-off and arrival times generally provides Forward Air customers with the predictability they need. In addition, our network of Forward Air terminals allows us to offer our Forward Air customers later cut-off times, a higher percentage of direct shipments (which reduces damage and shortens transit times) and earlier delivery times than most of our competitors. Our network of FASI terminals allows us the opportunity to provide precision deliveries to a wider range

~~Table of Contents~~

of locations than most pool distribution providers with increased on-time performance. TQI utilizes industry-leading temperature-controlled equipment, 24-hour real-time monitoring and tracking technology, and layered security features and practices to provide its customers with a level of service that is unmatched in the industry today.

~~Flexible Business Model.~~ Rather than owning and operating our own large fleets of trucks, we purchase most of our transportation requirements from owner-operators or truckload carriers. This approach allows us to respond quickly to changing demands and opportunities in our industry and to generate higher returns on assets because of the lower capital requirements.

~~Comprehensive Logistic and Other Service Offerings.~~ Through our three segments we offer an array of logistic and other services including: TLX, pick-up and delivery (Forward Air Complete™), pool distribution, temperature-controlled truckload, warehousing, customs brokerage and shipment consolidation and handling. These services are an essential part of many of our customers’ transportation needs and are not offered by many of our competitors. We are often able to provide these services utilizing existing infrastructure and thereby earning additional revenue without incurring significant additional fixed costs.

~~Leading Technology Platform.~~ We are committed to using information technology to improve our operations. Through improved information technology, we believe we can increase the volume of freight we handle in our networks, improve visibility of shipment information and reduce our operating costs. Our technology allows us to provide our customers with electronic bookings and real-time tracking and tracing of shipments while in our network, complete shipment history, proof of delivery, estimated charges and electronic bill presentment. We continue to enhance our systems to permit us and our customers to access vital information through both the Internet and electronic data interchange. We have continued to invest in information technology to the benefit of our customers and our business processes.

~~Strong Balance Sheet and Availability of Funding.~~ Our asset-light business model and strong market position in the expedited ground freight market provides the foundation for operations that have produced excellent cash flow from operations even in challenging conditions. Our strong balance sheet and available borrowing capacity, can also be a competitive advantage. Our competitors, particularly in the pool distribution market, are mainly regional and local operations, and may struggle to maintain operations in an uncertain economic environment. The threat of financial instability may encourage new and existing customers to use a more financially secure transportation provider.

~~Operations~~

The following describes in more detail the operations of each of our reportable segments: Expedited LTL, Truckload Premium Services, Intermodal and Pool Distribution.

~~Forward Air~~Expedited LTL

~~Airport-to-airport~~Overview

~~Forward Air is a leading provider of time-definite surface transportation~~Our Expedited LTL segment provides expedited regional, inter-regional and related logistics services to the North American expedited ground freight market. Through Forward Air, we transport cargo that must be delivered at a specific time but is less time-sensitive than traditional air freight. This type of cargo is frequently referred to in the transportation industry as deferred air freight.national LTL services. We market our ~~Forward Air airport-to-airport~~Expedited LTL services primarily to freight and logistics intermediaries (such as freight forwarders and third party logistics companies) and airlines (such as integrated air cargo carriers, and passenger and cargo ~~airlines. To serve this market, we~~airlines). We offer our customers a high level of service with a focus on on-time, damage-free deliveries. ~~We serve our customers by locating our~~Our terminals are located on or near airports in the United States and Canada and ~~maintaining~~maintain regularly scheduled transportation service between major cities. We either receive shipments at our terminals or if instructed to do so pick up shipments directly from our customers. We then transport the freight by truck (i) directly to the destination terminal; (ii) to our Columbus, Ohio central sorting facility; or (iii) to one of our 12 regional hubs, where they are unloaded, sorted and reloaded. After reloading the shipments, we deliver them to the terminals nearest their destinations and then, if requested by the customer, on to a final designated site. We ship freight directly between terminals when justified by the tonnage volume.

During 2014, approximately 27.0% of the freight Forward Air handled was for overnight delivery, approximately 57.1% was for delivery within two to three days and the balance was for delivery in four or more days. Forward Air generally does not market its airport-to-airport services directly to shippers (where such services might compete with our freight forwarder customers). Also, because Forward Air does not place significant size or weight restrictions on airport-to-airport shipments, Forward Air generally does not compete directly with integrated air cargo carriers such as United Parcel Service and Federal Express in the overnight delivery of small parcels. In 2014, Forward Air’s ten largest customers accounted for approximately 44.3% of Forward Air’s operating revenue and no single customer accounted for more than 10.0% of Forward Air’s operating revenue.

~~Table of Contents~~

~~Terminals~~

Operations

Our ~~airport-to-airport~~Expedited LTL network consists of terminals located in the following 8794 cities:



City	Airport Served	City	Airport Served
Albany, NY	ALB	~~Louisville, KY~~Lubbock, TX*	~~SDF~~LBB
Albuquerque, NM*	ABQ	Memphis, TN	MEM
Allentown, PA*	ABE	McAllen, TX	MFE
Amarillo, TX*	AMA	Miami, FL	MIA
Atlanta, GA	ATL	~~Miami, FL~~Midland, TX*	~~MIA~~MAF
Austin, TX	AUS	Milwaukee, WI	MKE
Baltimore, MDMD**	BWI	Minneapolis, MN	MSP
Baton Rouge, LA*	BTR	Mobile, AL*	MOB
Birmingham, AL*	BHM	Moline, IA	MLI
Blountville, TN*	TRI	Montgomery, AL*	MGM
Boston, MA	BOS	Nashville, TN	BNA
Buffalo, NY	BUF	Newark, NJ	EWR
Burlington, IA	BRL	Newburgh, NY	SWF
Cedar Rapids, IA	CID	New Orleans, LA	MSY
Charleston, SCSC****	CHS	New York, NY	JFK
Charlotte, NC	CLT	Norfolk, VA	ORF
Chicago, IL	ORD	Oklahoma City, OK	OKC
Cincinnati, OH	CVG	Omaha, NE	OMA
Cleveland, OH	CLE	Orlando, FL	MCO
Columbia, SC*	CAE	Pensacola, FL*	PNS
Columbus, OH***	CMH	Philadelphia, PA	PHL
Corpus Christi, TX*	CRP	Phoenix, AZ	PHX
Dallas/Ft. Worth, TX**TX	DFW	Pittsburgh, PA	PIT
Dayton, OH*	DAY	Portland, OR	PDX
Denver, CO**CO	DEN	Raleigh, NC	RDU
Des Moines, IA**	DSM	Richmond, VA**VA	RIC
Detroit, MI	DTW	~~Rochester, NY~~Roanoke, VA	~~ROC~~ROA
El Paso, TX	ELP	Rochester, NY	ROC
Evansville, IN	EVV	Sacramento, CA	SMF
Fort Wayne, IN*IN	FWA	Saginaw, MI	MBS
Grand Rapids, MI	GRR	Salt Lake City, UT	SLC
Grand Rapids, MI*Greensboro, NC	~~GRR~~GSO	San Antonio, TX	SAT
~~Greensboro, NC~~Greenville, SC	~~GSO~~GSP	San Diego, CA	SAN
~~Greenville, SC~~Hartford, CT	~~GSP~~BDL	San Francisco, CA	SFO
~~Hartford, CT~~Harrisburg, PA	~~BDL~~MDT	Seattle, WA	SEA
~~Harrisburg, PA~~Houston, TX	~~MDT~~IAH	Shreveport, LA*	SHV
~~Houston, TX~~Huntsville, AL*	~~IAH~~HSV	South Bend, IN*IN	SBN
Huntsville, AL*Indianapolis, IN	~~HSV~~IND	St. Louis, MO	STL
~~Indianapolis, IN~~Jacksonville, FL	~~IND~~JAX	Syracuse, NY	SYR
~~Jacksonville, FL~~	~~JAX~~	~~Tampa, FL~~	~~TPA~~
Kansas City, MO	MCI	Toledo, OH*Tampa, FL	~~TOL~~TPA
Knoxville, TN*	TYS	Tucson, AZToledo, OH	~~TUS~~TOL
Lafayette, LA*	LFT	Tulsa, OK*Traverse City, MI	~~TUL~~TVC
Laredo, TX	LRD	~~Washington, DC~~Tucson, AZ*	~~IAD~~TUS
Las Vegas, NV	LAS	Montreal, CanadaTulsa, OK*	~~YUL~~TUL
Little Rock, AR*	LIT	~~Toronto, Canada~~Washington, DC	~~YYZ~~IAD
Los Angeles, CA	LAX	Montreal, Canada*	YUL
Louisville, KY	SDF	Toronto, Canada	YYZ

* Denotes an independent agent location.

** Denotes a location with combined ~~Forward Air~~Expedited LTL and ~~FASI~~Pool Distribution operations.

*** Denotes a location in which ~~Forward Air~~Expedited LTL is an agent for ~~FASI.~~Pool Distribution.

****Denotes a location with combined Expedited LTL and Intermodal operations.

~~Table of Contents~~

Independent agents operate 2223 of our ~~Forward Air~~Expedited LTL locations. These locations typically handle lower volumes of freight relative to our Company-operated facilities.

~~Direct Service and Regional Hubs~~Shipments

~~We operate direct terminal-to-terminal services and regional overnight service between terminals where justified by freight volumes. We currently provide regional overnight service to many~~During 2017, approximately 30.1% of the ~~markets~~freight handled by Expedited LTL was for overnight delivery, approximately 55.6% was for delivery within ~~our network. Direct service allows us~~two to ~~provide quicker scheduled service at a lower cost because it allows us to minimize out-of-route miles~~three days and ~~eliminate~~ the ~~added time and cost of handling the freight at our central~~balance was for delivery in four or regional hub sorting facilities. Direct shipments also reduce the likelihood of damage because of reduced handling and sorting of the freight. As we continue to increase volume between various terminals, we intend to add other direct services. When warranted by sufficient volume in a region, we utilize larger terminals as regional sorting hubs, which allow us to bypass our Columbus, Ohio central sorting facility. These regional hubs improve our operating efficiency and enhance customer service. We operate regional hubs in Atlanta, Charlotte, Chicago, Dallas/Ft. Worth, Denver, Kansas City, Los Angeles, New Orleans, Newark, Newburgh, Orlando, and Sacramento.

~~Shipments~~more days.

The average weekly volume of freight moving through our ~~airport-to-airport~~Expedited LTL network was approximately ~~36.9~~49.5 million pounds per week in ~~2014.~~2017. During ~~2014,~~2017, our average shipment weighed approximately ~~650 pounds and shipment sizes ranged from small boxes weighing only a few pounds to large shipments of several thousand~~623 pounds. Although we impose no significant size or weight restrictions, we focus our marketing and price structure on shipments of 200 pounds or more. ~~As a result,~~

Expedited LTL generally does not market its services directly to shippers (where such services might compete with our freight and logistics intermediary customers). Also, because Expedited LTL does not place significant size or weight restrictions on shipments, we ~~typically~~generally do not compete directly ~~compete~~ with integrated air cargo carriers such as United Parcel Service and FedEx Corporation in the overnight delivery of small parcels.

The table below summarizes the average weekly volume of freight moving through our network for each year since ~~1999.~~2003.


	Average Weekly	Average Weekly
	Volume in Pounds	Volume in Pounds
Year	(In millions)	(In millions)
1999	19.4
2000	24.0
2001	24.3
2002	24.5
2003	25.3	25.3
2004	28.7	28.7
2005	31.2	31.2
2006	32.2	32.2
2007	32.8	32.8
2008	34.2	34.2
2009	28.5	28.5
2010	32.6	32.6
2011	34.0	34.0
2012	34.9	34.9
2013	35.4	35.4
2014	37.4	37.4
2015		47.2
2016		46.5
2017		49.5

~~Item 1A.~~


Item 1A.	Risk Factors

We routinely encounter and address risks in conducting our business. Some of these risks may cause our future results to be different - sometimes materially different - than we presently anticipate. Below are material risks we have identified that could adversely affect our business. How we react to material future developments, as well as how our competitors and customers react to those developments, could also affect our future results.

Overall economic conditions that reduce freight volumes could have a material adverse impact on our operating results and ability to achieve growth.

We are sensitive to changes in overall economic conditions that impact customer shipping volumes, industry freight demand and industry truck capacity. The transportation industry historically has experienced cyclical fluctuations in financial results due to economic recession, downturns in business cycles of our customers, interest rate fluctuations, inflation and other economic factors beyond our control. Deterioration in the economic environment subjects our business to various risks, including the following, that may have a material and adverse impact on our operating results and cause us not to maintain profitability or achieve growth:

A reduction in overall freight volumes reduces our revenues and opportunities for growth. In addition, a decline in the volume of freight shipped due to a downturn in customers’ business cycles or other factors (including our ability to assess dimensional-based weight increases) generally results in decreases in freight pricing and decreases in average revenue per pound of freight, as carriers compete for loads to maintain truck productivity.

Our base transportation rates are determined based on numerous factors such as length of haul, weight per shipment and freight class. During economic downturns, we may also have to lower our base transportation rates based on competitive pricing pressures and market factors.

Some of our customers may face economic difficulties and may not be able to pay us, and some may go out of business. In addition, some customers may not pay us as quickly as they have in the past, causing our working capital needs to increase.

A significant number of our transportation providers may go out of business and we may be unable to secure sufficient equipment or other ~~information~~transportation services to meet our commitments to our customers.

We may not be able to appropriately adjust our expenses to changing market demands. In order to maintain high variability in ~~this Form 10-K and other documents~~our business model, it is necessary to adjust staffing levels to changing market demands. In periods of rapid change, it is more difficult to match our staffing levels to our business needs.

If we have ~~filed~~difficulty attracting and retaining owner-operators or freight handlers, or are unable to contract with a sufficient number of third-party carriers to supplement our owner-operator fleet, our profitability and results of operations could be adversely affected.

We depend on owner-operators for most of our transportation needs. In 2017, owner-operators provided 57.3% of our purchased transportation. Competition for owner-operators is intense, and sometimes there are shortages of available owner-operators. In addition, a decline in the ~~SEC~~availability of trucks, tractors and trailers for owner-operator purchase or use may negatively affect our ability to hire, attract or retain available owner-operators. We also need a large number of freight handlers to operate our business efficiently. During periods of low unemployment in the areas where our terminals are located, we may have difficulty hiring and retaining a sufficient number of freight handlers. If we have difficulty attracting and retaining enough qualified freight handlers and owner-operators, we may be forced to increase wages and benefits or to increase the cost at which we contract with our owner-operators, either of which would increase our operating costs. This difficulty may also impede our ability to maintain our delivery schedules, which could make our service less competitive and force us to curtail our planned growth. A capacity deficit may lead to a loss of customers and a decline in the volume of freight we receive from customers.

To augment our fleet of owner-operators, from time to time we purchase transportation from third-party carriers at a higher cost. As with owner-operators, competition for third-party carriers is intense, and sometimes there are shortages of available third-party carriers. If we cannot secure a sufficient number of owner-operators and have to purchase transportation from third-party carriers, our operating costs will increase. If our labor and operating costs increase, we may be unable to offset the ~~following factors should be carefully considered in evaluating~~increased costs by increasing rates without adversely affecting our business. ~~Such factors~~As a result, our profitability and results of operations could ~~affect results and cause results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, us. Some or all of these factors may apply to our business.~~be adversely affected.

~~Our business is~~A determination by regulators that our independent owner-operators are employees rather than independent contractors could expose us to various liabilities and additional ongoing expenses, and related litigation can subject us to ~~general economic and business factors that are largely out of our control, any of~~substantial costs, which could have a material adverse effect on our results of ~~operations.~~operations and our financial condition.

At times, the Internal Revenue Service, the Department of Labor and state authorities have asserted that owner-operators are “employees,” rather than “independent contractors.” In addition, the topic of the classification of individuals as employees or independent contractors has gained increased attention among the plaintiffs’ bar. One or more governmental authorities may challenge our position that the owner-operators we use are not our employees. A determination by regulators that our independent owner-operators are employees rather than independent contractors could expose us to various liabilities and additional ongoing expenses, including but not limited to, employment-related expenses such as workers’ compensation insurance coverage and reimbursement of work-related expenses. Our ~~business is dependent upon a number~~exposure could include prior period compensation, as well as potential liability for employee benefits and tax withholdings. In addition, certain states have recently seen numerous class action lawsuits filed against transportation companies that engage independent contractors, some of ~~factors that may~~which have resulted in significant damage awards and/or monetary settlements for workers who have been allegedly misclassified as independent contractors. The legal and other costs associated with any of these matters can be substantial and could have a material adverse effect on ~~the~~our results of operations and our ~~operations,~~financial condition.

If we fail to maintain our information technology systems, or if we fail to successfully implement new technology or enhancements, we may be at a competitive disadvantage and experience a decrease in revenues.

We rely heavily on our information technology systems to efficiently run our business, and they are a key component of our growth strategy and competitive advantage. We expect our customers to continue to demand more sophisticated, fully integrated information systems from their transportation providers. To keep pace with changing technologies and customer demands, we must correctly interpret and address market trends and enhance the features and functionality of our information technology systems in response to these trends, which may lead to significant ongoing software development costs. We may be unable to accurately determine the needs of our customers and the trends in the transportation services industry or to design and implement the appropriate features and functionality of our information technology systems in a timely and cost-effective manner, which could put us at a competitive disadvantage and result in a decline in our efficiency, decreased demand for our services and a corresponding decrease in our revenues. Furthermore, as technology improves, our customers may be able to find alternatives to our services for matching shipments with available freight hauling capacity.

Our information technology systems can also play an integral role in managing our internal freight and transportation information and creating additional revenue opportunities including assessing available backhaul capacity. A failure to capture and utilize our internal freight and transportation information may impair our ability to service our existing customers or grow revenue.

Our information technology systems are subject to risks, many of which are ~~beyond~~outside of our control. ~~These factors include increases or rapid fluctuations in fuel prices, freight volumes, capacity~~

Our information technology systems are dependent upon global communications providers, web browsers, telephone systems and other aspects of the Internet infrastructure that have experienced significant system failures and electrical outages in the ~~trucking industry, insurance premiums, self-insured retention levels, difficulty~~past. While we take measures to ensure our major systems have redundant capabilities, our systems are susceptible to outages from fire, floods, power loss, telecommunications failures, data leakage, human error, break-ins, cyber-attacks and similar events. Despite our implementation of network security measures, our servers are vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems. The occurrence of any of these events could disrupt or damage our information technology systems and hamper our internal operations, impede our customers’ access to our information technology systems and adversely impact our customer service, volumes, and revenues and result in ~~attracting and retaining qualified owner-operators and freight handlers as well as needed outside capacity and~~increased cost. Furthermore, a material network breach in the ~~status~~security of our owner-operators as independent contractors. Our profitability would decline if we were unable to anticipate and react to increases in our operating costs, including purchased transportation and labor, or decreasesinformation technology systems could result in the ~~amount~~theft of ~~revenue per pound~~our intellectual property or trade secrets, personal information of ~~freight shipped through~~ our ~~networks. As~~employees and confidential information of our customers. To the extent that any disruptions or security breach results in a ~~result~~loss or damage to our data, or in inappropriate disclosure of ~~competitive factors,~~confidential information, it could cause significant damage to our reputation, affect our relationships with our customers, reduce the demand for our services, lead to claims against us and ultimately harm our business. In addition, we may be ~~unable~~required to ~~raise~~incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

We may have difficulty effectively managing our ~~prices to meet increases in our operating costs,~~growth, which could ~~result in a material adverse effect on~~adversely affect our business, results of operations and financial condition.

~~Economic conditions may adversely affect~~Our growth strategy includes increasing freight volume from existing customers, expanding our ~~customers~~service offerings and ~~the amount of freight available for transport. This may~~pursing strategic transactions. Our growth plans will place significant demands on our management and operating personnel. Our ability to manage our future growth effectively will require us to, ~~lower~~among other things, regularly enhance our ~~rates,~~operating and ~~this may also result in lower volumes of freight flowing~~management information systems, evaluate and change our service offerings and continue to attract, retain, train, motivate and manage key employees, including through training and development programs. If we are unable to manage our ~~network. Customers~~

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~~encountering adverse economic conditions represent a greater potential for loss, and we may be required to increase~~growth effectively, our ~~reserve for bad-debt losses.~~

~~Our~~business, results of operations and financial condition may be affected by seasonal factors. Volumes of freight tend to be lower in the first quarter after the winter holiday season. In addition, it is not possible to predict the short or long-term effects of any geopolitical events on the economy or on consumer confidence in the United States, or their impact, if any, on our future results of operations. adversely affected.

~~In order to grow~~Volatility in fuel prices, shortages of fuel or the ineffectiveness of our ~~business, we will need to increase the volume and revenue per pound of the freight shipped through our networks.~~

~~Our growth depends in significant part~~fuel surcharge program can have a material adverse effect on our ~~ability to increase the amount~~results of operations and revenue per pound of freight shipped through our networks. The amount of freight shipped through our networks and our revenue per pound depend on numerous factors, many of which are beyond our control, such as economic conditions and our competitors’ pricing. Therefore, we cannot guarantee that the amount of freight shipped or the revenue per pound we realize on that freight will increase or even remain at current levels. If we fail to increase the volume of the freight shipped through our networks or the revenue per pound of the freight shipped, we may be unable to maintain or increase our profitability.

~~Our rates, overall revenue and expenses~~We are subject to ~~volatility.~~

~~Our rates~~risks associated with the availability and price of fuel, which are subject to ~~change based on competitive pricing~~political, economic and market ~~factors. Our overall transportation rates consist~~factors that are outside of ~~base transportation and~~our control. Fuel prices have fluctuated dramatically over recent years. Over time we have been able to mitigate the impact of the fluctuations through our fuel surcharge rates. Our base transportation rates exclude fuel surcharges and are set based on numerous factors such as length of haul, freight class and weight per shipment. The base rates are subject to change based on competitive pricing pressures and market factors. Most of our competitors impose fuel surcharges, but there is no industry standard for the calculation of fuel surcharge rates.programs. Our fuel surcharge rates are set weekly based on the national average for fuel prices as published by the U.S. Department of Energy ~~(“DOE”)~~ and our fuel surcharge table. ~~Historically, we have not adjusted our method for determining fuel surcharge rates.~~

Our net fuel surcharge revenue is the result of our fuel surcharge rates and the tonnage transiting our networks. The fuel surcharge revenue is then netted with the fuel surcharge we pay to our owner-operators and third party transportation providers. ~~Fluctuations~~There can be no assurance that our fuel surcharge revenue programs will be effective in the future as the fuel surcharge may not capture the entire amount of the increase in fuel prices. Additionally, decreases in fuel prices reduce the cost of transportation services and accordingly, could reduce our revenues and may reduce margins for certain lines of business. In addition to changing fuel prices, fluctuations in volumes and related load factors ~~and fuel prices~~ may subject us to volatility in our net fuel surcharge revenue. ~~This~~Fuel shortages, changes in fuel

prices and the potential volatility in net fuel surcharge revenue may adversely impact our ~~overall revenue, base transportation revenue plus net fuel surcharge revenue, and~~ results of ~~operations.~~operations and overall profitability.

Because a portion of our network costs are fixed, ~~we will be adversely affected by~~ any factors that result in a decrease in the volume or revenue per pound of freight shipped through our ~~networks.~~networks will adversely affect our results of operations.

Our operations, particularly our networks of hubs and terminals, represent substantial fixed costs. As a result, any decline in the volume or revenue per pound of freight we handle ~~may~~will have an adverse effect on our operating margin and our results of operations. Several factors can result in such declines, including adverse business and economic conditions affecting shippers of freight as discussed above. In addition, volumes shipped through our network may be negatively impacted by lack of customer contractual obligations or cancellations of existing customer contracts. Typically, ~~Forward Air does~~we do not ~~have~~enter into long-term contracts with ~~its~~our customers. ~~FASI does have contracts with its customers but these~~Rather, our customer contracts typically ~~have terms allowing~~allow for cancellation within 30 to 60 days. As a result, we cannot guarantee that our current customers will continue to utilize our services or that they will continue at the same levels. ~~The actual shippers~~Any one of the freight moved through our networks include various manufacturers, distributors and/or retailers of electronics, clothing, telecommunications equipment, machine parts, trade show exhibit materials and medical equipment. Adverse business conditions affecting these shippers or adverse general economic conditions are likely to causeforegoing factors that results in a ~~decline~~decrease in the volume or revenue per pound of freight shipped ~~through~~will adversely affect our ~~networks.~~results of operations.

