

Part I.			Financial Information

Item 1.			Financial Statements (Unaudited).

Forward Air Corporation
Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
June 30,
2020 December 31,
2019
Assets
Current assets:
Cash and cash equivalents $ 80,916
$ 64,749
Accounts receivable, less allowance of $2,637 in 2020 and $2,053 in 2019 130,759
136,214
Other current assets 23,745
20,403
Current assets held for sale 11,871
14,952
Total current assets 247,291
236,318

Property and equipment 381,834
373,571
Less accumulated depreciation and amortization 187,239
180,815
Total property and equipment, net 194,595
192,756
Operating lease right-of-use assets 123,925
105,170
Goodwill and other acquired intangibles:

Goodwill 240,933
215,699
Other acquired intangibles, net of accumulated amortization of $86,174 in 2020 and $79,250 in 2019 148,452
124,857
Total goodwill and other acquired intangibles, net 389,385
340,556
Other assets 42,710
39,374
Noncurrent assets held for sale 74,593
76,704
Total assets $ 1,072,499
$ 990,878

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable $ 27,682
$ 25,411
Accrued expenses 48,041
44,154
Other current liabilities 3,784
5,318
Current portion of debt and finance lease obligations 1,445
1,421
Current portion of operating lease obligations 42,108
35,886
Current liabilities held for sale 23,792
24,974
Total current liabilities 146,852
137,164

Debt and finance lease obligations, less current portion 136,549
72,249
Operating lease obligations, less current portion 82,404
69,678
Other long-term liabilities 58,194
56,448
Deferred income taxes 45,883
41,214
Noncurrent liabilities held for sale 36,325
36,943

Shareholders’ equity:

Preferred stock —
—
Common stock, $0.01 par value: Authorized shares - 50,000,000, Issued and outstanding shares - 27,729,013 in 2020 and 27,850,233 in 2019 277
279
Additional paid-in capital 233,086
226,869
Retained earnings 332,929
350,034
Total shareholders’ equity 566,292
577,182
Total liabilities and shareholders’ equity $ 1,072,499
$ 990,878

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

Forward Air Corporation
Consolidated Statements of Comprehensive Income
(Dollars in thousands, except share and per share amounts)
(Unaudited)

Three months ended Six months ended
June 30,
2020 June 30,
2019 June 30,
2020 June 30,
2019
Operating revenue $ 281,678
$ 302,887
$ 587,235
$ 581,848

Operating expenses:
Purchased transportation 142,069
143,436
292,667
275,987
Salaries, wages and employee benefits 63,772
63,841
133,331
123,798
Operating leases 17,387
16,124
35,271
31,001
Depreciation and amortization 9,413
9,227
18,747
18,515
Insurance and claims 7,722
11,757
17,766
19,745
Fuel expense 2,519
4,467
6,532
8,582
Other operating expenses 24,882
24,965
53,234
51,448
Total operating expenses 267,764
273,817
557,548
529,076
Income from continuing operations 13,914
29,070
29,687
52,772

Other expense:
Interest expense (1,198 ) (581 ) (2,051 ) (1,156 )
Other, net —
(1 ) —
(2 )
Total other expense (1,198 ) (582 ) (2,051 ) (1,158 )
Income before income taxes 12,716
28,488
27,636
51,614
Income tax expense 3,491
7,244
6,995
12,683
Net income from continuing operations 9,225
21,244
20,641
38,931
(Loss) income from discontinued operations, net of tax (6,071 ) 1,086
(9,112 ) 1,806
Net income and comprehensive income $ 3,154

$ 22,330
$ 11,529
$ 40,737

Basic net income (loss) per share:

Continuing operations $ 0.33

$ 0.74

$ 0.72

$ 1.35
Discontinued operations (0.22 )
0.04

(0.31 )
0.07
Net income per share $ 0.11

$ 0.78

$ 0.41

$ 1.42

Diluted net income (loss) per share:

Continuing operations $ 0.33

$ 0.74

$ 0.72

$ 1.35
Discontinued operations (0.22 )
0.04

(0.32 )
0.06
Net income per share $ 0.11

$ 0.78

$ 0.40

$ 1.41

Dividends per share: $ 0.18
$ 0.18
$ 0.36
$ 0.36


Forward Air Corporation
Condensed Consolidated Balance Sheets
(unaudited and in thousands, except share and per share amounts)

	June 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	50,844	$	40,254
Accounts receivable, less allowance of $2,187 in 2021 and $2,273 in 2020	209,187		156,490
Other receivables	16,999		0
Other current assets	19,982		28,150
Current assets held for sale	0		21,002
Total current assets	297,012		245,896

Property and equipment	383,155		380,519
Less accumulated depreciation and amortization	196,168		190,652
Total property and equipment, net	186,987		189,867
Operating lease right-of-use assets	148,651		123,338

Goodwill	254,993		244,982
Other acquired intangibles, net of accumulated amortization of $100,018 in 2021 and $93,009 in 2020	145,813		145,032

Other assets	48,385		45,181
Noncurrent assets held for sale	0		53,097
Total assets	$	1,081,841	$	1,047,393

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	43,655	$	38,371
Accrued expenses	70,894		51,264
Other current liabilities	6,813		10,580
Current portion of debt and finance lease obligations	1,867		1,801
Current portion of operating lease liabilities	46,042		43,680
Current liabilities held for sale	0		25,924
Total current liabilities	169,271		171,620

Long-term debt and finance lease obligations, less current portion and debt issuance costs	161,729		117,408
Operating lease liabilities, less current portion	103,280		80,346
Other long-term liabilities	55,741		54,129
Deferred income taxes	41,471		41,986
Noncurrent liabilities held for sale	0		34,575

Shareholders’ equity:
Preferred stock, $0.01 par value: Authorized shares - 5,000,000; 0 shares issued or outstanding in 2021 and 2020	0		0
Common stock, $0.01 par value: Authorized shares - 50,000,000; issued and outstanding shares - 27,120,389 in 2021 and 27,316,434 in 2020	271		273
Additional paid-in capital	252,466		242,916
Retained earnings	297,612		304,140
Total shareholders’ equity	550,349		547,329
Total liabilities and shareholders’ equity	$	1,081,841	$	1,047,393

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

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Forward Air Corporation
Condensed Consolidated Statements of Comprehensive Income
(unaudited and in thousands, except per share amounts)

	Three Months Ended
	June 30, 2021		June 30, 2020
Operating revenues	$	420,671	$	281,678

Operating expenses:
Purchased transportation	215,217		142,069
Salaries, wages and employee benefits	84,641		63,772
Operating leases	20,370		17,387
Depreciation and amortization	9,414		9,413
Insurance and claims	10,891		7,722
Fuel expense	4,059		2,519
Other operating expenses	33,955		24,882

Total operating expenses	378,547		267,764
Income from continuing operations	42,124		13,914

Other expense:
Interest expense	(1,323)		(1,198)

Total other expense	(1,323)		(1,198)
Income before income taxes	40,801		12,716
Income tax expense	10,124		3,491
Net income from continuing operations	30,677		9,225
Loss from discontinued operation, net of tax	0		(6,071)
Net income and comprehensive income	$	30,677	$	3,154

Basic net income (loss) per share
Continuing operations	$	1.12	$	0.33
Discontinued operation	0		(0.22)
Net income per basic share	$	1.12	$	0.11

Diluted net income (loss) per share
Continuing operations	$	1.11	$	0.33
Discontinued operation	0		(0.22)
Net income per diluted share	$	1.11	$	0.11

Dividends per share	$	0.21	$	0.18

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

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Forward Air Corporation
Condensed Consolidated Statements of Comprehensive Income
(unaudited and in thousands, except per share amounts)

	Six Months Ended
	June 30, 2021		June 30, 2020
Operating revenues	$	782,873	$	587,235

Operating expenses:
Purchased transportation	399,825		292,667
Salaries, wages and employee benefits	159,538		133,331
Operating leases	39,537		35,271
Depreciation and amortization	18,651		18,747
Insurance and claims	20,632		17,766
Fuel expense	7,761		6,532
Other operating expenses	72,081		53,234

Total operating expenses	718,025		557,548
Income from continuing operations	64,848		29,687

Other expense:
Interest expense	(2,488)		(2,051)

Total other expense	(2,488)		(2,051)
Income before income taxes	62,360		27,636
Income tax expense	14,969		6,995
Net income from continuing operations	47,391		20,641
Loss from discontinued operation, net of tax	(5,533)		(9,112)
Net income and comprehensive income	$	41,858	$	11,529

Basic net income (loss) per share
Continuing operations	$	1.72	$	0.72
Discontinued operation	(0.20)		(0.31)
Net income per basic share	$	1.52	$	0.41

Diluted net income (loss) per share
Continuing operations	$	1.71	$	0.72
Discontinued operation	(0.20)		(0.32)
Net income per diluted share	$	1.51	$	0.40

Dividends per share	$	0.42	$	0.36

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

Forward Air Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Six months ended
June 30,
2020 June 30,
2019

Operating activities:
Net income from continuing operations $ 20,641
$ 38,931
Adjustments to reconcile net income of continuing operations to net cash provided by operating activities of continuing operations
Depreciation and amortization 18,747
18,515
Change in fair value of earn-out liability (2,702 ) —
Share-based compensation 5,507
5,910
Loss (gain) on disposal of property and equipment, net 9
(218 )
Provision for loss on receivables 688
635
Provision for revenue adjustments 1,787
1,277
Deferred income tax expense 4,668
3,290
Changes in operating assets and liabilities
Accounts receivable 2,979
(3,922 )
Prepaid expenses and other current assets 312
(4,842 )
Income taxes (341 ) (2,182 )
Accounts payable and accrued expenses 7,634
6,876
Net cash provided by operating activities of continuing operations 59,929
64,270

Investing activities:
Proceeds from disposal of property and equipment 988
1,008
Purchases of property and equipment (14,214 ) (14,214 )
Acquisition of business, net of cash acquired (55,931 ) (27,000 )
Net cash used in investing activities of continuing operations (69,157 ) (40,206 )

Financing activities:
Payments of finance lease obligations (676 ) (137 )
Proceeds from senior credit facility 65,000
10,000
Payments on earn-out liability (5,284 ) —
Proceeds from exercise of stock options —
1,278
Payments of cash dividends (10,087 ) (10,333 )
Repurchase of common stock (repurchase program) (15,259 ) (38,617 )
Proceeds from common stock issued under employee stock purchase plan 294
261
Cash settlement of share-based awards for tax withholdings (3,286 ) (2,770 )
(Distributions to) contributions from subsidiary (5,307 ) 5,374
Net cash provided by (used in) financing activities from continuing operations 25,395
(34,944 )
Net increase (decrease) in cash of continuing operations 16,167
(10,880 )

Cash from discontinued operations:
Cash (used in) provided by operating activities of discontinued operations, net (4,672 ) 7,494
Cash used in investing activities of discontinued operations, net (635 ) (2,120 )
Cash provided by (used in) financing activities of discontinued operations, net 5,307
(5,374 )
Net increase (decrease) in cash 16,167
(10,880 )
Cash at beginning of period of continuing operations 64,749
25,657
Cash at beginning of period of discontinued operations/held for sale —
—
Net increase (decrease) in cash 16,167
(10,880 )
Less: cash at end of period of discontinued operations/held for sale —
—
Cash at end of period of continuing operations $ 80,916
$ 14,777

Table of Contents


Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(unaudited and in thousands)


	Six Months Ended
	June 30, 2021		June 30, 2020

Operating activities:
Net income from continuing operations	$	47,391	$	20,641
Adjustments to reconcile net income of continuing operations to net cash provided by operating activities of continuing operations
Depreciation and amortization	18,651		18,747

Change in fair value of earn-out liability	(385)		(2,702)
Share-based compensation expense	5,578		5,507
Provision for revenue adjustments	3,525		1,787
Deferred income tax (benefit) expense	(572)		4,668
Other	189		697
Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses:
Accounts receivable	(51,018)		2,979
Other receivables	(13,491)		0
Other current and noncurrent assets	6,746		(29)
Accounts payable and accrued expenses	23,047		7,634
Net cash provided by operating activities of continuing operations	39,661		59,929

Investing activities:
Proceeds from sale of property and equipment	1,314		988
Purchases of property and equipment	(8,575)		(14,214)
Purchase of a business, net of cash acquired	(22,543)		(55,931)
Net cash used in investing activities of continuing operations	(29,804)		(69,157)

Financing activities:
Repayments of finance lease obligations	(954)		(676)
Proceeds from revolving credit facility	45,000		65,000
Payment of earn-out liability	0		(5,284)
Proceeds from issuance of common stock upon stock option exercises	3,570		0
Payments of dividends to stockholders	(11,565)		(10,087)
Repurchases and retirement of common stock	(33,992)		(15,259)
Proceeds from common stock issued under employee stock purchase plan	388		294
Payment of minimum tax withholdings on share-based awards	(2,832)		(3,286)
Contributions from (distributions to) subsidiary held for sale	1,118		(5,307)
Net cash provided by financing activities from continuing operations	733		25,395
Net increase in cash and cash equivalents of continuing operations	10,590		16,167

Cash from discontinued operation:
Net cash used in operating activities of discontinued operation	(6,902)		(4,672)
Net cash provided by (used in) investing activities of discontinued operation	8,020		(635)
Net cash (used in) provided by financing activities of discontinued operation	(1,118)		5,307
Net increase in cash and cash equivalents	10,590		16,167
Cash and cash equivalents at beginning of period of continuing operations	40,254		64,749
Cash at beginning of period of discontinued operation	0		0
Net increase in cash and cash equivalents	10,590		16,167
Less: cash at end of period of discontinued operation	0		0
Cash and cash equivalents at end of period of continuing operations	$	50,844	$	80,916

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

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Forward Air Corporation
Condensed Consolidated Statements of Shareholders’ Equity
(unaudited and in thousands)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount
Balance at December 31, 2020	27,316	$	273	$	242,916	$	304,140	$	547,329
Net income	—	—		—		11,181		11,181
Stock options exercised	40	—		2,147		—		2,147
Share-based compensation expense	—	—		2,613		—		2,613
Payment of dividends to shareholders	—	—		3		(5,800)		(5,797)
Payment of minimum tax withholdings on share-based awards	(35)	—		—		(2,744)		(2,744)
Repurchases and retirement of common stock	(114)	(1)		—		(9,997)		(9,998)
Issuance of share-based awards	111	1		(1)		—		0
Balance at March 31, 2021	27,318	$	273	$	247,678	$	296,780	$	544,731
Net income	—	—		—		30,677		30,677
Stock options exercised	26	—		1,416		—		1,416
Common stock issued under employee stock purchase plan	5	—		388		—		388
Share-based compensation expense	—	—		2,981		—		2,981
Payment of dividends to shareholders	—	—		3		(5,771)		(5,768)
Payment of minimum tax withholdings on share-based awards	(1)	—		—		(82)		(82)
Repurchases and retirement of common stock	(252)	(2)		—		(23,992)		(23,994)
Issuance of share-based awards	24	—		—		—		—
Balance at June 30, 2021	27,120	$	271	$	252,466	$	297,612	$	550,349


	Common Stock			Additional Paid-in Capital		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount
Balance at December 31, 2019	27,850	$	279	$	226,869	$	350,034	$	577,182
Net income	—	—		—		8,375		8,375
Share-based compensation expense	—	—		3,266		—		3,266
Payment of dividends to shareholders	—	—		2		(5,052)		(5,050)
Payment of minimum tax withholdings on share-based awards	(42)	—		—		(2,672)		(2,672)
Repurchases and retirement of common stock	(268)	(3)		—		(15,256)		(15,259)
Issuance of share-based awards	139	1		(2)		—		(1)
Balance at March 31, 2020	27,679	$	277	$	230,135	$	335,429	$	565,841
Net income	—	—		—		3,155		3,155
Common stock issued under employee stock purchase plan	7	—		295		—		295
Share-based compensation expense	—	—		2,654		—		2,654
Payment of dividends to shareholders	—	—		3		(5,042)		(5,039)
Payment of minimum tax withholdings on share-based awards	(13)	—		—		(613)		(613)
Issuance of share-based awards	56	—		(1)		—		(1)
Balance at June 30, 2020	27,729	$	277	$	233,086	$	332,929	$	566,292

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

Forward Air Corporation
Consolidated Statements of Shareholders' Equity
(In thousands)
(Unaudited)

Common Stock Additional Paid-in
Capital Retained Earnings Total Shareholders' Equity
Shares Amount
Balance at December 31, 2019 27,850
$ 279
$ 226,869
$ 350,034
$ 577,182
Net income and comprehensive income —
—
—
8,375
8,375
Share-based compensation —
—
3,266
—
3,266
Dividends ($0.18 per share) —
—
2
(5,052 ) (5,050 )
Cash settlement of share-based awards for tax withholdings (42 ) —
—
(2,672 ) (2,672 )
Share repurchases (268 ) (3 ) —
(15,256 ) (15,259 )
Vesting of previously non-vested shares 139
1
(2 ) —
(1 )
Balance at March 31, 2020 27,679
$ 277
$ 230,135
$ 335,429
$ 565,841
Net income and comprehensive income —
—
—
3,155
3,155
Common stock issued under employee stock purchase plan 7
—
295
—
295
Share-based compensation —
—
2,654
—
2,654
Dividends ($0.18 per share) —
—
3
(5,042 ) (5,039 )
Cash settlement of share-based awards for tax withholdings (13 ) —
—
(613 ) (613 )
Vesting of previously non-vested shares 56
—
(1 ) —
(1 )
Balance at June 30, 2020 27,729
$ 277
$ 233,086
$ 332,929
$ 566,292

Common Stock Additional Paid-in
Capital Retained Earnings Total Shareholders' Equity
Shares Amount
Balance at December 31, 2018 28,535
$ 285
$ 210,296
$ 342,663
$ 553,244
Net income and comprehensive income —
—
—
18,407
18,407
Other —
2
—
—
2
Exercise of stock options 18
—
830
—
830
Share-based compensation —
—
3,047
—
3,047
Dividends ($0.18 per share) —
—
1
(5,190 ) (5,189 )
Cash settlement of share-based awards for tax withholdings (44 ) (1 ) —
(2,720 ) (2,721 )
Share repurchases (230 ) (2 ) —
(14,179 ) (14,181 )
Vesting of previously non-vested shares 136
—
—
—
—
Balance at March 31, 2019 28,415
$ 284
$ 214,174
$ 338,981
$ 553,439
Net income and comprehensive income —
—
—
22,330
22,330
Other —
—
(2 ) (2 ) (4 )
Exercise of stock options 10
—
448
—
448
Common stock issued under employee stock purchase plan 5
—
261
—
261
Share-based compensation —
—
3,197
—
3,197
Dividends ($0.18 per share) —
—
2
(5,146 ) (5,144 )
Cash settlement of share-based awards for tax withholdings (1 ) —
—
(49 ) (49 )
Share repurchases (407 ) (4 ) —
(24,432 ) (24,436 )
Vesting of previously non-vested shares 18
—
—
—
—
Balance at June 30, 2019 28,040
$ 280
$ 218,080
$ 331,682
$ 550,042
The accompanying notes are an integral part of the financial statements.

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

1. Description of Business and Basis of Presentation

Basis of Presentation and Principles of Consolidation

Forward Air Corporation ("and its subsidiaries (“Forward Air” or the ~~Company", "We", "Our"~~“Company”) is a leading asset-light freight and logistics company. Prior to the Company’s Board of Directors’ (the "Board") approval of a strategy to divest the Company's Pool Distribution business (“Pool”), its services were classified into 3 principal reportable segments: Expedited Freight, Intermodal and Pool Distribution. As a result of the decision to divest of Pool, whichThe Company has ~~been classified as a discontinued operation, the Company now has~~ 2 ~~principal~~ reportable segments: Expedited Freight and ~~Intermodal (see Note 14,~~ ~~Segment Reporting). See Note 4,~~ ~~Discontinued Operations~~Intermodal. The Company conducts business in the United States and ~~Held for Sale, for additional information regarding the decision to divest of Pool.~~Canada.

~~Through the~~The Expedited Freight segment ~~the Company~~ operates a comprehensive national network to provide expedited regional, inter-regional and national less-than-truckload ~~("LTL"~~(“LTL”) services. Expedited Freight offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.

The ~~Company's~~ Intermodal segment provides 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"~~Container Freight Station (“CFS”) warehouse and handling services. ~~Today, Intermodal operates primarily~~

The condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position, results of operations, and cash flows at the dates and for the periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the ~~Midwest~~Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Results for interim periods are not necessarily indicative of the results for the year.

The Board approved a strategy to divest the Pool Distribution business (“Pool”) on April 23, 2020, and ~~Southeast, with a smaller operational presence in~~ the ~~Southwest United States.~~

sale of Pool ~~which has been classified as discontinued operations, provides~~was completed on February 12, 2021. Pool provided high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region. Pool ~~offers~~offered this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest United States.

The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by United States generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Company’s operating results are subject to seasonal trends (as described in the Company's 2019 Form 10-K) when measured on a quarterly basis; therefore operating results for the six months ended ~~June 30, 2020~~ are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. For further information, refer to the consolidated financial statements and notes thereto included in the Forward Air Corporation Annual Report on Form 10-K for the year ended December 31, 2019.