We derive a significant portion of our revenue from a few major customers, the loss of one or more of which could have a material adverse effect on our business.

For the calendar year ended December 31, 2017, our top 10 customers, based on revenue, accounted for approximately 26% of our revenue. Our Expedited LTL, TLS and Intermodal segments typically do not have long-term contracts with their customers. While our Pool segment business may involve a long-term written contract, those contracts may contain cancellation clauses, and there is no assurance that our current customers will continue to utilize our services or continue at the same levels. A reduction in or termination of our services by one or more of our major customers could have a material adverse effect on our business and operating results.

We operate in highly competitive and fragmented segments of our industry, and our business will suffer if we are unable to adequately address downward pricing pressures and other factors that may adversely affect our results of operations, growth prospects and profitability.

The segments of the freight transportation industry in which we participate are highly competitive, very fragmented and historically have few barriers to entry. ~~Our principal competitors include national~~We compete with a large number of other asset-light logistics companies, asset-based carriers, integrated logistics companies, and ~~regional truckload and less-than-truckload brokers and carriers.~~third-party freight brokers. To a lesser extent, we also compete with integrated air cargo carriers and passenger airlines. Our competition ranges from small operators that compete within a limited geographic area to companies with substantially greater financial and other resources, including greater freight capacity. We also face competition from freight forwarders who decide to establish their own networks to transport expedited ground ~~freight.~~freight, as well as from logistics companies, internet matching services and internet and third party freight brokers and new entrants to the market. In addition, customers can bring in-house some of the services we provide to them. We believe competition is based primarily on quality service, available capacity, on-time delivery, flexibility, reliability and security, transportation rates as well as the ability to acquire and maintain terminal facilities in desirable locations at reasonable rates. Many of our competitors periodically reduce their rates to gain business, especially during times of economic decline. In the past several years, several of our competitors have reduced their rates to unusually low levels that we believe are unsustainable in the long-term, but that may materially adversely affect our business in the short-term.

~~Table~~In addition, competitors may pursue other strategies to gain a competitive advantage such as developing superior information technology systems or establishing cooperative relationships to increase their ability to address customer needs. Furthermore, the transportation industry continues to consolidate. As a result of ~~Contents~~

~~the short-term.~~consolidation, our competitors may increase their market share and improve their financial capacity, and may strengthen their competitive positions. Business combinations could also result in competitors providing a wider variety of services at competitive prices, which could adversely affect our financial performance. These ~~competitors~~competitive pressures may cause a decrease in our volume of freight, require us to lower the prices we charge for our services and adversely affect ~~both~~ our results of operations, growth prospects and profitability.

~~If we have difficulty attracting and retaining owner-operators or freight handlers, our~~Our results of operations ~~could~~will be materially and adversely ~~affected.~~

~~We depend on owner-operators for most~~affected if our new service offerings do not gain market acceptance or result in the loss of our ~~transportation needs. In~~ ~~2014, owner-operators provided 49.5%~~current customer base.

One element of our ~~purchased transportation. Competition for owner-operators~~growth strategy is ~~intense,~~to expand our service offerings to customers. As a result, we have added additional services in the past few years. We may not succeed in making our customers sufficiently aware of existing and ~~sometimes there are shortages~~future services or in creating customer acceptance of ~~available owner-operators.~~these services at the prices we would want to charge. In addition, we ~~need a large number of freight handlers~~may be required to ~~operate~~devote substantial resources to educate our ~~business efficiently. During periods of low unemployment in the areas where our terminals are located, we may have difficulty hiring and retaining~~customers, with no assurance that a sufficient number of ~~freight handlers. If we have difficulty attracting and retaining enough qualified owner-operators~~customers will use our services for

commercial success to be achieved. We may not identify trends correctly, or ~~freight handlers, we~~ may not be ~~forced~~able to ~~increase wages and benefits, which would increase~~bring new services to market as quickly, effectively or price-competitively as our ~~operating costs. This difficulty~~competitors. In addition, new services may ~~also impede our ability to~~

~~maintain our delivery schedules, which could make our service less competitive and force~~alienate existing customers or cause us to ~~curtail~~lose business to our ~~planned growth.~~competitors. If ~~our labor costs increase, we may be unable to offset~~any of the ~~increased labor costs by increasing rates without adversely affecting our business. As a result, our profitability may be reduced.~~

If we have difficulty contracting with a sufficient number of third-party carriers to supplement our owner-operator fleet and satisfy our customers’ fast-growing transportation needs, our results of operationsforegoing occurs, it could ~~be adversely affected.~~

To augment our fleet of owner-operators, we purchase transportation from third-party carriers. As with owner-operators, competition for third-party carriers is intense, and sometimes there are shortages of available third-party carriers. If we cannot secure a sufficient number of owner-operators and have to purchase transportation from third-party carriers, our operating costs certainly will increase. This capacity deficit may lead to a loss of customers and a decline in the volume of freight we receive from customers.

~~Claims for property damage, personal injuries or workers’ compensation and related expenses could significantly reduce our earnings.~~

Under DOT regulations, we are liable for property damage and personal injuries caused by owner-operators and Company-employed drivers while they are operating on our behalf. We currently maintain liability insurance coverage that we believe is adequate to cover third-party claims. Forward Air and FASI have a self-insured retention of $0.5 million per occurrence for vehicle and general liability claims. We may also be subject to claims for workers’ compensation. We maintain workers’ compensation insurance coverage that we believe is adequate to cover such claims. Forward Air and FASI have a self-insured retention of approximately $0.3 million for each such claim, except in Ohio, where we are a qualified self-insured entity with an approximately $0.5 million self-insured retention. We could incur claims in excess of our policy limits or incur claims not covered by our insurance. Any claims beyond the limits or scope of our insurance coverage may have a material adverse effect on ~~us. Because we do not carry “stop loss” insurance, a significant increase in the number~~our results of claims that we must cover under our self-insurance retainage could adversely affect our profitability. In addition, we may be unable to maintain insurance coverage at a reasonable cost or in sufficient amounts or scope to protect us against losses.operations.

We have grown and may grow, in part, through acquisitions, which involve various risks, and we may not be able to identify or acquire companies consistent with our growth strategy or successfully integrate acquired businesses into our operations.

We have grown through acquisitions, and we intend to pursue opportunities to expand our business by acquiring other companies in the future. Acquisitions involve risks, including those relating to:

identification of appropriate acquisition candidates;

negotiation of acquisitions on favorable terms and valuations;

integration of acquired businesses and personnel;

implementation of proper business and accounting controls;

ability to obtain financing, at favorable terms or at all;

diversion of management attention;

retention of employees and customers;

unexpected liabilities;

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potential erosion of operating profits as new acquisitions may be unable to achieve profitability comparable with our ~~core airport-to-airport~~Expedited LTL business; and

detrimental issues not discovered during due diligence.

Acquisitions also may affect our short-term cash flow and net income as we expend funds, potentially increase indebtedness and incur additional expenses. If we are not able to identify or acquire companies consistent with our growth strategy, or if we fail to successfully integrate any acquired companies into our operations, we may not achieve anticipated increases in revenue, cost savings and economies of scale, our operating results may actually decline and acquired goodwill may become impaired.

Severe economic downturns like the recession experienced in 2008 and 2009 can result in weaker demand for ground transportation services, which may have a significant negative impact on our results of operations.

During 2008 and 2009, we experienced significantly weaker demand for our airport-to-airport and pool distribution services as a result of the severe downturn in the economy. During the time in question, we adjusted the size of our owner-operator fleet and reduced employee headcount to compensate for the drop in demand. No assurance can be given that reductions in owner-operators and employees or other steps we may take during similar times in the future will be adequate to offset the effects of reduced demand. If we experience another economic downturn it may have a significant negative impact on our results of operations.

~~Extreme or unusual weather conditions can disrupt our operations, impact freight volumes and increase our costs, all of which could adversely affect our results of operations.~~

Certain weather conditions such as ice and snow can disrupt our operations. Increases in the cost of operations, such as towing and other maintenance activities, frequently occur during the winter months. Natural disasters such as hurricanes and flooding can also impact freight volumes and negatively impact our results of operations.

We could be required to record a material non-cash charge to income if our recorded intangible assets or goodwill are determined to be impaired.

We have $~~72.7~~$111.2 million of recorded net definite-lived intangible assets on our consolidated balance sheet at December 31, ~~2014~~.2017. Our definite-lived intangible assets primarily represent the value of customer relationships and non-compete agreements that were recorded in conjunction with our various acquisitions. We review our long-lived assets, such as our definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is recognized on these assets when the ~~sum of undiscounted~~ estimated ~~cash flows expected to result from the use of the asset~~fair value is less than the carrying value. If such measurement indicates an impairment, we would be required to record a non-cash impairment charge to our consolidated statement of comprehensive income in the amount that the carrying value of these assets exceed the estimated fair value of the assets.

We also have recorded goodwill of $~~144.4~~$191.7 million on our consolidated balance sheet at December 31, ~~2014~~.2017. Goodwill is assessed for impairment annually (or more frequently if circumstances indicate possible impairment) for each of our reporting units. This assessment includes comparing the fair value of each reporting unit to the carrying value of the assets assigned to each reporting unit. If the carrying value of the reporting unit was to exceed our estimated fair value of the reporting unit, we would then be required to estimate the fair value of the individual assets and liabilities within the reporting unit to ascertain the amount of fair value of goodwill and any potential impairment. If we determine that our fair value of goodwill is less than the related book value, we could be required to record a non-cash impairment charge to our consolidated statement of comprehensive income, which could have a material adverse effect on our earnings.

We are dependent on our senior management team and other key employees, and the loss of any such personnel could materially and adversely affect our business, operating results and financial condition.

Our future performance depends, in significant part, upon the continued service of our senior management team and other key employees. We cannot be certain that we can retain these employees. The loss of the services of one or more of these or other key personnel could have a material adverse effect on our business, operating results and financial condition if we are unable to secure replacement personnel internally or through our recruitment programs and initiatives that have sufficient experience in our industry or in the management of our business. If we fail to develop and retain a core group of senior management and other key employees and address issues of succession planning, it could hinder our ability to execute on our business strategies and maintain our level of service.

Claims for property damage, personal injuries or workers’ compensation and related expenses could significantly reduce our earnings.

Under DOT regulations, we are liable for property damage and personal injuries caused by owner-operators and Company-employed drivers while they are operating on our behalf. Additionally, from time to time, the drivers employed and engaged by the third-party transportation carriers we contract with are involved in accidents, which may result in serious personal injuries. The resulting types and/or amounts of damages may be excluded by or exceed the amount of insurance coverage maintained by the contracted carrier. Although these drivers are not our employees and all of these drivers are employees, owner-operators, or independent contractors working for carriers, from time to time, claims may be asserted against us for their actions, or for our actions in retaining them. We currently maintain liability insurance coverage that we believe is adequate to cover third-party claims. We have a self-insured retention of $1.0 million per occurrence for vehicle and general liability claims. We may also be subject to claims for workers’ compensation. We maintain workers’ compensation insurance coverage that we believe is adequate to cover such claims. We have a self-insured retention of approximately $0.4 million for each such claim, except in Ohio, where we are a qualified self-insured entity with an approximately $0.5 million self-insured retention. We could incur claims in excess of our policy limits or incur claims not covered by our insurance. Any claims beyond the limits or scope of our insurance coverage may have ~~difficulty effectively managing~~a material adverse effect on us. Because we do not carry “stop loss” insurance, a significant increase in the number of claims that we must cover under our ~~growth, which~~self-insurance retainage could adversely affect our ~~results of operations.~~

Our growth plans will place significant demands on our management and operating personnel. Our ability to manage our future growth effectively will require us to regularly enhance our operating and management information systems and to continue to attract, retain, train, motivate and manage key employees. If we are unable to manage our growth effectively, our business, results of operations and financial condition may be adversely affected.

~~If we fail to maintain and enhance our information technology systems, we may lose orders and customers or incur costs beyond expectations.~~

We must maintain and enhance our information technology systems to remain competitive and effectively handle higher volumes of freight through our networks. We expect customers to continue to demand more sophisticated, fully integrated

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information systems from their transportation providers. If we are unable to maintain and enhance our information systems to handle our freight volumes and meet the demands of our customers, our business and results of operations will be adversely affected. If our information systems are unable to handle higher freight volumes and increased logistics services, our service levels and operating efficiency may decline. This may lead to a loss of customers and a decline in the volume of freight we receive from customers.

~~Our information technology systems are subject to risks that we cannot control.~~

Our information technology systems are dependent upon global communications providers, web browsers, telephone systems and other aspects of the Internet infrastructure that have experienced significant system failures and electrical outages in the past. While we take measures to ensure our major systems have redundant capabilities, our systems are susceptible to outages from fire, floods, power loss, telecommunications failures, break-ins, cyber-attacks and similar events. Despite our implementation of network security measures, our servers are vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems. The occurrence of any of these events could disrupt or damage our information technology systems and hamper our internal operations, our ability to provide services to our customers and the ability of our customers to access our information technology systems. A material network breach in the security of our information technology systems could include the theft of our intellectual property or trade secrets, personal information of our employees and confidential information of certain customers. To the extent that any disruptions or security breach results in a loss or damage to our data, or in inappropriate disclosure of confidential information, it could cause significant damage to our reputation, affect our relationships with our customers, reduce the demand for our services, lead to claims against us and ultimately harm our business.profitability. In addition, we may be ~~required~~unable to ~~incur significant costs~~maintain insurance coverage at a reasonable cost or in sufficient amounts or scope to protect us against losses.

We face risks related to self-insurance and third-party insurance that can be volatile to our earnings.

We self-insure a significant portion of our claims exposure and related expenses for cargo loss, employee medical expense, bodily injury, workers’ compensation and property damage, ~~caused~~and maintain insurance with insurance companies above our limits of self-insurance. Self-insurance retention and other limitations are detailed in Part II, Item 7, under “Self-Insurance Loss Reserves.” Our large self-insured retention limits can make our insurance and claims expense higher or more volatile. Additionally, if our third-party insurance carriers or underwriters leave the trucking sector, as was the case during 2017, or if they decline to renew us as an insured, it could materially increase our insurance costs or collateral requirements, or create difficulties in finding insurance in excess of our self-insured retention limits. Additionally, we could find it necessary to raise our self-insured retention, pay higher premiums or decrease our aggregate coverage limits when our policies are renewed or replaced, any of which will negatively impact our earnings.

We accrue for the costs of the uninsured portion of pending claims, based on the nature and severity of individual claims and historical claims development trends. Estimating the number and severity of claims, as well as related judgment or settlement amounts is inherently difficult. This, along with legal expenses, incurred but not reported claims, and other uncertainties can cause unfavorable differences between actual self-insurance costs and our reserve estimates.

Our business is subject to seasonal trends.

Historically, our operating results have been subject to seasonal trends when measured on a quarterly basis. Our first and second quarters have traditionally been the weakest compared with our third and fourth quarters. This trend is dependent on numerous factors including economic conditions, customer demand and weather. Because revenue is directly related to the available working days of shippers, national holidays and the number of business days during a given period may also create seasonal impact on our results of operations. After the winter holiday season and during the remaining winter months, our freight volumes are typically lower because some customers reduce shipment levels. In addition, a substantial portion of our revenue is derived from customers in industries whose shipping patterns are tied closely to consumer demand which can sometimes be difficult to predict or are based on just-in-time production schedules. Therefore, our revenue is, to a large degree, affected by factors that are outside of our control. There can be no assurance that our historic operating patterns will continue in future periods as we cannot influence or forecast many of these ~~disruptions or security breaches~~factors.

Our results of operations may be affected by harsh weather conditions and disasters.

Certain weather-related conditions such as ice and snow can disrupt our operations. Our operating expenses have historically been higher in the ~~future.~~

~~A determination~~winter months because of cold temperatures and other adverse winter weather conditions (such as explosive cyclogenesis events) which result in decreased fuel efficiency, increased cold weather-related maintenance costs of revenue equipment and increased insurance and claims costs. Harsh weather could also reduce our ability to transport freight, which could result in decreased revenues. Disasters, whether natural or man-made can also adversely affect our performance by ~~regulators that~~reducing demand and reducing our ~~independent owner-operators are employees rather than independent contractors~~ability to transport freight, which could ~~expose us to various liabilities~~result in decreased revenue and ~~additional costs.~~

At times, the Internal Revenue Service, the Department of Labor and state authorities have asserted that owner-operators are “employees,” rather than “independent contractors.” One or more governmental authorities may challenge our position that the owner-operators we use are not our employees. A determination by regulators that our independent owner-operators are employees rather than independent contractors could expose us to various liabilities and additional costs including, but not limited to, employment-related expenses such as workers’ compensation insurance coverage and reimbursement of work-relatedincreased operating expenses.

We operate in a regulated industry, and increased costs of compliance with, or liability for violation of, existing or future regulations could have a material adverse effect on our business.

The DOT and various state and federal agencies have been granted broad regulatory powers over our business in the United States, and we are licensed by the DOT and U.S. Customs. Additionally, our Canada business activities are subject to the similar laws and regulations of Canada and its provinces. If we fail to comply with any applicable regulations, our licenses may be revoked or we could be subject to substantial fines or penalties and to civil and criminal liability.

The transportation industry is subject to legislative and regulatory changes that can affect the economics of our business by requiring changes in operating practices or influencing the demand for, and the cost of providing, transportation services. ~~Heightened~~

The Federal Motor Carrier Safety Administration (“FMCSA”) has implemented a requirement that electronic driver logs be monitored by Electronic Log Devices (“ELDs”) for most interstate commercial motor vehicle drivers by no later than December 18, 2017. The cost associated with the ELD mandate, together with other regulations, could result in a reduction in the pool of owner-operators and other third-party carriers available to us to service our customers’ demands, which could increase driver turnover, decrease asset utilization, limit growth and adversely impact our results of operations. Further, heightened security concerns may continue to result in increased regulations, including the implementation of various security measures, checkpoints or travel restrictions on trucks.

In addition, there may be changes in applicable federal or state tax or other laws or interpretations of those laws. If this happens, we may incur additional taxes, as well as higher workers’ compensation and employee benefit costs, and possibly penalties and interest for prior periods. This could have an adverse effect on our results of operations.

We are subject to various environmental laws and regulations, and costs of compliance with, or liabilities for violations of, existing or future laws and regulations could significantly increase our costs of doing business.

Our operations are subject to environmental laws and regulations dealing with, among other things, the handling of hazardous materials and discharge and retention of stormwater. We operate in industrial areas, where truck terminals and other industrial activities are located, and where groundwater or other forms of environmental contamination may have occurred. Our operations involve the risks of fuel spillage, environmental damage, and hazardous waste disposal, among others. If we are involved in a spill or other accident involving hazardous substances, or if we are found to be in violation of applicable environmental laws or regulations, it could significantly increase our cost of doing business. Under specific environmental laws and regulations, we could be held responsible for all of the costs relating to any contamination at our past or present terminals and at third-party waste

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disposal sites. If we fail to comply with applicable environmental laws and regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.

In addition, as global warming issues become more prevalent, federal and local governments and our customers are beginning to respond to these issues. This increased focus on sustainability may result in new regulations and customer requirements that could negatively affect us. This could cause us to incur additional direct costs or to make changes to our operations in order to comply with any new regulations and customer requirements, as well as increased indirect costs or loss of revenue resulting from, among other things, our customers incurring additional compliance costs that affect our costs and revenues. We could also lose revenue if our customers divert business from us because we have not complied with their sustainability requirements. These costs, changes and loss of revenue could have a material adverse effect on our business, financial condition and results of operations.

WeThe FMCSA’s CSA initiative could adversely impact our ability to hire qualified drivers or contract with qualified owner-operators or third-party carriers, meet our growth projections and maintain our customer relationships, each of which could adversely impact our results of operations.

The FMCSA’s Compliance, Safety, Accountability initiative (“CSA”) is an enforcement and compliance program designed to monitor and improve commercial motor vehicle safety by measuring the safety record of both the motor carrier and the driver. These measurements are scored and used by the FMCSA to identify potential safety risks and to direct enforcement action. CSA scores are dependent upon safety and compliance experience, which could change at any time. In addition, the safety standards prescribed in CSA could change and our ability as well as our independent contractors’ ability to maintain an acceptable score could be adversely impacted. Public disclosure of certain CSA scores was restricted through the enactment of the Fixing America’s Surface Transportation Act of 2015 (the “FAST Act”) on December 4, 2015; however, the FAST Act does not restrict public disclosure of all data collected by the FMCSA. If we receive unacceptable CSA scores, and this data is made available to the public, our ~~senior management team, and the~~relationships with our customers could be damaged, which could result in a loss of ~~any such personnel could materially and adversely affect our~~ business.

~~Our future performance depends, in significant part, upon~~

The requirements of CSA could also shrink the ~~continued service~~industry’s pool of ~~our senior management team. We cannot be certain that we can retain these employees. The loss of~~drivers as those with unfavorable scores could leave the ~~services of one or more of these or other key personnel could have~~industry. As a ~~material adverse effect on our business, operating results and financial condition. We must continue~~result, the costs to ~~develop~~attract, train and retain qualified drivers, owner-operators or third-party carriers could increase. In addition, a ~~core group~~shortage of ~~management personnel~~qualified drivers could increase driver turnover, decrease asset utilization, limit growth and ~~address issues~~adversely impact our results of ~~succession planning if we are to realize our goal of growing our business. We cannot be certain that we will be able to do so.~~operations.

If our employees were to unionize, our operating costs would likely increase.

None of our employees is currently represented by a collective bargaining agreement. However, we have no assurance that our employees will not unionize in the future, which could increase our operating costs and force us to alter our operating methods. This could have a material adverse effect on our operating results.

Our charter and bylaws and provisions of Tennessee law could discourage or prevent a takeover that may be considered favorable.

Our charter and bylaws and provisions of Tennessee law may discourage, delay or prevent a merger, acquisition or change in control that may be considered favorable. These provisions could also discourage proxy contests and make it more difficult for shareholders to elect directors and take other corporate actions. Among other things, these provisions:

authorize us to issue preferred stock, the terms of which may be determined at the sole discretion of our Board of Directors and may adversely affect the voting or economic rights of our shareholders; and

establish advance notice requirements for nominations for election to the Board of Directors and for proposing matters that can be acted on by shareholders at a meeting.

Our charter and bylaws and provisions of Tennessee law may discourage transactions that otherwise could provide for the payment of a premium over prevailing market prices for our Common Stock and also could limit the price that investors are willing to pay in the future for shares of our Common Stock.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Properties

~~Management believes~~We believe that we have adequate facilities for conducting our business, including properties owned and leased. Management further believes that in the event replacement property is needed, it will be available on terms and at costs substantially similar to the terms and costs experienced by competitors within the transportation industry.

We lease our 37,500 square foot headquarters in Greeneville, Tennessee from the Greeneville-Greene County Airport Authority. The initial lease term ended in 2006 and has two ten-year and one five-year renewal options. During 2007, we renewed the lease through 2016.

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We own our Columbus, Ohio central sorting ~~facility.~~facility which is used by our Expedited LTL and TLS segments. The ~~expanded~~ Columbus, Ohio facility is 125,000 square feet with 168 trailer doors. This premier facility can unload, sort and load upwards of 3.7 million pounds in five hours. In addition to the expansion, we process-engineered the freight sorting in the expanded building to improve handling efficiencies. The benefits include reductions in the distance each shipment moves in the building to speed up the transfer process, less handling of freight to further improve service integrity and flexibility to operate multiple sorts at the same time.

We also own facilities near Dallas/Fort Worth, Texas, Chicago, Illinois and Atlanta, ~~Georgia.~~Georgia, all of which are used by the Expedited LTL segment. The Dallas/Fort Worth, Texas facility has over 216,000 square feet with 134 trailer doors and approximately 28,000 square feet of office space. The Chicago, Illinois facility is over 125,000 square feet with 110 trailer doors and over 10,000 square feet of office space. The Atlanta, Georgia facility is over 142,000 square feet with 118 trailer doors and approximately 12,000 square feet of office space. We lease our shared services headquarters in Greeneville, Tennessee. During 2016, we renewed the lease through 2023. Our executives are headquartered within our Atlanta, Georgia and Dallas, Texas facilities.

We lease and maintain 76130 additional terminals, ~~including our pool distribution terminals,~~office spaces and other properties located in major cities throughout the United States and Canada. Lease terms for these terminals are typically for three to ~~five~~seven years. ~~The~~As a result of the Towne acquisition, we currently have 2 idle facilities that we are still leasing. Our plan is to buyout or sublease these remaining facilities. In addition, we have operations in 30 ~~terminals are agent stations~~cities operated by independent agents who handle freight for us on a commission basis.

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Discussion of Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). The preparation of financial statements in accordance with GAAP requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Our estimates and assumptions are based on historical experience and changes in the business environment. However, actual results may differ from estimates under different conditions, sometimes materially. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial condition and results and require management’s most subjective judgments.

Allowance for Doubtful Accounts

~~We evaluate~~The Company evaluates the ~~collectibility~~collectability of ~~our~~its accounts receivable based on a combination of factors. In circumstances in which ~~management~~the Company is aware of a specific customer’s inability to meet its financial obligations to usthe Company (for example, bankruptcy filings, or accounts turned over for collection or litigation), ~~we record~~the Company records a specific reserve for these bad debts against amounts due to reduce the net recognized receivable to the amount wethe Company reasonably ~~believe~~believes will be collected. For all other customers, ~~we recognize~~the Company recognizes reserves for these bad debts based on the length of time the receivables are past due. Specifically, amounts that are 90 days or more past due are reserved at ~~50%~~50.0% for ~~Forward Air's airport-to-airport~~Expedited LTL, 10.0% for Intermodal, 25.0% for Pool and ~~TLX operations, 10%~~up to 50.0% for ~~Forward Air's intermodal drayage operations, 25% for FASI, 10% for TQI's pharmaceutical operations and 50% for TQI's non-pharmaceutical operations.~~TLS. If circumstances change (i.e., ~~we experience~~the Company experiences higher than expected defaults or an unexpected material adverse change in a customer’s ability to meet its financial obligations to ~~us)~~the Company), the estimates of the recoverability of amounts due to usthe Company could be changed by a material amount. Accounts are written off after all means of collection, including legal action, have been exhausted.

Allowance for Revenue Adjustments

Our allowance for revenue adjustments consists of amounts reserved for billing rate changes that are not captured upon load initiation. These adjustments generally arise: (i) when the sales department contemporaneously grants small rate changes (“spot quotes”) to customers that differ from the standard rates in the system; (ii) when freight requires dimensionalization or is reweighed resulting in a different required rate; (iii) when billing errors occur; and (iv) when data entry errors occur. When appropriate, permanent rate changes are initiated and reflected in the system. ~~We monitor the manual revenue adjustments closely through the employment of various controls that are in place to ensure that revenue recognition is not compromised and that fraud does not occur.~~ During ~~2014,~~2017, average revenue adjustments per month were approximately ~~$0.2~~$0.3 million, on average revenue per month of approximately ~~$65.1~~$91.7 million (approximately 0.3% of monthly revenue). In order to estimate the allowance for revenue adjustments related to ending accounts receivable, we prepare an analysis that considers average monthly revenue adjustments and the average lag for identifying and quantifying these revenue adjustments. Based on this analysis, we establish an allowance for approximately ~~45-100~~35-65 days (dependent upon experience by operating segment in the preceding twelve months) of average revenue adjustments, adjusted for rebates and billing errors. The lag is periodically adjusted based on actual historical experience. Additionally, the average amount of revenue adjustments per month can vary in relation to the level of sales or based on other factors (such as personnel issues that could result in excessive manual errors or in excessive spot quotes being granted). Both of these significant assumptions are continually evaluated for ~~validity.~~appropriateness.

Self-Insurance Loss Reserves

Given the nature of our operating environment, we are subject to vehicle and general liability, workers' compensation and employee health insurance claims. To mitigate a portion of these risks, we maintain insurance for individual vehicle and general liability claims exceeding ~~$0.5~~$1.0 million and workers' compensation claims and employee health insurance claims exceeding approximately $0.4 million and $0.3 million, respectively, except in Ohio, where for workers' compensation we are a qualified self-insured entity with an approximately $0.5 million self-insured retention. The amount of self-insurance loss reserves and loss adjustment expenses is determined based on an estimation process that uses information obtained from both company-specific and industry data, as well as general economic information. The estimation process for self-insurance loss exposure requires management to continuously monitor and evaluate the life cycle of claims. Using data obtained from this monitoring and our assumptions about the emerging trends, management develops information about the size of ultimate claims based on its historical experience and other available market information. The most significant assumptions used in the estimation process include determining the trend in loss costs, the expected consistency in the frequency and severity of claims incurred but not yet reported, changes in the timing of the reporting of losses from the loss date to the notification date, and expected costs to settle unpaid claims. We utilize semi-annual actuarial analysis to evaluate the open vehicle liability and workers' compensation claims and estimate the ongoing development exposure.

Changes in the inputs described above, such as claim life cycles, severity of claims and trends in loss costs, can result in material changes to our self-insurance loss reserves. Historically, significant changes in one assumption or changes in several

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assumptions have resulted in both increases and decreases to self-insurance loss reserves. Based on facts and circumstances one significant claim, such as a dock or vehicle accident, could result in an immediate increase in our self-insurance loss reserves of at least $0.3 million to ~~$0.5~~$1.0 million, our self-insured retention limits. Significant facts and circumstances for a claim would involve the degree of injuries, whether fatalities occurred, the amount of property damage, the degree of our involvement and whether or not our employees or representatives followed our processes and procedures. However, changes in the above variables could also reduce our self-insurance loss reserves. For example, ~~during the second quarter of 2012,~~in previous periods we have reduced our workers' compensation loss reserve by ~~approximately $1.1~~over $1.0 million as the result of improvements in our loss experience and in the severity of claims incurred over a certain period of time.

Revenue Recognition

Operating revenue and related costs are recognized as of the date shipments are completed. The transportation rates we charge our customers consist of base transportation rates and fuel surcharge rates. The revenues earned and related direct freight expenses incurred from our base transportation services are recognized on a gross basis in revenue and in purchased transportation. Transportation revenue is recognized on a gross basis as we are the primary obligor. The fuel surcharges billed to customers and paid to owner-operators and third party transportation providers are recorded on a net basis in revenue as we are not the primary obligor with regards to the fuel surcharges. Please see Recent Accounting Pronouncements for expected changes to revenue recognition.

Income Taxes

We account for income taxes using the liability method, whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Also, we report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in interest expense and operating expenses, respectively.

At December 31, ~~2014,~~2017, we had state net operating loss carryforwards of ~~$6.5~~$18.1 million for certain legal entities that will expire between ~~2015~~2017 and ~~2029.~~2030. The use of these state net operating losses is limited to the future taxable income of separate legal entities. Based on expectations of future taxable income, management believes that it is more likely than not that the results of operations for the ~~related~~certain legal entities will not generate sufficient taxable income to realize the net operating loss benefits for these state loss carryforwards. As a result, a valuation allowance has been provided for these specific state loss carryforwards. The valuation allowance on these certain state loss carryforwards was approximately $0.4 million at December 31, 2017 and $0.3 million at December 31, ~~2014.~~2016.

On December 22, 2017, President Trump signed into law H.R. 1, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (this legislation was formerly called the “Tax Cuts and Jobs Act” and is referred to herein as the “U.S. Tax Act”). The U.S. Tax Act provides for significant changes in the U.S. Internal Revenue Code of 1986, as amended. The U.S. Tax Act contains provisions with separate effective dates but is generally effective for taxable years beginning after December 31, 2017.

Beginning on January 1, 2018, the U.S. Tax Act lowers the U.S. corporate income tax rate from 35% to 21% on our U.S. earnings from that date and beyond. The revaluation of our U.S. deferred tax assets and liabilities to the 21% corporate tax rate reduced our net U.S. deferred income tax liability by approximately $15.9 million which is reflected as a reduction in our income tax expense in our results for the quarter and year ended December 31, 2017.

The ultimate impact of the U.S. Tax Act on our reported results in 2018 may differ from the estimates provided herein, possibly materially, due to, among other things, changes in interpretations and assumptions we have made, guidance that may be issued, and other actions we may take as a result of the U.S. Tax Act different from that presently contemplated. On December 22, 2017, the SEC staff issued SAB 118 that allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. We are currently analyzing the 2017 Tax Act, and in certain areas, have made reasonable estimates of the effects on our consolidated financial statements and tax disclosures, including the changes to our existing deferred tax balances.

Valuation of Goodwill

We test our goodwill for impairment annually or more frequently if events or circumstances indicate impairment may exist. Examples of such events or circumstances could include a significant change in business climate or a loss of significant customers. We complete our annual analysis of our reporting units as of the last day of our second quarter, June 30^th. ~~We first consider our operating segment and related components in accordance with U.S. GAAP.~~ Goodwill is allocated to reporting units that are expected to benefit from the business combinations generating the goodwill. We have ~~three~~five reporting units - ~~Forward Air, FASI~~Expedited LTL, Truckload Expedited, Intermodal, Pool Distribution and TQI. The Truckload Expedited and the TQI reporting units are included in the Truckload Premium Services reportable segment. In evaluating reporting units, we first assess qualitative factors to determine whether it is more likely than not that the fair value of any of ~~its~~the reporting ~~units~~unit is less than its carrying amount, including goodwill. When performing the qualitative assessment, we consider the impact of factors including, but not limited to, macroeconomic and industry conditions, overall financial performance of each reporting unit, litigation and new legislation. If based on the qualitative assessments, we believe it is more likely than not that the fair value of any reporting unit is less than the reporting unit's carrying amount, or periodically as deemed appropriate by management, we will prepare an estimation of the respective reporting unit's fair value utilizing a quantitative approach. If this estimation of fair value indicates that impairment potentially exists, we will then measure the amount of the impairment, if any. Goodwill impairment exists when the ~~calculated~~estimated implied fair value of goodwill is less than its carrying value.

We determine the fair value of our reporting units based on a combination of a market approach, which considers comparable companies, and the income approach, using a discounted cash flow model. Under the market approach, valuation multiples are derived based on a selection of comparable companies and applied to projected operating data for each reporting unit to arrive at an indication of fair value. Under the income approach, the discounted cash flow model determines fair value based on the present value of management prepared projected cash flows over a specific projection period and a residual value related to future cash flows beyond the projection period. Both values are discounted using a rate which reflects our best estimate of the weighted average cost of capital of a market participant, and is adjusted for appropriate risk factors. We believe the most sensitive estimate used in our income approach is the management prepared projected cash flows. Consequently, as necessary we perform sensitivity tests on select reporting units to ensure reductions of the present value of the projected cash flows by at least 10% would not adversely impact

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the results of the goodwill impairment tests. Historically, we have equally weighted the income and market approaches as we believed the quality and quantity of the collected information were approximately equal. The inputs used in the fair value calculations for goodwill are classified within level 3 of the fair value hierarchy as defined in the ~~FASB~~Financial Accounting Standards Board ("FASB") Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.

In ~~2014,~~2017, we performed a qualitative analysis on all reporting units. We then prepared a fair value estimation for our TQI reporting unit. We did not perform a fair value estimation for the other reporting units as we did not believe it was more likely than not that their fair value was less than the carrying amount. This was determined based on prior year valuations and qualitative analysis of each reporting unit in 2017. Currently, there is no goodwill assigned to the Truckload Expedited reporting unit. Our ~~2014 calculations~~2017 analysis for ~~each reporting unit~~TQI indicated that, as of June 30, ~~2014,~~2017, the fair value of ~~each~~the reporting unit exceeded ~~their~~its carrying value by approximately 15.1%.

In 2016, due to the financial performance of the TQI reporting unit falling notably short of previous projections the Company reduced TQI's projected cash flows and as a ~~range~~result the estimate of ~~approximately 9.0%~~TQI's fair value no longer exceeded the respective carrying value. Consequently, the Company recorded a goodwill impairment charge of $25.7 million for the TQI reporting unit during the year ended December 31, 2016.

Additionally, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is recognized on assets classified as held and used when the sum of undiscounted estimated cash flows expected to ~~175.0%~~result from the use of the asset is less than the carrying value. If such measurement indicates a possible impairment, the estimated fair value of the asset is compared to its net book value to measure the impairment charge, if any. In conjunction with the June 30, 2016 TQI goodwill impairment assessment, the Company determined there were indicators that TQI's customer relationship and non-compete intangible assets were impaired as the undiscounted cash flows associated with the applicable assets no longer exceeded the related assets' net book values. The Company then estimated the current fair value of the customer relationship and non-compete assets using an income approach (level 3). As a result of these estimates the Company recorded an impairment charge of $16.5 million related to TQI customer relationships during the three months ended June 30, 2016.

For our ~~2014~~2017 TQI analysis, the significant assumptions used ~~for~~in the income approach were 10 years of projected net cash flows, a discount ~~rates between 11.5%~~rate of 15.5% and ~~16.0% and~~a long-term growth ~~rates between~~rate of 4.0% ~~and 5.0%~~. ~~These~~As shown with the 2016 TQI goodwill impairment, the estimates used to calculate the fair value of each reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of the reporting unit's fair value and goodwill impairment for the reporting unit. For example, during the first quarter of 2009, we determined there were indicators of potential impairment of the goodwill assigned to the FASI segment. This determination was based on the continuing economic recession, declines in current market valuations, FASI operating losses in excess of expectations and reductions of projected net cash flows. As a result, we performed an interim impairment test as of March 31, 2009. Based on the results of the interim impairment test, we concluded that an impairment loss was probable and could be reasonably estimated. Consequently, we recorded a goodwill impairment charge of $7.0 million related to the FASI segment during the first quarter of 2009.

Share-Based Compensation

Our general practice has been to make a single annual grant to key employees and to ~~generally~~ make other grants only in connection with new employment or promotions. In addition, we make annual grants to non-employee directors in conjunction with their annual election to our Board of Directors or at the time of their appointment to the Board of Directors. For employees, we have granted stock options, non-vested shares and performance shares. For non-employee directors, we have granted non-vested shares annually beginning in 2006.

Stock options typically expire seven years from the grant date and vest ratably over a three-year period. The share-based compensation for stock options are recognized ~~net of estimated forfeitures,~~ ratably over the requisite service period, or vesting period. ~~Forfeitures were estimated based on our historical experience.~~ We used the Black-Scholes option-pricing model to estimate the grant-date fair value of options granted. The following table contains the weighted-average assumptions used to estimate the fair value of options granted. These assumptions are highly subjective and changes in these assumptions can materially affect the fair value estimate.


	December 31, 2014		December 31, 2013		December 31, 2012		December 31, 2017		December 31, 2016		December 31, 2015
Expected dividend yield	1.2	%	1.2	%	0.9	%	1.3	%	1.0	%	1.0	%
Expected stock price volatility	38.5	%	43.7	%	46.6	%	28.5	%	28.9	%	33.3	%
Weighted average risk-free interest rate	1.6	%	0.9	%	0.8	%	2.0	%	1.3	%	1.6	%
Expected life of options (years)	5.28		5.2		4.2		5.9		5.8		5.9

The fair value of non-vested shares issued were estimated using the closing market prices for the business day of the grant. The share-based compensation for the non-vested shares is recognized ~~net of estimated forfeitures,~~ ratably over the requisite service period or vesting period. ~~Forfeitures are estimated based on our historical experience, but will be adjusted for future changes in forfeiture experience.~~

We have also granted performance shares to key employees. Under the terms of the performance share agreements, on the third anniversary of the grant date, we will issue to the employees a calculated number of common stock shares based on the three year performance of our ~~common stock share price~~total shareholder return as compared to the ~~share price performance~~total shareholder return of a selected peer group. No shares may be issued if the ~~share price~~total shareholder return performance outperforms ~~30%~~25% or less of the peer group, but the number of shares issued may be doubled if the ~~share price~~total shareholder return performs better than 90% of the peer group. The share-based compensation for performance shares are recognized ~~net of estimated forfeitures, ratably~~ over the requisite service period, or vesting period. The fair value of the performance shares was estimated using a Monte Carlo simulation. The following table contains the weighted-average assumptions used to estimate the fair value of performance shares granted. These assumptions are highly subjective and changes in these assumptions can materially affect the fair value estimate.

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			Year ended						Year ended
	December 31, 2014		December 31, 2013		December 31, 2012		December 31, 2017		December 31, 2016		December 31, 2015
Expected stock price volatility	32.5	%	34.5	%	40.8	%	24.7	%	22.3	%	23.5	%
Weighted average risk-free interest rate	0.7	%	0.4	%	0.4	%	1.4	%	0.8	%	1.0	%

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Our management, including our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, ~~2014.~~2017. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in this annual report on Form 10-K has been appropriately recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

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Management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance to management and the Board of Directors regarding the preparation and fair presentation of financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2014.~~2017. In making this assessment, management used the framework set forth by the Committee on Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework (~~1992 Framework)~~"2013 Framework"). Based on our assessment, we have concluded, as of December 31, ~~2014,~~2017, that our internal control over financial reporting was effective based on those criteria.

The SEC's general guidance permits the exclusion of an assessment of the effectiveness of a registrant's disclosure controls and procedures as they relate to its internal controls over financial reporting for an acquired business during the first year following such acquisition, if among other circumstances and factors there is not adequate time between the acquisition date and the date of assessment. As previously disclosed, the Company completed its acquisition of Central States Trucking Co. and Central States Logistics, Inc. (collectively referred to as “CST”) on February 2, 2014. CST represents approximately 20.4% and 20.8% of the Company's total and net assets, respectively, as of December 31, 2014 and 9.3% and 7.5% of revenues and net income, respectively, for the year then ended. Management's assessment and conclusion on the effectiveness of the Company's disclosure controls and procedures as of December 31, 2014 excluded an assessment of the internal control over financial reporting of CST.

Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements for the year ended December 31, ~~2014,~~2017, has issued an attestation report on the Company’s internal control over financial reporting.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the fourth quarter of ~~2014~~2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm

~~The~~To the Shareholders and the Board of Directors ~~and Shareholders~~ of Forward Air Corporation

Opinion on Internal Control over Financial Reporting

We have audited Forward Air Corporation’s internal control over financial reporting as of December 31, ~~2014,~~2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(1992~~(2013 framework) (the COSO criteria). In our opinion, Forward Air ~~Corporation’s~~Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 23, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the ~~company’s~~Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Central States Trucking Co. and Central States Logistics, Inc., which are included in the 2014 consolidated financial statements of Forward Air Corporation and constituted $110.5 million and $96.6 million of total and net assets, respectively, as of December 31, 2014 and $72.3 million and $4.6 million of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of Forward Air Corporation also did not include an evaluation of the internal control over financial reporting of Central States Trucking Co. and Central States Logistics, Inc.

~~In our opinion, Forward Air Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.~~

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2014 of Forward Air Corporation and our report dated February 20, 2015 expressed an unqualified opinion thereon.



	/s/ Ernst & Young LLP
~~Nashville, Tennessee~~
Atlanta, Georgia
February ~~20, 2015~~	23, 2018

~~Table of Contents~~

Item 9B. Other Information

Not applicable.

Part III

Item 10. Directors, Executive Officers and Corporate Governance

Executive Officers of the Registrant

Pursuant to Instruction 3 to Item 401(b) of Regulation S-K of the Securities Act and General Instruction G(3) to Form 10-K, the following information is included in Part IIII of this report. The ages listed below are as of December 31, ~~2014.~~2017.

The following are our executive officers:



Name	Age	Position
Bruce A. Campbell	6366	Chairman, President and Chief Executive Officer
~~Rodney L. Bell~~Michael J. Morris	5249	Chief Financial Officer, Senior Vice President and Treasurer
~~Craig A. Drum~~	59	~~Senior Vice President, Sales~~
Michael L. Hance	4346	Senior Vice President, Chief Legal Officer & Secretary
Matthew J. Jewell	4851	~~Executive Vice~~ President ~~Intermodal~~- Logistics Services ~~& Chief Strategy Officer~~
~~Michael P. McLean~~	41	~~Chief Accounting Officer, Vice President & Controller~~
Chris C. Ruble	5255	~~Executive Vice~~ President ~~Operations~~- Expedited Services

There are no family relationships between any of our executive officers. All officers hold office atuntil the ~~pleasure~~earliest to occur of their resignation or removal by the Board of Directors.

Bruce A. Campbell has served as a director since April 1993, as President since August 1998, as Chief Executive Officer since October 2003 and as Chairman of the Board since May 2007. Mr. Campbell was Chief Operating Officer from April 1990 until October 2003 and Executive Vice President from April 1990 until August 1998. Prior to joining us, Mr. Campbell served as Vice President of Ryder-Temperature Controlled Carriage in Nashville, Tennessee from September 1985 until December 1989.

~~Rodney L. Bell began serving~~Michael J. Morris has served as Chief Financial Officer, Senior Vice President and Treasurer in June ~~2006.~~2016. From 2010 to 2015, Mr. ~~Bell, who is a Certified Public Accountant (inactive),~~Morris was ~~appointed Chief Accounting Officer in February 2006 and continued to serve as Vice President and Controller, positions held since October 2000 and February 1995, respectively. Mr. Bell joined~~ the ~~Company in March 1992 as Assistant Controller after serving as a senior manager with the accounting firm of Adams and Plucker in Greeneville, Tennessee.~~

~~Craig A. Drum has served as~~ Senior Vice President ~~Sales since July 2001 after joining us~~of Finance & Treasurer at Con-way Inc. (“Con-way”) and in ~~January 2000 as Vice President, Sales for one of our subsidiaries. In February 2001, Mr. Drum was promoted~~2016 he transitioned to be the Senior Vice President of ~~National Accounts. Prior to January 2000, Mr. Drum spent most~~Finance & Treasurer at XPO Logistics Inc. (“XPO”) following XPO's acquisition of ~~his 24-year career in air freight with Delta Air Lines, Inc., most recently as the Director of Sales and Marketing - Cargo.~~Con-way.

Michael L. Hance has served as Senior Vice President, Chief Legal Officer and Secretary since May 2014. From May 2010 until May 2014, he served as Senior Vice President of Human Resources and General Counsel. From January 2008 until May 2010, he served as Senior Vice President and General Counsel, and from August 2006 until January 2008, he served as Vice President and Staff Counsel. Before joining us, Mr. Hance practiced law with the law firms of Baker, Donelson, Bearman, Caldwell and Berkowitz, P.C. from October 2003 until August 2006 and with Bass, Berry & Sims, PLC from September 1999 to September 2003.

Matthew J. Jewell ~~has~~was promoted to President - Logistics Services, effective January 2016. Prior to this promotion, he served as Executive Vice President, Intermodal Services & Chief Strategy Officer since May 2014. From January 2008 until May 2014, he served as Executive Vice President and Chief Legal Officer. From July 2002 until January 2008, he served as Senior Vice President and General Counsel. In October 2002, he was also appointed Secretary. From July 2002 until May 2004, Mr. Jewell was also the Senior Vice President, General Counsel and Secretary of Landair Corporation. From January 2000 until joining us in July 2002, Mr. Jewell was a partner with the law firm of Austin & Sparks, P.C. Mr. Jewell was an associate at Dennis, Corry & Porter, L.L.P. from July 1991 to December 1998 and a partner from January 1999 to January 2000.