The accompanying unaudited consolidated financial statements of the Company include Forward Air Corporation and its subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to the prior period financial information to conform to the current year presentation.

~~Discontinued Operations~~

On April 23, 2020, the Board approved a strategy to divest Pool within the next year. Accordingly, Pool met the criteria for assets held for sale as of June 30, 2020. Pool assets and liabilities are reflected as “Assets and liabilities held for sale” on the Consolidated Balance Sheets in this report. In addition, the results of operations for Pool have been presented as a discontinued operation in ~~this report as discontinued operations. Amounts~~our Condensed Consolidated Statements of Comprehensive Income for all period presented. In addition, the assets and liabilities were presented as held for sale in the Condensed Consolidated Balance Sheets for the prior period. Unless otherwise noted, amounts, percentages and discussion for all periods ~~discussed below~~ reflect the results of operations, financial condition and cash flows from ~~Forward Air’s~~our continuing ~~operations, unless otherwise noted. See Note 4,~~ operations.

~~Discontinued Operations~~

2. Revenue Recognition

Revenue is recognized when the Company satisfies the performance obligation by the delivery of a shipment in accordance with contractual agreements, bills of lading (“BOLs”) and ~~Held~~general tariff provisions. The amount of revenue recognized is measured as the consideration the Company expects to receive in exchange for ~~Sale~~those services pursuant to a contract with a customer. A contract exists once the Company enters into a contractual agreement with a customer. The Company does not recognize revenue in cases where collectibility is not probable, and defers recognition until collection is probable or payment is received.

The Company generates revenue from the delivery of a shipment and the completion of related services. Revenue for the delivery of a shipment is recorded over time to coincide with when customers simultaneously receive and consume the benefits of the delivery services. Accordingly, revenue billed to a customer for the transportation of freight are recognized over the transit period as the performance obligation to the customer is satisfied. The Company determines the transit period for a shipment based on the pick-up date and the delivery date, which may be estimated if delivery has not occurred as of a reporting period. The determination of the transit period and how much of it has been completed as of a given reporting date may require the Company to make judgments that impact the timing of revenue recognized. For delivery of shipments with a pick-up date in one reporting period and a delivery date in another reporting period, the Company recognizes revenue based on relative transit time in each reporting period. A portion of the total revenue to be billed to the customer after completion of a delivery is

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

~~Use~~recognized in each reporting period based on the percentage of ~~Estimates~~

~~The preparation~~total transit time that has been completed at the end 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.

~~In particular, management has made estimates and assumptions~~applicable reporting period. Upon delivery of a shipment or related service, customers are billed according to the ~~impact of the novel coronavirus ("COVID-19") on its business. COVID-19 was characterized as~~applicable payment terms. Related services are a pandemic by the World Health Organization on March 11, 2020. To help lessen its spread, many countries have implemented travel restrictions and/or required companies to limit or suspend business operations. These actions have disrupted supply chainsseparate performance obligation and ~~company operations around the world. The current environment resulting from COVID-19 is unprecedented and comes with a great deal of uncertainty as discussed further throughout this document.~~

~~2. Recent Accounting Pronouncements~~

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which replaces the incurred loss methodology previously employed to measure credit losses for most financial assets and requires the use of a forward-looking expected loss model. Under current accounting guidance, credit losses are recognized when it is probable a loss has been incurred. The updated guidance will require financial assets to be measured at amortized costs less a reserve, equal to the net amount expected to be collected. This standard is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The Company adopted this standard as of January 1, 2020, which resulted in the Company revising its allowance for doubtful accounts policy on a prospective basis. The adoption of this standard did not have a material impact on the Company's financial statements.

The Company has a broad range of customers, including freight forwarders, third-party logistics (“3PL”) companies, passenger and cargo airlines, steamship lines, and retailers, located across a diverse geography. In addition, the Company does not have a significant concentration of credit risk; no single customer accounts for more than 10% of its consolidated revenue. 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, in order to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company recognizes a general reserve based on a percentage of revenue to ensure accounts receivables are properly recorded at the net amount expected to be collected. Management evaluates the collectability of its accounts receivables at least quarterly and sets the reserve based on historical and current collection history and reasonable and supportable forecasts about any expected changes to our collection experience in the future due to changing economic conditions. 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.

~~3. Revenue~~

The Company's revenue is generated from providing transportation and related services to customers in accordance with contractual agreements, bill of lading ("BOL") contracts and general tariff provisions. Related services include accessorial charges such as terminal handling, storage, equipment rentals and customs brokerage.

Revenue is classified based on the line of business as the Company believes this best depicts the nature, timing and amount of revenue and cash flows. For all lines of business, the Company records revenue on a gross basis as it is the principal in the transaction as the Company has discretion to determine the amount of consideration. Additionally, the Company has the discretion to select drivers and other vendors for the services provided to customers. These ~~services are distinct~~factors, discretion in the amount of consideration and ~~are accounted for as separate performance obligations. Generally,~~ the ~~Company's performance obligations begin when~~selection of drivers and other vendors, support revenue recognized on a customer's BOL is received and are satisfied when the delivery of a shipment and related services are completed. The Company generally recognizes revenue for its services over time to coincide with when its customers simultaneously receive and consume the benefits of these services. Performance obligations are short-term with transit days typically less than a week. Upon delivery of a shipment or related service, customers are billed and remit payment according to payment terms.

gross basis.

Excluding Pool, the Company's revenue from contracts with customers is disclosed within 2 reportable segments: Expedited Freight and Intermodal. This is consistent with disclosures in earnings releases and annual reports and with the information regularly reviewed by the chief operating decision maker for evaluating financial performance. See additional discussion in Note 14, ~~Segment Reporting~~.

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

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

~~(Unaudited)~~

~~June 30, 2020~~

4.3. Discontinued ~~Operations~~Operation and Held for Sale

OnAs previously disclosed, on April 23, 2020, the ~~Board approved~~Company made a ~~strategy~~decision to divest of Pool. The Pool ~~within the next year. Accordingly, Pool~~business met the criteria for held for sale classification. As a result, the assets and liabilities of Pool were presented separately under the captions “Current assets held for ~~sale as of June 30, 2020. Pool~~sale”, “Noncurrent assets ~~and liabilities are reflected as “Assets and~~held for sale”, “Current liabilities held for sale” onand “Noncurrent liabilities held for sale” in the Condensed Consolidated Balance Sheets ~~in this report. In addition, the results~~as of ~~operations for Pool have been presented in this report as discontinued operations.~~

Upon meeting the assets held for sale criteria and during its annual impairment analysis, the Company evaluated whether Pool's estimated fair value, less costs to sell, exceeded the carrying value of its assets and liabilities. As a result of that assessment, we determined that the fair value of Pool exceeded its carrying value by approximately 5%.

December 31, 2020. The results of Pool were ~~previously included~~reclassified to “Loss from discontinued operation, net of tax” in ~~its own segment. The Company will continue to have 2 reporting segments: Expedited Freight~~the Condensed Consolidated Statements of Comprehensive Income for three and ~~Intermodal, which is consistent with the way the Chief Operating Decision Maker reviews operating results~~six months ended June 30, 2021 and ~~makes resource decisions (See Note 14,~~ ~~Segment Reporting~~).2020. Certain corporate overhead and other costs previously allocated to Pool for segment reporting purposes did not qualify for classification within discontinued ~~operations~~operation and have been reallocated to continuing operations. These costs ~~have been~~were reclassified to the eliminations and other column in the segment reconciliation ~~that appears~~ in Note ~~14,~~13, Segment Reporting.

Sale of Pool

On February 12, 2021, the Company completed the sale of the Pool business for $8,000 in cash and up to a $12,000 earn-out based on earnings before interest, taxes, depreciation and amortization. The sale agreement for Pool included an earn-out based on the achievement of certain earnings before interest, taxes, depreciation and amortization attainment over an eleven-month period, beginning February 1, 2021. The Company will receive payment for the amount earned in the first quarter of 2022, and if elected, the buyer may defer the payment of up to half of the amount earned to first quarter of 2023. The estimated fair value of the earn-out asset on the date of sale was $6,967. The fair value was based on the estimated eleven-month period of the earnings before interest, taxes, depreciation and amortization and was calculated using a Monte Carlo simulation model.

The weighted-average assumptions under the Monte Carlo simulation model were as follows:


			February 12, 2021
Counterparty credit spread			1.2%
Earnings before interest, taxes, depreciation and amortization discount rate			15.0%
Asset volatility			55.0%

Subsequent to the date of sale, the Company will recognize any increases in the carrying value of the earn-out asset when the change is realized and will evaluate the earn-out asset for impairment at each reporting period. The Company concluded there were no indicators of impairment during the three months ended June 30, 2021. As of June 30, 2021, the Company recorded $3,508 in “Other receivables” and $3,459 in “Other assets” in the Condensed Consolidated Balance Sheets.

Transition Services Agreement

On February 12, 2021, the Company entered into a Transition Services Agreement (“TSA”) with TOG FAS Holdings LLC, the buyer of the Pool business. Under the TSA, the Company performs certain services on an interim basis in order to facilitate the orderly transition of the Pool business. The effective date of the TSA was February 12, 2021 and will remain in effect until the date all services have been completed, but no more than six months following effective date. The TSA provides the right to extend the term of the TSA with no limit on the number of the mutually agreed upon extensions. In exchange for the services performed by the Company under the TSA, the Company receives a monthly service charge. For the three and six

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

months ended June 30, 2021, the Company recognized $241 and $412, respectively, in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income, for the services performed under the TSA.

Additionally, under the TSA, the Company remits payments to outside vendors on behalf of TOG FAS Holdings LLC for expenses incurred by the Pool business up to a limit of $18,000. The Company is reimbursed by TOG FAS Holdings LLC within 60 days from the end of the month in which the payment is remitted. As of June 30, 2021, the Company recorded a receivable in the amount of $13,491 in “Other receivables” in the Condensed Consolidated Balance Sheets for the reimbursement due to the Company.

Summarized ~~Held for Sale and~~ Discontinued ~~Operations~~Operation Financial Information

~~The following table provides a reconciliation~~A summary of the carrying amounts of major classes of assets and liabilities which are included in assets and liabilities held for sale in the accompanying Consolidated Balance Sheets as of each of the periods presented below:

June 30,
2020 December 31,
2019
Assets
Current assets:
Cash and cash equivalents $ —
$ —
Accounts receivable, less allowance of $124 in 2020 and $49 in 2019 11,224
13,983
Other current assets 647
969
Total current assets held for sale $ 11,871
$ 14,952

Property and equipment $ 52,046
$ 53,166
Less accumulated depreciation and amortization 32,443
32,891
Total property and equipment, net 19,603
20,275
Operating lease right-of-use assets 44,110
46,487
Goodwill and other acquired intangibles:

Goodwill 5,406
5,406
Other acquired intangibles, net of accumulated amortization of $12,679 in 2020 and $12,359 in 2019 2,621
2,941
Total goodwill and other acquired intangibles, net 8,027
8,347
Other assets 2,853
1,595
Total noncurrent assets held for sale $ 74,593
$ 76,704

Liabilities
Current liabilities:
Accounts payable $ 2,732
$ 4,575
Accrued expenses 5,163
5,668
Other current liabilities —
2
Current portion of operating lease obligations 15,897
14,729
Total current liabilities held for sale $ 23,792
$ 24,974

  Operating lease obligations, less current portion $ 28,385
$ 31,847
  Other long-term liabilities 3,989
2,368
  Deferred income taxes 3,951
2,728
Total noncurrent liabilities held for sale $ 36,325
$ 36,943

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

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

~~(Unaudited)~~

~~June 30, 2020~~

~~The following table summarizes~~ the results of operations classified as a discontinued ~~operations,~~operation, net of tax, in the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020 ~~and 2019:~~is as follows:

Three months ended Six months ended
June 30,
2020 June 30,
2019 June 30,
2020 June 30,
2019
Operating revenue $ 13,974
$ 42,869
$ 50,926
$ 85,379

Operating expenses:
Purchased transportation 3,147
11,688
12,683
23,151
Salaries, wages and employee benefits 8,394
16,437
25,507
32,842
Operating leases 4,966
4,202
10,646
8,498
Depreciation and amortization 362
1,454
1,657
2,993
Insurance and claims 1,287
1,472
3,013
2,856
Fuel expense 413
1,462
1,740
2,955
Other operating expenses 3,495
4,674
7,841
9,572
Total operating expenses 22,064
41,389
63,087
82,867
(Loss) income from discontinued operations before income taxes (8,090 ) 1,480
(12,161 ) 2,512
Income tax (benefit) expense (2,019 ) 394
(3,049 ) 706
(Loss) income from discontinued operations, net of tax $ (6,071 ) $ 1,086
$ (9,112 ) $ 1,806







	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Operating revenues	$	0	$	13,974	$	17,087	$	50,926

Operating expenses:
Purchased transportation	0		3,147		4,290		12,683
Salaries, wages and employee benefits	0		8,394		9,674		25,507
Operating leases	0		4,966		2,907		10,646
Depreciation and amortization	0		362		0		1,657
Insurance and claims	0		1,287		929		3,013
Fuel expense	0		413		644		1,740
Other operating expenses	0		3,495		2,087		7,841
Total operating expenses	0		22,064		20,531		63,087
Loss from discontinued operation	0		(8,090)		(3,444)		(12,161)
Loss on sale of business	0		0		(2,860)		0
Loss from discontinued operation before income taxes	0		(8,090)		(6,304)		(12,161)
Income tax benefit	0		(2,019)		(771)		(3,049)
Loss from discontinued operation, net of tax	$	0	$	(6,071)	$	(5,533)	$	(9,112)

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5.Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2021

4. Acquisitions ~~and Long-Lived Assets~~

Expedited Freight ~~Acquisitions~~Acquisition

As part of the ~~Company's~~Company’s strategy to expand final mile pickup and delivery operations, in January 2020, the Company acquired certain assets and liabilities of Linn Star Holdings, Inc., Linn Star Transfer, Inc. and Linn Star Logistics, LLC (collectively, “Linn Star”) for $57,239. This acquisition increased the Company's Final Mile capabilities with an additional 20 locations. In addition, in April 2019, the Company acquired certain assets and liabilities of FSA Network, Inc., doing business as FSA Logistix (“FSA”), for $27,000 and a potential ~~earnout~~earn-out of up to $15,000. ~~Both transactions were funded using cash flows from operations.~~ The ~~assets, liabilities, and operating results of these acquisitions have been~~purchase agreement for FSA included ~~in the Company's consolidated financial statements from the date of acquisition and have been assigned to the Expedited Freight reportable segment.~~

~~The FSA acquisition agreement provides the sellers~~ an ~~earnout opportunity of~~earn-out up to $15,000 based on the achievement of certain revenue milestones over ~~two~~2 one-year periods, beginning May 1, 2019. ~~Upon~~The estimated fair value of the earn-out liability on the date of acquisition was $11,803. The fair value was based on the estimated two-year performance of the acquired customer revenue and was calculated using a Monte Carlo simulation model. The fair value of the earn-out liability was adjusted at each reporting period based on changes in the expected cash flows and related assumptions used in the Monte Carlo simulation model. During the three and six months ended June 30, 2021, the fair value of the earn-out changed by ($4) and ($52), respectively, and the change in fair value was recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income. During the three and six months ended June 30, 2020, the fair value of the earn-out changed by ($2,108) and ($2,702), respectively, and the change in fair value was recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income. The first one-year period ended in the second quarter of 2020 and the Company paid $5,284 based on the terms of the purchase agreement. The second one-year period ended in the second quarter of 2021 and the Company will remit payment in the third quarter of 2021 based on the terms of purchase agreement. As of June 30, 2021 and December 31, 2020, the fair value of the earn-out liability was ~~$11,803~~$6,813 and $6,865, respectively, which was ~~included~~reflected in ~~other~~“Other current ~~and long-term~~ liabilities” in the opening consolidated balance sheet. The earn-out liability was classified as 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”) and the value was determined based on estimated revenues and the probability of achieving them. The fair value was based on the two-year performance of FSA's acquired customer revenue and was estimated using a Monte Carlo simulation.Condensed Consolidated Balance Sheets.

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

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

~~(Unaudited)~~

~~June 30, 2020~~

~~The initial weighted average assumptions used in the Monte Carlo simulation are summarized in the following table:~~

FSA Earn-out

April 21, 2019 December 31, 2019 June 30, 2020
Risk-free rate 2.9% 2.2% 2.2%
Revenue discount rate 4.4% 4.4% 3.2%
Revenue volatility 3.0% 5.0% 6.0%

In June 2020, the Company paid the first period's earn-out payment of $5,284; the second and final payment is expected to be paid in the second quarter of 2021. Excluding the impact from this payment, during the three months ended ~~June 30, 2020~~, the earn-out fair value decreased $2,108 to $3,784, which is classified as a current liability. The change in fair value is included in other operating expenses and is based on changes in expected cash flows and expected new business wins.

~~Intermodal Acquisitions~~

~~As part of the Company's strategy to expand its Intermodal operations, in July 2019,~~May 2021, the Company acquired certain assets and liabilities of ~~O.S.T. Logistics, Inc.~~J&P Hall Express Delivery (“J&P”) for $7,543. J&P is headquartered in Atlanta, Georgia with a second terminal in Albany, Georgia. The acquisition of J&P supports the Company’s strategic growth plan by expanding pickup and ~~O.S.T.~~delivery, less than truckload, truckload, less than container load, container freight station warehousing, and airport transfer services across the Southeastern United States. The acquisition was financed by cash flow from operations. The results of J&P have been included in the Company’s Condensed Consolidated Financial Statements as of and from the date of acquisition. The associated goodwill has been included in the Company’s Expedited Freight reportable segment.

Intermodal Acquisition

In February 2021, the Company acquired certain assets and liabilities of Proficient Transport Incorporated and Proficient Trucking, ~~Co.,~~ Inc. (together ~~referred to as “OST”~~“Proficient Transport”) for ~~$12,000. OST~~$15,510 and a potential earn-out up to $2,000. Proficient Transport is aan intermodal drayage company ~~and expanded~~headquartered in Chicago, Illinois. The acquisition of Proficient Transport supports the ~~Company's~~Company’s strategic growth plan by expanding the intermodal footprint ~~on the East Coast, primarily~~ in ~~Baltimore, Maryland, with additional locations in Pennsylvania, Virginia, South~~Georgia, Illinois, North Carolina, and ~~Georgia. This transaction~~Texas, and introduces a new location in Ohio. The acquisition was ~~funded using~~financed by cash flows from operations. The ~~assets, liabilities, and operating~~ results of ~~the acquisition~~Proficient Transport have been included in the ~~Company's consolidated financial statements~~Company’s Condensed Consolidated Financial Statements as of and from the date of ~~acquisition and have~~acquisition. The associated goodwill has been included in the Company’s Intermodal reportable segment.

The purchase agreement for Proficient Transport included an earn-out up to $2,000 based on the achievement of certain revenue milestones over a one-year period, beginning March 1, 2021. The estimated fair value of the earn-out liability on the date of acquisition was $829. The fair value was based on the estimated one-year performance of the acquired customer revenue and was calculated using the option pricing method. The weighted-average assumptions used to calculate the estimated fair value of the earn-out under the option pricing method were as follows:


	February 28, 2021	June 30, 2021
Risk-free rate	0.1%	0.1%
Revenue discount rate	8.3%	8.3%
Revenue volatility	27.3%	19.7%

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

During both the three and six months ended June 30, 2021, the fair value of the earn-out changed by ($333) and the change in the fair value was recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income. As of June 30, 2021, the fair value of the earn-out liability was $496, which was reflected in “Other current liabilities” in the Condensed Consolidated Balance Sheets.

~~Allocations~~

Fair Value of ~~Purchase Price~~Assets Acquired and Liabilities Assumed

Assets acquired and liabilities assumed as of the acquisition date are presented in the following table:


	Proficient Transport		J&P
	February 28, 2021		May 30, 2021
Tangible assets:
Accounts receivable	$	4,171	$	1,686

Prepaid expenses and other current assets	0		32
Property and equipment	140		934
Other assets	24		3


Total tangible assets	4,335		2,655
Intangible assets:
Customer relationships	6,060		1,580
Non-compete agreements	18		132

Goodwill	6,249		3,762
Total intangible assets	12,327		5,474
Total assets acquired	16,662		8,129

Liabilities assumed:
Current liabilities	323		586




Total liabilities assumed	323		586
Net assets acquired	$	16,339	$	7,543

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

FSA OST Linn Star

April 21, 2019 July 14, 2019 January 12, 2020
Tangible assets:
Cash $ 202
$ —
$ 1,308
Other receivables 1,491
—
—
Prepaid expenses and other current assets —
—
1,182
Property and equipment 40
10,371
605
Operating lease right-of-use assets 3,209
1,672
10,011
Total tangible assets 4,942
12,043
13,106
Intangible assets:
Non-compete agreements 900
850
450
Customer relationships 17,900
5,700
29,800
Goodwill 19,963
2,050
25,234
Total intangible assets 38,763
8,600
55,484
Total assets acquired 43,705
20,643
68,590

Liabilities assumed:
Current liabilities 8,466
—
1,340
Other liabilities 5,030
—
—
Debt and finance lease obligations —
6,971
—
Operating lease obligations 3,209
1,672
10,011
Total liabilities assumed 16,705
8,643
11,351
Net assets acquired $ 27,000
$ 12,000
$ 57,239

~~The above purchase price allocation for Linn Star is~~are preliminary ~~as the Company is still in the process of finalizing the valuation of the acquired assets and liabilities assumed. The above estimated fair values of assets acquired and liabilities assumed are~~ based on the information ~~that was~~ available as of the acquisition date through the date of this filing.