~~Table of Contents~~

Michael P. McLean began serving as Chief Accounting Officer, Vice President and Controller in February 2008. From June 2006 until February 2008, Mr. McLean, who is a Certified Public Accountant, served as Vice President of Accounting and Controller. Mr. McLean joined the Company as Vice President, Accounting in February 2006 and served in that position until May 2006. Prior to joining us in February 2006, Mr. McLean served as Director of Financial Reporting at CTI Molecular Imaging, Inc., a publicly-traded medical technology company since February 2003. From July 2001 until January 2003, Mr. McLean was an audit manager with the accounting firm of Coulter & Justus, PC in Knoxville, Tennessee.

Chris C. Ruble ~~has~~was promoted to President - Expedited Services, effective January 2016. Prior to this promotion, he served as Executive Vice President, Operations since August 2007. From October 2001 until August 2007, he served as Senior Vice President, Operations. He was a Regional Vice President from September 1997 to October 2001 and a regional manager from February 1997 to September 1997, after starting with us as a terminal manager in January 1996. From June 1986 to August 1995, Mr. Ruble served in various management capacities at Roadway Package System, Inc.

Other information required by this item ~~with respect to our directors~~ is incorporated herein by reference to our proxy statement for the ~~2014~~2018 Annual Meeting of Shareholders (the ~~“2015~~“2018 Proxy Statement”). The ~~2015~~2018 Proxy Statement will be filed with the SEC not later than 120 days subsequent to December 31, ~~2014.~~2017.

Item 11. Executive Compensation

The information required by this item is incorporated herein by reference to the ~~2015~~2018 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The information required by this item is incorporated herein by reference to the ~~2015~~2018 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated herein by reference to the ~~2015~~2018 Proxy Statement.

Item 14. Principle Accounting Fees and Services

The information required by this item is incorporated herein by reference to the ~~2015~~2018 Proxy Statement.

Part IV

Item 15. Exhibits, Financial Statement Schedules


(a)(1) and (2)	List of Financial Statements and Financial Statement Schedules.

The response to this portion of Item 15 is submitted as a separate section of this report.


(a)(3)	List of Exhibits.

The response to this portion of Item 15 is submitted as a separate section of this report.


(b)	Exhibits.

The response to this portion of Item 15 is submitted as a separate section of this report.


(c)	Financial Statement Schedules.

The response to this portion of Item 15 is submitted as a separate section of this report.

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		Forward Air Corporation

Date:	February ~~20, 2015~~23, 2018	By:	/s/ ~~Rodney L. Bell~~Michael J. Morris
			~~Rodney L. Bell~~Michael J. Morris
			Chief Financial Officer, Senior Vice President
			and Treasurer (Principal Financial Officer)

		~~By:~~	~~/s/ Michael P. McLean~~
			~~Michael P. McLean~~
			~~Chief Accounting Officer, Vice President~~
			~~and Controller (Principal Accounting Officer)~~

~~Table of Contents~~

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



Signature	Title	Date
/s/ Bruce A. Campbell	Chairman, President and Chief Executive	February ~~20, 2015~~23, 2018
Bruce A. Campbell	Officer (Principal Executive Officer)

/s/ ~~Rodney L. Bell~~Michael J. Morris	Chief Financial Officer, Senior Vice President	February ~~20, 2015~~23, 2018
~~Rodney L. Bell~~Michael J. Morris	and Treasurer ~~( Principal~~(Principal Financial ~~Officer)~~

~~/s/ Michael P. McLean~~	~~Chief Accounting Officer, Vice President and~~	~~February 20, 2015~~
~~Michael P. McLean~~	~~Controller (Principal Accounting~~ Officer)

/s/ C. Robert Campbell	Lead Director	February ~~20, 2015~~23, 2018
C. Robert Campbell

/s/ Ronald W. Allen	Director	February ~~20, 2015~~23, 2018
Ronald W. Allen

/s/ Ana Burns Amicarella	Director	February 23, 2018
Ana Burns Amicarella

/s/ Valerie A. Bonebrake	Director	February 23, 2018
Valerie A. Bonebrake

/s/ Craig Carlock	Director	February 23, 2018
Craig Carlock

/s/ C. John Langley, Jr.	Director	February ~~20, 2015~~23, 2018
C. John Langley, Jr.

~~/s/ Tracy A. Leinbach~~	~~Director~~	~~February 20, 2015~~
~~Tracy A. Leinbach~~

~~/s/ Larry D. Leinweber~~	~~Director~~	~~February 20, 2015~~
~~Larry D. Leinweber~~

/s/ G. Michael Lynch	Director	February ~~20, 2015~~23, 2018
G. Michael Lynch

/s/ ~~Ray A. Mundy~~Javier Palomarez	Director	February ~~20, 2015~~23, 2018
~~Ray A. Mundy~~

~~/s/ Gary L. Paxton~~	~~Director~~	~~February 20, 2015~~
~~Gary L. Paxton~~Javier Palomarez

~~Table of Contents~~

Annual Report on Form 10-K

Item 8, Item 15(a)(1) and (2), (a)(3), (b) and (c)

List of Financial Statements and Financial Statement Schedule

Financial Statements and Supplementary Data

Certain Exhibits

Financial Statement Schedule

Year Ended December 31, ~~2014~~2017

Forward Air Corporation

Greeneville, Tennessee

~~F-1~~

~~Table of Contents~~

Forward Air Corporation

Form 10-K — Item 8 and Item 15(a)(1) and (2)

Index to Financial Statements and Financial Statement Schedule

The following consolidated financial statements of Forward Air Corporation are included as a separate section of this report:



	Page No.
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets — December 31, ~~2014~~2017 and ~~2013~~2016	F-4
Consolidated Statements of Comprehensive Income — Years Ended December 31, ~~2014, 2013~~2017, 2016 and ~~2012~~2015	F-6
Consolidated Statements of Shareholders’ Equity — Years Ended December 31, ~~2014, 2013~~2017, 2016 and ~~2012~~2015	F-7
Consolidated Statements of Cash Flows — Years Ended December 31, ~~2014, 2013~~2017, 2016 and ~~2012~~2015	F-8
Notes to Consolidated Financial Statements — December 31, ~~2014~~2017	F-9

The following financial statement schedule of Forward Air Corporation is included as a separate section of this report.



Schedule II - Valuation and Qualifying Accounts	S-1

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

~~F-2~~

~~Table of Contents~~

Report of Independent Registered Public Accounting Firm

~~The~~To the Shareholders and the Board of Directors ~~and Shareholders~~ of Forward Air Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Forward Air Corporation (the Company) as of December 31, ~~2014~~2017 and ~~2013, and~~2016, the related consolidated statements of comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, ~~2014. Our audits also included~~2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the "consolidated financial statements“). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), Forward Air Corporation’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 23, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements ~~and schedule~~ are the responsibility of the Company's management. Our responsibility is to express an opinion on ~~these~~the Company’s financial statements ~~and schedule~~ based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material ~~misstatement. An audit includes~~misstatement, whether due to fraud or error. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the financial statements. ~~An audit~~Our audits also ~~includes assessing~~included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial ~~statement presentation.~~statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Forward Air Corporation at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Forward Air Corporation’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated February 20, 2015 expressed an unqualified opinion thereon.



	/s/ Ernst & Young LLP
~~Nashville, Tennessee~~
We have served as the Company‘s auditor since 1991.

Atlanta, Georgia
February ~~20, 2015~~	23, 2018

~~F-3~~

~~Table of Contents~~

									Forward Air Corporation	Consolidated Balance Sheets	(Dollars in thousands)
	December 31, 2014		December 31, 2013		December 31, 2017		December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	41,429	$	127,367	$	3,893	$	8,511
Accounts receivable, less allowance of $2,563 in 2014 and $1,919 in 2013	95,326		76,500
Accounts receivable, less allowance of $3,006 in 2017 and $1,714 in 2016					143,041		116,602
Inventories	1,056		1,052		1,425		1,306
Prepaid expenses and other current assets	9,648		14,296		9,955		9,851
Deferred income taxes	2,496		1,145
Income tax receivable					4,428		—
Total current assets	149,955		220,360		162,742		136,270
Property and equipment:
Land	16,998		16,998		16,928		16,928
Buildings	66,477		66,474		65,870		65,857
Equipment	212,216		178,752		291,181		273,463
Leasehold improvements	7,957		6,263		12,604		10,694
Construction in progress	1,540		2,563		12,652		12,079
Total property and equipment	305,188		271,050		399,235		379,021
Less accumulated depreciation and amortization	132,699		116,287		193,123		178,816
Net property and equipment	172,489		154,763		206,112		200,205
Goodwill and other acquired intangibles:
Goodwill	144,412		88,496		191,671		184,675
Other acquired intangibles, net of accumulated amortization of $40,307 in 2014 and $31,790 in 2013	72,705		40,110
Other acquired intangibles, net of accumulated amortization of $71,527 in 2017 and $61,334 in 2016					111,247		106,650
Total net goodwill and other acquired intangibles	217,117		128,606		302,918		291,325
Other assets	2,244		2,540		15,944		13,491
Total assets	$	541,805	$	506,269	$	687,716	$	641,291

The accompanying notes are an integral part of the consolidated financial statements.

~~F-4~~

~~Table of Contents~~

									Forward Air Corporation	Consolidated Balance Sheets (Continued)	(Dollars in thousands)
	December 31, 2014		December 31, 2013		December 31, 2017		December 31, 2016
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	20,572	$	16,267	$	24,704	$	18,012
Accrued payroll and related items	8,122		6,325		13,230		11,522
Insurance and claims accruals	6,042		5,105		11,999		10,122
Payables to owner-operators	4,182		4,710		6,322		5,597
Collections on behalf of customers	374		416		329		349
Other accrued expenses	2,571		1,719		2,869		4,243
Income taxes payable	1,292		—		320		70
Current portion of capital lease obligations	276		69		359		347
Current portion of long-term debt					—		27,665
Total current liabilities	43,431		34,611		60,132		77,927
Capital lease obligations, less current portion	1,275		3		365		725
Long-term debt, less current portion					40,223		—
Other long-term liabilities	8,356		8,940		24,104		21,699
Deferred income taxes	25,180		26,850		29,403		41,871
Commitments and contingencies (Note 7)
Shareholders’ equity:
Preferred stock, $0.01 par value: Authorized shares - 5,000,000; no shares issued	—		—		—		—
Common stock, $0.01 par value: Authorized shares - 50,000,000; issued and outstanding shares - 30,255,182 in 2014 and 30,522,079 in 2013	303		305
Common stock, $0.01 par value: Authorized shares - 50,000,000; issued and outstanding shares - 29,454,062 in 2017 and 30,090,335 in 2016					295		301
Additional paid-in capital	130,107		107,726		195,346		179,512
Retained earnings	333,153		327,834		337,848		319,256
Total shareholders’ equity	463,563		435,865		533,489		499,069
Total liabilities and shareholders’ equity	$	541,805	$	506,269	$	687,716	$	641,291

The accompanying notes are an integral part of the consolidated financial statements.

~~F-5~~

~~Table of Contents~~

																			Forward Air Corporation	Consolidated Statements of Comprehensive Income	(In thousands, except per share data)

	Year ended									Year ended
	December 31, 2014			December 31, 2013			December 31, 2012			December 31, 2017			December 31, 2016			December 31, 2015
Operating revenue	$	780,959		$	652,481		$	584,446		$	1,100,816		$	982,530		$	959,125

Operating expenses:
Purchased transportation	334,576			285,690			252,720			478,167			413,355			408,769
Salaries, wages and employee benefits	182,105			151,097			135,006			264,739			242,002			240,604
Operating leases	33,994			29,310			27,989			63,799			60,492			66,272
Depreciation and amortization	31,133			23,579			21,021			41,055			38,210			37,157
Insurance and claims	15,736			12,619			11,309			29,578			25,392			21,483
Fuel expense	20,148			15,145			10,038			16,542			13,233			15,903
Other operating expenses	66,861			50,686			42,831			98,264			87,425			87,165
Impairment of goodwill and other intangible assets										—			42,442			—
Total operating expenses	684,553			568,126			500,914			992,144			922,551			877,353
Income from operations	96,406			84,355			83,532			108,672			59,979			81,772

Other income (expense):
Interest expense	(610		)	(532		)	(391		)	(1,209		)	(1,597		)	(2,047		)
Other, net	289			99			14			(11		)	4			(58		)
Total other expense	(321		)	(433		)	(377		)	(1,220		)	(1,593		)	(2,105		)
Income before income taxes	96,085			83,922			83,155			107,452			58,386			79,667
Income taxes	34,916			29,455			30,487			20,131			30,716			24,092
Net income and comprehensive income	$	61,169		$	54,467		$	52,668		$	87,321		$	27,670		$	55,575

Net income per share:
Basic	$	1.99		$	1.81		$	1.82		$	2.90		$	0.91		$	1.80
Diluted	$	1.96		$	1.77		$	1.78		$	2.89		$	0.90		$	1.78

Dividends per share:	$	0.48		$	0.40		$	0.34		$	0.60		$	0.51		$	0.48

The accompanying notes are an integral part of the consolidated financial statements.

~~F-6~~

~~Table of Contents~~

																												Forward Air Corporation	Consolidated Statements of Shareholders' Equity	(In thousands, except per share data)
	Common Stock						Additional Paid-in Capital			Retained Earnings				Total Shareholders' Equity			Common Stock					Additional Paid-in Capital		Retained Earnings		Total Shareholders' Equity
	Shares		Amount				Additional Paid-in Capital						Shares					Amount				Additional Paid-in Capital		Retained Earnings		Total Shareholders' Equity
Balance at December 31, 2011	28,553		$	285			$	42,212		Retained Earnings	$	244,405		Total Shareholders' Equity		$	286,902
Net income and comprehensive income for 2012	—		—				—			52,668				52,668
Exercise of stock options	582		6				15,734			—				15,740
Common stock issued under employee stock purchase plan	9		—				259			—				259
Share-based compensation	—		—				6,050			—				6,050
Dividends ($0.34 per share)	—		—				5			(9,952		)		(9,947		)
Cash settlement of share-based awards for minimum tax withholdings	(11	)	—			—	—			(386		)		(386		)
Share repurchases	—		—				—			—				—
Vesting of previously non-vested shares	62		1				(1		)	—				—
Income tax benefit from stock options exercised	—		—				385			—				385
Balance at December 31, 2012	29,195		292				64,644			286,735				351,671
Net income and comprehensive income for 2013	—		—				—			54,467				54,467
Exercise of stock options	1,263		12				32,990			—				33,002
Common stock issued under employee stock purchase plan	9		—				296			—				296
Share-based compensation	—		—				6,178			—				6,178
Dividends ($0.40 per share)	—		—				7			(12,148		)		(12,141		)
Cash settlement of share-based awards for minimum tax withholdings	(23	)	—			—	—			(866		)		(866		)
Share repurchases	(9	)	—				—			(354		)		(354		)
Vesting of previously non-vested shares	87		1				(1		)	—				—
Income tax benefit from stock options exercised	—		—				3,612			—				3,612
Balance at December 31, 2013	30,522		305				107,726			327,834				435,865
Net income and comprehensive income for 2014	—		—				—			61,169				61,169
Balance at December 31, 2014																	30,255		303			130,107		333,153		463,563
Net income and comprehensive income for 2015																	—		—			—		55,575		55,575
Exercise of stock options	469		5				13,230			—				13,235			605		6			17,394		(3,087	)	14,313
Common stock issued under employee stock purchase plan	9		—				354			—				354			11		—			449		—		449
Share-based compensation	—		—				6,681			—				6,681			—		—			7,486		—		7,486
Dividends ($0.48 per share)	—		—				9			(14,804		)		(14,795		)	—		—			7		(14,828	)	(14,821	)
Cash settlement of share-based awards for minimum tax withholdings	(25	)	—			—	—			(1,083		)		(1,083		)	(38	)	—			—		(1,931	)	(1,931	)
Share repurchases	(882	)	(9		)		—			(39,963		)		(39,972		)	(423	)	(5	)		—		(19,987	)	(19,992	)
Vesting of previously non-vested shares	162		2				(2		)	—				—			134		1			(1	)	—		—
Income tax benefit from stock options exercised	—		—				2,109			—				2,109			—		—			5,413		—		5,413
Balance at December 31, 2014	30,255		$	303			$	130,107		$	333,153			$	463,563
Balance at December 31, 2015																	30,544		305			160,855		348,895		510,055
Net income and comprehensive income for 2016																	—		—			—		27,670		27,670
Exercise of stock options																	346		3			8,145		—		8,148
Common stock issued under employee stock purchase plan																	11		—			442		—		442
Share-based compensation																	—		—			8,334		—		8,334
Dividends ($0.51 per share)																	—		—			6		(15,535	)	(15,529	)
Cash settlement of share-based awards for minimum tax withholdings																	(42	)	—		—	—		(1,800	)	(1,800	)
Share repurchases																	(910	)	(9	)		—		(39,974	)	(39,983	)
Vesting of previously non-vested shares																	141		2			(2	)	—		—
Income tax benefit from stock options exercised																	—		—			1,732		—		1,732
Balance at December 31, 2016																	30,090		301			179,512		319,256		499,069
Net income and comprehensive income for 2017																	—		—			—		87,321		87,321
Exercise of stock options																	206		2			7,270		—		7,272
Conversion of deferred stock																	10		—			—		—		—
Common stock issued under employee stock purchase plan																	10		—			458		—		458
Share-based compensation																	—		—			8,103		—		8,103
Dividends ($0.60 per share)																	—		—			4		(18,056	)	(18,052	)
Cash settlement of share-based awards for minimum tax withholdings																	(35	)	—		—	—		(1,699	)	(1,699	)
Share repurchases																	(948	)	(9	)		—		(48,974	)	(48,983	)
Vesting of previously non-vested shares																	121		1			(1	)	—		—
Balance at December 31, 2017																	29,454		295			195,346		337,848		533,489

The accompanying notes are an integral part of the consolidated financial statements.

~~F-7~~

~~Table of Contents~~

																			Forward Air Corporation	Consolidated Statements of Cash Flows	(In thousands)
	Year ended									Year ended
	December 31, 2014			December 31, 2013			December 31, 2012			December 31, 2017			December 31, 2016			December 31, 2015
Operating activities:
Net income	$	61,169		$	54,467		$	52,668		$	87,321		$	27,670		$	55,575
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	31,133			23,579			21,021			41,055			38,210			37,157
Gain on change in fair value of earn-out liability	—			(615		)	—
Impairment of goodwill, intangible and other assets										—			42,442			—
Share-based compensation	6,681			6,178			6,050			8,103			8,334			7,486
(Gain) loss on disposal of property and equipment	(383		)	(454		)	318
Loss (gain) on disposal of property and equipment										1,281			291			(181		)
Provision for loss on receivables	241			423			199			1,814			258			33
Provision for revenue adjustments	2,465			2,531			2,003			3,055			2,020			4,793
Deferred income taxes	(3,021		)	4,856			2,043			(12,468		)	3,525			14,531
Tax benefit for stock options exercised	(2,109		)	(3,707		)	(385		)	—			(1,732		)	(5,413		)
Changes in operating assets and liabilities, net of acquisition of business
Accounts receivable	(12,193		)	1,447			(6,542		)	(31,308		)	(9,715		)	5,403
Prepaid expenses and other current assets	(280		)	(215		)	(1,331		)
Prepaid expenses and other assets										(1,204		)	283			(1,378		)
Accounts payable and accrued expenses	(199		)	2,588			(3,477		)	8,945			(1,413		)	(17,513		)
Income taxes	8,156			(239		)	(3,981		)	(3,230		)	20,177			(14,771		)
Net cash provided by operating activities	91,660			90,839			68,586			103,364			130,350			85,722

Investing activities:
Proceeds from disposal of property and equipment	1,947			1,973			911			2,440			1,929			1,720
Purchases of property and equipment	(39,487		)	(35,439		)	(21,353		)	(38,265		)	(42,186		)	(40,495		)
Acquisition of business, net of cash acquired	(90,172		)	(45,328		)	—			(23,140		)	(11,800		)	(61,878		)
Other	2			(129		)	(263		)	(223		)	(336		)	(265		)
Net cash used in investing activities	(127,710		)	(78,923		)	(20,705		)	(59,188		)	(52,393		)	(100,918		)

Financing activities:
Proceeds from term loan										—			—			125,000
Payments of debt and capital lease obligations	(9,736		)	(20,375		)	(551		)	(42,790		)	(55,768		)	(101,352		)
Payments on line of credit	—			—			—
Proceeds from senior credit facility										55,000			—			—
Proceeds from exercise of stock options	13,235			33,002			15,740			7,272			8,148			14,313
Payments of cash dividends	(14,795		)	(12,141		)	(9,947		)	(18,052		)	(15,529		)	(14,821		)
Repurchase of common stock (repurchase program)	(39,972		)	(354		)	—
Purchase of common stock under repurchase program										(48,983		)	(39,983		)	(19,992		)
Common stock issued under employee stock purchase plan	354			296			259			458			442			449
Cash settlement of share-based awards for minimum tax withholdings	(1,083		)	(866		)	(386		)	(1,699		)	(1,800		)	(1,931		)
Tax benefit for stock options exercised	2,109			3,707			385			—			1,732			5,413
Net cash (used in) provided by financing activities	(49,888		)	3,269			5,500			(48,794		)	(102,758		)	7,079
Net (decrease) increase in cash	(85,938		)	15,185			53,381
Net decrease in cash										(4,618		)	(24,801		)	(8,117		)
Cash at beginning of year	127,367			112,182			58,801			8,511			33,312			41,429
Cash at end of year	$	41,429		$	127,367		$	112,182		$	3,893		$	8,511		$	33,312

The accompanying notes are an integral part of the consolidated financial statements

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Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2014~~2017

(In thousands, except share and per share data)

1. Accounting Policies

Basis of Presentation and Principles of Consolidation

Forward Air Corporation's (“the Company”, “We”, “Our”) services can be classified into ~~three~~four principal ~~reporting~~reportable segments: ~~Forward Air, Forward Air Solutions~~Expedited LTL, Truckload Premium Services (“~~FASI”~~TLS”), Intermodal and Pool Distribution ("Pool") ~~and Total Quality ("TQI")~~(See note 10).

Through the ~~Forward Air~~Expedited LTL segment, the Company provide time-definite transportation and related logistics services to the North American deferred air freight market and its activities can be classified into three categories of service: airport-to-airport, logistics, and other. Forward Air’s airport-to-airport service operateswe operate a comprehensive national network ~~for the time-definite surface transportation of~~to provide expedited ~~ground freight. The airport-to-airport service~~regional, inter-regional and national less-than-truckload ("LTL") services. Expedited LTL offers customers local pick-up and delivery and scheduled surface transportation of cargo as a cost effective, reliable alternative to air transportation. Forward Air’s logistics services provide expedited truckload brokerage, intermodal drayage and dedicated fleet services. Forward Air’s other services ~~include~~including shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling. ~~The Forward Air~~

Through our TLS segment, ~~primarily provides its transportation~~we provide expedited truckload brokerage, dedicated fleet services, ~~through a network of terminals located at or near airports~~as well as high security and temperature-controlled logistics services in the United States and Canada.

~~FASI~~Our Intermodal segment provides ~~pool~~first- and last-mile high value intermodal container drayage services both to and from seaports and railheads. Intermodal also offers dedicated contract and CFS warehouse and handling services. Today, Intermodal operates primarily in the Midwest and Southeast, with a smaller operational presence in the Southwest.

In our Pool Distribution segment, we provide high-frequency handling and distribution ~~services~~of time sensitive product to numerous destinations within a specific geographic region. We offer this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest ~~continental~~ United States. Pool distribution involves managing high-frequency handling and distribution of time-sensitive product to numerous destinations in specific geographic regions. FASI’s primary customers for this service are regional and nationwide distributors and retailers, such as mall, strip mall and outlet based retail chains.

TQI is a provider of maximum security and temperature-controlled logistics services, primarily truckload services, to the life sciences sector (pharmaceutical and biotechnology products). In addition to core pharmaceutical services and other cold chain services, TQI provides truckload and less-than-truckload brokerage transportation services.

The accompanying consolidated financial statements of the Company include Forward Air Corporation and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant areas requiring management estimates include the following key financial areas:

Allowance for Doubtful Accounts

The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances in which the Company is aware of a specific customer’s inability to meet its financial obligations to the Company (for example, bankruptcy filings, accounts turned over for collection or litigation), the Company records a specific reserve for these bad debts against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company recognizes reserves for these bad debts based on the length of time the receivables are past due. Specifically, amounts that are 90 days or more past due are reserved at 50.0% for ~~Forward Air's airport-to-airport and TLX operations,~~Expedited LTL, 10.0% for ~~Forward Air's intermodal drayage operations,~~ Intermodal, 25.0% for ~~FASI~~Pool and ~~10.0% for TQI's pharmaceutical operations and~~up to 50.0% for ~~TQI's non-pharmaceutical operations.~~TLS. If circumstances change (i.e., the Company experiences higher than expected defaults or an unexpected material adverse change in a customer’s ability to meet its financial obligations to the Company), the estimates of the recoverability of amounts due to the Company could be changed by a material amount. Accounts are written off after all means of collection, including legal action, have been exhausted.

Allowance for Revenue Adjustments

The Company’s allowance for revenue adjustments consists of amounts reserved for billing rate changes that are not captured upon load initiation. These adjustments generally arise: (1) when the sales department contemporaneously grants small rate changes (“spot quotes”) to customers that differ from the standard rates in the system; (2) when freight requires

~~F-9~~

~~Table of Contents~~

~~FORWARD AIR CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~December 31, 2014~~

~~(In thousands, except share and per share data)~~

dimensionalization or is reweighed resulting in a different required rate; (3) when billing errors occur; and (4) when data entry errors occur. When appropriate, permanent rate changes are initiated and reflected in the system. The Company monitors the manual revenue adjustments closely through the employment of various controls that are in place to ensure that revenue recognition is not compromised and that fraud does not occur. During ~~2014,~~2017, average revenue adjustments per month were approximately ~~$205~~ $255

F-9

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2017

(In thousands, except share and per share data)

on average revenue per month of approximately ~~$65,080~~$91,735 (0.3% of monthly revenue). In order to estimate the allowance for revenue adjustments related to ending accounts receivable, the Company prepares an analysis that considers average monthly revenue adjustments and the average lag for identifying and quantifying these revenue adjustments. Based on this analysis, the Company establishes an allowance covering approximately 4535-~~100~~65 days (dependent upon experience in the last twelve months) of average revenue adjustments, adjusted for rebates and billing errors. The lag is periodically adjusted based on actual historical experience. Additionally, the average amount of revenue adjustments per month can vary in relation to the level of sales or based on other factors (such as personnel issues that could result in excessive manual errors or in excessive spot quotes being granted). Both of these significant assumptions are continually evaluated for ~~validity.~~appropriateness.

Self-Insurance Loss Reserves

Given the nature of the Company’s operating environment, the Company is subject to vehicle and general liability, workers’ compensation and employee health insurance claims. To mitigate a portion of these risks, the Company maintains insurance for individual vehicle and general liability claims exceeding $~~500~~1,000 and workers’ compensation claims and employee health insurance claims exceeding $~~250~~350, and $225, respectively, except in Ohio, where for workers’ compensation we are a qualified self-insured entity with a $500 self-insured retention. The amount of self-insurance loss reserves and loss adjustment expenses is determined based on an estimation process that uses information obtained from both company-specific and industry data, as well as general economic information. The estimation process for self-insurance loss exposure requires management to continuously monitor and evaluate the life cycle of claims. Using data obtained from this monitoring and the Company’s assumptions about the emerging trends, management develops information about the size of ultimate claims based on its historical experience and other available market information. The most significant assumptions used in the estimation process include determining the trend in loss costs, the expected consistency in the frequency and severity of claims incurred but not yet reported, changes in the timing of the reporting of losses from the loss date to the notification date, and expected costs to settle unpaid claims. The Company utilizes a semi-annual actuarial analyses to evaluate open claims and estimate the ongoing development exposure.

Revenue Recognition

Operating revenue and related costs are recognized as of the date shipments are completed. The transportation rates the Company charges its customers consist of base transportation rates and fuel surcharge rates. The revenues earned and related direct freight expenses incurred from the Company’s base transportation services are recognized on a gross basis in revenue and in purchased transportation. Transportation revenue is recognized on a gross basis as the Company is the primary obligor. The fuel surcharges billed to customers and paid to owner-operators and third party transportation providers are recorded on a net basis as the Company is not the primary obligor with regards to the fuel surcharges. Please see Recent Accounting Pronouncements for expected changes to revenue recognition.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash and cash equivalents.

Inventories

Inventories of tires, replacement parts, supplies, and fuel for equipment are stated at the lower of cost or market utilizing the FIFO (first-in, first-out) method of determining cost. Inventories of tires and replacement parts are not material in the aggregate. Replacement parts are expensed when placed in service, while tires are capitalized and amortized over their expected life. Replacement parts and tires are included as a component of other operating expenses in the consolidated statements of comprehensive income.

~~F-10~~

~~Table of Contents~~

~~FORWARD AIR CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~December 31, 2014~~

~~(In thousands, except share and per share data)~~

Property and Equipment

Property and equipment are stated at cost. Expenditures for normal repair and maintenance are expensed as incurred. Depreciation of property and equipment is calculated based upon the cost of the asset, reduced by its estimated salvage value, using the straight-line method over the estimated useful lives as follows:

F-10

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2017

(In thousands, except share and per share data)



Buildings		30-40 years
Equipment		3-10 years
Leasehold improvements		Lesser of Useful Life or Initial Lease Term

Depreciation expense for each of the three years ended December 31, ~~2014~~2017, ~~2013~~2016 and ~~2012~~2015 was ~~$22,616, $17,817~~$30,862, $28,088 and $~~16,455~~26,252 respectively.

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is recognized on assets classified as held and used when the sum of undiscounted estimated cash flows expected to result from the use of the asset is less than the carrying value. If such measurement indicates a possible impairment, the estimated fair value of the asset is compared to its net book value to measure the impairment charge, if any. When the criteria have been met for long-lived assets to be classified as held for sale, the assets are recorded at the lower of carrying value or fair market value (less selling costs). See additional discussion in Note 2, Acquisition, Goodwill and Other Long-Lived Assets.

Operating Leases

Certain operating leases include rent increases during the initial lease term. For these leases, the Company recognizes the related rental expenses on a straight-line basis over the term of the lease, which includes any rent holiday period, and records the difference between the amounts charged to operations and amount paid as rent as a rent liability. Reserves for idle facilities are initially measured at the fair value of the portion of the lease payments associated with the vacated facilities, reduced by estimated sublease rentals. See additional discussion in Note 2, Acquisition, Goodwill and Other Long-Lived Assets.

Goodwill and Other Intangible Assets

Goodwill is recorded at cost based on the excess of purchase price over the fair value of net assets acquired. Goodwill and intangible assets with indefinite lives are not amortized but the Company conducts an annual (or more frequently if circumstances indicate possible impairment) impairment test of goodwill for each ~~reportable segment~~reporting unit at June 30 of each year. Other intangible assets are amortized over their useful lives. Results of impairment testing are described in Note 2, Acquisition, Goodwill and Other Long-Lived Assets.

Acquisitions are accounted for using the purchase method. The definite-lived intangible assets of the Company resulting from acquisition activity and the related amortization are described in Note 2, Acquisition, Goodwill and Other Long-Lived Assets.

Software Development

Costs related to software developed or acquired for internal use are expensed or capitalized based on the applicable stage of software development and any capitalized costs are amortized over their estimated useful life. The Company typically uses a five-year straight line amortization for the capitalized amounts of software development costs. At December 31, ~~2014~~2017 and ~~2013~~2016 the Company had ~~$13,246~~$19,567 and $~~11,763~~16,268, respectively, of capitalized software development costs included in property and equipment. Accumulated amortization on these assets was ~~$9,065~~$10,874 and $~~7,644~~10,716 at December 31, ~~2014~~2017 and ~~2013~~2016, respectively. Included in depreciation expense is amortization of capitalized software development costs. Amortization of capitalized software development for the years ended December 31, ~~2014~~2017, ~~2013~~2016 and ~~2012~~2015 was ~~$1,464,~~$1,816, $~~1,228~~1,658 and $~~1,100~~1,526 respectively. As of December 31, ~~2014~~2017 the estimated amortization expense for the next five years of capitalized software development costs is as follows:



2018	2,197
2019	1,878
2020	1,620
2021	1,327
2022	716
Total	$	7,738

F-11

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2014~~2017

(In thousands, except share and per share data)

2015 $ 1,374
2016 1,080
2017 767
2018 509
2019 211
Total $ 3,941

Income Taxes

The Company accounts for income taxes using the liability method, whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be recovered or settled. We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in interest expense and operating expenses, respectively.

Net Income Per Share

The Company calculates net income per share in accordance with the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, Earnings per Share (the ~~“FASB Codification~~“ASC 260”). Under the ~~FASB Codification~~ASC 260, basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period. The Company's non-vested shares contain non-forfeitable rights to dividends and are therefore considered participating securities for purposes of computing net income per share pursuant to the two-class method. Net income allocated to participating securities was ~~$404~~$700 in ~~2014.~~2017, $212 in 2016 and $369 in 2015. Net losses are not allocated to participating securities in periods in which the Company incurs a net loss. Diluted net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding after considering the additional dilution from any dilutive non-participating securities. The Company's non-participating securities include options and performance shares.

Share-Based Payments

The Company’s general practice has been to make a single annual grant of share-based compensation to key employees and to ~~generally~~ make other grants only in connection with new employment or promotions. In addition, the Company makes annual grants to non-employee directors in conjunction with their annual election to our Board of Directors or at the time of their appointment to the Board of Directors. For employees, the Company has granted stock options, non-vested shares and performance shares. For non-employee directors, the Company has generally issued non-vested ~~shares during the years ended~~ ~~December 31, 2014~~, ~~2013~~ ~~and~~ ~~2012~~.shares.

Stock options typically expire seven years from the grant date and vest ratably over a three-year period. The share-based compensation for stock options is recognized ~~net of estimated forfeitures,~~ ratably over the requisite service period, or vesting period. ~~Based on the Company’s historical experience, forfeitures have been estimated.~~ The Company uses the Black-Scholes option-pricing model to estimate the grant-date fair value of options granted. The following table contains the weighted-average assumptions used to estimate the fair value of options granted. These assumptions are ~~highly~~ subjective and changes in these assumptions can materially affect the fair value estimate.


	December 31, 2014		December 31, 2013		December 31, 2012		December 31, 2017		December 31, 2016		December 31, 2015
Expected dividend yield	1.2	%	1.2	%	0.9	%	1.3	%	1.0	%	1.0	%
Expected stock price volatility	38.5	%	43.7	%	46.6	%	28.5	%	28.9	%	33.3	%
Weighted average risk-free interest rate	1.6	%	0.9	%	0.8	%	2.0	%	1.3	%	1.6	%
Expected life of options (years)	5.3		5.2		4.2		5.9		5.8		5.9

~~F-12~~

~~Table of Contents~~

~~FORWARD AIR CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~December 31, 2014~~

~~(In thousands, except share and per share data)~~

service period or vesting period. ~~Forfeitures are estimated based on our historical experience, but will be adjusted for future changes in forfeiture experience.~~

The fair value of the performance shares was estimated using a Monte Carlo simulation. The share-based compensation for performance shares are recognized ~~net of estimated forfeitures,~~ ratably over the requisite service period, or vesting period. The following table contains the weighted-average assumptions used to estimate the fair value of performance shares granted. These assumptions are ~~highly~~ subjective and changes in these assumptions can materially affect the fair value estimate.

F-12

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2017

(In thousands, except share and per share data)


			Year ended						Year ended
	December 31, 2014		December 31, 2013		December 31, 2012		December 31, 2017		December 31, 2016		December 31, 2015
Expected stock price volatility	32.5	%	34.5	%	40.8	%	24.7	%	22.3	%	23.5	%
Weighted average risk-free interest rate	0.7	%	0.4	%	0.4	%	1.4	%	0.8	%	1.0	%

Under the 2005 Employee Stock Purchase Plan (the “ESPP”), ~~which has been approved by shareholders,~~ the Company is authorized to issue shares of Common Stock to eligible employees. These shares may be issued at a price equal to 90% of the lesser of the market value on the first day or the last day of each six-month purchase period. Common Stock purchases are paid for through periodic payroll deductions and/or up to two large lump sum contributions. ~~We recognize~~The Company recognizes share-based compensation on the date of purchase based on the difference between the purchase date fair market value and the employee purchase price.

Recent Accounting Pronouncements

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): "Simplifying the Accounting for Goodwill Impairment." Under the current guidance for assessing goodwill for impairment, an entity can first assess qualitative factors to determine whether a two-step goodwill impairment test is necessary. Under the new standard, a goodwill impairment loss will instead be measured at the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill, thus no longer requiring the two-step method. The guidance requires prospective adoption and will be effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption of this guidance is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We plan to adopt this guidance in January 2018 and we do not expect any impact to the consolidated financial statements.

In March 2016, the FASB issued guidance that changes the accounting for certain aspects of share-based payments to employees. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital ("APIC") pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for, and we elected, to account for forfeitures as they occur rather than on an estimated basis. We adopted this guidance in January 2017 and the elimination of APIC pools resulted in approximately $545 of income tax benefit during the full year December 31, 2017. This guidance has been applied prospectively and no prior periods have been adjusted.

In February 2016, the FASB, issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The guidance will be effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. We are evaluating the impact of the future adoption of this standard on our consolidated financial statements.

In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance is effective for the interim and annual periods beginning on or after December 15, ~~2016 (early adoption is not permitted).~~2017. The guidance permits the use of either a full retrospective or modified retrospective adoption approach with a cumulative effect transition method. The Company has not yet selected a transition method and is currently evaluating the impact of the amended guidance on our consolidated financial position, results of operations and related disclosures.

~~2. Acquisitions, Goodwill and Other Long-Lived Assets~~

~~Acquisition of CST~~adjustment recorded in either scenario as necessary upon transition.

~~On February 2, 2014,~~As permitted by the ~~Company acquired all~~guidance, we will implement the use of full retrospective presentation. While evaluating principal versus agent relationships under the ~~outstanding capital stock~~new standard, we determined that we will transition certain revenue streams from an agent to principal relationship. This will cause these revenue streams and their associated costs to be recognized on a gross basis that have historically been recognized on a net basis, increasing revenue and expenses by approximately $66,000 for the year ended December 31, 2017 and $47,000 for the same period of ~~Central States Trucking Co. and Central States Logistics, Inc. (collectively referred to as “CST”). Pursuant to the terms of the Agreement and concurrently~~2016 with the execution of the Agreement, the Company acquired all of the outstanding capital stock of CST in exchange for $82,998 in net cash and $11,215 in assumed debt. With the exception of capital leases, the assumed debt was immediately paid in full after funding of the acquisition. The acquisition and settlement of the assumed debt were funded using the Company's cashno impact on hand. Under the purchase agreement, $10,000 of the purchase price was paid into an escrow account to protect the Company against potential unknown liabilities. The amount held in escrow will be remitted to the sellers on February 2, 2015.operating income.

CST provides industry leading container and intermodal drayage services primarily within the Midwest region of the United States. CST also provides dedicated contract and Container Freight Station (“CFS”) warehouse and handling services. The acquisition of CST provides us with a scalable platform for which to enter the intermodal drayage space and thereby continuing to expand and diversify our service offerings. As part of our strategy to scale CST's operations, in September 2014, CST acquired certain assets of Recob Great Lakes Express, Inc. ("RGL") for $1,350 and in November 2014, acquired Multi-Modal Trucking, Inc. and Multi-Modal Services, Inc. (together referred to as "MMT") for approximately $5,825 in cash and $1,000 in available earn out. The MMT earn out is based on acquired operations exceeding 2015 earnings goals, and the earn out was fully accrued as of December 31, 2014. The acquisition of RGL and MMT's assets provided an opportunity for CST to expand into additional Midwest markets.

F-13

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2014~~2017

(In thousands, except share and per share data)

In addition, based on a review of our customer shipping arrangements, we currently believe the implementation of this standard will change our revenue recognition policy from recognizing revenue upon shipment completion to recognizing revenue over time based on the progress toward completion of shipments in transit at each period end. While the timing of revenue recognition will be accelerated, due to the short duration of our transit times and relatively low dollar value of individual shipments, the anticipated impact on our consolidated financial position, revenue and results from operations is not expected to be significant.

The Company incurred total transaction costs related to the acquisitions of approximately $900, which were expensed during the nine months ended September 30, 2014, in accordance with U.S. GAAP. These transaction costs were primarily included in "Other operating expenses" in the consolidated statements of comprehensive income.

2. Acquisitions, Goodwill and Other Long-Lived Assets

The assets, liabilities, and operating results of CST, RGL and MMT ("CST acquisitions") have been included in the Company's consolidated financial statements from the dates of acquisition and have been assigned to the Forward Air reportable segment. The results of CST, RGL and MMT operations are reflected in the Company's consolidated statements of comprehensive income for the year ended December 31, 2014 from the dates of acquisition are as follows (in thousands, except per share data):

Dates of Acquisition to December 31, 2014
Logistics revenue $ 52,061
Other revenues 20,253
Operating income 7,525
Net income 4,586
Net income per share
Basic $ 0.15
Diluted $ 0.15

Acquisition of ~~TQI~~Towne

On March ~~4, 2013,~~9, 2015, the Company ~~entered into a Stock Purchase Agreement ("Agreement"~~acquired CLP Towne Inc. (“Towne”) ~~with all of the shareholders of TQI~~pursuant to ~~acquire 100% of the outstanding stock. Pursuant to the terms of~~ the Agreement and ~~concurrently with the execution~~Plan of Merger (the “Merger Agreement”) resulting in Towne becoming an indirect, wholly-owned subsidiary of the ~~Agreement,~~Company. For the acquisition of Towne, the Company ~~acquired all of the outstanding capital stock of TQI in exchange for $45,328~~paid $61,878 in net cash ~~$20,113~~and assumed $59,544 in ~~assumed~~ debt and ~~an available earn-out~~capital leases. With the exception of ~~up to $5,000. The~~assumed capital leases, the assumed debt was immediately paid in full after funding of the acquisition. ~~The acquisition and settlement of~~Of the ~~assumed debt were funded using the Company's~~total aggregate cash ~~on hand. Under the purchase agreement, $4,500 of the purchase price~~consideration paid, $16,500 was ~~paid~~placed into an escrow account, with $2,000 of such amount being available to ~~protect~~settle any shortfall in Towne’s net working capital, with $14,500 of such amount available for a period of time to settle certain possible claims against Towne’s common stockholders for indemnification. To the ~~Company against potential unknown liabilities.~~extent the escrow fund is insufficient, certain equity holders have agreed to indemnify Forward Air, subject to certain limitations set forth in the Merger Agreement, as a result of inaccuracies in or breaches of certain of Towne’s representations, warranties, covenants and agreements and other matters. During the second quarter of 2017, we received $2,525 from this escrow for reimbursement of various claims. Approximately $1,621 was credited to operating leases and other operating expenses to offset related costs incurred in previous periods. The ~~amount held in escrow~~remaining $904 was ~~remitted~~used to establish reserves for various pending claims. Forward Air financed the Merger Agreement with a $125,000 2 year term loan available under the senior credit facility.

Towne was a full-service trucking provider offering time-sensitive less-than-truckload shipping, full truckload service, an extensive cartage network, container freight stations and dedicated trucking. Towne’s LTL network provided scheduled deliveries to 61 service points. A fleet of approximately 525 independent contractor tractors provided the line-haul between those service points. The acquisition of Towne provided the Expedited LTL segment with opportunities to expand its service points and service offerings, such as pick up and delivery services. Additional benefits of the acquisition included increased linehaul network shipping density and a significant increase to our owner-operator fleet, both of which are key to the ~~sellers in September 2014.~~profitability of Expedited LTL.

Pursuant to the terms of the Agreement, the Company could pay the former shareholders of TQI additional cash consideration from $0 to $5,000 if certain earnings before interest, taxes, depreciation and amortization ("EBITDA") goals are exceeded. The ultimate payout is based on the level by which TQI operating results exceed specified thresholds as defined by the Agreement in both 2013 and 2014. At the time of acquisition the Company recognized an estimated earn-out liability of $615. The fair value of the earn-out liability (level 3) was estimated using an income approach based on the present value of probability-weighted amounts payable under a range of performance scenarios for 2013 and 2014 and a discount rate of 10.9%. However, based on the most probable outcomes the estimated earn-out liability was reduced to $0 and recognized as a gain in our results from operations during the fourth quarter of 2013. TQI's 2014 EBITDA performance did not exceed the goals established by the Agreement and therefore no earn out payments were required.

~~The Company incurred total transaction costs related to~~Effective with the acquisition of ~~approximately $943, which was expensed~~Towne, the Company immediately entered into a restructuring plan to remove duplicate costs, primarily in the form of, but not limited to salaries, wages and benefits and facility leases. As a result of these plans, during the year ended December 31, ~~2013,~~2015, the Company recognized expense of $2,624 and $11,722 for severance obligations and reserves for idle facilities, respectively. The expenses associated with the severance obligations and idle facilities were recognized in ~~accordance with U.S. GAAP. These~~the salaries, wages and benefits and operating lease line items, respectively. The Company also incurred expense of $9,197 for various other integration and transaction related costs which were ~~primarily~~largely included in ~~"Other~~other operating ~~expenses" expense~~expenses during 2015.

CST Acquisitions

As part of the Company's strategy to expand its Intermodal operations, in May 2017, we acquired certain assets of Atlantic Trucking Company, Inc., Heavy Duty Equipment Leasing, LLC, Atlantic Logistics, LLC and Transportation Holdings, Inc. (together referred to as “Atlantic” in this note) for $22,500 and a potential earnout of $1,000. The acquisition was funded by a combination of cash on hand and funds from our revolving credit facility. Atlantic was a privately held provider of intermodal, drayage and related services headquartered in Charleston, South Carolina. It also has terminal operations in Atlanta, Charlotte, Houston, Jacksonville, Memphis, Nashville, Norfolk and Savannah. These locations allow Intermodal to significantly expand its footprint in the ~~consolidated statements~~southeastern region. In October 2017, we also acquired certain assets of ~~comprehensive income.~~

~~The acquisition allows~~Kansas City Logistics, LLC ("KCL") for $640 and a potential earnout of $100. KCL provides CST with an expanded footprint in the Kansas and Missouri markets. During the year ended December 31, 2016, Atlantic generated approximately $62,300 in revenue. In January 2016, the Company also acquired certain assets of Ace Cargo, LLC ("Ace") for $1,700, and in August 2016, we acquired certain assets of Triumph Transport, Inc. and Triumph Repair Service, Inc. (together referred to as “Triumph”) for $10,100 and an earnout of $1,250 paid in September 2017. These acquisitions provided an opportunity for our Intermodal operations to expand into additional Midwest markets. The assets, liabilities, and ~~diversify its complimentary truckload operations while maintaining its goal~~operating results of ~~offering high-value added services.~~

these collective acquisitions have been included in the Company's consolidated financial statements from their dates of acquisition and have been included in the Intermodal reportable segment.

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FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2014~~2017

(In thousands, except share and per share data)

Included in the assumed liabilities of TQI is a liability for unrecognized tax benefits for $1,120. The liability is attributable to TQI not filing income tax returns in all jurisdictions in which it operated. The $1,120 consists of unrecognized tax benefits of $853 and related penalties and interest of $174 and $93, respectively. In accordance with the Agreement, the former shareholders of TQI have indemnified the Company against this tax exposure. As a result, the Company also recognized an offsetting receivable net of the estimated federal tax benefit for $728.