The weighted-average useful life of acquired ~~definite-lived~~ intangible assets ~~have~~as of the acquisition date are summarized in the following ~~useful lives:~~table:

Weighted-Average Useful Lives

~~FSA~~Proficient Transport

~~OST~~

~~Linn Star~~J&P

~~Non-compete agreements~~Customer relationships

58 years

12 years

~~1 year~~

~~Customer relationships~~Non-compete agreements

151 year

5 years

~~10 years~~

~~15 years~~

The fair value of the non-compete agreements and customer relationships 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 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. Cash flows were assumed to extend through the remaining economic useful life of each class of intangible asset.

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

5. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill during the six months ended June 30, 2021 are summarized as follows:


	Expedited Freight		Intermodal		Consolidated




Balance as of December 31, 2020	$	165,268	$	79,714	$	244,982
Acquisitions	3,762		6,249		10,011
Balance as of June 30, 2021	$	169,030	$	85,963	$	254,993

Goodwill is allocated to reporting units that are expected to benefit from the business combinations generating the goodwill. Excluding Pool, the Company has 4 reporting units - Expedited LTL, Truckload, Final Miletested for impairment on an annual basis and ~~Intermodal. As discussed in Note 4,~~ ~~Discontinued Operations and Held for Sale, the carrying amounts~~more often if indications of Pool's assets and liabilities, including goodwill, are classified as held for sale in the accompanying Consolidated Balance Sheets and its operating results are not part of the continuing operations of the Company.

impairment exist. The Company ~~conducted~~conducts its annual impairment ~~assessments and tests of goodwill for each reporting unit~~analyses as of June 30 ~~2020~~each year. Based on the current macroeconomic conditions, the Company assessed its goodwill and noother intangible assets for indications of impairment ~~charges were required.~~as of June 30, 2021. The Company ~~estimated~~concluded there were no indicators of impairment during the fair value of the applicable reporting units, using a combination of discounted projected cash flows and market valuations for comparable companies as of the valuation date (level 3). Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. Our calculations for Expedited LTL, Truckload, Final Mile and Intermodal indicated the fair value of each reporting unit exceeded their carrying value by 421.6%, 65.7%, 118.5% and 49.4%, respectively, as of six months ended June 30, ~~2020~~2021.

Other Intangible Assets

~~This discounted projected cash flow analysis required~~

Changes in the ~~Company to calculate~~carrying amount of acquired intangible assets during the present value of its projected future cash flows using each reporting unit's applicable discount rate. The Company used a ten-year projection period to derive operating cash flow projections. Certain assumptions were made regarding future revenue and operating income growth based on industry market data and historical and expected performance. The Company's projected operating income was combined with expected working capital and capital expenditure requirements to determine operating cash flows. The significant assumptions used in this analysis weresix months ended June 30, 2021 are summarized as follows:

Expedited LTL Truckload Final Mile Intermodal
Discount rate 10.5 % 13.5 % 13.5 % 13.5 %
Terminal growth rate 4.0 % 4.0 % 4.0 % 4.0 %


	Gross Carrying Amount
	Customer Relationships1		Non-Compete Agreements		Trade Names		Total
Balance as of December 31, 2020	$	228,416	$	8,125	$	1,500	$	238,041
Acquisitions	7,640		150		0		7,790
Balance as of June 30, 2021	$	236,056	$	8,275	$	1,500	$	245,831

~~Market valuations for comparable companies employ valuation multiples derived from market stock prices~~


	Accumulated Amortization
	Customer Relationships1		Non-Compete Agreements		Trade Names		Total
Balance as of December 31, 2020	$	85,930	$	5,579	$	1,500	$	93,009
Amortization expense	6,344		665		0		7,009
Balance as of June 30, 2021	$	92,274	$	6,244	$	1,500	$	100,018

1Carrying value as of ~~companies that are engaged in the same or similar lines~~June 30, 2021 and December 31, 2020 is inclusive of ~~business as the reporting units and that are actively traded on a free and open market. The estimates used to calculate the fair value~~$16,501 of each reporting unit change over time 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.

accumulated impairment.

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

~~The following is a summary of the Company's goodwill as of~~ ~~June 30, 2020. Approximately $161,789 of goodwill is deductible for tax purposes.~~

Beginning balance, December 31, 2019 Linn Star Acquisition Ending balance, June 30, 2020
Expedited LTL
Goodwill $ 97,593
$ —
$ 97,593
Accumulated Impairment —
—
—

Truckload
Goodwill 45,164
—
45,164
Accumulated Impairment (25,686 ) —
(25,686 )

Final Mile
Goodwill 19,963
25,234
45,197
Accumulated Impairment —
—
—

Intermodal
Goodwill 78,665
—
78,665
Accumulated Impairment —
—
—

Total
Goodwill 241,385
25,234
266,619
Accumulated Impairment (25,686 ) —
(25,686 )
$ 215,699
$ 25,234
$ 240,933

~~Other Long-Lived Assets~~

6. Stock Incentive Plans

Stock Incentive Plan

The Company ~~tests its long-lived assets (asset groups)~~recorded shared-based compensation expense as follows for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Management evaluates long-lived assets for impairment at the lowest level for which cashflows are identifiable. In general, these assets are reviewed at the reporting unit level, discussed above, by significant asset category. Examples of significant asset categories include land, buildings, tractors, trailers, other equipment, leasehold improvements, right-of-use lease assets, customer relationships, non-compete agreements, software and inventory.

As part of the Company's annual goodwill impairment analysis, management compared the undiscounted cash flows of each reporting unit to the carrying value of its long-lived assets, noting no impairment charges were required during the three and six months ended June 30, ~~2020.~~2021 and 2020:


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Salaries, wages and employee benefits - continuing operations	$	2,463	$	2,154	$	4,732	$	4,971
Salaries, wages and employee benefits - discontinued operation	0		222		16		410
Total share-based compensation expense	$	2,463	$	2,376	$	4,748	$	5,381

~~6. Share-Based Payments~~

The Company’s general practice has been to make a single annual grant of share-based compensation in the first quarter to key employees and to make other employee grants only in connection with new employment or promotions. Forms of share-based compensation granted to employees byIn May 2016, the Company ~~include~~adopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) for the issuance of up to 2,000 of common shares to employees. As of June 30, 2021, approximately 797 shares remain available for grant under the Omnibus Plan.

Stock Options

Share-based compensation expense associated with stock options ~~non-vested shares of common stock (“non-vested shares”), and performance shares.~~is amortized ratably over the vesting period. The Company ~~also typically makes a single annual grant of non-vested shares to non-employee directors in conjunction with~~estimates the ~~annual election of non-employee directors to the Board of Directors. Share-based compensation is based on the grant date~~ fair value of the ~~instrument and is recognized ratably over~~grants using the requisite service period or vesting period. All share-based compensation expense is recognized in salaries, wages and employee benefits. Share-based compensation amounts below are disclosed on both a continuing and discontinuing basis.Black-Scholes option-pricing model.

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

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

~~(Unaudited)~~

~~June 30, 2020~~

~~Employee Activity - Stock Options~~

Stock option grants to employees generally expire seven years from the grant date and typically vest ratably over a three-year period. All forfeitures were recognized as they occurred. The Company used the Black-Scholes option-pricing model to estimate the grant-date fair value of options granted. There were no options grantedtransactions during the six months ended June 30, ~~2019. Further, there~~2021 on a continuing operations basis were noas follows:


	Stock Options	Weighted-Average Exercise Price
Outstanding as of January 1, 2021	359	$	55.79
Granted	39	75.05
Exercised	(52)	54.57
Forfeited	0	0
Outstanding as of June 30, 2021	346	$	58.30

As of June 30, 2021, the total share-based compensation expense related to unvested stock options ~~granted~~net yet recognized was $1,002, and the weighted-average period over which it is expected to ~~employees~~be recognized is approximately two years.

Table of ~~the Company's discontinued operations~~Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2021

Stock option transactions during the six months ended June 30, ~~2020~~2021 on a discontinued operation basis were as follows:


	Stock Options	Weighted-Average Exercise Price
Outstanding as of January 1, 2021	14	$	52.15
Granted	0	0
Exercised	(14)	52.15
Forfeited	0	0
Outstanding as of June 30, 2021	0	$	0

Restricted Shares

Restricted shares are restricted from sale or ~~2019. The weighted-average fair value~~transfer until vesting, and restrictions lapse in three equal installments beginning one year after the date of ~~options granted and assumptions used to estimate their fair value~~grant. Share-based compensation expense associated with these awards is amortized ratably over the requisite service period. Restricted share transactions during the six months ended June 30, ~~2020 were as follows (on a continuing basis):~~

Six months ended
June 30, 2020
Expected dividend yield 1.1 %
Expected stock price volatility 24.1 %
Weighted average risk-free interest rate 1.5 %
Expected life of options (years) 5.9
Weighted average grant date fair value $ 14.79

~~The following tables summarize the Company’s employee stock option activity and related information~~2021 on a continuing ~~basis:~~operations basis were as follows:


	Restricted Shares	Weighted-Average Grant Date Fair Value
Outstanding as of January 1, 2021	210	$	62.78
Granted	108	75.28
Vested	(98)	61.49
Forfeited	(15)	69.91
Outstanding as of June 30, 2021	205	$	69.31

Six months ended June 30, 2020
Weighted-

Weighted-
Average

Average Aggregate Remaining

Exercise Intrinsic Contractual
Options Price Value Term
Outstanding at December 31, 2019 417
$ 53

Granted 36
66

Exercised —
—

Forfeited (4 ) 60

Outstanding at June 30, 2020 449
$ 54
$ 247
3.9
Exercisable at June 30, 2020 317
$ 51
$ 1,379
3.3

As of June 30, 2021, the total share-based compensation expense related to restricted shares not yet recognized was $11,227, and the weighted-average period over which it is expected to be recognized is approximately two years.

Six months ended
June 30,
2020 June 30,
2019
Share-based compensation for options $ 600
$ 829
Tax benefit for option compensation $ 153
$ 212
Unrecognized compensation cost for options $ 1,348
$ 2,316
Weighted average period over which unrecognized compensation will be recognized (years) 1.6

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

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

~~(Unaudited)~~

~~June 30, 2020~~

~~The following tables summarize the Company’s employee stock option activity and related information on a discontinued basis:~~

Six months ended June 30, 2020
Weighted-

Weighted-
Average

Average Aggregate Remaining

Exercise Intrinsic Contractual
Options Price Value Term
Outstanding at December 31, 2019 14
$ 52

Granted —
—

Exercised —
—

Forfeited —
—

Outstanding at June 30, 2020 14
$ 52
$ 37
3.3
Exercisable at June 30, 2020 12
$ 52
$ 41
3.2

Six months ended
June 30,
2020 June 30,
2019
Share-based compensation for options $ 11
$ 21
Tax benefit for option compensation $ 3
$ 5
Unrecognized compensation cost for options $ 11
$ 42
Weighted average period over which unrecognized compensation will be recognized (years) 0.6

~~Employee Activity - Non-vested Shares~~

The fair value of non-vested shares issued was estimated using the closing market prices for the business day of the grant. The share-based compensation for the nonvested shares is recognized ratably over the requisite service period or vesting period, which is a three-year period. All forfeitures were recognized as they occurred.

~~The following tables summarize the Company’s employee non-vested share activity and related information on a continuing basis:~~

Six months ended June 30, 2020

Weighted-

Average Aggregate
Non-vested Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 264
$ 58

Granted 111
66

Vested (140 ) 57

Forfeited (13 ) 62

Outstanding and non-vested at June 30, 2020 222
$ 63
$ 13,964

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

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

~~(Unaudited)~~

~~June 30, 2020~~

Six months ended
June 30,
2020 June 30,
2019
Share-based compensation for non-vested shares $ 3,727
$ 3,960
Tax benefit for non-vested share compensation $ 950
$ 1,010
Unrecognized compensation cost for non-vested shares $ 11,019
$ 12,635
Weighted average period over which unrecognized compensation will be recognized (years) 2.0

~~The following tables summarize the Company’s employee non-vested share activity and related information on a discontinued basis:~~

Six months ended June 30, 2020

Weighted-

Average Aggregate
Non-vested Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 13
$ 58

Granted 6
63

Vested (8 ) 58

Forfeited —
—

Outstanding and non-vested at June 30, 2020 11
$ 61
$ 678

Six months ended
June 30,
2020 June 30,
2019
Share-based compensation for non-vested shares $ 201
$ 182
Tax benefit for non-vested share compensation $ 51
$ 46
Unrecognized compensation cost for non-vested shares $ 552
$ 557
Weighted average period over which unrecognized compensation will be recognized (years) 2.1

~~Employee Activity - Performance Shares~~

The Company annually grants performance shares to key employees. Under the terms of the performance share agreements, following the end of a three-year performance period, the Company may issue to these employees a calculated number of common stock shares if certain performance targets are met. For shares grantedtransactions during the ~~three and~~ six months ended June 30, ~~2020 and 2019, 50% of the performance share issuances will be~~2021 on a discontinued operation basis were as follows:


	Restricted Shares	Weighted-Average Grant Date Fair Value
Outstanding as of January 1, 2021	10	$	61.25
Granted	0	0
Vested	(5)	60.49
Forfeited	(5)	61.92
Outstanding as of June 30, 2021	0	$	0

Performance Awards

Performance awards are based on ~~meeting three-year~~achieving certain financial targets, such as targets for earnings before interest, taxes, depreciation and amortization, ~~("EBITDA") per share targets~~ and ~~the remaining 50% of the performance share issuances will be based on the three-year performance of~~ the Company’s total shareholder return ~~("TSR")~~ as compared to the ~~TSR~~total shareholder return of a selected peer ~~group. All forfeitures were recognized~~group, as ~~they occurred.~~

~~Depending upon~~determined by the ~~EBITDA per share~~Company’s Board of Directors. Performance targets ~~met, 0% to 200%~~are set at the beginning of each three-year measurement period. Share-based compensation expense associated with these awards is amortized ratably over the ~~granted shares may ultimately be issued. For shares granted based on total shareholder return, 0% of the shares will be issued if the Company's total shareholder return outperforms~~ ~~25%~~ ~~or less of the peer group, but 200% of the shares will be issued if the Company's total shareholder return performs better than~~ ~~90%~~ ~~of the peer group.~~

~~The fair value of the performance shares granted based on meeting EBITDA per share targets were estimated using the closing market prices~~vesting period. Depending on the ~~day of grant and~~financial target, the ~~probability of meeting these targets as of the measurement date. The fair value of the performance shares granted~~compensation expense is based on the ~~three-year performance~~projected assessment of the ~~Company’s total shareholder return was estimated using~~level of performance that will be achieved.

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

~~a Monte Carlo simulation. The following table contains~~Performance award transactions during the weighted-average assumptions, on both a continuing and discontinued basis, used to estimate the fair value of performance shares granted using the Monte Carlo simulation. These assumptions are subjective and changes in these assumptions can materially affect the fair value estimate.

Six months ended
June 30,
2020 June 30,
2019
Expected stock price volatility 23.5 % 23.4 %
Weighted average risk-free interest rate 1.4 % 2.5 %

~~The following tables summarize the Company’s employee performance share activity, assuming median share awards, and related information~~six months ended June 30, 2021 on a continuing ~~basis:~~operations basis were as follows assuming target levels of performance:


	Performance Awards	Weighted-Average Grant Date Fair Value
Outstanding as of January 1, 2021	65	$	67.62
Granted	36	87.33

Earned	(11)	72.30
Forfeited or unearned	(11)	70.22
Outstanding as June 30, 2021	79	$	75.61

Six months ended June 30, 2020

Weighted-

Average Aggregate
Performance Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 58
$ 62

Granted 38
69

Additional shares awarded based on performance 13
51

Vested (33 ) 51

Forfeited (11 ) 66

Outstanding and non-vested at June 30, 2020 65
$ 68
$ 4,425

As of June 30, 2021, the total share-based compensation expense related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was $4,621, and the weighted-average period over which it is expected to be recognized is approximately three years.

Six months ended

June 30,
2020 June 30,
2019
Share-based compensation for performance shares $ 794
$ 682
Tax benefit for performance share compensation $ 202
$ 174
Unrecognized compensation cost for performance shares $ 2,837
$ 2,299
Weighted average period over which unrecognized compensation will be recognized (years) 2.3

~~The following tables summarize the Company’s employee performance share activity, assuming median share awards, and related information on a discontinued basis:~~

Six months ended June 30, 2020

Weighted-

Average Aggregate
Performance Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 4
$ 62

Granted 2
69

Additional shares awarded based on performance 1
51

Vested (2 ) 51

Forfeited —
—

Outstanding and non-vested at June 30, 2020 5
$ 66
$ 275

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

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

~~(Unaudited)~~

~~June 30, 2020~~

Six months ended

June 30,
2020 June 30,
2019
Share-based compensation for performance shares $ 48
$ 35
Tax benefit for performance share compensation $ 12
$ 9
Unrecognized compensation cost for performance shares $ 165
$ 137
Weighted average period over which unrecognized compensation will be recognized (years) 2.1

~~Employee Activity –~~ Employee Stock Purchase Plan

~~Under the 2005 Employee Stock Purchase Plan (the “ESPP”), which has been approved by shareholders,~~As of June 30, 2021, the Company is authorized to issue up to a remaining ~~350~~330 shares of common stock to employees ofunder the ~~Company.~~2005 Employee Stock Purchase Plan (the “ESPP”). 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 2 large lump sum contributions.

~~The following table summarizes the Company's employee~~Employee stock purchase plan activity and related information was as follows on a continuing operations basis:

Six months ended

June 30,
2020 June 30,
2019
Shares purchased by participants under plan 6
4
Average purchase price $ 45
$ 49
Weighted-average fair value of each purchase right under the ESPP granted ¹ $ 5
$ 10
Share-based compensation for ESPP shares $ 30
$ 46

¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period


	Six Months Ended
	June 30, 2021		June 30, 2020
Shares purchased by participants under the ESPP	5		6
Average purchase price	$	68.76	$	44.84
Weighted-average fair value of each purchase right under the ESPP granted ¹	$	20.99	$	4.98
Share-based compensation for ESPP shares	$	118	$	30

¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period.

~~The following table summarizes the Company's employee~~Employee stock purchase plan activity and related information was as follows on a discontinued operation basis:


	Six Months Ended
	June 30, 2021		June 30, 2020
Shares purchased by participants under the ESPP	0		1
Average purchase price	$	0	$	44.84
Weighted-average fair value of each purchase right under the ESPP granted ¹	$	0	$	4.98
Share-based compensation for ESPP shares	$	0	$	3

¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period.

Six months ended

June 30,
2020
June 30,
2019
Shares purchased by participants under plan 1
1
Average purchase price $ 45
$ 49
Weighted-average fair value of each purchase right under the ESPP granted ¹ $ 5
$ 10
Share-based compensation for ESPP shares $ 3
$ 6

¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period

Table of Contents

~~Non-employee~~ Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2021

Director ~~Activity - Non-vested~~Restricted Shares

~~In May 2006,~~Under 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, approved in May ~~22, 2007. The Amended Plan was then~~2007 and further amended in February 2013 and ~~restated on December 17, 2008. Under~~January 2016, up to 360 of common shares may be issued. As of June 30, 2021, approximately 75 shares remain available for grant under the Amended ~~Plan, on~~Plan.

Director restricted share transactions during the ~~first business day after each Annual Meeting~~six months ended June 30, 2021 were as follows:


	Director Restricted Shares	Weighted-Average Grant Date Fair Value
Outstanding as of January 1, 2021	24	$	42.88
Granted	17	93.39
Vested	(26)	47.12
Forfeited	0	0
Outstanding as of June 30, 2021	15	$	93.46

For the three and six months ended June 30, 2021, the Company recorded $400 and $728, respectively, of ~~Shareholders, each non-employee director will automatically~~share-based compensation expense associated with these grants. For the three and six months ended June 30, 2020, the Company recorded $245 and $506, respectively, of share-based compensation expense associated with these grants. As of June 30, 2021, the total share-based compensation expense related to the restricted shares net yet recognized was $1,221, and the weighted-average period over which it is expected to be ~~granted an award (the “Annual Grant”), in such form and size as the Board determines from year to~~recognized is approximately less than one year. ~~Unless~~

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

otherwise determined by the Board, Annual Grants will become vested and nonforfeitable on the earlier of (a) the day immediately prior to the first Annual Meeting that occurs after the Grant Date or (b) the first anniversary of the Grant Date 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 credit the director with dividend equivalent payments in the form of additional deferred stock units for each cash dividend payment made by the Company. All forfeitures were recognized as they occurred.

7. Indebtedness

In May 2016, with the approval of shareholders, the Company further amended the Amended Plan to reserve for issuance an additional 160 common shares, increasing the total number of reserved common shares under the Amended Plan to 360.

As of June 30, 2021, the Company had $157,500 in borrowings outstanding under the revolving credit facility, $18,326 utilized for outstanding letters of credit and $49,174 of available borrowing capacity under the revolving credit facility. As of December 31, 2020, ~~there were approximately 92 shares remaining~~the Company had $112,500 in borrowings outstanding under the revolving credit facility, $18,326 utilized for outstanding letters of credit and $94,174 of available ~~for grant. There were no shares granted to non-employee directors classified~~borrowing capacity under the revolving credit facility. The interest rate on the outstanding borrowings under the revolving credit facility was 3.25% as ~~discontinued operations in any period.~~of both June 30, 2021 and June 30, 2020.

~~The following tables summarize the Company’s non-employee non-vested share activity and related information on a continuing basis:~~

Six months ended June 30, 2020

Weighted-

Average Aggregate
Non-vested Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 16
$ 62

Granted 24
43

Vested (16 ) 62

Forfeited —
—

Outstanding and non-vested at June 30, 2020 24
$ 43
$ 1,035

Six months ended

June 30,
2020 June 30,
2019
Share-based compensation for non-vested shares $ 506
$ 483
Tax benefit for non-vested share compensation $ 129
$ 123
Unrecognized compensation cost for non-vested shares $ 896
$ 784
Weighted average period over which unrecognized compensation will be recognized (years) 0.9

~~7. Senior Credit Facility~~

~~The~~In September 2017, the Company ~~has~~entered into a ~~5-year~~five-year senior unsecured revolving credit facility (the “Facility”) ~~that was entered into on September 29, 2017 and amended on April 16, 2020. The Facility has~~with a maximum aggregate principal amount of ~~$225,000,~~$150,000, with a sublimit of $30,000 for letters of credit and a sublimit of $30,000 for swing line loans. The maturity date of the Facility is September 29, 2022. In April 2020, the Company entered into the first amendment to the Facility, which increased the maximum aggregate principal amount to $225,000. The Facility may be increased by up to $25,000 to a maximum aggregate principal amount of $250,000 pursuant to the terms of the amended credit agreement, subject to the lenders’ agreement to increase their commitments or the addition of new lenders extending such commitments. Such increases to the Facility may be in the form of additional revolving credit loans, term loans or a combination thereof, and are contingent upon there being no events of 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 and may be used to refinance existing indebtedness of the Company and for working capital, capital expenditures and other general corporate purposes. The Facility refinanced the Company’s obligations

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

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

~~(Unaudited)~~

~~June 30, 2020~~

~~for its unsecured credit facility under the credit agreement dated as of February 4, 2015, as amended, which was terminated as of the date of the new~~ Facility.

~~Unless~~Under the ~~Company elects otherwise under~~amended Facility, interest accrues on the ~~credit agreement, interest on borrowings~~amounts outstanding under the Facility, ~~will be~~ at the Company’s option, at either (1) London Interbank Offered Rate (“LIBOR”) rate, not less than 1.00%, plus a margin ranging from 2.25% to 2.75% based on the Company’s leverage ratio, or (2) base ~~interest~~ rate, ~~(which~~which cannot be less than 3.00%~~) and will be~~. The base rate is the highest of ~~(a)~~(i) the federal funds rate, ~~(which cannot be~~not less than ~~0.00%)~~0, plus 0.50%, ~~(b)~~(ii) the administrative ~~agent's~~agent’s prime rate and ~~(c)~~(iii) the LIBOR ~~Rate (which cannot be~~rate, not less than 1.00%), plus 1.00% ~~and, in each case,~~, plus a margin ~~that can range~~ranging from 0.25% to 0.75% ~~with respect to the Facility depending~~based on the Company’s ~~ratio of consolidated funded indebtedness to earnings before interest, taxes, depreciation and amortization, as set forth~~leverage ratio. Interest is payable in ~~the credit agreement. Payments of interest~~arrears for each loan that is based on the LIBOR ~~Rate are due in arrears~~rate on the last day of the interest period applicable to ~~such~~each loan, ~~(with~~and interest ~~periods of one, two or three months being available, at the Company’s option). Payments of interest~~is payable in arrears on loans ~~that are~~ not based on the LIBOR ~~Rate are due~~rate on the last day of each ~~quarter ended March 31, June 30, September 30 and December 31 of each year. All unpaid amounts of principal and interest are due at maturity.~~

quarter.

~~As of~~ ~~June 30, 2020~~, the Company had $132,500 in borrowings outstanding under the revolving credit facility, $15,367 utilized for outstanding letters of credit and $77,133 of available borrowing capacity under the revolving credit facility. The interest rate on the outstanding borrowing under the revolving credit facility was 3.25% as of ~~June 30, 2020~~.

The Facility contains customary events of 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 agreement. The Company also has to fulfill financial covenants with respect to a leverage ratio and an interest coverage ratio. As of June 30, ~~2020~~,2021, the Company was in compliance with the aforementioned covenants.

In July 2021, the Company entered into the second amendment to the Facility, which extended the maturity date to July 20, 2026 and changed the interest rate options available under the Facility. Under the amended Facility, interest accrues on the amounts outstanding under the Facility at the Company’s option, at either (1) Bloomberg Short-Term Bank Yield Index rate (the “BSBY Rate”), which cannot be less than 0, plus a margin ranging from 1.25% to 1.75% based on the Company’s leverage ratio, or (2) the base rate, which cannot be less than 2.00%. The base rate is the highest of (i) the federal funds rate, which cannot be less than 0, plus 0.50%, (ii) the administrative agent’s prime rate and (iii) the BSBY Rate, which cannot be less than 0, plus 1.00%, plus a margin ranging from 0.00% to 0.50% based on the Company’s leverage ratio. In addition, under the second amendment, the Facility may be increased by up to $75,000 to a maximum aggregate principal amount of $300,000 pursuant to the terms of the amended credit agreement, subject to the lenders’ agreement to increase their commitments or the addition of new lenders extending such commitments. Such increases to the Facility may be in the form of additional revolving credit loans, term loans or a combination thereof, and are contingent upon there being no events of default under the Facility.

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

8. Net Income (Loss) Per Share

~~The following table sets forth the computation~~A reconciliation of net income attributable to Forward Air and weighted-average common shares outstanding for purposes of calculating basic and diluted net income per ~~share:~~share during the three and six months ended June 30, 2021 and 2020 is as follows:


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020

Numerator:
Net income and comprehensive income from continuing operations	$	30,677	$	9,225	$	47,391	$	20,641
Net loss and comprehensive loss from discontinued operation	0		(6,071)		(5,533)		(9,112)
Net income attributable to Forward Air	$	30,677	$	3,154	$	41,858	$	11,529

Income allocated to participating securities	(256)		(13)		(363)		(83)

Numerator for basic and diluted net income per share for continuing operations	$	30,421	$	9,212	$	47,028	$	20,558
Numerator for basic and diluted net loss per share for discontinued operation	$	0	$	(6,071)	$	(5,533)	$	(9,112)

Denominator:
Denominator for basic net income per share - weighted-average number of common shares outstanding	27,261		27,695		27,309		28,424
Dilutive stock options and performance share awards	154		31		145		67
Denominator for diluted net income per share - weighted-average number of common shares and common share equivalents outstanding	27,415		27,726		27,454		28,491

Basic net income (loss) per share:
Continuing operations	$	1.12	$	0.33	$	1.72	$	0.72
Discontinued operation	0		(0.22)		(0.20)		(0.31)
Net income per basic share	$	1.12	$	0.11	$	1.52	$	0.41

Diluted net income (loss) per share:
Continuing operations	$	1.11	$	0.33	$	1.71	$	0.72
Discontinued operation	0		(0.22)		(0.20)		(0.32)
Net income per diluted share	$	1.11	$	0.11	$	1.51	$	0.40

Three months ended Six months ended
June 30,
2020 June 30,
2019 June 30,
2020 June 30,
2019
Numerator:
Net income and comprehensive income from continuing operations $ 9,225
$ 21,244
$ 20,641
$ 38,931
Net (loss) income and comprehensive (loss) income from discontinued operations (6,071 ) 1,086
(9,112 ) 1,806
Net income attributable to Forward Air shareholders $ 3,154
$ 22,330
$ 11,529
$ 40,737

Income allocated to participating securities (13 ) (251 ) (83 ) (459 )

Numerator for basic and diluted net income per share for continuing operations $ 9,212
$ 20,993
$ 20,558
$ 38,472
Numerator for basic and diluted net (loss) income per share for discontinued operations $ (6,071 ) $ 1,086
$ (9,112 ) $ 1,806

Denominator:

Denominator for basic income per share - weighted-average shares 27,695
28,268
28,424
28,421
Effect of dilutive stock options 13
77
35
76
Effect of dilutive performance shares 18
28
32
34
Denominator for diluted income per share - adjusted weighted-average shares 27,726
28,373
28,491
28,531

Basic net income (loss) per share:
     Continuing operations $ 0.33
$ 0.74
$ 0.72
$ 1.35
     Discontinued operations (0.22 ) 0.04
(0.31 ) 0.07
Net income per share $ 0.11
$ 0.78
$ 0.41
$ 1.42

Diluted net income (loss) per share:
     Continuing operations $ 0.33
$ 0.74
$ 0.72
$ 1.35
     Discontinued operations (0.22 ) 0.04
(0.32 ) 0.06
Net income per share $ 0.11
$ 0.78
$ 0.40
$ 1.41

Three months ended June 30, 2020
Expedited Freight Intermodal Eliminations & other Continuing Operations
External revenues $ 235,417
$ 46,420
$ —
$ 281,837
Intersegment revenues 241
8
(408 ) (159 )
Depreciation 5,009
1,081
25
6,115
Amortization 1,731
1,567
—
3,298
Share-based compensation expense 2,062
472
(105 ) 2,429
Interest expense 3
59
1,136
1,198
Income (loss) from operations 11,753
4,413
(2,252 ) 13,914
Total assets 912,814
212,923
(139,702 ) 986,035
Capital expenditures 11,545
18
—
11,563

Three months ended June 30, 2019 (As Adjusted)
Expedited Freight Intermodal Eliminations & other Continuing Operations
External revenues $ 252,468
$ 50,522
$ —
$ 302,990
Intersegment revenues 818
17
(938 ) (103 )
Depreciation 6,399
463
(46 ) 6,816
Amortization 1,081
1,330
—
2,411
Share-based compensation expense 2,391
443
211
3,045
Interest expense 2
—
579
581
Income (loss) from operations 28,187
5,245
(4,362 ) 29,070
Total assets 687,570
187,815
(20,530 ) 854,855
Capital expenditures 11,761
142
—
11,903

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(Inunaudited and in thousands, except per share data)

~~(Unaudited)~~

June 30, ~~2020~~2021

Six months ended June 30, 2020
Expedited Freight Intermodal Eliminations & other Continuing Operations
External revenues $ 488,560
$ 98,875
$ —
$ 587,435
Intersegment revenues 727
13
(940 ) (200 )
Depreciation 9,916
2,134
43
12,093
Amortization 3,519
3,135
—
6,654
Share-based compensation expense 4,729
861
(83 ) 5,507
Interest expense 6
113
1,932
2,051
Income (loss) from operations 26,933
8,126
(5,372 ) 29,687
Total assets 912,814
212,923
(139,702 ) 986,035
Capital expenditures 13,950
264
—
14,214

Six months ended June 30, 2019 (As Adjusted)
Expedited Freight Intermodal Eliminations & other Continuing Operations
External revenues $ 477,421
$ 104,619
$ —
$ 582,040
Intersegment revenues 1,523
35
(1,750 ) (192 )
Depreciation 13,005
932
(86 ) 13,851
Amortization 1,927
2,737
—
4,664
Share-based compensation expense 4,560
974
376
5,910
Interest expense 4
2
1,150
1,156
Income (loss) from operations 49,093
11,426
(7,747 ) 52,772
Total assets 687,570
187,815
(20,530 ) 854,855
Capital expenditures 13,999
215
—
14,214

~~The following table summarizes revenue~~Revenue from the ~~defined~~individual services ~~included~~ within the Expedited Freight ~~revenue~~segment for the three and six months ended June 30, 2021 and 2020 ~~and 2019:~~are as follows:

Three months ended Six months ended
June 30,
2020 June 30,
2019 June 30,
2020 June 30,
2019

Expedited freight revenue:
Network revenue $ 134,173
$ 172,491
$ 286,182
$ 333,841
Truckload revenue 41,857
48,624
89,384
96,309
Final mile revenue 53,427
24,957
101,229
34,714
Other revenue 6,201
7,214
12,492
14,080
Total revenue $ 235,658
$ 253,286
$ 489,287
$ 478,944







	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020







Expedited Freight revenues:
Network	$	210,088	$	134,173	$	388,715	$	286,182
Truckload	56,968		41,857		109,348		89,384
Final Mile	69,883		53,427		132,139		101,229
Other	14,796		6,201		25,719		12,492
Total	$	351,735	$	235,658	$	655,921	$	489,287

~~Table of Contents~~



Item 2.			~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

~~Forward Air Corporation is~~We are a leading asset-light freight and logistics ~~company. As a result of~~company providing less-than-truckload (“LTL”), final mile truckload and intermodal drayage services across the ~~Company’s decision~~United States and in Canada. We offer premium services that typically require precision execution, such as expedited transit, delivery during tight time windows and special handling. We utilize an asset-light strategy to ~~divest of Pool,~~minimize our investments in equipment and facilities and to reduce our capital expenditures.

Our services are ~~now~~ classified into two reportable segments: Expedited Freight and Intermodal.

Through the Expedited Freight segment, we operate a comprehensive national network to provide expedited regional, inter-regional and national LTL services. Expedited Freight offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling. We plan to grow our LTL and final mile geographic footprints through greenfield start-ups as well as acquisitions. On July 13, 2020, we announced an organic growth initiative and now offer LTL service in Savannah, Georgia. With this expansion, our LTL network began its evolution toward broader market coverage beyond its legacy airport-to-airport footprint.

Our Intermodal segment provides 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"~~(“CFS”) warehouse and handling services. ~~Today,~~ Intermodal operates primarily in the Midwest and Southeast, with smaller operational presence in Southwest and Mid-Atlantic United States. We plan to grow Intermodal’s geographic footprint through acquisitions as well as greenfield start-ups where we do not have an acceptable acquisition target. ~~On April 16, 2020, we announced a greenfield start-up in Front Royal, VA, which furthered our growth objectives.~~

Our operations, particularly our network of hubs and terminals, represent substantial fixed costs. Consequently, our ability to increase our earnings depends in significant part on our ability to increase the amount of freight and the revenue per pound for the freight shipped through our networks and to grow other services, such as LTL pickup and delivery, final mile solutions and intermodal services, which will allow us to maintain revenue growth in challenging shipping environments. In addition, we are continuing to execute synergies across our services, particularly with service offerings in the Expedited Freight segment. Synergistic opportunities include the ability to share resources, particularly our fleet resources.

~~On April 23, 2020, the~~The Board approved a strategy to divest the Pool ~~within~~Distribution business (“Pool”) on April 23, 2020, and the ~~next year. As a result~~sale of ~~this decision, Forward Air reclassified~~ Pool ~~from continuing operations to discontinued operations in accordance with ASC 205-20.~~was completed on February 12, 2021. Pool ~~provides~~provided high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region. Pool ~~offers~~offered this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest United States.

Accordingly, the results of operations for Pool ~~has~~have been ~~reported~~presented as a discontinued ~~operations~~operation in our Condensed Consolidated Statements of Comprehensive Income ~~and~~for all period presented. In addition, the ~~related~~ assets and liabilities ~~have been~~were presented as held for sale in the Condensed Consolidated Balance ~~Sheets. These changes have been applied to all periods presented.~~Sheets for the prior period. Unless otherwise noted, amounts, percentages and discussion for all periods ~~included below~~ reflect the results of operations, financial condition and cash flows from ~~Forward Air’s~~our continuing operations. Refer to Note 4, Discontinued ~~Operations~~Operation and Held for Sale, to the ~~Company’s consolidated financial statements~~our Condensed Consolidated Financial Statements for additional information on our discontinued ~~operations.~~operation.

Trends and Developments

~~Impact~~COVID-19

Our business is highly susceptible to changes in the economic conditions. Our products and services are directly tied to the production and sale of goods and, more generally, to the North American economy. The COVID-19 pandemic has adversely impacted economic activity and conditions worldwide and created significant volatility and disruption to the financial markets. Efforts to control the spread of COVID-19

~~COVID-19 was characterized as a pandemic by the World Health Organization on March 11, 2020. To help lessen its spread, many countries implemented travel~~ led governments and other authorities to impose restrictions ~~and/or required companies to limit or suspend~~which resulted in business ~~operations. These actions~~closures and disrupted supply chains worldwide. As a result, transportation and company operations around the world. These restrictions began to lessen in May 2020, although the effects are still being felt. The current environment resulting from COVID-19 is unprecedented and comes with a great deal of uncertainty.

The Forward Air team is actively managing through the COVID-19 pandemic, with a paramount focus on team member and customer safety. Given our modal exposures to air freight, ocean freight and physical retail, the impact of COVID-19 presents a meaningful challenge that we are addressing through our asset-light business model.

~~In Expedited Freight, our networks remain fully operational. However, much of the freight that typically moves through our LTL network is not classified as “essential goods” -~~supply chain companies such as ~~staples, consumables or consumer packaged goods. As such, we were~~ours experienced slowdowns and reduced demand for our services.

~~Table of Contents~~

~~adversely~~Although our business and operations have returned to pre-COVID levels, the situation surrounding COVID-19 and its variants remains fluid and may be further impacted by the ~~numerous stay-at-home orders that were issued in March 2020~~policies of President Biden’s administration, the availability and success of a vaccine and vaccination rates. The extent to ~~combat COVID-19. In addition, declining fuel prices have resulted in decreased fuel surcharge revenue as compared to prior periods.~~

~~Despite these headwinds, we are making key investments that we believe will enable us to emerge from this episode as a stronger LTL competitor (amid a potentially reduced field~~which outbreaks of ~~service providers). Our owner-operator fleet is the best it has ever been, which helped reduce~~COVID-19 and its variants impacts our ~~use~~business, results of brokered power to approximately 6.0% of miles in the six months ended June 30, 2020. Our Truckload team is becoming more integrated in our LTL operations, and our Truckload brokerage group is growing by generating opportunities amid supply chain disruptions. We are also integrating Final Mile into our LTL operations while organically growing in an environment where more heavy-bulky items are being ordered online. We are presently operating four terminals that service both our Final Mile and LTL operations and expect this number to grow in the future. In addition, our Final Mile fleet is supporting LTL operations by performing pickup and delivery services on their behalf in six terminals.

COVID-19 also impacted our Intermodal business, which faced reduced volumes from lower Asian imports amid reduced US demand, blank sailings and port congestion driven by container imbalances. Our Intermodal network remains fully functional with all terminals open and we lowered purchase transportation and labor costs to address the volume declines.

Beyond lowering our costs through our flexible business model, we are actively pursuing new revenue opportunities in line with our medium-term growth objectives. We believe that we have the most reliable networks for moving freight that is bigger-than-a-box, and we are stretching these capabilities to “essential goods,” small and midsize businesses, business-to-consumer shipments, new verticals and warehousing opportunities.

As discussed above, on April 23, 2020, the Company's Board approved a strategy to divest Pool within the next year. This represents a strategic shift for the Company that will have a major effect on its operations and financial ~~results. The Company is currently exploring all options~~condition in 2021 will depend on future developments, which are highly uncertain and cannot be predicted by, including, but not limited to ~~divest of these assets, but has not entered into a material definitive agreement to sell these assets as~~the duration, spread, severity and impact of the ~~date~~COVID-19 outbreak, including the new variants, the effects of ~~this report. However,~~ the ~~Company does~~outbreak on our customers and suppliers and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume.

In addition, although we believe ~~it is probable that these assets will~~we have sufficient capital and liquidity to manage our business over the short- and long-term, our liquidity may be ~~divested within a year of receiving this authority from~~materially affected if conditions in the ~~Board. As~~credit and financial markets deteriorate as a result ~~the Company has reported Pool as~~of COVID-19 including failure by us or our customers to secure any necessary financing in a Discontinued Operation in this report. COVID-19’s impact on our Pool Distribution business has been significant. Reduced US demand, coupled with temporary retail mall closures in response to stay-at-home orders in March 2020, have materially reduced Pool’s revenue. We furloughed roughly 90% of Pool’s workforce in response in April 2020, although we are bringing the workforce back as volumes rebound. As of June 30, 2020, we returned to approximately 80% of our pre-COVID-19 workforce levels. We remain committed to serving our current and additional Pool customers as volumes improve while we are pursuing divestiture options for this business unit.timely manner.

We expected a downturn in Q2 2020, but project a slow recovery sequentially through Q1 2021, although year-on-year growth is expected to be negative for the remainder of 2020. Pool’s results drove a discontinued operations loss for the three and six months ended June 30, 2020, however on a continuing operations and consolidated basis, the Company was profitable and expects to be profitable for the remainder of the year ended December 31, 2020.