The assets, liabilities, and operating results of TQI have been included in the Company's consolidated financial statements from the date of acquisition and have been assigned to a new TQI reportable segment. The results of TQI reflected in the Company's consolidated statements of comprehensive income are as follows (in thousands, except per share data):

March 4, 2013 to December 31, 2013
Logistics revenue $ 41,842
Operating income 3,600
Net income 1,961
Net income per share
Basic $ 0.07
Diluted $ 0.06

~~F-15~~

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~~FORWARD AIR CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~December 31, 2014~~

~~(In thousands, except share and per share data)~~

Allocations of Purchase Prices

The following table presents the allocations of the ~~CST acquisitions and TQI~~previously discussed purchase prices to the assets acquired and liabilities assumed based on their estimated fair values and resulting residual goodwill (in thousands):


	CST		RGL & MMT		TQI		Towne		Ace & Triumph		Atlantic		KCL
	February 2, 2014		September & November 2014		March 4, 2013		March 9, 2015		January & August 2016		May 7, 2017		October 22, 2017
Tangible assets:
Accounts receivable	$	9,339	$	—	$	5,639	$	24,068	$	—	$	—	$	—
Prepaid expenses and other current assets	101		—		1,093		2,916		—		—		—
Property and equipment	2,132		287		5,103		2,095		1,294		1,821		223
Other assets	35		—		728		614		—		—		—
Deferred income taxes	—		—		947
Total tangible assets	11,607		287		13,510		29,693		1,294		1,821		223
Intangible assets:
Non-compete agreements	930		92		470		—		139		1,150		6
Trade name	500		—		1,000
Customer relationships	36,000		3,590		22,300		66,000		5,335		13,400		234
Goodwill	51,710		4,206		45,164		59,666		6,282		6,719		277
Total intangible assets	89,140		7,888		68,934		125,666		11,756		21,269		517
Total assets acquired	100,747		8,175		82,444		155,359		13,050		23,090		740

Liabilities assumed:
Current liabilities	6,535		1,000		4,725		28,920		—		590		100
Other liabilities	—		—		1,735		3,886		1,250		—		—
Debt and capital lease obligations	11,215		—		20,113		59,544		—		—		—
Deferred income taxes	—		—		10,543		1,131		—		—		—
Total liabilities assumed	17,750		1,000		37,116		93,481		1,250		590		100
Net assets acquired	$	82,997	$	7,175	$	45,328	$	61,878	$	11,800	$	22,500	$	640

The acquired definite-live intangible assets have the following useful lives:



	Useful Lives
	~~CST~~Towne	Ace & Triumph	~~RGL & MMT~~Atlantic	~~TQI~~KCL
Customer relationships	20 years	15 years	15 years	15 years
Non-competes	-	5 years	5 years	~~5 years~~
~~Trade names~~	2 ~~years~~	-	5 years

The fair value of the non-compete agreements ~~trade name~~ and customer ~~relationship~~relationships assets were estimated using an income approach (level 3). Under this method, an intangible asset's fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To ~~calculate~~estimate fair value, the Company used cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company ~~believes that~~believed the level and timing of cash flows appropriately ~~reflect~~reflected market participant assumptions. ~~The fair~~

~~F-16~~

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~~FORWARD AIR CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~December 31, 2014~~

~~(In thousands, except share and per share data)~~

value of the TQI and CST trades names were estimated using an income approach, specifically known as the relief from royalty method. The relief from royalty method is based on a hypothetical royalty stream that would be paid if the Company did not own the TQI name and had to license the trade name. The Company derived the hypothetical royalty income from the projected revenues of TQI. Cash flows were assumed to extend through the remaining economic useful life of each class of intangible asset.

The following unaudited pro forma information presents a summary of the Company's consolidated results of operations as if the CST acquisitions and TQI acquisition occurred as of January 1, 2013 (in thousands, except per share data).

Year ended

December 31,
2014 December 31,
2013
Operating revenue $ 786,048
$ 710,107
Income from operations 96,596
91,215
Net income 61,286
58,713
Net income per share

Basic $ 2.00
$ 1.95
Diluted $ 1.97
$ 1.91

~~See note 12 for discussion of subsequent events related to acquisitions.~~

Goodwill

~~The following is a summary of the changes in goodwill for the year ended December 31, 2014. All goodwill, except the goodwill assigned to TQI, is deductible for tax purposes.~~

Forward Air
FASI
TQI
Total

Accumulated

Accumulated

Accumulated

Goodwill Impairment
Goodwill Impairment
Goodwill Impairment
Net
Beginning balance, December 31, 2013 $ 37,926
$ —

$ 12,359
$ (6,953 )
$ 45,164
$ —

$ 88,496
CST acquisitions 55,916
—

—
—

—
—

55,916
Ending balance, December 31, 2014 $ 93,842
$ —

$ 12,359
$ (6,953 )
$ 45,164
$ —

$ 144,412

The Company conducted its annual impairment assessments and tests of goodwill for each reporting unit as of June 30, 2014 and no impairment charges were required. The Company conducts an annual (or more frequently if circumstances indicate possible impairment) impairment test of goodwill for each reporting unit at June 30 of each year.2017. The first step of the goodwill impairment test is the ~~Company assesses~~Company's assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, including goodwill.

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FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2017

(In thousands, except share and per share data)

When performing the qualitative assessment, the Company considers the impact of factors including, but not limited to, macroeconomic and industry conditions, overall financial performance of each reporting unit, litigation and new legislation. If based on the qualitative assessments, the Company believes it more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, or periodically as deemed appropriate by management, the Company will prepare an estimation of the respective reporting unit's fair value utilizing a quantitative approach. If a quantitative fair value estimation is required, the Company ~~calculates~~estimates the fair value of the applicable ~~reportable~~reporting units, using a combination of discounted projected cash flows and market valuations for comparable companies as of the valuation date. The Company's inputs into the fair value ~~calculations~~estimates for goodwill are classified within level 3 of the fair value hierarchy as defined in the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“the FASB Codification”). If ~~this~~the estimation of fair value indicates ~~that~~the impairment potentially exists, the Company will then measure the amount of the impairment, if any. Goodwill impairment exists when the ~~calculated~~estimated implied fair value of goodwill is less than its carrying value. Changes in strategy or market conditions could significantly impact these fair value estimates and require adjustments to recorded asset balances.

The Company conducted its annual impairment assessments and tests of goodwill for each reporting unit as of June 30, 2017 and no impairment charges were required. Further, due to Total Quality, Inc. ("TQI") performance falling short of the projections used in our June 2017 impairment assessment, the Company believed there were indicators of impairment as of December 31, 2017. Therefore, the Company performed an additional impairment assessment and determined TQI's goodwill was not impaired as of December 31, 2017.

In 2016, due to the financial performance of the TQI reporting unit falling notably short of previous projections the Company reduced TQI's projected cash flows and as a result the estimate of TQI's fair value no longer exceeded the respective carrying value. Consequently, the Company recorded a goodwill impairment charge of $25,686 for the TQI reporting unit during the year ended December 31, 2016.

The following is a summary of the changes in goodwill for the year ended December 31, 2017. Approximately $112,527 of goodwill is deductible for tax purposes.

~~F-17~~



	Expedited LTL				Truckload Premium					Pool Distribution					Intermodal				Total
			Accumulated				Accumulated					Accumulated					Accumulated
	Goodwill		Impairment		Goodwill		Impairment			Goodwill		Impairment			Goodwill		Impairment		Net
Ending balance, December 31, 2016	$	97,593	$	—	$	45,164	$	(25,686	)	$	12,359	$	(6,953	)	$	62,198	$	—	$	184,675
Atlantic & KCL Acquisitions	$	—	$	—	$	—	$	—		$	—	$	—		$	6,996	$	—	$	6,996
Ending balance, December 31, 2017	$	97,593	$	—	$	45,164	$	(25,686	)	$	12,359	$	(6,953	)	$	69,194	$	—	$	191,671

Other Acquired Intangibles

Through acquisitions, the Company acquired customer relationships, non-compete agreements and trade names having weighted-average useful lives of 15.9, 5.2 and 4.0 years, respectively. Amortization expense on acquired customer relationships, non-compete agreements and trade names for each of the years ended December 31, 2017, 2016 and 2015 was $10,193, $10,122 and $10,905, respectively.

As of December 31, 2017, definite-lived intangible assets are comprised of the following:



	Acquired Intangibles		Accumulated Amortization		Accumulated Impairment		Net Acquired Intangibles
Customer relationships	$	193,209	$	66,986	$	16,501	$	109,722
Non-compete agreements	4,566		3,074		—		1,492
Trade name	1,500		1,467		—		33
Total	$	199,275	$	71,527	$	16,501	$	111,247

As of December 31, 2016, definite-lived intangible assets are comprised of the following:

F-16

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2014~~2017

(In thousands, except share and per share data)

Through acquisitions between 2005 and 2014, including TQI and CST, the Company acquired customer relationships, non-compete agreements and trade names of $108,240, $3,272 and $1,500, respectively, having weighted-average useful lives of 13.5, 5.3 and 4.0 years, respectively. Amortization expense on acquired customer relationships, non-compete agreements and trade names for each of the three years ended December 31, 2014, 2013 and 2012 was $8,517, $5,762 and $4,566, respectively.



	Acquired Intangibles		Accumulated Amortization		Accumulated Impairment		Net Acquired Intangibles
Customer relationships	$	179,575	$	57,390	$	16,501	$	105,684
Non-compete agreements	3,410		2,677		—		733
Trade name	1,500		1,267		—		233
Total	$	184,485	$	61,334	$	16,501	$	106,650

The estimated amortization expense for the next five years on definite-lived intangible assets as of December 31, ~~2014~~2017 is as follows:


	2015		2016		2017		2018		2019		2018		2019		2020		2021		2022
Customer relationships	$	7,387	$	6,856	$	6,741	$	5,236	$	5,156	$	8,399	$	8,319	$	8,319	$	8,177	$	7,976
Non-compete agreements	318		318		310		220		30		464		289		259		246		78
Trade name	450		221		200		33		—		33		—		—		—		—
Total	$	8,155	$	7,395	$	7,251	$	5,489	$	5,186	$	8,896	$	8,608	$	8,578	$	8,423	$	8,054

Additionally, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate ~~that~~ the carrying amount may not be recoverable. Impairment is recognized on assets classified as held and used when the sum of undiscounted estimated cash flows expected to result from the use of the asset is less than the carrying value. If such measurement indicates a possible impairment, the estimated fair value of the asset is compared to its net book value to measure the impairment charge, if any. In conjunction with the June 30, 2016 TQI goodwill impairment assessment the Company determined there were indicators that TQI's customer relationship and non-compete intangible assets were impaired, as the undiscounted cash flows associated with the applicable assets no longer exceeded the related assets' net book values. The Company estimated the fair value of the customer relationship and non-compete assets using an income approach (level 3). Under this method, an intangible asset's fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To estimate fair value, the Company used cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believed the level and timing of cash flows appropriately reflected market participant assumptions. As a result of these estimates the Company recorded an impairment charge of $16,501 related to TQI customer relationships during the year ended December 31, 2016. The Company incurred no such impairment charge during the year ended December 31, 2017.

3. Debt and Capital Lease Obligations

Credit Facilities

~~In February 2012,~~On September 29, 2017, the Company entered into a five-year senior unsecured revolving credit facility (the “Facility”) with a maximum aggregate principal amount of $150,000, with a sublimit of $30,000 for letters of credit and a sublimit of $30,000 for swing line loans. The Facility may be increased by up to $100,000 to a maximum aggregate principal amount of $250,000 pursuant to the terms of the credit agreement, subject to the lenders’ agreement to increase their commitments or the addition of new ~~$150,000~~lenders extending such commitments. Such increases to the Facility may be in the form of additional revolving credit ~~facility. This facility has~~loans, term loans or a ~~term~~combination thereof, and are contingent upon there being no events of ~~five~~ ~~years and matures in February 2017. Interest rates for advances~~default under the Facility and satisfaction of other conditions precedent and are subject to the other limitations set forth in the credit agreement.

The Facility is scheduled to mature in September 2022. The proceeds were used to refinance existing indebtedness of the Company and may also be used for working capital, capital expenditures and other general corporate purposes. The Facility refinanced the Company’s obligations for its unsecured credit facility ~~are~~ ~~LIBOR~~under the credit agreement dated as of February 4, 2015, as amended, which was terminated as of the date of the new Facility.

Unless the Company elects otherwise under the credit agreement, interest on borrowings under the Facility is based on the highest of (a) the federal funds rate (not less than 0%) plus ~~1.1%~~ ~~based upon covenants related~~0.5%, (b) the administrative agent's prime rate and (c) the LIBOR Rate plus 1.0%, in each case plus a margin that can range from 0.3% to ~~total~~0.8% with respect to the Facility depending on the

F-17

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2017

(In thousands, except share and per share data)

Company’s ratio of consolidated funded indebtedness to earnings (~~1.3%~~before interest, taxes, depreciation and amortization, as set forth in the credit agreement. Payments of interest for each loan that is based on the LIBOR Rate are due in arrears on the last day of the interest period applicable to such loan (with interest periods of one, two or three months being available, at the Company’s option). Payments of interest on loans that are not based on the LIBOR Rate are due on the last day of each quarter ended March 31, June 30, September 30 and December 31 ~~2014). The agreement contains certain covenants~~of each year. All unpaid amounts of principal and ~~restrictions related to new indebtedness, investment types and dispositions of property. None of the covenants~~interest are ~~expected to significantly affect the Company's operations or ability to pay dividends. No assets are pledged as collateral against the credit facility.~~due at maturity. As of December 31, ~~2014,~~2017, the Company had no$40,500 in borrowings outstanding under the revolving credit ~~facility. At December 31, 2014, the Company had~~facility, $7,932 utilized ~~$9,749 of availability~~ for outstanding letters of credit and ~~had $140,251~~$101,568 of available borrowing capacity ~~outstanding~~ under the revolving credit facility. ~~See note 12 for discussion~~The interest rate on the outstanding borrowings under the facility was 2.9% at December 31, 2017.

The Facility contains customary events of ~~subsequent events related~~default including, among other things, payment defaults, breach of covenants, cross acceleration to material indebtedness, bankruptcy-related defaults, material judgment defaults, and the occurrence of certain change of control events. The occurrence of an event of default may result in, among other things, the termination of the Facilities, acceleration of repayment obligations and the exercise of remedies by the lenders with respect to the Company and its subsidiaries that are party to the Facility. The Facility also contains financial covenants and other covenants that, among other things, restrict the ability of the Company and its subsidiaries, without the approval of the required lenders, to engage in certain mergers, consolidations, asset sales, dividends and stock repurchases, investments, and other transactions or to incur liens or indebtedness in excess of agreed thresholds, as set forth in the credit ~~facility.~~agreement.

The Facility replaced the Company's previously existing unsecured credit facility, which had a maximum aggregate principal amount of $275,000, including a revolving credit facility of $150,000 and a term loan facility of $125,000. The previous revolving credit facility was scheduled to expire in February 2020.

Capital Leases

~~Through~~Primarily through acquisitions, the Company assumed several equipment leases that met the criteria for classification as a capital lease. The leased equipment is being amortized over the shorter of the lease term or useful life.

Property and equipment include the following amounts for assets under capital leases:


	December 31, 2014			December 31, 2013			December 31, 2017			December 31, 2016
Equipment	$	793		$	685		$	635		$	635
Accumulated amortization	(253		)	(680		)	(413		)	(307		)
	$	540		$	5		$	222		$	328

Amortization of assets under capital leases is included in depreciation and amortization expense.

Future minimum payments, by year and in the aggregate, under non-cancelable capital leases with initial or remaining terms of one year or more consist of the following at December 31, ~~2014:~~2017:



2018	$	391
2019	325
2020	60
2021	—
2022	—
Thereafter	—
Total	776
Less amounts representing interest	52
Present value of net minimum lease payments (including current portion of $359)	$	724

F-18

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2014~~2017

(In thousands, except share and per share data)

2015 $ 349
2016 347
2017 347
2018 347
2019 320
Thereafter 55
Total 1,765
Less amounts representing interest 214
Present value of net minimum lease payments (including current portion of $276) $ 1,551

Interest Payments

Interest payments during ~~2014, 2013~~2017, 2016 and ~~2012~~2015 were ~~$495, $482~~$1,193, $1,770 and ~~$365,~~$2,017, respectively. No interest was capitalized during the years ended December 31, ~~2014, 2013~~2017, 2016 and ~~2012.~~2015.

4. Shareholders' Equity, Stock Options and Net Income per Share

Preferred Stock

There are 5,000,000 shares of preferred stock with a par value of $0.01 authorized, but no shares have been issued to date.

Cash Dividends

During each quarter of ~~2014~~2017 ,and the fourth quarter of 2016, the Company’s Board of Directors declared a cash dividend of $0.15 per share of Common Stock. During the first, second and third quarters of 2016 and each quarter of 2015, the Company's Board of Directors declared a cash dividend of $0.12 per share of Common Stock. During each quarter of 2013 and the third and fourth quarter of 2012, the Company's Board of Directors declared a cash dividend of $0.10 per share of Common Stock. During the first and second quarter of 2012, the Company's Board of Directors declared a cash dividend of $0.07 per share of Common Stock. On February ~~10, 2015,~~6, 2018, the Company’s Board of Directors declared a ~~$0.12~~$0.15 per share dividend that will be paid in the first quarter of ~~2015.~~2018. The Company expects to continue to pay regular quarterly cash dividends, though each subsequent quarterly dividend is subject to review and approval by the Board of Directors.

Repurchase of Common ~~Stoc~~kStock

InOn July ~~2007,~~21, 2016, our Board of Directors approved a stock repurchase ~~program (“Repurchase Plan”) for~~plan that authorized the repurchase of up to ~~2,000,000~~3,000,000 shares of ~~our common stock. During~~ the ~~year ended December 31, 2013, we repurchased 8,675 shares of common stock under~~Company's Common Stock. Under the ~~Repurchase Plan for $354, or $40.84 per share. No shares were repurchased~~2016 repurchase plan, during the year ended December 31, ~~2012.~~

~~Also, on February 7, 2014, our Board of Directors approved a stock repurchase authorization for up to 2,000,000~~2017, we repurchased 947,819 shares of the Company’s common stock. In connection with this action, the board cancelled the Company’s Repurchase Plan. During the year ended December 31, 2014, we repurchased 881,979 shares of common stockCommon Stock for ~~$39,972,~~$48,983, or ~~$45.32~~$51.68 per share. As of December 31, ~~2014~~2017, ~~1,118,021~~1,818,665 shares remain that may be repurchased.

Share-Based Compensation

The Company had previously reserved for issuance 4,500,000 common shares under the 1999 Stock Option and Incentive Plan (the “1999 Plan”). ~~Options issued under the 1999 Plan have~~ ~~seven~~ to ~~ten-year terms and vested over a~~ ~~one~~ to ~~five~~ ~~year period.~~

In May 2008, with the approval of shareholders, the Company amended and restated the 1999 Stock Option and Incentive Plan (the “1999 Amended Plan”) to reserve for issuance an additional 3,000,000 common shares, increasing the total number of reserved common shares under the 1999 Amended Plan to 7,500,000. Options issued under these plans have ~~7,500,000~~seven. to ten-year terms and vested over a one to five year period.

In May 2016, with the approval of shareholders, the Company adopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) to reserve for issuance 2,000,000 common shares. With the adoption of the Omnibus Plan, no further awards will be issued under the 1999 Amended Plan. As of December 31, ~~2014,~~2017, there were approximately ~~746,000~~1,691,567 shares remaining available for ~~grant.~~grant under the Omnibus Plan.

~~F-19~~

~~Table of Contents~~

~~FORWARD AIR CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~December 31, 2014~~

~~(In thousands, except share and per share data)~~

Employee Activity - Options

The following tables summarize the Company’s employee stock option activity and related information for the years ended December 31, ~~2014~~2017, ~~2013~~2016 and ~~2012~~2015:

2014 2013 2012
Weighted- Weighted- Weighted-
Average Average Average
Options Exercise Options Exercise Options Exercise
(000) Price (000) Price (000) Price

Outstanding at beginning of year 1,732
$ 27
2,874
$ 26
3,363
$ 26
Granted 106
43
118
38
94
37
Exercised (450 ) 28
(1,260 ) 26
(570 ) 27
Forfeited (25 ) 37
—
—
(13 ) 29
Outstanding at end of year 1,363
$ 28
1,732
$ 27
2,874
$ 26
Exercisable at end of year 1,160
$ 26
1,514
$ 26
2,487
$ 26
Weighted-average fair value of options granted during the year $ 14
$ 14
$ 13

Aggregate intrinsic value for options exercised $ 7,259
$ 15,477
$ 3,924

Average aggregate intrinsic value for options outstanding $ 24,425

Average aggregate intrinsic value for exercisable options $ 23,274

Outstanding

Exercisable

Weighted-
Weighted-

Weighted-
Range of
Number
Average
Average
Number
Average
Exercise
Outstanding
Remaining
Exercise
Exercisable
Exercise
Price
(000)
Contractual Life
Price
(000)
Price
$ 22.47
- 24.98
672
1.7 $ 22.66
672
$ 22.66
28.61
- 29.44
401
0.9 28.95
401
28.95
36.55
- 41.80
184
4.7 37.03
87
36.90
42.48
- 45.97
106
6.2 43.17
—
—
$ 22.47
- 45.97
1,363
2.2 $ 28.05
1,160
$ 25.91

Year ended

December 31,
2014
December 31,
2013
December 31,
2012
Shared-based compensation for options $ 1,302

$ 1,410

$ 2,585
Tax benefit for option compensation $ 497

$ 508

$ 713
Unrecognized compensation cost for options, net of estimated forfeitures $ 1,632

~~F-20~~F-19

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2014~~2017

(In thousands, except share and per share data)



	2017					2016					2015
				Weighted-					Weighted-					Weighted-
				Average					Average					Average
	Options			Exercise		Options			Exercise		Options			Exercise
	(000)			Price		(000)			Price		(000)			Price

Outstanding at beginning of year	564			$	41	786			$	32	1,363			$	28
Granted	128			48		137			44		96			50
Exercised	(206		)	35		(346		)	24		(659		)	26
Forfeited	(46		)	46		(13		)	35		(14		)	29
Outstanding at end of year	440			$	45	564			$	41	786			$	32
Exercisable at end of year	226			$	42	331			$	37	586			$	28
Weighted-average fair value of options granted during the year	$	13				$	12				$	15
Aggregate intrinsic value for options exercised	$	3,569				$	7,803				$	16,191
Average aggregate intrinsic value for options outstanding	$	3,387
Average aggregate intrinsic value for exercisable options	$	2,259



						Outstanding			Exercisable
					Weighted-	Weighted-			Weighted-
Range of				Number	Average	Average		Number	Average
Exercise				Outstanding	Remaining	Exercise		Exercisable	Exercise
Price				(000)	Contractual Life	Price		(000)	Price
36.55		-	37.14	83	1.6	36.85		83	36.85
41.32		-	44.90	159	4.4	43.29		90	43.07
45.34		-	48.32	123	6.0	47.73		10	46.44
50.71		-	53.73	70	4.3	51.03		43	50.81
57.18		-	57.18	5	7.0	57.18		—	—
$	36.55	-	57.18	440	3.5	$	44.70	226	$	42.39



	Year ended
	December 31, 2017		December 31, 2016		December 31, 2015
Shared-based compensation for options	$	1,313	$	1,473	$	1,386
Tax benefit for option compensation	$	466	$	546	$	542
Unrecognized compensation cost for options	$	1,647
Weighted average period over which unrecognized compensation will be recognized (years)	1.8

Employee Activity – Non-vested shares

Non-vested share grants to employees vest ratably over a three-year period. The following tables summarize the Company's employee non-vested share activity and related information:

F-20

Year ended

2014
2013
2012

Weighted-

Weighted-

Weighted-

Non-vested
Average
Non-vested
Average
Non-vested
Average

Shares
Grant Date
Shares
Grant Date
Shares
Grant Date

(000)
Fair Value
(000)
Fair Value
(000)
Fair Value

Outstanding and non-vested at beginning of year 186

$ 35

168

$ 33

108

$ 29
Granted 99

42

98

37

103

37
Vested (94 )
43

(68 )
37

(36 )
29
Forfeited (1 )
37

(12 )
36

(7 )
33
Outstanding and non-vested at end of year 190

$ 40

186

$ 35

168

$ 33
Aggregate grant date fair value $ 7,585

$ 6,588

$ 5,579

Total fair value of shares vested during the year $ 4,008

$ 2,503

$ 1,249

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2017

(In thousands, except share and per share data)

Year ended

December 31,
2014
December 31,
2013
December 31,
2012
Shared-based compensation for non-vested shares $ 3,626

$ 3,058

$ 2,039
Tax benefit for non-vested share compensation $ 1,385

$ 1,165

$ 785
Unrecognized compensation cost for non-vested shares, net of estimated forfeitures $ 4,325



	Year ended
	2017					2016					2015
				Weighted-					Weighted-					Weighted-
	Non-vested			Average		Non-vested			Average		Non-vested			Average
	Shares			Grant Date		Shares			Grant Date		Shares			Grant Date
	(000)			Fair Value		(000)			Fair Value		(000)			Fair Value

Outstanding and non-vested at beginning of year	222			$	45	191			$	46	190			$	40
Granted	126			48		134			44		100			51
Vested	(105		)	45		(94		)	44		(93		)	39
Forfeited	(16		)	47		(9		)	45		(6		)	45
Outstanding and non-vested at end of year	227			$	47	222			$	45	191			$	46
Aggregate grant date fair value	$	10,618				$	10,108				$	8,773
Total fair value of shares vested during the year	$	5,040				$	4,064				$	4,694



	Year ended
	December 31, 2017		December 31, 2016		December 31, 2015
Shared-based compensation for non-vested shares	$	5,045	$	4,614	$	4,070
Tax benefit for non-vested share compensation	$	1,791	$	1,712	$	1,591
Unrecognized compensation cost for non-vested shares	$	6,137
Weighted average period over which unrecognized compensation will be recognized (years)	1.7

Employee Activity – Performance shares

In ~~2014, 2013~~2017, 2016 and ~~2012,~~2015, the Company granted performance shares to key employees. Under the terms of the performance share agreements, on the third anniversary of the grant date, the Company will issue to the employees a calculated number of common stock shares based on the three year performance of the Company's ~~common stock share price~~total shareholder return as compared to the ~~share price performance~~total shareholder return of a selected peer group. No shares may be issued if the Company ~~share price performance~~total shareholder return outperforms ~~30%~~25% or less of the peer group, but the number of shares issued may be doubled if the Company ~~share price~~total shareholder return performs better than 90% of the peer group.