Intermodal Acquisition

We have also taken steps to improve our financial flexibility by executing an amendment to increase the availability on our $150 million revolving credit facility by $75 million, which closed on April 16, 2020. In addition, we have deferred payroll and federal and state income tax payments as allowed by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, which resulted in an approximately $5 million cash flow benefit for the second quarter of 2020 and is expected to result in an approximately $12 million cash flow benefit for 2020. This includes cash flow benefits for the Company as a whole, including cash flows related to discontinued operations. Note that payroll taxes may be deferred for all of 2020, while federal and state income tax payments were only permitted to be deferred for the second quarter of 2020 and were due and payable on or before July 15, 2020. In addition, we took advantage of employee retention credits as allowed by the CARES Act of $0.8 million, which primarily benefited our discontinued operations. At this time, the Company does not expect any liquidity issues or inability in meeting its financial obligations. See additional discussion over the impact to our results from operations below.

~~Expedited LTL Acquisitions~~

As part of ~~our~~the inorganic growth strategy, ~~to expand our final mile pickup and delivery operations,~~ in ~~January 2020,~~February 2021, we acquired certain assets and liabilities of ~~Linn Star~~Proficient Transport Incorporated and Proficient Trucking, Inc. (together “Proficient Transport”) for ~~$57.2 million. This~~$15,510 and a potential earn-out up to $2,000. The estimated fair value of the earn-out liability on the date of acquisition ~~increased~~was $829. The fair value was based on the estimated one-year performance of the acquired customer revenue and was calculated using the option pricing method. Proficient Transport is an intermodal drayage company headquartered in Chicago, Illinois. The acquisition of Proficient Transport will expand our ~~Final Mile capabilities with an additional 20 locations.~~ intermodal footprint in Georgia, Illinois, North Carolina, and Texas, and will introduce a new location in Ohio. The acquisition was funded using cash flows from operations. The results of Proficient Transport have been included in our Condensed Consolidated Financial Statements as of and from the date of acquisition.

Expedited Freight Acquisition

In ~~addition, in April 2019,~~May 2021, we acquired certain assets and liabilities of ~~FSA~~J&P Hall Express Delivery (“J&P”) for ~~$27.0 million~~$7,543. J&P is headquartered in Atlanta, Georgia with a second terminal in Albany, Georgia. The acquisition of J&P supports our strategic growth plan by expanding pickup and ~~a potential earnout of up to $15.0 million based upon future revenue generation. We paid~~delivery, less than truckload, truckload, less than container load, container freight station warehousing, and airport transfer services across the ~~first installment on this earn-out of $5.3 million in June 2020.~~Southeastern United States. The remaining expected payment had a fair value of $3.8 million as of June 30, 2020. These acquisitions provided an opportunity for our Expedited Freight segment to expand its final mile service offering into additional geographic markets, form relationships with new customers, and add volumes to our existing locations.

~~Table of Contents~~

These acquisitions were funded using cash flows from operations. The assets, liabilities, and operating results of these acquisitions have been included in the Company's consolidated financial statements from the date of acquisition and have been assigned to the Expedited Freight reportable segment. See additional discussion in Note 5, ~~Acquisitions and Long-Lived Assets, to our Consolidated Financial Statements.~~

~~Intermodal Acquisitions~~

As part of our strategy to expand our Intermodal operations, in July 2019, we acquired certain assets and liabilities of OST for $12.0 million. OST is a drayage company and expanded our intermodal footprint on the East Coast, primarily in Baltimore, Maryland, with additional locations in Pennsylvania, Virginia, South Carolina and Georgia. This acquisition was funded using cash ~~flows~~flow from ~~operations and provide an opportunity for our Intermodal segment to expand into additional geographic markets and add volumes to our existing locations.~~operations. The ~~assets, liabilities, and operating~~ results of ~~this acquisition~~J&P have been included in ~~the Company's consolidated financial statements~~our Condensed Consolidated Financial Statements as of and from the date of ~~acquisition~~acquisition.

Sale of Pool

On February 12, 2021, we sold Pool for an $8,000 cash payment and ~~have been assigned~~up to a $12,000 earn-out based on 2021 earnings before interest, taxes, depreciation and amortization attainment, beginning February 1, 2021. The estimated fair value of the ~~Intermodal reportable segment. See additional discussion~~earn-out on the date of sale was $6,967, and was calculated based on the estimated performance of Pool using a Monte Carlo simulation model. A loss on the sale of Pool in ~~Note 5,~~ ~~Acquisitions and Long-Lived Assets, to our Consolidated Financial Statements.~~the amount of $2,860 was recorded in discontinued operation.

Environmental Protection and Community Support

~~At Forward Air, our mission is to create long-term value for our shareholders, customers~~We embrace a comprehensive definition of sustainability that addresses Environmental, Social, and employees while having a positive impact on the communities in which we live and work. We strive to integrate social responsibility and environmental sustainability into every aspect of our strategy - from how we engage with employees and local communities to offering more sustainable products and services to customers. Our commitment to this mission requires us to adhere to a strong corporate governance program that includes policies and principles that integrate environmental, social and governanceGovernance factors (“ESG”) ~~matters into~~. In 2019, our ~~broader risk management and strategic planning initiatives.~~

~~During 2019, the~~ Board amended the Corporate Governance and Nominating (“CG&N”) Committee ~~charter~~Charter to ~~reflect that the committee would review and discuss with management the Company’s (i)~~ensure Board oversight of our efforts related to environmental, social, and governance matters, and ~~(ii)~~ management of sustainability-related risks and opportunities. At least twice a year, the CG&N Committee is updated on each of these ~~reviews~~topics and ~~discussions occur at least quarterly. The~~provides feedback and recommendations that it deems appropriate.

In 2020, we created and staffed the Head of Corporate ~~Governance and Nominating Committee provides leadership and~~ESG role to provide oversight of our ESG ~~practices, including oversight of our policies~~vision, strategic planning, performance management and ~~programs related to environmental sustainability, health~~improvement activities. Shortly after, we initiated an ESG market analysis and ~~safety, diversity~~benchmarking exercise that explored the ESG issues that most impact transportation and ~~inclusion,~~logistics industries and ~~charitable giving.~~marketplaces.

~~To facilitate our ESG initiatives, we appointed a head of Corporate ESG~~We began in ~~the first quarter of 2020. We also have engaged a third-party~~2020 to conduct an ESG ~~materiality~~ assessment, ~~during the first half of 2020. Our intent is~~starting with a third-party stakeholder assessment that served as a basis for identifying and prioritizing ESG topics most relevant to ~~build upon this work to develop~~our industry, our business, and our stakeholders. The assessment’s findings yielded initial topics that we recognized as important. We followed with a more ~~robust~~in-depth assessment of risks and opportunities, utilizing Sustainable Accounting Standards Board (“SASB”) standards as a guide, in order to further refine our disclosure topics and gain stakeholder alignment. This more detailed assessment yielded clarity of our ESG ~~strategy, institutionalize processes~~topics and ~~begin~~prioritization based on the degree of both qualitative and quantitative impact to ~~provide more public disclosure around activities~~our business.

We identified ten ESG topic priority areas relevant to our business and ~~performance going forward.~~mapped each to widely adopted ESG reporting standards as identified by SASB. Within these ten topic areas, we identified specific related risks and opportunities, and aligned on improvement activities. In first quarter of 2021, we published our first ESG report that describes our sustainability focus and plan. We are committed to making our ~~presence~~results count across the ~~country.~~

country and will continue to update our future disclosures accordingly.

~~Environmental Protection~~: We have already taken a variety of steps to improve the sustainability of our operations. For example, as a partner of the U.S. Environmental Protection Agency ("EPA") SmartWay program since 2008, Forward Air has continued to adopt new environmentally safe policies and innovations to improve fuel efficiency and reduce emissions. We actively seek to utilize equipment with reduced environmental impact. We utilize trailers with light weight composites and employ trailer skirts to decrease aerodynamic drag, both of which improve fuel efficiency. We are also increasing our use of electric forklifts and transitioning to automatic transmission tractors, which will decrease our fuel consumption.

Through vendor partnerships, we are implementing new solutions to manage waste and improve recycling across our facilities. Annually, we recycle tons of dunnage and thousands of aluminum load bars. Forward Air also participates in ReCaps, providing and purchasing recycled trailer tires. We also focus on increasing our landfill diversion rate through our partnership with Waste Harmonics.

~~Community Support~~: On Veteran’s Day 2019, Forward Air launched Operation: Forward Freedom - providing support to our Veterans primarily through partnering with Hope for the Warriors. Hope for the Warriors is a nonprofit organization that is dedicated to restoring a sense of self, family and hope to United States military veterans. This is an important cause for us as many of our employees, independent contractors, customers and vendors are or have a family member who is a military veteran. During the second quarter of 2020, as part of Operation: Forward Freedom, Forward Air allocated $10 million of its cash balances to a $249 billion U.S. Government money market fund through its account at Drexel Hamilton, a service-disabled veteran-owned and operated broker-dealer founded on the principal of offering meaningful employment opportunities to disabled veterans.

In addition, we are a corporate partner of Truckers Against Trafficking, a nonprofit organization that educates, equips, empowers and mobilizes members of the trucking and busing industries to combat human trafficking. In November 2019, we also joined Women in Trucking, which is a nonprofit organization, supporting and celebrating women in the trucking industry.

Table of Contents

Results from Operations

The following table sets forth our consolidated ~~historical~~ financial data from operations for the three months ended June 30, 2021 and 2020 ~~and 2019 (in millions):~~

Three months ended
June 30, June 30, Percent
2020 2019 Change Change
(As Adjusted)
Operating revenue:
Expedited Freight $ 235.7
$ 253.3
$ (17.6 ) (6.9 )%
Intermodal 46.4
50.5
(4.1 ) (8.1 )
Eliminations and other operations (0.4 ) (0.9 ) 0.5
(55.6 )
Operating revenue 281.7
302.9
(21.2 ) (7.0 )
Operating expenses:
Purchased transportation 142.1
143.4
(1.3 ) (0.9 )
Salaries, wages, and employee benefits 63.8
63.8
—
—
Operating leases 17.4
16.1
1.3
8.1
Depreciation and amortization 9.4
9.2
0.2
2.2
Insurance and claims 7.7
11.8
(4.1 ) (34.7 )
Fuel expense 2.5
4.5
(2.0 ) (44.4 )
Other operating expenses 24.9
25.0
(0.1 ) (0.4 )
Total operating expenses 267.8
273.8
(6.0 ) (2.2 )
Income (loss) from continuing operations:
Expedited Freight 11.8
28.2
(16.4 ) (58.2 )
Intermodal 4.4
5.2
(0.8 ) (15.4 )
Other operations (2.3 ) (4.3 ) 2.0
(46.5 )
Income from continuing operations 13.9
29.1
(15.2 ) (52.2 )
Other expense:
Interest expense (1.2 ) (0.6 ) (0.6 ) 100.0
Total other expense (1.2 ) (0.6 ) (0.6 ) 100.0
Income from continuing operations before income taxes 12.7
28.5
(15.8 ) (55.4 )
Income tax expense 3.5
7.3
(3.8 ) (52.1 )
Net income from continuing operations 9.2
21.2
(12.0 ) (56.6 )
(Loss) income from discontinued operations, net of tax (6.0 ) 1.1
(7.1 ) (645.5 )
Net income and comprehensive income $ 3.2
$ 22.3
$ (19.1 ) (85.7 )%

Note: Prior period balances have been adjusted to conform with the Company's revised segment reporting classification. See additional discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2019 Annual Report on Form 10-K(unaudited and in ~~Note 14,~~ thousands):


	Three Months Ended
	June 30, 2021		June 30, 2020		Change		Percent Change
Operating revenues:
Expedited Freight	$	351,735	$	235,658	$	116,077	49.3	%
Intermodal	69,133		46,428		22,705		48.9
Eliminations and other operations	(197)		(408)		211		(51.7)
Operating revenues	420,671		281,678		138,993		49.3
Operating expenses:
Purchased transportation	215,217		142,069		73,148		51.5
Salaries, wages, and employee benefits	84,641		63,772		20,869		32.7
Operating leases	20,370		17,387		2,983		17.2
Depreciation and amortization	9,414		9,413		1		—
Insurance and claims	10,891		7,722		3,169		41.0
Fuel expense	4,059		2,519		1,540		61.1
Other operating expenses	33,955		24,882		9,073		36.5

Total operating expenses	378,547		267,764		110,783		41.4
Income (loss) from continuing operations:
Expedited Freight	34,688		11,753		22,935		195.1
Intermodal	8,386		4,413		3,973		90.0

Other Operations	(950)		(2,252)		1,302		(57.8)
Income from continuing operations	42,124		13,914		28,210		202.7
Other expense:
Interest expense	(1,323)		(1,198)		(125)		10.4

Total other expense	(1,323)		(1,198)		(125)		10.4
Income from continuing operations before income taxes	40,801		12,716		28,085		220.9
Income tax expense	10,124		3,491		6,633		190.0
Net income from continuing operations	30,677		9,225		21,452		232.5
Loss from discontinued operations, net of tax	—		(6,071)		6,071		(100.0)
Net income and comprehensive income	$	30,677	$	3,154	$	27,523	872.6	%

~~Segment Reporting, to our Consolidated Financial Statements.~~

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Revenues

Operating ~~revenue decreased $21.2 million,~~revenues increased $138,993, or ~~7.0%~~49.3%, to ~~$281.7 million~~$420,671 for the three months ended June 30, ~~2020~~2021 compared to ~~$302.9 million~~$281,678 for the three months ended June 30, ~~2019.~~2020. The ~~decrease~~increase was primarily driven by an increase in our Expedited Freight segment of ~~$17.6 million~~$116,077 due to ~~decreased network, truckload~~increased Network, Truckload and ~~other revenue, partially offset by increased final mile revenue in our Expedited Freight segment as discussed further below.~~Final Mile revenue.

Operating Expenses

Operating expenses ~~decreased $6.0 million,~~increased $110,783, or ~~2.2%~~41.4%, to ~~$267.8 million~~$378,547 for the three months ended June 30, ~~2020~~2021 compared to ~~$273.8 million~~$267,764 for the three months ended June 30, ~~2019.~~2020. The ~~decrease~~increase was primarily driven by ~~insurance~~an increase in purchased transportation expense of $73,148 in both our Expedited Freight and ~~claims due~~Intermodal segments. Purchased transportation expense includes our independent contractor fleet owners and owner-operators, who lease their equipment to ~~decreased vehicle claims reserves over the prior year.~~our motor carrier, (“Leased Capacity Providers”) and third party carriers.

Income from Continuing Operations and Segment Operations

Income from continuing operations ~~decreased $15.2 million,~~increased $28,210, or ~~52.2%~~202.7%, to ~~$13.9 million~~$42,124 for the three months ended June 30, ~~2020~~2021 compared to ~~$29.1 million~~$13,914 for the three months ended June 30, ~~2019.~~2020. The ~~decrease is~~increase was primarily driven by ~~the impact~~an increase in income from continuing operations at our Expedited Freight segment and Intermodal segment of ~~COVID-19 on the Company's revenue.~~$22,935 and $3,973, respectively. The results for our two reportable segments are discussed in detail in the following sections.

Interest Expense

Interest expense was ~~$1.2 million~~$1,323 for the three months ended June 30, ~~2020~~2021 compared to ~~$0.6 million~~$1,198 for the three months ended June 30, ~~2019.~~2020. The increase in interest expense was attributable to additional outstanding borrowings onunder our revolving credit ~~facility.~~facility during the second quarter of 2021. The interest rate on the outstanding borrowings under the revolving credit facility was 3.25% as of both June 30, 2021 and June 30, 2020.

Income Taxes on a Continuing Basis

The combined federal and state effective tax rate on a continuing basis for the three months ended June 30, ~~2020~~2021 was ~~27.5%~~24.8% compared to a rate of ~~25.4%~~27.5% for the three months ended June 30, ~~2019.~~2020. The ~~higher~~lower effective tax rate for the three months ended June 30, ~~2020~~2021 was primarily due to ~~decreased~~increased vesting of restricted shares as well as exercises of stock ~~based compensation vesting and exercises~~options in the second quarter of 2021 when compared to the same period in ~~2019 and increased executive compensation as a percentage of income before income taxes, which was not deductible for income tax purposes.~~2020.

~~(Loss) Income~~Loss from Discontinued ~~Operations,~~Operation, net of tax

~~Income~~Loss from discontinued ~~operations,~~operation, net of tax ~~decreased $7.1 million to a $6.0 million loss~~was $6,071 for the three months ended June 30, ~~2020~~2020. Loss from ~~$1.1 million of income for~~discontinued operation includes our Pool business and, as discussed above, the Pool business was sold on February 12, 2021. For the three months ended June 30, ~~2019. Income from discontinued operations includes the Company's~~2020, our Pool business ~~and, as discussed above, Pool's operations were negatively~~was adversely impacted by COVID-19 as many of ~~its~~our customers were affected by retail mall ~~closures~~closure in response to stay-at-home ~~orders. As a result, there was a sudden and significant decline~~orders beginning in ~~Pool's operating revenue, resulting in an operating loss for Pool during the three months ended June 30,~~March 2020.

Net Income

As a result of the foregoing factors, net income ~~decreased by $19.1 million,~~increased $27,523, or ~~85.7%~~872.6%, to ~~$3.2 million~~$30,677 for the three months ended June 30, ~~2020~~2021 compared to ~~$22.3 million~~$3,154 for the three months ended June 30, ~~2019.~~2020.

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Expedited Freight - Three Months Ended June 30, ~~2020~~2021 compared to Three Months Ended June 30, ~~2019~~2020

The following table sets forth the ~~historical~~ financial data of our Expedited Freight segment for the three months ended June 30, ~~2020~~2021 and ~~2019 (in millions):~~2020:


Expedited Freight Segment Information
(unaudited and in thousands)

	Three Months Ended
	June 30, 2021		Percent of Revenue		June 30, 2020		Percent of Revenue		Change		Percent Change
Operating revenues:
Network1	$	210,088	59.7	%	$	134,173	56.9	%	$	75,915	56.6	%
Truckload	56,968		16.2		41,857		17.8		15,111		36.1
Final Mile	69,883		19.9		53,427		22.7		16,456		30.8
Other	14,796		4.2		6,201		2.6		8,595		138.6
Total operating revenues	351,735		100.0		235,658		100.0		116,077		49.3

Operating expenses:
Purchased transportation	191,648		54.5		127,478		54.1		64,170		50.3
Salaries, wages and employee benefits	67,560		19.2		50,508		21.4		17,052		33.8
Operating leases	14,868		4.2		13,338		5.7		1,530		11.5
Depreciation and amortization	6,779		1.9		6,740		2.9		39		0.6
Insurance and claims	8,385		2.4		5,715		2.4		2,670		46.7
Fuel expense	2,147		0.6		1,406		0.6		741		52.7
Other operating expenses	25,660		7.3		18,720		7.9		6,940		37.1

Total operating expenses	317,047		90.1		223,905		95.0		93,142		41.6
Income from operations	$	34,688	9.9	%	$	11,753	5.0	%	$	22,935	195.1	%

1Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

Expedited Freight Segment Information
(In millions)
(Unaudited)

Three months ended
June 30, Percent of June 30, Percent of Percent

2020 ¹
Revenue 2019 Revenue Change Change
(As Adjusted)
Operating revenue:
Network ²
$ 134.2
56.9 % $ 172.5
68.1 % $ (38.3 ) (22.2 )%
Truckload 41.9
17.8
48.6
19.2
(6.7 ) (13.8 )
Final Mile 53.4
22.7
25.0
9.9
28.4
113.6
Other 6.2
2.6
7.2
2.8
(1.0 ) (13.9 )
Total operating revenue 235.7
100.0
253.3
100.0
(17.6 ) (6.9 )

Operating expenses:
Purchased transportation 127.5
54.1
125.8
49.7
1.7
1.4
Salaries, wages and employee benefits 50.5
21.4
50.9
20.1
(0.4 ) (0.8 )
Operating leases 13.3
5.6
12.1
4.8
1.2
9.9
Depreciation and amortization 6.7
2.8
7.5
3.0
(0.8 ) (10.7 )
Insurance and claims 5.7
2.4
6.6
2.6
(0.9 ) (13.6 )
Fuel expense 1.4
0.6
2.7
1.1
(1.3 ) (48.1 )
Other operating expenses 18.8
8.0
19.5
7.7
(0.7 ) (3.6 )
Total operating expenses 223.9
95.0
225.1
88.9
(1.2 ) (0.5 )
Income from operations $ 11.8
5.0 % $ 28.2
11.1 % $ (16.4 ) (58.2 )%

¹Includes revenues and operating expenses from the acquisition of FSA and Linn Star, which were acquired in April 2019 and January 2020, respectively. FSA results are partially included in the prior period. Linn Star results are not included in the prior period.
² Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

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Expedited Freight Operating Statistics

	Three Months Ended
	June 30, 2021			June 30, 2020			Percent Change
Business days	64			64			—	%

Tonnage 1,2
Total pounds	728,191			522,031			39.5
Pounds per day	11,378			8,157			39.5

Shipments 1,2
Total shipments	1,096			963			13.8
Shipments per day	17.1			15.0			14.0

Weight per shipment	664			542			22.5

Revenue per hundredweight 3	$	28.63		$	26.32		8.8
Revenue per hundredweight, ex fuel 3	$	24.68		$	23.09		6.9

Revenue per shipment 3	$	191.89		$	139.30		37.8
Revenue per shipment, ex fuel 3	$	165.62		$	121.77		36.0

Network revenue from door-to-door shipments as a percentage of network revenue 3,4	51.3		%	49.9		%	2.8

1 In thousands
2 Excludes accessorial, Truckload and Final Mile products
3 Includes intercompany revenue between the Network and Truckload revenue streams
4 Door-to-door shipments include all shipments with a pickup and/or delivery

Expedited Freight Operating Statistics

Three months ended
June 30, June 30, Percent
2020 2019 Change
(As Adjusted)
Business days 64
64
— %

Tonnage ^1,2

    Total pounds 522,031
626,748
(16.7 )
    Pounds per day 8,157
9,793
(16.7 )

Shipments ^1,2

    Total shipments 963
1,014
(5.0 )
    Shipments per day 15.0
15.8
(5.0 )

Weight per shipment 542
618
(12.3 )

Revenue per hundredweight ³
$ 26.32
$ 27.39
(3.9 )
Revenue per hundredweight, ex fuel ³
$ 23.09
$ 22.91
0.8

Revenue per shipment ³
$ 139
$ 171
(18.7 )
Revenue per shipment, ex fuel ³
$ 122
$ 144
(15.3 )

Network revenue from door-to-door shipments as a percentage of network revenue ^3,4
49.9 % 39.9 % 25.1
Network gross margin ⁵
50.6 % 55.8 % (9.3 )%

¹ In thousands
² Excludes accessorial, full Truckload and Final Mile products
³ Includes intercompany revenue between the Network and Truckload revenue streams
⁴ Door-to-door shipments include all shipments with a pickup and/or delivery
⁵ Network revenue less Network purchased transportation as a percentage of Network revenue

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Operating Revenues

Expedited Freight operating ~~revenue decreased $17.6 million,~~revenues increased $116,077, or ~~6.9%~~49.3%, to ~~$235.7 million~~$351,735 for the three months ended June 30, ~~2020~~2021 from ~~$253.3 million~~$235,658 for the three months ended June 30, ~~2019.~~2020. The ~~decrease~~increase was attributable to ~~decreased network, truckload~~increased Network, Truckload and ~~other revenue, partially offset by increased final mile~~Final Mile revenue. Network revenue ~~decreased $38.3 million~~increased due to a ~~16.7% decrease~~39.5% increase in tonnage, a ~~5.0% decrease~~13.8% increase in shipments and a ~~3.9% decrease~~8.8% increase in revenue per hundredweight ~~over~~as compared to the prior ~~year~~year. The increase in tonnage and shipments was primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the second quarter of 2020. Strategic pricing initiatives and freight rationalization actions contributed to the increase in the revenue per hundredweight. Fuel surcharge revenue increased $11,925, or 70.6% as a result of the rise in fuel prices and increased tonnage. Truckload revenue increased $15,111 primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the second quarter of 2020. Final Mile revenue increased $16,456 due to the ~~impact~~combination of ~~COVID-19, discussed above.~~

~~In addition, fuel surcharge revenue decreased $10.8 million, or 39.1%, due to declining fuel prices~~organic growth and ~~decreased tonnage. Truckload revenue decreased by $6.7 million primarily due to a decrease~~the acquisition of CLW Delivery, Inc. (“CLW”) in ~~revenue per mile driven by rate pressures from both spot market and contract rate customers.~~October 2020. Other revenue, which includes warehousing and terminal handling, ~~decreased $1.0 million~~increased $8,595 due to the ~~lower~~higher linehaul tonnage and shipment counts. ~~Conversely, final mile revenue increased $28.4 million primarily due to the acquisitions of FSA in April 2019 and Linn Star in January 2020.~~

Purchased Transportation

Expedited Freight purchased transportation increased ~~$1.7 million,~~$64,170, or ~~1.4%~~50.3%, to ~~$127.5 million~~$191,648 for the three months ended June 30, ~~2020~~2021 from ~~$125.8 million~~$127,478 for the three months ended June 30, ~~2019.~~2020. Purchased transportation was ~~54.1%~~54.5% of Expedited Freight operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~49.7%~~54.1% for the same period in ~~2019.~~2020. Expedited Freight purchased transportation includes ~~owner operators~~Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. The increase in purchased transportation as a percentage of ~~revenue~~revenues was ~~mostly due to an increase in final mile purchased transportation~~primarily due to the ~~acquisitions~~change in the mix of ~~FSA~~freight capacity purchased from Leased Capacity Providers, third party carriers and ~~Linn Star.~~Company-employed drivers for Network and Truckload services. In the second quarter of 2021, we purchased 63.0%, 33.7% and 3.3% of our freight capacity from Leased Capacity Providers, third party carriers and Company-employed drivers, respectively. This ~~increase was partially offset by a 4.6% reduction~~compares to 68.4%, 27.3% and 4.3% in the same period in ~~linehaul cost per mile due to increased utilization of owner-operators over more costly third-party transportation providers.~~2020.

Salaries, Wages and Employee Benefits

Expedited Freight salaries, wages and employee benefits ~~decreased $0.4 million,~~increased $17,052, or ~~0.8%~~33.8%, to ~~$50.5 million~~$67,560 for the three months ended June 30, ~~2020~~2021 from ~~$50.9 million~~$50,508 for the three months ended June 30, ~~2019.~~2020. Salaries, wages and employee benefits were ~~21.4%~~19.2% of Expedited Freight operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~20.1%~~21.4% for the same period in ~~2019.~~ 2020. The ~~decrease~~increase in salaries, wages and employee benefits expense was ~~primarily~~ due to ~~cost-control~~the additional employees hired in response to the increase in tonnage and shipments in the second quarter of 2021, higher group health insurance premiums and an increased reserve for incentive compensation. Cost-control measures implemented in ~~response to COVID-19 and was partially offset by a $4.6 million increase due~~the prior year contributed to the ~~acquisitions~~decrease in salaries, wages and employee benefits expense as a percentage of ~~FSA and Linn Star.~~operating revenues.

Operating Leases

Expedited Freight operating leases increased ~~$1.2 million,~~$1,530, or ~~9.9%~~11.5%, to ~~$13.3 million~~$14,868 for the three months ended June 30, ~~2020~~2021 from ~~$12.1 million~~$13,338 for the three months ended June 30, ~~2019.~~2020. Operating leases were ~~5.6%~~4.2% of Expedited Freight operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~4.8%~~5.7% for the same period in ~~2019.~~2020. The increase in operating leases expense was primarily due to ~~an increase~~higher facility and equipment lease expense in 2021, which is partially attributable to facility leases ~~mostly from additional facilities acquired from FSA~~assumed in connection with the CLW and ~~Linn Star.~~J&P acquisitions.

Depreciation and Amortization

Expedited Freight depreciation and amortization ~~decreased $0.8 million,~~increased $39, or ~~10.7%~~0.6%, to ~~$6.7 million~~$6,779 for the three months ended June 30, ~~2020~~2021 from ~~$7.5 million~~$6,740 for the three months ended June 30, ~~2019.~~2020. Depreciation and amortization was ~~2.8%~~1.9% of Expedited Freight operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~3.0%~~2.9% for the same period in ~~2019.~~2020. The ~~decrease~~increase in depreciation and amortization expense ~~was~~is primarily due to ~~a $1.7 million decrease in trailer depreciation~~the additional amortization expense resulting from the acquisitions of CLW and J&P.

Insurance and Claims

Expedited Freight insurance and claims increased $2,670, or 46.7%, to $8,385 for the three months ended June 30, ~~2020 compared to the same period in 2019 primarily related to extending the useful lives of its trailers~~2021 from seven to ten years in the third quarter of 2019. See additional discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2019 Annual Report on Form 10-K. This decrease was partially offset by $0.7 million of increased amortization of acquired intangibles from the acquisitions of FSA and Linn Star.

~~Insurance and Claims~~

~~Expedited Freight insurance and claims decreased $0.9 million, or 13.6%, to $5.7 million~~$5,715 for the three months ended June 30, ~~2020 from $6.6 million for the three months ended June 30, 2019.~~2020. Insurance and claims were 2.4% of Expedited Freight operating ~~revenue~~revenues for both the three months ended June 30, 2021 and 2020. The increase in insurance and claims expense was primarily attributable to an increase in vehicle insurance premiums as well as additional vehicle liability and cargo claims. See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations” section below.

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Fuel Expense

Expedited Freight fuel expense increased $741, or 52.7%, to $2,147 for the three months ended June 30, 2020 compared to 2.6% for the same period in 2019. The decrease in expense was primarily attributable to a decrease in vehicle liability claims. See additional discussion over the consolidated increase in self-insurance reserves related to vehicle claims in the "Other operations" section below.

~~Table of Contents~~

~~Fuel Expense~~

~~Expedited Freight fuel expense decreased $1.3 million, or 48.1%, to $1.4 million~~2021 from $1,406 for the three months ended June 30, ~~2020 from $2.7 million for the three months ended June 30, 2019.~~2020. Fuel expense was 0.6% of Expedited Freight operating ~~revenue~~revenues for both the three months ended June 30, ~~2020 compared to 1.1% for the same period in 2019.~~2021 and 2020. Expedited Freight fuel expense ~~decreased~~increased due to ~~lower~~increased mileage and the rise in the average price of fuel ~~prices and lower Company-employed driver miles.~~in the second quarter of 2021.

Other Operating Expenses

Expedited Freight other operating expenses ~~decreased $0.7 million,~~increased $6,940, or ~~3.6%~~37.1%, to ~~$18.8 million~~$25,660 for the three months ended June 30, ~~2020~~2021 from ~~$19.5 million~~$18,720 for the three months ended June 30, ~~2019.~~2020. Other operating expenses were ~~8.0%~~7.3% of Expedited Freight operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~7.7%~~7.9% for the same period in ~~2019. Other~~2020. The increase in other operating expenses ~~included~~was driven by an increase in equipment maintenance costs, terminal and office expenses, legal and professional fees, ~~and~~ other over-the-road ~~costs. These~~costs and parts for final mile installations. In the second quarter of 2020, other operating expenses ~~primarily decreased due to~~included a ~~$2.1 million decrease~~$2,108 gain from changes in the fair value of an earn-out liability ~~from the FSA acquisition~~ due to the timing of expected new ~~customer wins and a $1.1 million decrease~~business wins. A similar gain was not recorded in travel related expenses. These decreases were partly offset by a $2.0 million increase in parts costs for final mile installations and a $0.7 million increase in bad debt reserves in part due to increased specific reserves related to customers negatively impacted by COVID-19.the second quarter of 2021.

Income from Operations

Expedited Freight income from operations ~~decreased $16.4 million,~~increased $22,935, or ~~58.2%~~195.1%, to ~~$11.8 million~~$34,688 for the three months ended June 30, ~~2020~~2021 compared to ~~$28.2 million~~$11,753 for the three months ended June 30, ~~2019.~~2020. Income from operations was ~~5.0%~~9.9% of Expedited Freight operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~11.1%~~5.0% for the same period in ~~2019.~~2020. The ~~decrease~~increase in income from operations as a percentage of operating revenues was ~~primarily due to lower tonnage, shipments and~~driven by increased revenue per hundredweight ~~due to the impact~~and higher number of ~~COVID-19. In addition, the decrease was due to additional costs from the acquisitions of FSA~~shipments combine with cost-control measures and ~~Linn Star, as they continue to be integrated into the Expedited Freight segment. These margin deteriorations were~~operational efficiencies, partially offset by ~~increased utilization~~the change in mix of ~~owner-operators over more costly third-party transportation providers.~~freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers.

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Intermodal - Three Months Ended June 30, ~~2020~~2021 compared to Three Months Ended June 30, ~~2019~~2020

The following table sets forth the ~~historical~~ financial data of our Intermodal segment for the three months ended June 30, ~~2020~~2021 and ~~2019 (in millions):~~2020:


Intermodal Segment Information
(unaudited and in thousands)

	Three Months Ended
	June 30, 2021		Percent of Revenue		June 30, 2020		Percent of Revenue		Change		Percent Change
Operating revenues	$	69,133	100.0	%	$	46,428	100.0	%	$	22,705	48.9	%

Operating expenses:
Purchased transportation	23,767		34.4		14,904		32.1		8,863		59.5
Salaries, wages and employee benefits	16,230		23.5		11,728		25.3		4,502		38.4
Operating leases	5,500		8.0		4,045		8.7		1,455		36.0
Depreciation and amortization	2,612		3.8		2,648		5.7		(36)		(1.4)
Insurance and claims	2,355		3.4		1,789		3.9		566		31.6
Fuel expense	1,912		2.8		1,113		2.4		799		71.8
Other operating expenses	8,371		12.1		5,788		12.5		2,583		44.6
Total operating expenses	60,747		87.9		42,015		90.5		18,732		44.6
Income from operations	$	8,386	12.1	%	$	4,413	9.5	%	$	3,973	90.0	%


Intermodal Operating Statistics

	Three Months Ended
	June 30, 2021		June 30, 2020		Percent Change
Drayage shipments	96,805		68,974		40.3	%
Drayage revenue per shipment	$	618	$	556	11.2	%
Number of locations	29		24		20.8	%

Intermodal Segment Information
(In millions)
(Unaudited)

Three months ended
June 30, Percent of June 30, Percent of Percent

2020 ¹
Revenue 2019 Revenue Change Change
Operating revenue $ 46.4
100.0 % $ 50.5
100.0 % $ (4.1 ) (8.1 )%

Operating expenses:
Purchased transportation 14.9
32.1
18.2
36.0
(3.3 ) (18.1 )
Salaries, wages and employee benefits 11.7
25.2
12.4
24.6
(0.7 ) (5.6 )
Operating leases 4.0
8.6
4.0
7.9
—
—
Depreciation and amortization 2.6
5.6
1.8
3.6
0.8
44.4
Insurance and claims 1.8
3.9
1.7
3.4
0.1
5.9
Fuel expense 1.1
2.4
1.7
3.4
(0.6 ) (35.3 )
Other operating expenses 5.9
12.7
5.5
10.9
0.4
7.3
Total operating expenses 42.0
90.5
45.3
89.7
(3.3 ) (7.3 )
Income from operations $ 4.4
9.5 % $ 5.2
10.3 % $ (0.8 ) (15.4 )%

¹Includes revenues and operating expenses from the acquisition of OST, which was acquired in July 2019 (and is not included in the prior period)

Intermodal Operating Statistics

Three months ended
June 30, June 30, Percent
2020 2019 Change
Drayage shipments 68,974
76,074
(9.3 )%
Drayage revenue per shipment $ 556
$ 571
(2.6 )
Number of locations 24
21
14.3 %

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Revenues

Intermodal operating ~~revenue decreased $4.1 million,~~revenues increased $22,705, or ~~8.1%~~48.9%, to ~~$46.4 million~~$69,133 for the three months ended June 30, ~~2020~~2021 from ~~$50.5 million~~$46,428 for the three months ended June 30, ~~2019.~~2020. The ~~decrease~~increase in operating ~~revenue~~revenues was primarily attributable to a ~~9.3% decrease~~40.3% increase in drayage shipments over ~~prior year primarily due to~~ the ~~impact of COVID-19, discussed above.~~same period in 2020 and an increase in accessorial revenues. The ~~decrease~~increase in ~~revenue from declining~~ drayage shipments was ~~partially offset~~driven by ~~increased accessorial revenue.~~the combination of the economic recovery from COVID-19, which adversely impacted the results of operations for the second quarter of 2020, and the Proficient Transport acquisition in February 2021.

Purchased Transportation

Intermodal purchased transportation ~~decreased $3.3 million,~~increased $8,863, or ~~18.1%~~59.5%, to ~~$14.9 million~~$23,767 for the three months ended June 30, ~~2020~~2021 from ~~$18.2 million~~$14,904 for the three months ended June 30, ~~2019.~~2020. Purchased transportation was ~~32.1%~~34.4% of Intermodal operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~36.0%~~32.1% for the same period in ~~2019.~~2020. Intermodal purchased transportation includes ~~owner operators~~Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. The ~~decrease~~increase in ~~Intermodal~~ purchased transportation as a percentage of ~~revenue~~revenues was primarily due to ~~operating efficiencies~~the change in the mix of freight capacity purchased from Leased Capacity Providers, third party carriers and ~~increased accessorial revenue over the prior year.~~Company-employed drivers.

Salaries, Wages and Employee Benefits

Intermodal salaries, wages and employee benefits ~~decreased $0.7 million,~~increased $4,502, or ~~5.6%~~38.4%, to ~~$11.7 million~~$16,230 for the three months ended June 30, ~~2020~~2021 compared to ~~$12.4 million~~$11,728 for the three months ended June 30, ~~2019.~~2020. Salaries, wages and employee benefits were ~~25.2%~~23.5% of Intermodal operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~24.6%~~25.3% for the same period in ~~2019.~~ 2020. The ~~decrease~~increase in salaries, wages and employee benefits expense was primarily due to ~~cost-control measures~~the additional employees hired in response to ~~COVID-19.~~the increase in shipments in the second quarter of 2021 and an increased reserve for incentive compensation. Cost-control measures implemented in the prior year contributed to the decrease in salaries, wages and employee benefits expense as a percentage of operating revenues.

Operating Leases

Intermodal operating leases ~~remained unchanged~~increased $1,455, or 36.0%, to $5,500 for the three months ended June 30, ~~2020~~2021 compared to ~~the three months ended June 30, 2019. Operating leases were 8.6% of Intermodal operating revenue~~$4,045 for the three months ended June 30, ~~2020 compared to 7.9% for the same period in 2019. The increase as a percentage~~2020. Operating leases were 8.0% of ~~revenue was due to the decreased drayage volumes over the prior year.~~

~~Depreciation and Amortization~~

Intermodal ~~depreciation and amortization increased $0.8 million, or 44.4%, to $2.6 million~~operating revenues for the three months ended June 30, ~~2020 from $1.8 million~~2021 compared to 8.7% for the same period in 2020. The increase in operating leases expense was primarily due to new trailer leases in 2021.

Depreciation and Amortization

Intermodal depreciation and amortization decreased $36, or 1.4%, to $2,612 for the three months ended June 30, ~~2019. Depreciation and amortization was 5.6% of Intermodal operating revenue~~2021 from $2,648 for the three months ended June 30, ~~2020 compared to 3.6% for the same period in 2019~~. ~~The increase in depreciation~~2020. Depreciation and amortization was ~~due to a $0.6 million increase in depreciation~~3.8% of ~~equipment partly due to the equipment acquired from OST. The increase was also attributable to a $0.2 million increase in amortization of acquired intangibles.~~

~~Insurance and Claims~~

Intermodal ~~insurance and claims increased $0.1 million, or 5.9%, to $1.8 million~~operating revenues for the three months ended June 30, 2021 compared to 5.7% for the same period in 2020. The decrease in depreciation and amortization expense was primarily due to the full depreciation of equipment obtained through acquisitions in 2020, partially offset by the additional amortization expense resulting from ~~$1.7 million~~the acquisition of Proficient Transport.

Insurance and Claims

Intermodal insurance and claims increased $566, or 31.6%, to $2,355 for the three months ended June 30, ~~2019. Insurance and claims were 3.9% of Intermodal operating revenue~~2021 from $1,789 for the three months ended June 30, ~~2020~~2020. Insurance and claims were 3.4% of Intermodal operating revenues for the three months ended June 30, 2021 compared to ~~3.4%~~3.9% for the same period in ~~2019.~~ 2020. The increase in ~~Intermodal~~ insurance and claims expense was primarily due to an increase in vehicle insurance ~~premiums, partly offset by a decrease in claims.~~premiums. See additional ~~discussion~~discussion over the consolidated ~~increase~~change in self-insurance reserves ~~related to vehicle claims~~ in the ~~"Other operations"~~“Other Operations” section below.

Fuel Expense

Intermodal fuel expense ~~decreased $0.6 million,~~increased $799, or ~~35.3%~~71.8%, to ~~$1.1 million~~$1,912 for the three months ended June 30, ~~2020~~2021 from ~~$1.7 million~~$1,113 for the three months ended June 30, ~~2019.~~2020. Fuel expense was ~~2.4%~~2.8% of Intermodal operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~3.4%~~2.4% for the same period in ~~2019.~~2020. Intermodal fuel expense ~~decreased~~increased due to ~~lower~~increased mileage and the rise in the average price of fuel ~~prices and lower Company-employed driver activity.~~in the second quarter of 2021.

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Other Operating Expenses

Intermodal other operating expenses increased ~~$0.4 million,~~$2,583, or ~~7.3%~~44.6%, to ~~$5.9 million~~$8,371 for the three months ended June 30, ~~2020~~2021 from ~~$5.5 million~~$5,788 for the three months ended June 30, ~~2019.~~2020. Other operating expenses were ~~12.7%~~12.1% of Intermodal operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~10.9%~~12.5% for the same period in ~~2019.~~2020. The increase in Intermodal other operating expenses was primarily due to ~~a $0.2 million increase in bad debt reserves in part due to increased specific reserves related to customers negatively impacted by COVID-19 and increased~~additional expenses to support the increased accessorial ~~revenue~~revenues noted above.