The following tables summarize the Company's employee performance share activity, assuming median share awards, and related information:

F-21

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2014~~2017

(In thousands, except share and per share data)


	Year ended													Year ended
	2014					2013				2012				2017					2016					2015
				Weighted-				Weighted-				Weighted-					Weighted-					Weighted-					Weighted-
	Non-vested			Average		Non-vested		Average		Non-vested		Average		Non-vested			Average		Non-vested			Average		Non-vested			Average
	Shares			Grant Date		Shares		Grant Date		Shares		Grant Date		Shares			Grant Date		Shares			Grant Date		Shares			Grant Date
	(000)			Fair Value		(000)		Fair Value		(000)		Fair Value		(000)			Fair Value		(000)			Fair Value		(000)			Fair Value

Outstanding and non-vested at beginning of year	88			$	37	62		$	36	38		$	30	80			$	55	77			$	52	74			$	44
Granted	23			48		26		40		24		45		27			56		29			49		27			67
Additional shares awarded based on performance	19			30		—		—		—		—		—			—		7			40		—			—
Vested	(56		)	30		—		—		—		—		—			—		(33		)	40		(24		)	45
Forfeited	—			—		—		—		—		—		(38		)	51		—			—		—			—
Outstanding and non-vested at end of year	74			$	44	88		$	37	62		$	36	69			$	58	80			$	55	77			$	52
Aggregate grant date fair value	$	3,279				$	3,278			$	2,205			$	3,980				$	4,373				$	4,016


	Year ended						Year ended
	December 31, 2014		December 31, 2013		December 31, 2012		December 31, 2017		December 31, 2016		December 31, 2015
Shared-based compensation for performance shares	$	1,098	$	1,055	$	699	$	1,045	$	1,447	$	1,308
Tax benefit for performance share compensation	$	419	$	402	$	269	$	371	$	537	$	512
Unrecognized compensation cost for performance shares, net of estimated forfeitures	$	1,225
Unrecognized compensation cost for performance shares							$	1,383
Weighted average period over which unrecognized compensation will be recognized (years)							1.7

Employee Activity – Employee Stock Purchase Plan

Under the ESPP, at December 31, ~~2014,~~2017, the Company is authorized to issue up to a remaining ~~403,792~~371,859 shares of Common Stock to employees of the Company. For the years ended December 31, ~~2014, 2013~~2017, 2016 and ~~2012,~~2015, participants under the ~~plan~~ESPP purchased ~~8,530,~~9,954, ~~8,800~~11,174, and ~~8,846~~10,805 shares, respectively, at an average price of ~~$41.51,~~$46.01, $~~33.68~~39.50, and $~~29.26~~41.55 per share, respectively. The weighted-average fair value of each purchase right under the ESPP granted for the years ended December 31, ~~2014, 2013~~2017, 2016 and ~~2012,~~2015, which is equal to the discount from the market value of the Common Stock at the end of each six month purchase period, was ~~$7.74,~~$9.26, $~~7.52~~6.46, and $~~4.47~~5.82 per share, respectively. Share-based compensation expense of ~~$66,~~$92, $6672, and $4061 was recognized in salaries, wages and employee benefits, during the years ended December 31, ~~2014, 2013~~2017, 2016 and ~~2012,~~2015, respectively.

Non-employee Directors – Non-vested shares

OnIn May ~~23,~~ 2006, the Company’s shareholders approved the Company’s 2006 Non-Employee Director Stock Plan (the “2006 Plan”). The Company’s shareholders then approved the Company’s Amended and Restated Non-Employee Director Stock Plan (the “Amended Plan”) on May 22, 2007. The Amended Plan was then further amended and restated on December 17, 2008. Under the Amended Plan, on the first business day after each Annual Meeting of Shareholders, each non-employee director will automatically be granted an award (the “Annual Grant”), in such form and size as the Board determines from year to year. Unless otherwise determined by the Board, Annual Grants will become vested and nonforfeitable one year after the date of grant so long as the non-employee director’s service with the Company does not earlier terminate. Each director may elect to defer receipt of the shares under a non-vested share award until the director terminates service on the Board of Directors. If a director elects to defer receipt, the Company will issue deferred stock units to the director, which do not represent actual ownership

in shares and the director will not have voting rights or other incidents of ownership until the shares are issued. However, the Company will

F-22

Table of Contents

FORWARD AIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2017

(In thousands, except share and per share data)

credit the director with dividend equivalent payments in the form of additional deferred stock units for each cash dividend payment made by the Company.

~~F-22~~

~~Table~~In May 2016, with the approval of ~~Contents~~

~~FORWARD AIR CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

shareholders, the Company further amended the Amended Plan to reserve for issuance an additional 160,000 common shares, increasing the total number of reserved common shares under the Amended Plan to 360,000. As of December 31, ~~2014~~2017, there were approximately 148,019 shares remaining available for grant.

~~(In thousands, except share and per share data)~~

The following tables summarize the Company's non-employee non-vested share activity and related information:


	Year ended															Year ended
	2014					2013					2012					2017					2016					2015
	Non-vested					Non-vested					Non-vested					Non-vested					Non-vested					Non-vested
	Shares and			Weighted-		Shares and			Weighted-		Shares and			Weighted-		Shares and			Weighted-		Shares and			Weighted-		Shares and			Weighted-
	Deferred			Average		Deferred			Average		Deferred			Average		Deferred			Average		Deferred			Average		Deferred			Average
	Stock Units			Grant Date		Stock Units			Grant Date		Stock Units			Grant Date		Stock Units			Grant Date		Stock Units			Grant Date		Stock Units			Grant Date
	(000)			Fair Value		(000)			Fair Value		(000)			Fair Value		(000)			Fair Value		(000)			Fair Value		(000)			Fair Value

Outstanding and non-vested at beginning of year	15			$	38	20			$	32	24			$	33	16			$	44	15			$	51	15			$	44
Granted	15			44		15			38		20			32		14			52		16			44		14			51
Vested	(15		)	38		(20		)	32		(24		)	32		(16		)	44		(15		)	51		(14		)	43
Forfeited	—			—		—			—		—			—		(3		)	49		—			—		—			—
Outstanding and non-vested at end of year	15			$	44	15			$	38	20			$	32	11			$	52	16			$	44	15			$	51
Aggregate grant date fair value	$	650				$	560				$	640				$	742				$	688				$	740
Total fair value of shares vested during the year	$	632				$	762				$	752				$	809				$	639				$	727



City
Albuquerque, NM*	~~Jeffersonville, OH~~Kansas City, MO
Atlanta, GA	~~Kansas City, MO~~Lakeland, FL
Baltimore, MDMD***	~~Lakeland, FL~~Las Vegas, NV
Baton Rouge, LA*	~~Las Vegas, NV~~Little Rock, AR*
Charlotte, NC	Little Rock, AR*Miami, FL
Chicago, IL*	~~Miami, FL~~Montgomery, AL
Columbus, OH**	~~Montgomery, AL~~Nashville, TN
Dallas/Ft. Worth, TX***	~~Nashville, TN~~
Denver, CO***TX	Raleigh, NC
Des Moines, IA***	Richmond, VA***VA
Detroit, MI*	Rochester, NY*NY
El Paso, TX*Houston, TX	San Antonio, TX
~~Houston, TX~~Jacksonville, FL	St. Louis, MO*
Jacksonville, FLTX	Tulsa, OK***
~~Jacksonville, TX~~Jeffersonville, OH


2014	High		Low		Dividends
2017							High		Low		Dividends
First Quarter	$	46.66	$	41.36	$	0.12	$	51.51	$	45.86	$	0.15
Second Quarter	48.08		42.09		0.12		56.52		46.35		0.15
Third Quarter	48.93		44.45		0.12		57.68		49.98		0.15
Fourth Quarter	51.37		43.60		0.12		59.98		49.88		0.15

2013	High		Low		Dividends
2016							High		Low		Dividends
First Quarter	$	39.58	$	35.28	$	0.10	$	49.01	$	36.00	$	0.12
Second Quarter	39.66		35.93		0.10		48.69		41.48		0.12
Third Quarter	41.94		36.05		0.10		47.78		41.70		0.12
Fourth Quarter	44.57		38.26		0.10		50.72		40.07		0.15



Equity Compensation Plan Information
Plan Category	Number of Securities to be Issued upon Exercise or Vesting of Outstanding/Unvested Shares, Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
		(a)		(b)
Equity Compensation Plans Approved by Shareholders	1,659,835	$	28	1,659,547
Equity Compensation Plans Not Approved by Shareholders	—	—		—
Total	1,659,835	$	28	1,659,547



	Year ended December 31,
	2017			2016			Change			Percent Change
Operating revenue:
Expedited LTL	$	619.8		$	570.8		$	49.0		8.6	%
Truckload Premium Services	179.3			164.3			15.0			9.1
Pool Distribution	164.2			148.6			15.6			10.5
Intermodal	148.9			103.7			45.2			43.6
Eliminations and other operations	(11.4		)	(4.9		)	(6.5		)	132.7
Operating revenue	1,100.8			982.5			118.3			12.0
Operating expenses:
Purchased transportation	478.2			413.4			64.8			15.7
Salaries, wages, and employee benefits	264.7			242.0			22.7			9.4
Operating leases	63.8			60.5			3.3			5.5
Depreciation and amortization	41.1			38.2			2.9			7.6
Insurance and claims	29.6			25.4			4.2			16.5
Fuel expense	16.5			13.2			3.3			25.0
Other operating expenses	98.3			87.4			10.9			12.5
Impairment of goodwill, intangibles and other assets	—			42.4			(42.4		)	(100.0	)
Total operating expenses	992.2			922.5			69.7			7.6
Income (loss) from operations:
Expedited LTL	88.1			83.5			4.6			5.5
Truckload Premium Services	3.2			(35.4		)	38.6			NM
Pool Distribution	6.4			3.6			2.8			77.8
Intermodal	12.7			11.0			1.7			15.5
Other operations	(1.8		)	(2.7		)	0.9			(33.3	)
Income from operations	108.6			60.0			48.6			81.0
Other expense:
Interest expense	(1.2		)	(1.6		)	0.4			(25.0	)
Other, net	—			—			—			—
Total other expense	(1.2		)	(1.6		)	0.4			(25.0	)
Income before income taxes	107.4			58.4			49.0			83.9
Income taxes	20.1			30.7			(10.6		)	(34.5	)
Net income	$	87.3		$	27.7		$	59.6		215.2	%



	Year ended
	December 31,			December 31,						Percent
	2014			2013			Change			Change
Operating revenue	$	781.0		$	652.5		$	128.5		19.7	%
Operating expenses:
Purchased transportation	334.6			285.7			48.9			17.1
Salaries, wages, and employee benefits	182.1			151.1			31.0			20.5
Operating leases	34.0			29.3			4.7			16.0
Depreciation and amortization	31.1			23.6			7.5			31.8
Insurance and claims	15.7			12.5			3.2			25.6
Fuel expense	20.2			15.2			5.0			32.9
Other operating expenses	66.9			50.7			16.2			32.0
Total operating expenses	684.6			568.1			116.5			20.5
Income from operations	96.4			84.4			12.0			14.2
Other income (expense):
Interest expense	(0.6		)	(0.5		)	(0.1		)	20.0
Other, net	0.3			0.1			0.2			200.0
Total other expense	(0.3		)	(0.4		)	0.1			(25.0	)
Income before income taxes	96.1			84.0			12.1			14.4
Income taxes	34.9			29.5			5.4			18.3
Net income	$	61.2		$	54.5		$	6.7		12.3	%



	Average Weekly Miles
Year	(In thousands)
2003	211
2004	260
2005	248
2006	331
2007	529
2008	676
2009	672
2010	788
2011	876
2012	1,005
2013	1,201
2014	1,185
2015	1,459
2016	1,756
2017	1,902



City
Atlanta, GA	Joliet, IL
Charleston, SC	Kansas City, MO
Charlotte, NC	Memphis, TN
Chicago/Joliet, IL	Milwaukee, WI
Cincinnati, OH	Minneapolis, MN
Cleveland, OH	Nashville, TN
Dallas, TX	Norfolk, VA
Houston, TX	Rochelle, IL
Indianapolis, IN	Romulus, MI
Jacksonville, FL	Savannah, GA


~~(b)~~	~~Includes shares available for future issuance under the ESPP. As of December 31, 2014, an aggregate of 403,792 shares of Common Stock were available for issuance under the ESPP.~~



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares that May Yet Be Purchased Under the Program (1)
October 1-31, 2017	—	$	—	—	—
November 1-30, 2017	—	—		—	—
December 1-31, 2017	121,186	58		121,186	1,818,665
Total	121,186	$	58	121,186	1,818,665



	Year ended
	December 31,			Percent of		December 31,			Percent of					Percent
	2014			Revenue		2013			Revenue		Change			Change
Operating revenue
Forward Air	$	612.4		78.4	%	$	501.1		76.8	%	$	111.3		22.2	%
FASI	125.2			16.0		113.4			17.4		11.8			10.4
TQI	48.8			6.3		41.8			6.4		7.0			16.7
Intercompany eliminations	(5.4		)	(0.7	)	(3.8		)	(0.6	)	(1.6		)	42.1
Total	781.0			100.0		652.5			100.0		128.5			19.7

Purchased transportation
Forward Air	277.3			45.3		230.9			46.1		46.4			20.1
FASI	36.6			29.3		34.5			30.4		2.1			6.1
TQI	24.7			50.6		23.2			55.5		1.5			6.5
Intercompany eliminations	(4.0		)	74.1		(2.9		)	76.3		(1.1		)	37.9
Total	334.6			42.8		285.7			43.8		48.9			17.1

Salaries, wages and employee benefits
Forward Air	131.7			21.5		105.4			21.0		26.3			25.0
FASI	42.0			33.5		39.3			34.7		2.7			6.9
TQI	8.4			17.2		6.4			15.3		2.0			31.3
Total	182.1			23.3		151.1			23.2		31.0			20.5

Operating leases
Forward Air	24.9			4.1		20.2			4.0		4.7			23.3
FASI	9.0			7.2		9.0			7.9		—			—
TQI	0.1			0.2		0.1			0.2		—			—
Total	34.0			4.4		29.3			4.5		4.7			16.0

Depreciation and amortization
Forward Air	21.7			3.5		16.2			3.2		5.5			34.0
FASI	5.8			4.6		5.0			4.4		0.8			16.0
TQI	3.6			7.4		2.4			5.8		1.2			50.0
Total	31.1			4.0		23.6			3.6		7.5			31.8

Insurance and claims
Forward Air	11.8			1.9		8.7			1.8		3.1			35.6
FASI	3.1			2.5		3.3			2.9		(0.2		)	(6.1	)
TQI	0.8			1.7		0.5			1.2		0.3			60.0
Total	15.7			2.0		12.5			1.9		3.2			25.6

Fuel expense
Forward Air	8.4			1.4		4.0			0.8		4.4			110.0
FASI	7.3			5.8		7.0			6.2		0.3			4.3
TQI	4.5			9.2		4.2			10.1		0.3			7.1
Total	20.2			2.6		15.2			2.3		5.0			32.9

Other operating expenses
Forward Air	50.5			8.2		37.0			7.4		13.5			36.5
FASI	15.4			12.3		13.2			11.6		2.2			16.7
TQI	2.4			4.9		1.4			3.3		1.0			71.4
Intercompany eliminations	(1.4		)	25.9		(0.9		)	23.7		(0.5		)	55.6
Total	66.9			8.6		50.7			7.8		16.2			32.0

Income from operations
Forward Air	86.1			14.1		78.7			15.7		7.4			9.4
FASI	6.0			4.8		2.1			1.9		3.9			185.7
TQI	4.3			8.8		3.6			8.6		0.7			19.4
Total	$	96.4		12.3	%	$	84.4		12.9	%	$	12.0		14.2	%



Expedited LTL Segment Information
(In millions)
(Unaudited)

	Year ended
	December 31,		Percent of		December 31,		Percent of				Percent
	2017		Revenue		2016		Revenue		Change		Change
Operating revenue	$	619.8	100.0	%	$	570.8	100.0	%	$	49.0	8.6	%

Operating expenses:
Purchased transportation	254.9		41.1		225.1		39.5		29.8		13.2
Salaries, wages and employee benefits	145.9		23.5		139.0		24.4		6.9		5.0
Operating leases	36.7		5.9		34.4		6.0		2.3		6.7
Depreciation and amortization	22.1		3.6		21.9		3.8		0.2		0.9
Insurance and claims	15.4		2.5		13.2		2.3		2.2		16.7
Fuel expense	3.8		0.6		3.3		0.6		0.5		15.2
Other operating expenses	52.9		8.6		50.4		8.8		2.5		5.0
Total operating expenses	531.7		85.8		487.3		85.4		44.4		9.1
Income from operations	$	88.1	14.2	%	$	83.5	14.6	%	$	4.6	5.5	%



Expedited LTL Operating Statistics

	Year ended
	December 31,			December 31,			Percent
	2017			2016			Change

Operating ratio	85.8		%	85.4		%	0.5	%

Business days	254.0			255.0			(0.4	)
Business weeks	50.8			51.0			(0.4	)

Expedited LTL:
Tonnage
Total pounds ¹	2,513,055			2,370,788			6.0
Average weekly pounds ¹	49,470			46,486			6.4

Linehaul shipments
Total linehaul	4,036,385			3,757,275			7.4
Average weekly	79,456			73,672			7.9

Forward Air Complete shipments	943,396			782,425			20.6
As a percentage of linehaul shipments	23.4		%	20.8		%	12.5

Average linehaul shipment size	623			631			(1.3	)

Revenue per pound ²
Linehaul yield	$	17.12		$	17.64		(2.3	)
Fuel surcharge impact	1.20			0.95			1.1
Forward Air Complete impact	3.82			3.33			2.2
Total Expedited LTL yield	$	22.14		$	21.92		1.0	%


¹ - In thousands
² - In dollars per hundred pound; percentage change is expressed as a percent of total yield.