Income from Operations

Intermodal income from operations ~~decreased $0.8 million,~~increased $3,973, or ~~15.4%~~90.0%, to ~~$4.4 million~~$8,386 for the three months ended June 30, ~~2020~~2021 compared to ~~$5.2 million~~$4,413 for the three months ended June 30, ~~2019.~~2020. Income from operations was ~~9.5%~~12.1% of Intermodal operating ~~revenue~~revenues for the three months ended June 30, ~~2020~~2021 compared to ~~10.3%~~9.5% for the same period in ~~2019.~~2020. The ~~deterioration~~increase in income from operations as a percentage of operating ~~income~~revenues was ~~primarily attributable to increased bad debt reserves and losing~~driven by the operating leverage on fixed costs such as operating leases, depreciation and ~~amortization due to the impact of COVID-19.~~

amortization.

Other Operations - Three Months Ended June 30, ~~2020~~2021 compared to Three Months Ended June 30, ~~2019~~2020

Other ~~operating activity was a $2.3 million~~operations included an $950 operating loss during the three months ended June 30, ~~2020 and~~2021 compared to a ~~$4.3 million~~$2,252 operating loss during the three months ended June 30, ~~2019.~~2020. The ~~three months ended June 30, 2020 included severance of $1.0 million and increased~~change in the operating loss was driven by decreased self-insurance reserves for vehicle liability and workers’ compensation claims, ~~of $0.6 million.~~partially offset by an accrual for an incentive program established in 2021 and increased reserves for group health insurance claims. The ~~increase~~decrease in the self-insurance reserves ~~were primarily~~for vehicle liability and workers’ compensation claims was due to ~~increases to our~~the favorable loss development ~~factors for prior quarter claims. The remaining loss was~~factor of historical claims attributable to ~~$0.3 million~~the safety measures in ~~share based compensation and $0.5 million~~place. In the second quarter of ~~corporate~~2020, severance costs ~~previously allocated to~~in the ~~Pool Distribution segment that are~~amount of $997 were recorded in accordance with severance agreements for former employees. Similar severance costs were not ~~part of the discontinued operation. These costs represent corporate costs that will remain with the Company after the Pool Distribution business is divested.~~

~~The $4.3 million operating loss for the three months ended June 30, 2019 was primarily due to a $4.0 million vehicle claim reserve~~ recorded in the second quarter of 2019 for pending vehicular claims, partly offset by decreases to our loss development factors for vehicle and workers' compensation claims of $0.5 million and $0.3 million, respectively. The remaining loss was attributed to $0.6 million in costs related to the CEO transition, including retention shares, and $0.5 million of corporate costs previously allocated to the Pool Distribution segment that are not part of the discontinued operation.2021.

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Results from Operations

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The following table sets forth our consolidated historical financial data from operations for the six months ended June 30, 2021 and 2020 ~~and 2019 (in millions):~~

Six months ended June 30,
2020 2019 Change Percent Change
(As Adjusted)
Operating revenue:
Expedited Freight $ 489.3
$ 478.9
$ 10.4
2.2 %
Intermodal 98.9
104.6
(5.7 ) (5.4 )
Eliminations and other operations (1.0 ) (1.7 ) 0.7
(41.2 )
Operating revenue 587.2
581.8
5.4
0.9
Operating expenses:
Purchased transportation 292.7
276.0
16.7
6.1
Salaries, wages, and employee benefits 133.3
123.9
9.4
7.6
Operating leases 35.3
31.0
4.3
13.9
Depreciation and amortization 18.7
18.5
0.2
1.1
Insurance and claims 17.8
19.7
(1.9 ) (9.6 )
Fuel expense 6.5
8.5
(2.0 ) (23.5 )
Other operating expenses 53.2
51.4
1.8
3.5
Total operating expenses 557.5
529.0
28.5
5.4
Income (loss) from continuing operations:
Expedited LTL 26.9
49.1
(22.2 ) (45.2 )
Intermodal 8.1
11.4
(3.3 ) (28.9 )
Other operations (5.3 ) (7.7 ) 2.4
(31.2 )
Income from continuing operations 29.7
52.8
(23.1 ) (43.8 )
Other expense:
Interest expense (2.1 ) (1.2 ) (0.9 ) 75.0
Total other expense (2.1 ) (1.2 ) (0.9 ) 75.0
Income from continuing operations before income taxes 27.6
51.6
(24.0 ) (46.5 )
Income tax expense 7.0
12.7
(5.7 ) (44.9 )
Net income from continuing operations $ 20.6
$ 38.9
$ (18.3 ) (47.0 )
(Loss) income from discontinued operations, net of tax (9.1 ) 1.8
(10.9 ) (605.6 )
Net income and comprehensive income $ 11.5
$ 40.7
$ (29.2 ) (71.7 )%


	Six Months Ended
	June 30, 2021		June 30, 2020		Change		Percent Change
Operating revenues:
Expedited Freight	$	655,921	$	489,287	$	166,634	34.1	%
Intermodal	127,647		98,888		28,759		29.1
Eliminations and other operations	(695)		(940)		245		(26.1)
Operating revenues	782,873		587,235		195,638		33.3
Operating expenses:
Purchased transportation	399,825		292,667		107,158		36.6
Salaries, wages, and employee benefits	159,538		133,331		26,207		19.7
Operating leases	39,537		35,271		4,266		12.1
Depreciation and amortization	18,651		18,747		(96)		(0.5)
Insurance and claims	20,632		17,766		2,866		16.1
Fuel expense	7,761		6,532		1,229		18.8
Other operating expenses	72,081		53,234		18,847		35.4

Total operating expenses	718,025		557,548		160,477		28.8
Income (loss) from continuing operations:
Expedited Freight	59,218		26,933		32,285		119.9
Intermodal	12,895		8,126		4,769		58.7
Other Operations	(7,265)		(5,372)		(1,893)		35.2
Income from continuing operations	64,848		29,687		35,161		118.4
Other expense:
Interest expense	(2,488)		(2,051)		(437)		21.3

Total other expense	(2,488)		(2,051)		(437)		21.3
Income from continuing operations before income taxes	62,360		27,636		34,724		125.6
Income tax expense	14,969		6,995		7,974		114.0
Net income from continuing operations	47,391		20,641		26,750		129.6
Loss from discontinued operation, net of tax	(5,533)		(9,112)		3,579		(39.3)
Net income and comprehensive income	$	41,858	$	11,529	$	30,329	263.1	%

~~Segment Reporting, to our Consolidated Financial Statements.~~

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Revenues

Operating ~~revenue~~revenues increased ~~$5.4 million,~~$195,638, or ~~0.9%~~33.3% to ~~$587.2 million~~$782,873 for the six months ended June 30, ~~2020~~2021 compared to ~~$581.8 million~~$587,235 for the six months ended June 30, ~~2019.~~2020. The increase was primarily driven by our Expedited Freight segment of $10.4 million driven by final mile revenue from the acquisition of FSA in April 2019 and Linn Star in January 2020. Revenue increases associated with the final mile acquisitions were partially offset by decreased volumes$166,634 due to ~~COVID-19, which impacted each of the Company's segments, as further discussed below.~~increased Network, Truckload and Final Mile.

Operating Expenses

Operating expenses increased ~~$28.5 million,~~$160,477, or ~~5.4%~~28.8%, to ~~$557.5 million~~$718,025 for the six months ended June 30, ~~2020~~2021 compared to ~~$529.0 million~~$557,548 for the six months ended June 30, ~~2019.~~2020. The increase was primarily driven by a purchased transportation ~~increases~~increase of ~~$16.7 million~~$107,158 in our Expedited Freight and ~~salaries, wages and employee benefits increases of $9.4 million.~~Intermodal segments. Purchased transportation includes ~~owner operators~~Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. Purchased transportation expense increased due to increases for the Expedited Freight segment. These increases were mostly due to an increase in final mile purchased transportation due to the acquisitions of FSA and Linn Star. Salaries, wages and employee benefits increased primarily due to additional salaries from acquisitions and increased Company-employed drivers.carriers.

Income from Continuing Operations and Segment Operations

Income from continuing operations ~~decreased $23.1 million,~~increased $35,161, or ~~43.8%~~118.4%, to ~~$29.7 million~~$64,848 for the six months ended June 30, ~~2020~~2021 compared to ~~$52.8 million~~$29,687 for the six months ended June 30, ~~2019.~~2020. The ~~decrease is~~increase was primarily driven by ~~the impact~~increases at our Expedited Freight segment and Intermodal segment of ~~COVID-19 on the Company's volumes.~~$32,285 and $4,769, respectively. The results for our two reportable segments are discussed in detail in the following sections.

Interest Expense

Interest expense was ~~$2.1 million~~$2,488 for the six months ended June 30, ~~2020~~2021 compared to ~~$1.2 million~~$2,051 for the six months ended June 30, ~~2019.~~2020. The increase in interest expense was attributable to additional outstanding borrowings onunder our revolving credit ~~facility.~~facility during the six months ended June 30, 2021.

Income Taxes on a Continuing Basis

The combined federal and state effective tax rate on a continuing basis for the six months ended June 30, ~~2020~~2021 was ~~25.3%~~24.0% compared to a rate of ~~24.6%~~25.3% for the six months ended June 30, ~~2019.~~2020. The ~~higher~~lower effective tax rate for the six months ended June 30, ~~2020~~2021 was primarily due to ~~decreased~~increased vesting of restricted shares as well as exercises of stock ~~based compensation vesting and exercises~~ options in for the six months ended June 30, 2021 when compared to the same period in ~~2019 and increased executive compensation as a percentage of income before income taxes, which was not deductible for income tax purposes.~~2020.

~~(Loss) Income~~Loss from Discontinued ~~Operations,~~Operation, net of tax

~~Income~~Loss from discontinued operations, net of tax decreased ~~$10.9 million~~$3,579 to a ~~$9.1 million~~$5,533 loss for the six months ended June 30, ~~2020~~2021 from ~~$1.8 million of income~~a $9,112 loss for the six months ended June 30, ~~2019. (Loss) income~~2020. Loss from discontinued ~~operations~~operation includes ~~the Company's~~our Pool business and, as discussed above, ~~Pool's operations were negatively~~the Pool business was sold on February 12, 2021. For the six months ended June 30, 2020, our Pool business was adversely impacted by COVID-19 as many of ~~its~~our customers were affected by retail mall ~~closures~~closure in response to stay-at-home orders beginning in March 2020. ~~As a result, there was a sudden and significant decline in Pool's operating revenue, resulting in an operating loss for Pool during the six months ended June 30, 2020.~~

Net Income

As a result of the foregoing factors, net income ~~decreased~~increased by ~~$29.2 million,~~$30,329, or ~~71.7%~~263.1%, to ~~$11.5 million~~$41,858 for the six months ended June 30, ~~2020~~2021 compared to ~~$40.7 million~~$11,529 for the six months ended June 30, ~~2019.~~2020.

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Expedited Freight - Six Months Ended June 30, ~~2020~~2021 compared to Six Months Ended June 30, ~~2019~~2020

The following table sets forth the historical financial data of our Expedited Freight segment for the six months ended June 30, ~~2020~~2021 and ~~2019 (in millions):~~2020:


Expedited Freight Segment Information
(unaudited and in thousands)

	Six Months Ended
	June 30, 2021		Percent of Revenue		June 30, 2020		Percent of Revenue		Change		Percent Change
Operating revenues:
Network 1	$	388,715	59.3	%	$	286,182	58.5	%	$	102,533	35.8	%
Truckload	109,348		16.7		89,384		18.3		19,964		22.3
Final Mile	132,139		20.1		101,229		20.7		30,910		30.5
Other	25,719		3.9		12,492		2.6		13,227		105.9
Total operating revenues	655,921		100.0		489,287		100.0		166,634		34.1

Operating expenses:
Purchased transportation	356,012		54.3		260,268		53.2		95,744		36.8
Salaries, wages and employee benefits	129,247		19.7		105,943		21.7		23,304		22.0
Operating leases	29,086		4.4		26,940		5.5		2,146		8.0
Depreciation and amortization	13,577		2.1		13,435		2.7		142		1.1
Insurance and claims	15,996		2.4		12,328		2.5		3,668		29.8
Fuel expense	4,140		0.6		3,550		0.7		590		16.6
Other operating expenses	48,645		7.4		39,890		8.2		8,755		21.9

Total operating expenses	596,703		91.0		462,354		94.5		134,349		29.1
Income from operations	$	59,218	9.0	%	$	26,933	5.5	%	$	32,285	119.9	%

1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

Expedited Freight Segment Information
(In millions)
(Unaudited)

Six months ended
June 30, Percent of June 30, Percent of Percent

2020 ¹
Revenue 2019 Revenue Change Change
(As Adjusted)
Operating revenue:
Network ²
$ 286.2
58.5 % $ 333.8
69.7 % $ (47.6 ) (14.3 )%
Truckload 89.4
18.3
96.3
20.1
(6.9 ) (7.2 )
Final Mile 101.2
20.7
34.7
7.2
66.5
191.6
Other 12.5
2.6
14.1
2.9
(1.6 ) (11.3 )
Total operating revenue 489.3
100.0
478.9
100.0
10.4
2.2

Operating expenses:
Purchased transportation 260.3
53.2
240.6
50.2
19.7
8.2
Salaries, wages and employee benefits 106.0
21.7
96.7
20.2
9.3
9.6
Operating leases 26.9
5.5
23.2
4.8
3.7
15.9
Depreciation and amortization 13.4
2.7
14.9
3.1
(1.5 ) (10.1 )
Insurance and claims 12.4
2.5
11.6
2.4
0.8
6.9
Fuel expense 3.5
0.7
5.2
1.1
(1.7 ) (32.7 )
Other operating expenses 39.9
8.2
37.6
7.9
2.3
6.1
Total operating expenses 462.4
94.5
429.8
89.7
32.6
7.6
Income from operations $ 26.9
5.5 % $ 49.1
10.3 % $ (22.2 ) (45.2 )%

¹Includes revenues and operating expenses from the acquisition of FSA and Linn Star, which were acquired in April 2019 and January 2020, respectively. FSA results are partially included in the prior period. Linn Star results are not included in the prior period.
² Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue

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Expedited Freight Operating Statistics

	Six Months Ended
	June 30, 2021			June 30, 2020			Percent Change
Business days	127			128			(0.8)	%

Tonnage 1,2
Total pounds	1,379,530			1,091,987			26.3
Pounds per day	10,862			8,531			27.3

Shipments 1,2
Total shipments	2,122			1,849			14.8
Shipments per day	16.7			14.4			15.7

Weight per shipment	650			591			10.0

Revenue per hundredweight 3	$	28.12		$	26.76		5.1
Revenue per hundredweight, ex fuel 3	$	24.29		$	23.09		5.2

Revenue per shipment 3	$	183.39		$	154.81		18.5
Revenue per shipment, ex fuel 3	$	158.47		$	133.11		19.1

Network revenue from door-to-door shipments as a percentage of network revenue 3,4	50.0		%	46.9		%	6.6

1 In thousands
2 Excludes accessorial, Truckload and Final Mile products
3 Includes intercompany revenue between the Network and Truckload revenue streams
4 Door-to-door shipments include all shipments with a pickup and/or delivery

Expedited Freight Operating Statistics

Six months ended
June 30, June 30, Percent
2020 2019 Change
(As Adjusted)
Business days 128
127
0.8 %

Tonnage ^1,2

    Total pounds 1,091,987
1,223,388
(10.7 )
    Pounds per day 8,531
9,633
(11.4 )

Shipments ^1,2

    Total shipments 1,849
1,944
(4.9 )
    Shipments per day 14.4
15.3
(5.6 )

Weight per shipment 591
629
(6.0 )

Revenue per hundredweight ³
$ 26.76
$ 27.09
(1.2 )
Revenue per hundredweight, ex fuel ³
23.09
22.83
1.1

Revenue per shipment ³
$ 155
173
(10.4 )
Revenue per shipment, ex fuel ³
133
146
(8.9 )

Network revenue from door-to-door shipments as a percentage of network revenue ^3,4
46.9 % 39.1 % 19.9
Network gross margin ⁵
52.1 % 55.1 % (5.4 )

¹ In thousands
² Excludes accessorial, full Truckload and Final Mile products
³ Includes intercompany revenue between the Network and Truckload revenue streams
⁴ Door-to-door shipments include all shipments with a pickup and/or delivery
⁵ Network revenue less Network purchased transportation as a percentage of Network revenue

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Operating Revenues

Expedited Freight operating ~~revenue~~revenues increased ~~$10.4 million,~~$166,634, or ~~2.2%~~34.1%, to ~~$489.3 million~~$655,921 for the six months ended June 30, 2021 from ~~$478.9 million~~$489,287 for the six months ended June 30, 2020. The increase was ~~due~~attributable to increased ~~final mile revenue of $66.5 million, partially offset by decreases in network, truckload~~Network, Truckload and ~~other~~Final Mile revenue. ~~Final mile revenue increased primarily due to the acquisition of FSA in April 2019 and Linn Star in January 2020.~~ Network revenue ~~decreased $47.6 million~~increased due to a ~~10.7% decrease~~26.3% increase in tonnage, a ~~4.9% decrease~~14.8% increase in shipments and a ~~1.2% decrease~~10.0% increase in revenue per hundredweight ~~over~~as compared to the prior year. The ~~decrease~~increase in tonnage and shipments was primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the sixmonths ended June 30, 2020. Strategic pricing initiatives and freight rationalization actions contributed to the increase in the revenue per hundredweight. Fuel surcharge revenue increased $12,788, or 31.9% as a result of the rise in fuel prices and increased tonnage. Truckload revenue increased $19,964 primarily driven by the economic recovery from COVID-19, which adversely impacted the results of operations for the sixmonths ended June 30, 2020. Final Mile revenue increased $30,910 due to the ~~impact~~combination of ~~COVID-19, discussed above. The decrease~~organic growth and the acquisition of CLW Delivery, Inc. (“CLW”) in revenue per hundredweight was due to decreased shipment size and rates. In addition, fuel surcharge revenue decreased $10.8 million, or 39.1%, due to declining fuel prices and decreased tonnage. Truckload revenue decreased by $6.9 million primarily due to a decrease in revenue per mile driven by rate pressures from both spot market and contract rate customers.October 2020. Other revenue, which includes warehousing and terminal handling, ~~decreased $1.6 million~~increased $13,227 due to the ~~lower~~higher linehaul tonnage and shipment ~~counts~~counts.

Purchased Transportation

Expedited Freight purchased transportation increased ~~$19.7 million,~~$95,744, or ~~8.2%~~36.8%, to ~~$260.3 million~~$356,012 for the six months ended June 30, ~~2020~~2021 from ~~$240.6 million~~$260,268 for the six months ended June 30, ~~2019.~~2020. Purchased transportation was ~~53.2%~~54.3% of Expedited Freight operating revenue for the six months ended June 30, ~~2020~~2021 compared to ~~50.2%~~53.2% for the same period in ~~2019.~~2020. Expedited Freight purchased transportation includes ~~owner operators~~Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. The increase in purchased transportation as a percentage of ~~revenue~~revenues was ~~mostly due to an increase in final mile purchased transportation~~primarily due to the ~~acquisitions~~change in the mix of ~~FSA and Linn Star. This increase was partially offset by a 4.5% reduction in linehaul cost per mile due to increased utilization of owner-operators~~freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers ~~over more costly third-party transportation providers.~~for Network and Truckload services. For the six months ended June 30, 2021, we purchased 63.8%, 32.6% and 3.6% of our freight capacity from Leased Capacity Providers, third party carriers and Company-employed drivers, respectively. This compares to 70.4%, 24.8% and 4.8% in the same period in 2020.

Salaries, Wages, and Employee Benefits

Expedited Freight salaries, wages and employee benefits increased by ~~$9.3 million,~~$23,304, or ~~9.6%~~22.0%, to ~~$106.0 million~~$129,247 for the six months ended June 30, ~~2020~~2021 from ~~$96.7 million~~$105,943 for the six months ended June 30, ~~2019.~~2020. Salaries, wages and employee benefits were ~~21.7%~~19.7% of Expedited ~~Freight’s~~Freight operating ~~revenue~~revenues for the six months ended June 30, ~~2020~~2021 compared to ~~20.2%~~21.7% for the same period in ~~2019.~~ 2020. The increase in salaries, wages and employee benefits expense was primarily due to ~~a $12.3 million increase due~~the additional employees hired in response to the ~~acquisitions of FSA~~increase in tonnage and ~~Linn Star. An additional $2.1 million increase was primarily related to credits for~~shipments in 2021, higher group health insurance premiums ~~received~~and an increased reserve for incentive compensation. Cost-control measures implemented in the prior ~~year. These increases were partially offset by cost-control measures implemented~~ year contributed to the decrease in ~~response to COVID-19.~~salaries, wages and employee benefits expense as a percentage of operating revenues.