Truckload Premium Services Segment Information												Truckload Premium Services Segment Information
(In millions)												(In millions)
(Unaudited)												(Unaudited)

	Year ended											Year ended
	December 31,			December 31,						Percent		December 31,		Percent of		December 31,			Percent of					Percent
	2013			2012			Change			Change		2017		Revenue		2016			Revenue		Change			Change
Operating revenue	$	652.5		$	584.4		$	68.1		11.7	%	$	179.3	100.0	%	$	164.3		100.0	%	$	15.0		9.1	%

Operating expenses:
Purchased transportation	285.7			252.7			33.0			13.1		131.3		73.2		115.4			70.2		15.9			13.8
Salaries, wages, and employee benefits	151.1			135.0			16.1			11.9
Salaries, wages and employee benefits												20.4		11.4		19.3			11.7		1.1			5.7
Operating leases	29.3			28.0			1.3			4.6		0.9		0.5		0.3			0.2		0.6			200.0
Depreciation and amortization	23.6			21.1			2.5			11.8		6.3		3.5		6.5			4.0		(0.2		)	(3.1	)
Insurance and claims	12.5			11.3			1.2			10.6		5.4		3.0		4.8			2.9		0.6			12.5
Fuel expense	15.2			10.0			5.2			52.0		3.3		1.8		2.6			1.6		0.7			26.9
Other operating expenses	50.7			42.8			7.9			18.5		8.5		4.8		8.4			5.1		0.1			1.2
Impairment of goodwill, intangibles and other assets												—		—		42.4			25.8		(42.4		)	(100.0	)
Total operating expenses	568.1			500.9			67.2			13.4		176.1		98.2		199.7			121.5		(23.6		)	(11.8	)
Income from operations	84.4			83.5			0.9			1.1
Other income (expense):
Interest expense	(0.5		)	(0.4		)	(0.1		)	25.0
Other, net	0.1			—			0.1			100.0
Total other expense	(0.4		)	(0.4		)	—			—
Income before income taxes	84.0			83.1			0.9			1.1
Income taxes	29.5			30.4			(0.9		)	(3.0	)
Net income	$	54.5		$	52.7		$	1.8		3.4	%
Income (loss) from operations												$	3.2	1.8	%	$	(35.4	)	(21.5	)%	$	38.6		(109.0	)%



Truckload Premium Services Operating Statistics

	Year ended
	December 31,		December 31,		Percent
	2017		2016		Change

Company driver ¹	7,822		6,740		16.1	%
Owner operator ¹	45,123		50,442		(10.5	)
Third party ¹	43,653		32,358		34.9
Total Miles	96,598		89,540		7.9

Revenue per mile	$	1.80	$	1.79	0.6

Cost per mile	$	1.43	$	1.38	3.6	%

¹ - In thousands



Pool Distribution Segment Information
(In millions)
(Unaudited)

	Year ended
	December 31,		Percent of		December 31,		Percent of				Percent
	2017		Revenue		2016		Revenue		Change		Change
Operating revenue	$	164.2	100.0	%	$	148.6	100.0	%	$	15.6	10.5	%

Operating expenses:
Purchased transportation	43.2		26.3		40.0		26.9		3.2		8.0
Salaries, wages and employee benefits	62.7		38.2		56.8		38.2		5.9		10.4
Operating leases	13.3		8.1		12.7		8.6		0.6		4.7
Depreciation and amortization	6.8		4.1		6.0		4.0		0.8		13.3
Insurance and claims	4.7		2.9		4.4		3.0		0.3		6.8
Fuel expense	5.5		3.3		4.8		3.2		0.7		14.6
Other operating expenses	21.6		13.2		20.3		13.7		1.3		6.4
Total operating expenses	157.8		96.1		145.0		97.6		12.8		8.8
Income from operations	$	6.4	3.9	%	$	3.6	2.4	%	$	2.8	77.8	%



Intermodal Segment Information
(In millions)
(Unaudited)

	Year ended
	December 31,		Percent of		December 31,		Percent of				Percent
	2017		Revenue		2016		Revenue		Change		Change
Operating revenue	$	148.9	100.0	%	$	103.7	100.0	%	$	45.2	43.6	%

Operating expenses:
Purchased transportation	58.6		39.4		36.2		34.9		22.4		61.9
Salaries, wages and employee benefits	33.5		22.5		25.2		24.3		8.3		32.9
Operating leases	13.5		9.1		12.0		11.6		1.5		12.5
Depreciation and amortization	5.8		3.9		3.9		3.8		1.9		48.7
Insurance and claims	4.2		2.8		3.0		2.9		1.2		40.0
Fuel expense	3.9		2.6		2.5		2.4		1.4		56.0
Other operating expenses	16.7		11.2		9.9		9.5		6.8		68.7
Total operating expenses	136.2		91.5		92.7		89.4		43.5		46.9
Income from operations	$	12.7	8.5	%	$	11.0	10.6	%	$	1.7	15.5	%


Contractual Obligations	Payment Due Period										Payment Due Period (in thousands)
									2020 and										2023 and
	Total		2015		2016-2017		2018-2019		Thereafter		Total		2018		2019-2020		2021-2022		Thereafter
Capital lease obligations	$	1,765	$	349	$	694	$	667	55		$	776	$	391	$	385	$	—	—
Equipment purchase commitments	5,708		5,708		—		—		—		29,607		29,607		—		—		—
Operating leases	64,516		22,295		28,361		11,390		2,470		117,648		42,051		57,085		16,230		2,282
Total contractual cash obligations	$	71,989	$	28,352	$	29,055	$	12,057	$	2,525	$	148,031	$	72,049	$	57,470	$	16,230	$	2,282



	Dates of Acquisition to December 31, 2014
Logistics revenue	$	52,061
Other revenues	20,253
Operating income	7,525
Net income	4,586
Net income per share
Basic	$	0.15
Diluted	$	0.15



	March 4, 2013 to December 31, 2013
Logistics revenue	$	41,842
Operating income	3,600
Net income	1,961
Net income per share
Basic	$	0.07
Diluted	$	0.06



	December 31, 2014			December 31, 2013
Deferred tax assets:
Accrued expenses	$	6,313		$	4,287
Allowance for doubtful accounts	1,002			745
Share-based compensation	5,698			6,066
Accruals for income tax contingencies	300			547
Impairment of goodwill and other intangible assets	534			854
Net operating loss carryforwards	280			253
Total deferred tax assets	14,127			12,752
Valuation allowance	(273		)	(234		)
Total deferred tax assets, net of valuation allowance	13,854			12,518
Deferred tax liabilities:
Tax over book depreciation	19,222			21,806
Non-compete agreements	3,639			5,149
Prepaid expenses deductible when paid	2,488			2,354
Goodwill	11,189			8,914
Total deferred tax liabilities	36,538			38,223
Net deferred tax liabilities	$	(22,684	)	$	(25,705	)



	December 31, 2014			December 31, 2013
Current assets	$	2,496		$	1,145
Noncurrent liabilities	(25,180		)	(26,850		)
	$	(22,684	)	$	(25,705	)


	Liability for			Liability for
	Unrecognized Tax			Unrecognized Tax
	Benefits			Benefits
Balance at December 31, 2011	481
Balance at December 31, 2014				771
Reductions for settlement with state taxing authorities	(204		)	(64		)
Balance at December 31, 2012	277
Additions for tax positions of current year	209			66
Additions for tax positions of prior years - TQI	853
Balance at December 31, 2013	1,339
Balance at December 31, 2015				773
Reductions for settlement with state taxing authorities	(697		)	(247		)
Additions for tax positions of prior years - TQI	63
Additions for tax positions of current year	66			56
Balance at December 31, 2014	$	771
Balance at December 31, 2016				$	582
Reductions for settlement with state taxing authorities				$	(14	)
Additions for tax positions of prior years				$	400
Additions for tax positions of current year				$	366
Balance at December 31, 2017				$	1,334



	December 31, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
Capital lease obligations	$	724	$	744	$	1,072	$	1,139



Year ended December 31, 2017	Expedited LTL		Truckload Premium Services		Pool Distribution		Intermodal		Eliminations & Other			Consolidated
External revenues	$	616,245	$	171,970	$	163,932	$	148,669	$	—		$	1,100,816
Intersegment revenues	3,534		7,350		289		238		(11,411		)	—
Depreciation and amortization	22,103		6,328		6,773		5,848		3			41,055
Share-based compensation expense	6,776		378		387		562		—			8,103
Interest expense	3		2		—		48		1,156			1,209
Income (loss) from operations	88,142		3,248		6,378		12,673		(1,769		)	108,672
Total assets	629,091		65,829		55,970		147,773		(210,947		)	687,716
Capital expenditures	36,650		33		1,068		514		—			38,265


Year ended December 31, 2014	Forward Air		FASI		TQI		Eliminations			Consolidated
Year ended December 31, 2016												Expedited LTL		Truckload Premium Services			Pool Distribution		Intermodal		Eliminations & Other			Consolidated
External revenues	$	608,118	$	124,382	$	48,459	$	—		$	780,959	$	567,711	$	163,254		$	148,054	$	103,511	$	—		$	982,530
Intersegment revenues	4,219		831		365		(5,415		)	—		3,067		1,018			607		160		(4,852		)	—
Depreciation and amortization	21,721		5,811		3,601		—			31,133		21,919		6,441			5,975		3,876		(1		)	38,210
Share-based compensation expense	6,470		176		35		—			6,681		7,209		332			334		459		—			8,334
Impairment of goodwill and other intangible assets												—		42,442			—		—		—			42,442
Interest expense	602		2		6		—			610		1,687		3			—		83		(176		)	1,597
Interest income	8		—		—		—			8
Income tax expense	31,792		2,203		921		—			34,916
Net income	53,985		3,790		3,394		—			61,169
Income (loss) from operations												83,518		(35,405		)	3,633		10,956		(2,723		)	59,979
Total assets	607,765		47,516		88,781		(202,257		)	541,805		632,698		53,695			50,271		129,714		(225,087		)	641,291
Capital expenditures	26,170		7,133		6,184		—			39,487		37,501		1,828			2,637		220		—			42,186

Year ended December 31, 2013	Forward Air		FASI		TQI		Eliminations			Consolidated
External revenues	$	497,993	$	112,766	$	41,722	$	—		$	652,481
Intersegment revenues	3,075		645		120		(3,840		)	—
Depreciation and amortization	16,222		4,945		2,412		—			23,579
Share-based compensation expense	5,959		140		79		—			6,178
Interest expense	513		8		11		—			532
Interest income	36		—		1		—			37
Income tax expense	26,981		846		1,628		—			29,455
Net income	51,251		1,255		1,961		—			54,467
Total assets	478,790		42,049		85,490		(100,060		)	506,269
Capital expenditures	25,017		6,901		3,521		—			35,439

Year ended December 31, 2012	Forward Air		FASI		TQI		Eliminations			Consolidated
External revenues	$	500,621	$	83,825	$	—	$	—		$	584,446
Intersegment revenues	1,116		1,152		—		(2,268		)	—
Depreciation and amortization	16,356		4,665		—		—			21,021
Share-based compensation expense	5,857		193		—		—			6,050
Interest expense	369		22		—		—			391
Interest income	41		—		—		—			41
Income tax expense	30,053		434		—		—			30,487
Net income	51,127		1,541		—		—			52,668
Total assets	395,936		37,135		—		(33,884		)	399,187
Capital expenditures	15,910		5,443		—		—			21,353



Year ended December 31, 2015	Expedited LTL		Truckload Premium Services		Pool Distribution		Intermodal		Eliminations & Other			Consolidated
External revenues	$	573,476	$	152,251	$	128,826	$	103,977	$	595		$	959,125
Intersegment revenues	3,550		1,080		1,169		315		(6,114		)	—
Depreciation and amortization	21,125		6,206		6,003		3,773		50			37,157
Share-based compensation expense	6,088		840		300		258		—			7,486
Interest expense	1,959		5		—		83		—			2,047
Income (loss) from operations	79,193		13,288		3,820		11,949		(26,478		)	81,772
Total assets	641,360		89,312		46,970		118,081		(195,791		)	699,932
Capital expenditures	29,995		5,972		3,983		545		—			40,495


	2014								2017
	March 31		June 30		September 30		December 31		March 31		June 30			September 30		December 31
Operating revenue	$	171,569	$	193,852	$	201,477	$	214,061	246,982		267,518			280,201		306,116
Income from operations	16,271		27,595		26,906		25,634		23,189		29,809			26,898		28,776
Net income	10,202		17,178		16,744		17,045		14,243		19,550			18,155		35,374

Net income per share:
Basic	$	0.33	$	0.56	$	0.55	$	0.56	$	0.47	$	0.65		$	0.60	$	1.19
Diluted	$	0.33	$	0.55	$	0.54	$	0.55	$	0.47	$	0.64		$	0.60	$	1.18

	2013								2016
	March 31		June 30		September 30		December 31		March 31		June 30			September 30		December 31
Operating revenue	$	141,560	$	159,804	$	170,033	$	181,084	229,548		238,637			249,552		264,793
Income from operations	15,790		22,505		22,857		23,203		21,404		(14,348		)	24,700		28,223
Net income	10,855		13,831		14,197		15,584		13,099		(10,066		)	11,931		12,706

Net income per share:
Basic	$	0.37	$	0.46	$	0.47	$	0.51	$	0.43	$	(0.33	)	$	0.39	$	0.42
Diluted	$	0.36	$	0.45	$	0.46	$	0.50	$	0.43	$	(0.33	)	$	0.39	$	0.42


Col. A		Col. B		Col. C					Col. D				Col. E		Col. B		Col. C					Col. D			Col. E
		Balance at Beginning of Period		Charged to Costs and Expenses			Charged to Other Accounts Described		Deductions -Describe				Balance at End of Period		Balance at Beginning of Period		Charged to Costs and Expenses			Charged to Other Accounts Described		Deductions -Described			Balance at End of Period
Year ended December 31, 2014
Allowance for doubtful accounts		$	1,583	$	241		$	—	$	(331	)	⁽²⁾	$	2,155
Allowance for revenue adjustments	⁽¹⁾	336		2,465			—		2,393			⁽³⁾	408
Income tax valuation		234		39			—		—				273
		2,153		2,745			—		2,062				2,836
Year ended December 31, 2013
Year ended December 31, 2017
Allowance for doubtful accounts		$	1,149	$	423		$	—	$	(11	)	⁽²⁾	$	1,583	1,309		1,814			—		581		⁽²⁾	2,542
Allowance for revenue adjustments(1)	⁽¹⁾	295		2,531			—		2,490			⁽³⁾	336		405		3,055			—		2,996		⁽³⁾	464
Income tax valuation		319		(85		)	—		—				234		282		78			—		—			360
		1,763		2,869			—		2,479				2,153		1,996		4,947			—		3,577			3,366
Year ended December 31, 2012
Year ended December 31, 2016
Allowance for doubtful accounts		$	1,219	$	199		$	—	$	269		⁽²⁾	$	1,149	$	1,310	$	258		$	—	$	259	⁽²⁾	$	1,309
Allowance for revenue adjustments	⁽¹⁾	284		2,003			—		1,992			⁽³⁾	295
Allowance for revenue adjustments(1)															1,095		2,020			—		2,710		⁽³⁾	405
Income tax valuation		348		(29		)	—		—				319		284		(2		)	—		—			282
		1,851		2,173			—		2,261				1,763		2,689		2,276			—		2,969			1,996
Year ended December 31, 2015
Allowance for doubtful accounts															$	2,155	$	33		$	—	$	878	⁽²⁾	$	1,310
Allowance for revenue adjustments ⁽¹⁾															408		4,793			—		4,106		⁽³⁾	1,095
Income tax valuation															273		11			—		—			284
															2,836		4,837			—		4,984			2,689



EXHIBIT INDEX
No.		Exhibit
3.1		Restated Charter of the registrant (incorporated herein by reference to Exhibit 3 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 28, 1999 (File No. 0-22490))
3.2		Amended and Restated Bylaws of the registrant (incorporated herein by reference to Exhibit 3.1 to the ~~registrant's~~registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July ~~6, 2009 (File No. 0-22490))~~31, 2017)
4.1		Form of Forward Air Corporation Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1998 filed with the Securities and Exchange Commission on November 16, 1998 (File No. 0-22490))
10.1	*	Forward Air Corporation 2005 Employee Stock Purchase Plan (incorporated herein by reference to the registrant's Proxy Statement filed with the Securities and Exchange Commission on April 20, 2005 (File No. 0-22490))
10.2		Lease Agreement, dated as of June 1, 2006, between the Greeneville-Greene County Airport Authority and the registrant (incorporated herein by reference to Exhibit 10.3 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2006 filed with the Securities and Exchange Commission on February 27, 2007 (File No. 0-22490))
~~10.3~~		Air Carrier Certificate, effective August 28, 2003 (incorporated herein by reference to Exhibit 10.5 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed with the Securities and Exchange Commission on March 11, 2004 (File No. 0-22490))
~~10.4~~10.3	*	Amendment to the Non-Employee Director Stock Plan (incorporated herein by reference to Exhibit 10.7 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed with the Securities and Exchange Commission on March 11, 2004 (File No. 0-22490))
10.4		Form of Director Indemnification Agreement
10.5		Credit Agreement dated February 14, 2012 among the registrant and certain of its subsidiaries and Bank of America, N.A., as administrative agent and other lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2012 (File No. 0-22490))
~~10.6~~	*	Employment Agreement dated October 30, 2007, between Forward Air Corporation and Bruce A. Campbell, including Attachment B, Restrictive Covenants Agreement entered into contemporaneously with and as part of the Employment Agreement (incorporated herein by reference to Exhibit 99.1 to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2007 (File No. 0-22490))
~~10.7~~10.6	*	Amendment dated December 30, 2008 to Employment Agreement dated October 30, 2007, between Forward Air Corporation and Bruce A. Campbell (incorporated herein by reference to Exhibit 10.9 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed with the Securities and Exchange Commission on February 26, 2009 (File No. 0-22490))
~~10.8~~10.7	*	Second Amendment dated February 24, 2009 to Employment Agreement dated October 30, 2007, between Forward Air Corporation and Bruce A. Campbell (incorporated herein by reference to Exhibit 10.10 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed with the Securities and Exchange Commission on February 26, 2009 (File No. 0-22490))
~~10.90~~10.8	*	Third Amendment dated December 15, 2010 to Employment Agreement dated October 30, 2007, between Forward Air Corporation and Bruce A. Campbell (incorporated herein by reference to Exhibit 10.10 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the Securities and Exchange Commission on February 24, 2011 (File No. 0-22490))
~~10.10~~10.9	*	Form of Incentive Stock Option Agreement under the registrant's Amended and Restated Stock Option and Incentive Plan, as amended and 1999 Stock Option and Incentive Plan, as amended, for grants prior to February 12, 2006 (incorporated herein by reference to Exhibit 10.12 to the registrant's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2005 filed with the Securities and Exchange Commission on March 22, 2006 (File No. 0-22490))
~~10.11~~10.10	*	Form of Non-Qualified Stock Option Agreement under the registrant's Non-Employee Director Stock Option Plan, as amended, for grants prior to February 12, 2006 (incorporated herein by reference to Exhibit 10.13 to the registrant's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2005 filed with the Securities and Exchange Commission on March 22, 2006 (File No. 0-22490))
~~10.12~~10.11	*	Forward Air Corporation Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Appendix A of the registrant's Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 3, 2008 (File No. 0-22490))



~~10.13~~10.12	*	Form of Incentive Stock Option Agreement under the registrant's Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.19 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed with the Securities and Exchange Commission on February 26, 2009 (File No. 0-22490))
~~10.14~~10.13	*	Form of Non-Qualified Stock Option Agreement under the registrant's Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.16 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the Securities and Exchange Commission on February 24, 2011 (File No. 0-22490))
~~10.15~~10.14	*	Form of Restricted Stock Agreement for an award of restricted stock under the registrant's 1999 Stock Option and Incentive Plan, as amended, granted during 2006 (incorporated herein by reference to Exhibit 10.19 to the registrant's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2005 filed with the Securities and Exchange Commission on March 22, 2006 (File No. 0-22490))
~~10.16~~	*	Form of Restricted Stock Agreement under the registrant's Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.19 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the Securities and Exchange Commission on February 24, 2011 (File No. 0-22490))
~~10.17~~	*	Form of Non-Employee Director Restricted Stock Agreement for an award of restricted stock under the registrant's 2006 Non-Employee Director Stock Plan (incorporated herein by reference to Exhibit 99.2 to the registrant's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on May 19, 2006 (File No. 0-22490))
~~10.18~~	*	Form of Performance Share Agreement for performance shares granted in February 2011, under the registrant's Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, filed with the Securities and Exchange Commission on April 25, 2011 (File No. 0-22490))
~~10.19~~	*	Forward Air Corporation Executive Severance and Change in Control Plan, effective as of January 1, 2013 (incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2012 (File No. 0-22490))
~~10.20~~10.15	*	Forward Air Corporation Recoupment Policy, effective as of January 1, 2013 (incorporated herein by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2012 (File No. 0-22490))
~~10.21~~10.16	*	Forward Air Corporation Amended and Restated Stock Option and Incentive Plan, as further amended and restated on February 7, 2013 (incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2013 (File No. 0-22490))
~~10.22~~10.17	*	Form of Performance Share Agreement for performance shares granted in February 2013, under the registrant's Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, filed with the Securities and Exchange Commission on April 25, 2013 (File No. 0-22490))
~~10.23~~	*	Form of Restricted Stock Agreement for an award granted in February 2013, under the registrant's Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, filed with the Securities and Exchange Commission on April 25, 2013 (File No. 0-22490))
~~10.24~~	*	~~Form on~~ Non-Qualified Stock Option Agreement for an award granted in February 2013, under the registrant's Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.4 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, filed with the Securities and Exchange Commission on April 25, 2013 (File No. 0-22490))
~~10.25~~10.18	*	Amended and Restated Non-Employee Director Stock Plan, as further amended and restated on February 8, 2013 (incorporated herein by reference to Exhibit 10.5 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, filed with the Securities and Exchange Commission on April 25, 2013 (File No. 0-22490))
~~10.26~~10.19		~~Stock Purchase~~ Agreement and Plan of Merger, dated ~~March~~February 4, ~~2013,~~2015 by and among CLP Towne Inc., Forward Air, ~~Corporation, TQI Holdings,~~ Inc., FAC Subsidiary, Inc., ZM Private Equity Fund I, L.P., as the Equity Holders’ Representative, and the ~~sellers named therein~~Indemnifying Equity Holders party thereto (incorporated herein by reference to Exhibit 2.1 to the ~~registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 4, 2013 (File No. 0-22490))~~
~~10.27~~		Agreement of Purchase and Sale, dated as of July 10, 2006, among AMB Property II, L.P., Headlands Realty Corporation and Forward Air, Inc. (incorporated herein by reference to Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006 filed with the Securities and Exchange Commission on August 4, 2006 (File No. 0-22490))
~~10.28~~		Agreement of Purchase and Sale, dated as of September 14, 2006, by and between Headlands Realty Corporation and Forward Air, Inc. (incorporated herein by reference to Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006 filed with the Securities and Exchange Commission on November 3, 2006 (File No. 0-22490))



~~10.29~~		Asset Purchase Agreement dated November 26, 2007 by and among Forward Air Corporation, Black Hawk Freight Services, Inc. and the stockholders of Black Hawk Freight Services, Inc. (incorporated herein by reference to Exhibit 2.1 to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 30, 2007 (File No. 0-22490))
~~10.30~~		Stock Purchase Agreement dated January 23, 2014, by and among Forward Air Corporation, Central States Trucking Co., Central States Logistics, Inc., Central States, Inc., and the stockholders of Central States, Inc. (incorporated herein by reference to Exhibit 2.1 to the registrant'sregistrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February ~~6, 2014~~5, 2015 (File No. 0-22490))
~~10.31~~10.20		~~First amendment to the~~ Credit Agreement dated February ~~14, 2012 by~~4, 2015 among Forward Air Corporation and ~~among~~Forward Air, Inc., as borrowers, the ~~Company, certain~~subsidiaries of ~~its subsidiaries,~~ the ~~lenders referred to~~borrowers identified therein, ~~and~~ Bank of America, N.A., ~~as administrative agent~~First Tennessee Bank, N.A. and the other lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the ~~registrant's~~registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 5, 2015 (File No. 0-22490))
10.21		First Amendment dated June 19, 2015 to the Credit Agreement dated February 4, 2015 among Forward Air Corporation and Forward Air, Inc., as borrowers, the subsidiaries of the borrowers identified therein, Bank of America, N.A., First Tennessee Bank, N.A. and the other lenders party thereto (incorporated herein by reference to Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 24, 2015 (File No. 0-22490))
10.22		First Amendment to the Forward Air Corporation Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016, filed with the Securities and Exchange Commission on April 27, 2016 (File No. 0-22490))
10.23	*	Form of Nonqualified Stock Option Agreement under the registrant’s Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2016 (File No. 0-22490))
10.24	*	Form of CEO Nonqualified Stock Option Agreement under the registrant’s Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2016 (File No. 0-22490))
10.25	*	Form of Restricted Stock Agreement under the registrant’s Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2016 (File No. 0-22490))
10.26	*	Form of CEO Restricted Stock Agreement under the registrant’s Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2016 (File No. 0-22490))
10.27	*	Form of Performance Share Agreement under the registrant’s Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2016 (File No. 0-22490))
10.28	*	Form of CEO Performance Share Agreement under the registrant’s Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2016 (File No. 0-22490))



10.29	*	Form of Non-Employee Director Restricted Stock Units Agreement under the registrant’s Amended and Restated Non- Employee Director Stock Plan (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May ~~21, 2014~~10, 2016 (File No. 0-22490))
10.30	*	Form of Non-Employee Director Restricted Stock Agreement under the registrant’s Amended and Restated Non-Employee Director Stock Plan (incorporated herein by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 10, 2016 (File No. 0-22490))
10.31	*	Michael J. Morris Offer Letter dated as of May 24, 2016 (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 26, 2016 (File No. 0-22490))
10.32	*	Form of Employee Restricted Share Agreement under the registrant’s 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016 filed with the Securities and Exchange Commission on July 27, 2016))
10.33	*	Form of CEO Nonqualified Stock Option Agreement under the registrant’s 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.41 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2017)
10.34	*	Form of CEO Performance Share Agreement under the registrant’s 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.42 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2017)
10.35	*	Form of CEO Restricted Stock Agreement under the registrant’s 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.43 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2017)
10.36	*	Form of Nonqualified Stock Option Agreement under the registrant’s 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.44 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2017)
10.37	*	Form of Performance Share Agreement under the registrant’s 2016 Omnibus Compensation Plan (incorporated herein by reference to Exhibit 10.45 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2017)
10.38	*	Form of Notice of Grant of Performance Shares under the registrant’s 2016 Omnibus Compensation Plan (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 27, 2017)
10.39	*	Executive Mortgage Assistance Agreement (incorporated herein by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 27, 2017)
10.40	*	Severance Agreement (incorporated herein by reference to Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 27, 2017)
10.41	*	2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2017)
10.42	*	Amended and Restated Non-Employee Director Stock Plan (incorporated herein by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2017)
10.43		Credit Agreement dated September 29, 2017 among Forward Air Corporation and Forward Air, Inc., as the borrowers, the subsidiaries of the borrowers identified therein as the guarantors, Bank of America, N.A., U.S. Bank National Association and the other lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 3, 2017)
21.1		Subsidiaries of the registrant
23.1		Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
31.1		Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a) (17 CFR 240.13a-14(a))
31.2		Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a) (17 CFR 240.13a-14(a))
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002