Operating Leases

Expedited Freight operating leases increased ~~$3.7 million,~~$2,146, or ~~15.9%~~8.0%, to ~~$26.9 million~~$29,086 for the six months ended June 30, ~~2020~~2021 from ~~$23.2 million~~$26,940 for the six months ended June 30, ~~2019.~~2020. Operating leases were ~~5.5%~~4.4% of Expedited Freight operating ~~revenue~~revenues for the six months ended June 30, ~~2020~~2021 compared to ~~4.8%~~5.5% for the same period in ~~2019.~~2020. The increase in operating leases expense was primarily due to ~~a $3.3 million increase~~higher facility and equipment lease expense in 2021, which is partially attributable to facility leases ~~mostly from additional facilities acquired from FSA~~assumed in connection with the CLW and Linn Star and a $0.7 million increase in tractor rentals and leases to correspond with increased Company-employed driver usage. These increases were partially offset by a $0.2 million decrease in trailer rentals and leases, as old leases were replaced with purchased trailers.J&P acquisitions.

Depreciation and Amortization

Expedited Freight depreciation and amortization ~~decreased $1.5 million,~~increased $142, or ~~10.1%~~1.1%, to ~~$13.4 million~~$13,577 for the six months ended June 30, ~~2020~~2021 from ~~$14.9 million~~$13,435 for the six months ended June 30, ~~2019.~~2020. Depreciation and amortization was ~~2.7%~~2.1% of Expedited Freight operating ~~revenue~~revenues for the six months ended June 30, ~~2020~~2021 compared to ~~3.1%~~2.7% for the same period in ~~2019.~~2020. The ~~decrease~~increase in depreciation and amortization expense ~~was~~is primarily due to ~~a $3.4 million decrease in trailer depreciation~~the additional amortization expense resulting from the acquisitions of CLW and J&P.

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Insurance and Claims

Expedited Freight insurance and claims increased $3,668, or 29.8%, to $15,996 for the six months ended June 30, ~~2020 compared to the same period in 2019 primarily related to extending the useful lives of its trailers~~2021 from seven to ten years in the third quarter of 2019. See additional discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2019 Annual Report on Form 10-K. This decrease was partially offset by $1.6 million of increased amortization of acquired intangibles from the acquisitions of FSA and Linn Star.

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~~Insurance and Claims~~

~~Expedited Freight insurance and claims increased $0.8 million, or 6.9%, to $12.4 million~~$12,328 for the six months ended June 30, ~~2020 from $11.6 million~~2020. Insurance and claims were 2.4% of Expedited Freight operating revenues for the six months ended June 30, ~~2019. Insurance and claims were 2.5% of Expedited Freight operating revenue for the six months ended June 30, 2020~~2021 compared to ~~2.4%~~2.5% for the same period in ~~2019. The~~2020. The increase in insurance and claims expense was primarily attributable to an increase in vehicle insurance premiums ~~offset by favorable~~as well as additional vehicle liability and cargo claims. See ~~additional~~additional discussion over the consolidated ~~increase~~change in self-insurance reserves ~~related to vehicle claims~~ in the ~~"Other operations"~~“Other Operations” section below.

Fuel Expense

Expedited Freight fuel expense ~~decreased $1.7 million,~~increased $590, or ~~32.7%~~16.6%, to ~~$3.5 million~~$4,140 for the six months ended June 30, ~~2020~~2021 from ~~$5.2 million~~$3,550 for the six months ended June 30, ~~2019.~~2020. Fuel expense was ~~0.7%~~0.6% of Expedited Freight operating ~~revenue~~revenues for the six months ended June 30, ~~2020~~2021 compared to ~~1.1%~~0.7% for the same period in ~~2019.~~2020. Expedited Freight fuel ~~expenses decreased~~expense increased due to ~~lower~~increased mileage and the rise in the average price of fuel ~~prices.~~for the six months ended June 30, 2021.

Other Operating Expenses

Expedited Freight other operating expenses increased ~~$2.3 million,~~$8,755, or ~~6.1%~~21.9%, to ~~$39.9 million~~$48,645 for the six months ended June 30, ~~2020~~2021 from ~~$37.6 million~~$39,890 for the six months ended June 30, ~~2019.~~2020. Other operating expenses were ~~8.2%~~7.4% of Expedited Freight operating ~~revenue~~revenues for the six months ended June 30, ~~2020~~2021 compared to ~~7.9%~~8.2% for the same period in ~~2019. Other~~2020. The increase in other operating expenses ~~included~~was driven by an increase in equipment maintenance costs, terminal and office expenses, legal and professional fees, ~~and~~ other over-the-road ~~costs. The increase in expense was primarily attributable to a $4.1 million increase in~~costs and parts ~~costs~~ for final mile ~~installations and increased terminal and office~~installations. For the six months ended June 30, 2020, other operating expenses ~~due to the acquisitions of FSA and Linn Star. These increases were partly offset by~~included a ~~$2.6 million decrease~~$2,702 gain from changes in the fair value of an earn-out liability ~~from the FSA acquisition~~ due to the timing of expected new ~~customer~~business wins. A similar gain was not recorded for the six months ended June 30, 2021.

Income from Operations

Expedited Freight income from operations ~~decreased $22.2 million,~~increased $32,285, or ~~45.2%~~119.9%, to ~~$26.9 million~~$59,218 for the six months ended June 30, ~~2020~~2021 compared to ~~$49.1 million~~$26,933 for the six months ended June 30, ~~2019.~~2020. Income from operations was ~~5.5%~~9.0% of Expedited Freight operating ~~revenue~~revenues for ~~the~~ six months ended June 30, ~~2020~~2021 compared to ~~10.3%~~5.5% for the same period in ~~2019.~~2020. The ~~decrease~~increase in income from operations as a percentage of operating revenues was ~~primarily due to lower tonnage, shipments and~~driven by increased revenue per hundredweight ~~due to the impact~~and higher number of ~~COVID-19. In addition, the decrease was due to additional costs from the acquisitions of FSA~~shipments combine with cost-control measures and ~~Linn Star, as they continue to be integrated into the Expedited Freight segment. These margin deteriorations were~~operational efficiencies, partially offset by ~~increased utilization~~the change in mix of ~~owner-operators over more costly third-party transportation providers.~~freight capacity purchased from Leased Capacity Providers, third party carriers and Company-employed drivers.

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Intermodal - Six Months EndedJune 30, ~~2020~~2021 compared to Six Months Ended June 30, ~~2019~~2020

The following table sets forth the historical financial data of our Intermodal segment for the six months ended June 30, ~~2020~~2021 and ~~2019 (in millions):~~2020:

Intermodal Segment Information
(In millions)
(Unaudited)

Six months ended
June 30, Percent of June 30, Percent of Percent

2020 ¹
Revenue 2019 Revenue Change Change
Operating revenue $ 98.9
100.0 % $ 104.6
100.0 % $ (5.7 ) (5.4 )%

Operating expenses:
Purchased transportation 33.1
33.5
36.6
35.0
(3.5 ) (9.6 )
Salaries, wages and employee benefits 24.7
25.0
25.1
24.0
(0.4 ) (1.6 )
Operating leases 8.5
8.6
7.7
7.4
0.8
10.4
Depreciation and amortization 5.3
5.4
3.7
3.5
1.6
43.2
Insurance and claims 3.8
3.8
3.1
3.0
0.7
22.6
Fuel expense 3.0
3.0
3.4
3.3
(0.4 ) (11.8 )
Other operating expenses 12.4
12.5
13.6
13.0
(1.2 ) (8.8 )
Total operating expenses 90.8
91.8
93.2
89.1
(2.4 ) (2.6 )
Income from operations $ 8.1
8.2 % $ 11.4
10.9 % $ (3.3 ) (28.9 )%

¹Includes revenues and operating expenses from the acquisition of OST, which was acquired in July 2019 (and is not included in the prior period)

Intermodal Operating Statistics

Six months ended

June 30, June 30, Percent

2020 2019 Change
Drayage shipments 151,448
151,681
(0.2 )%
Drayage revenue per shipment $ 553
$ 598
(7.5 )%
Number of locations 24
21
14.3 %

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Intermodal Segment Information
(unaudited and in thousands)

	Six Months Ended
	June 30, 2021		Percent of Revenue		June 30, 2020		Percent of Revenue		Change		Percent Change
Operating revenue	$	127,647	100.0	%	$	98,888	100.0	%	$	28,759	29.1	%

Operating expenses:
Purchased transportation	44,370		34.8		33,070		33.4		11,300		34.2
Salaries, wages and employee benefits	30,293		23.7		24,658		24.9		5,635		22.9
Operating leases	10,337		8.1		8,473		8.6		1,864		22.0
Depreciation and amortization	5,048		4.0		5,269		5.3		(221)		(4.2)
Insurance and claims	4,757		3.7		3,762		3.8		995		26.4
Fuel expense	3,622		2.8		2,982		3.0		640		21.5
Other operating expenses	16,325		12.8		12,548		12.7		3,777		30.1
Total operating expenses	114,752		89.9		90,762		91.8		23,990		26.4
Income from operations	12,895		10.1	%	$	8,126	8.2	%	$	4,769	58.7	%


Intermodal Operating Statistics

	Six Months Ended
	June 30, 2021		June 30, 2020		Percent Change
Drayage shipments	186,714		151,448		23.3	%
Drayage revenue per shipment	$	587	$	553	6.1	%
Number of locations	29		24		20.8	%

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Operating Revenues

Intermodal operating ~~revenue decreased $5.7 million,~~revenues increased $28,759, or ~~5.4%~~29.1%, to ~~$98.9 million~~$127,647 for the six months ended June 30, ~~2020~~2021 from $104.6 million for the same period in 2019. The decrease in operating revenue was primarily attributable to a 7.5% decrease in drayage revenue per shipment over prior year due in part to $3.3 million of lower rail storage revenue, decreased fuel surcharge revenue due to lower fuel prices and a decrease in linehaul shipments. These decreases were partially offset by a $1.5 million increase from per diem revenue.

~~Purchased Transportation~~

~~Intermodal purchased transportation decreased $3.5 million, or 9.6%, to $33.1 million~~$98,888 for the six months ended June 30, 2020. The increase in operating revenues was primarily attributable to a 23.3% increase in drayage shipments over the same period in 2020 and an increase in accessorial revenues. The increase in drayage shipments was driven by the combination of the economic recovery from ~~$36.6 million~~COVID-19, which adversely impacted the results of operations for the six months ended June 30, 2020, and the Proficient Transport acquisition in February 2021.

Purchased Transportation

Intermodal purchased transportation increased $11,300, or 34.2%, to $44,370 for the six months ended June 30, ~~2019. Purchased transportation was 33.5% of Intermodal operating revenue~~2021 from $33,070 for the six months ended June 30, ~~2020~~2020. Purchased transportation was 34.8% of Intermodal operating revenues for the six months ended June 30, 2021 compared to ~~35.0%~~33.4% for the same period in ~~2019.~~2020. Intermodal purchased transportation includes ~~owner operators~~Leased Capacity Providers and third party carriers, while Company-employed drivers are included in salaries, wages and employee benefits. The ~~decrease~~increase in ~~Intermodal~~ purchased transportation as a percentage of ~~revenue~~revenues was primarily due to ~~operating efficiencies~~the change in the mix of freight capacity purchased from Leased Capacity Providers, third party carriers and ~~increased accessorial revenue over the prior year.~~Company-employed drivers.

Salaries, Wages, and Employee Benefits

Intermodal salaries, wages and employee benefits ~~decreased $0.4 million,~~increased $5,635, or ~~1.6%~~22.9%, to ~~$24.7 million~~$30,293 for the six months ended June 30, ~~2020~~2021 compared to ~~$25.1 million~~$24,658 for the six months ended June 30, ~~2019.~~2020. Salaries, wages and employee benefits were ~~25.0%~~23.7% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 24.9% for the same period in 2020. The increase in salaries, wages and employee benefits expense was primarily due to the additional employees hired in response to the increase in shipments for the six months ended June 30, 2021 and an increased reserve for incentive compensation. Cost-control measures implemented in the prior year contributed to the decrease in salaries, wages and employee benefits expense as a percentage of operating revenues.

Operating Leases

Intermodal operating leases increased $1,864, or 22.0%, to $10,337 for the six months ended June 30, 2021 from $8,473 for the six months ended June 30, 2020. Operating leases were 8.1% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 8.6% for the same period in 2020. The increase in operating leases expense was primarily due to new trailer leases in 2021.

Depreciation and Amortization

Intermodal depreciation and amortization decreased $221, or 4.2%, to $5,048 for the six months ended June 30, 2021 from $5,269 for the six months ended June 30, 2020. Depreciation and amortization was 4.0% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 5.3% for the same period in 2020. The decrease in depreciation and amortization expense was primarily due to the full depreciation of equipment obtained through acquisitions in 2020, partially offset by additional amortization expense resulting from the acquisition of Proficient Transport.

Insurance and Claims

Intermodal insurance and claims increased $995, or 26.4%, to $4,757 for the six months ended June 30, 2021 from $3,762 for the six months ended June 30, 2020. Insurance and claims were 3.7% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 3.8% for the same period in 2020. The increase in insurance and claims expense was primarily due to an increase in vehicle insurance premiums. See additional discussion over the consolidated change in self-insurance reserves in the “Other Operations” section below.

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Fuel Expense

Intermodal fuel expense increased $640, or 21.5%, to $3,622 for the six months ended June 30, 2021 from $2,982 for the six months ended June 30, 2020. Fuel expense was 2.8% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 3.0% for the same period in 2020. Intermodal fuel expense increased due to increased mileage and the rise in the average price of fuel for the six months ended June 30, 2021.

Other Operating Expenses

Intermodal other operating expenses increased $3,777, or 30.1%, to $16,325 for the six months ended June 30, 2021 compared to $12,548 for the six months ended June 30, 2020. Other operating expenses were 12.8% of Intermodal operating revenues for the six months ended June 30, 2021 compared to 12.7% from the same period in 2020. The increase in Intermodal other operating expenses was primarily due to additional expenses to support the increased accessorial revenues noted above.

Income from Operations

Intermodal income from operations increased by $4,769, or 58.7%, to $12,895 for the six months ended June 30, 2021 compared to $8,126 for the six months ended June 30, 2020. Income from operations was 10.1% of Intermodal operating revenue for the six months ended June 30, ~~2020~~2021 compared to ~~24.0%~~8.2% for the same period in ~~2019.~~

~~The decrease in expense was primarily due to cost-control measures in response to COVID-19.~~

~~Operating Leases~~

Intermodal operating leases increased $0.8 million, or 10.4%, to $8.5 million for the six months ended June 30, 2020 from $7.7 million for the six months ended June 30, 2019. Operating leases were 8.6% of Intermodal operating revenue for the six months ended June 30, 2020 compared to 7.4% for the same period in 2019.2020. The increase in expense was primarily due to a $0.4 million increase in tractor rentals and leases to correspond with increased Company-employed driver usage. Facility leases also increased $0.3 million mostly from additional facilities acquired from OST.

~~Depreciation and Amortization~~

Intermodal depreciation and amortization increased $1.6 million, or 43.2%, to $5.3 million for the six months ended June 30, 2020 from $3.7 million for the six months ended June 30, 2019. Depreciation and amortization was 5.4% of Intermodal operating revenue for the six months ended June 30, 2020 compared to 3.5% for the same period in 2019. The increase in depreciation and amortization was due to a $1.2 million increase in depreciation of equipment partly due to the equipment acquired from OST. The increase was also attributable to a $0.4 million increase in amortization of acquired intangibles.

~~Insurance and Claims~~

Intermodal insurance and claims increased $0.7 million, or 22.6%, to $3.8 million for the six months ended June 30, 2020 from $3.1 million for the six months ended June 30, 2019. Insurance and claims were 3.8% of Intermodal operating revenue for the six months ended June 30, 2020 compared to 3.0% for the same period in 2019. The increase in Intermodal insurance and claims was primarily due to an increase in insurance premiums. See additional discussion over the consolidated increase in self-insurance reserves related to vehicle claims in the "Other operations" section below.

~~Fuel Expense~~

Intermodal fuel expense decreased $0.4 million, or 11.8%, to $3.0 million for the six months ended June 30, 2020 from $3.4 million for the six months ended June 30, 2019. Fuel expense was 3.0% of Intermodal operating revenue for the six months ended June 30, 2020 compared to 3.3% for the same period in 2019. Intermodal fuel expense decreased due to lower fuel prices.

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~~Other Operating Expenses~~

Intermodal other operating expenses decreased $1.2 million, or 8.8%, to $12.4 million for the six months ended June 30, 2020 compared to $13.6 million for the six months ended June 30, 2019. Other operating expenses were 12.5% of Intermodal operating revenue for the six months ended June 30, 2020 compared to 13.0% from the same period in 2019. The decrease in Intermodal other operating expenses was primarily due to strong cost controls and decreased per diem expenses, corresponding with the decrease in per diem revenue noted above. These decreases were slightly offset by a $0.2 million increase in bad debt reserves in part due to increased specific reserves related to customers negatively impacted by COVID-19

~~Income from Operations~~

~~Intermodal~~ income from operations ~~decreased~~as a percentage of operating revenues was driven by ~~$3.3 million, or 28.9%, to $8.1 million for~~ the ~~six months ended June 30, 2020 compared to $11.4 million for the six months ended June 30, 2019. Income from operations was 8.2% of Intermodal~~ operating ~~revenue for the six months ended June 30, 2020 compared to 10.9% for the same period in 2019. The deterioration in operating income was primarily attributable to losing~~ leverage on fixed costs such as ~~salaries, wages and benefits,~~ operating leases, depreciation and ~~amortization and insurance due to the impact of COVID-19.~~

amortization.

Other Operations - Six Months Ended June 30, ~~2020~~2021 compared to ~~Six~~Nine Months Ended June 30, ~~2019~~2020

Other operating activity was a ~~$5.3 million~~$7,265 operating loss during the six months ended June 30, ~~2020~~2021 and a ~~$7.7 million~~$5,372 operating loss during the six months ended June 30, ~~2019.~~2020. The change in the operating loss was driven by increased professional fees related to cybersecurity and shareholder engagement activities and accrual for an incentive program established in 2021, partially offset by decreased self-insurance reserves for vehicle liability, workers’ compensation and group health insurance claims. The decrease in the self-insurance reserves for vehicle liability and workers’ compensation claims was due to the favorable loss development factor of historical claims attributable to the safety measures in place. For the six months ended June 30, 2020, ~~included increased self-insurance reserves~~severance costs in the amount of $997 were recorded in accordance with severance agreements for ~~vehicle and workers' compensation claims of $2.6 million and $0.5 million, respectively. These increases~~former employees. Similar severance costs were primarily due to increases to our loss development factors for prior quarter claims. The remaining loss was primarily attributable to severance of $1.0 million, $0.5 million in share based compensation and $0.4 million of corporate costs previously allocated to the Pool Distribution segment that are not ~~part of the discontinued operation. These costs represent corporate costs that will remain with the Company after the Pool Distribution business is divested.~~

~~The $7.7 million operating loss~~recorded for the six months ended June 30, 2019 was primarily due to increased self-insurance reserves for vehicle and workers' compensation claims of $5.3 million and $0.2 million, respectively. The increase in vehicle liability reserves was primarily due to a $4.0 million vehicle claim reserve recorded in the second quarter of 2019 for pending vehicular claims. The remaining loss was attributed to $1.3 million in costs related to the CEO transition, including retention shares, and $0.8 million of corporate costs previously allocated to the Pool Distribution segment that are not part of the discontinued operation.2021.

Critical Accounting Policies

~~Our unaudited consolidated~~The discussion and analysis of our financial ~~statements~~condition and results of operations are based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with ~~United States~~U.S. generally accepted accounting ~~principles (“GAAP”).~~principles. The preparation of these financial statements ~~in accordance with GAAP~~ requires ~~our~~ management to make estimates and assumptions that affect the reported amounts ~~reported in~~of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates estimates, including those related to allowance for doubtful accounts and revenue adjustments, deferred income taxes and uncertain tax positions, goodwill, other intangible and long-lived assets, and self-insurance loss reserves. Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the ~~unaudited consolidated financial statements and accompanying notes. The Company’s~~circumstances. Actual results may differ from those estimates under different assumptions or conditions. A description of critical accounting policies ~~have not changed from those described under~~and related judgments and estimates that affect the ~~caption “Discussion~~preparation of ~~Critical Accounting Policies”~~our Condensed Consolidated Financial Statements is set forth in ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations in~~ our ~~2019~~ Annual Report on Form 10-K ~~with~~for the exception of the presentation of Pool's assets and liabilities as held for sale in the Consolidated Balance Sheets and Pool's results of operations presented as discontinued operations in the Consolidated Statements of Comprehensive Income. For further discussion on for sale and discontinued operations, see “Note 4, ~~Discontinued Operations and Held for Sale~~.

~~Impact of Recent Accounting Pronouncements~~

year-ended December 31, 2020.

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Liquidity and Capital Resources

We have historically financed our working capital needs, including capital expenditures, with cash flows from operations and borrowings under our ~~bank lines of credit. As discussed above,~~revolving credit facility. We believe that borrowings under our revolving credit facility, together with available cash and internally generated funds, will be sufficient to support our working capital, capital expenditures and debt service requirements for the foreseeable future. In July 2021, we entered into the second amendment to our revolving credit facility, which extended the maturity date to July 20, 2026 and changed the interest rate options available. In connection with the second amendment, we have ~~assessed~~replaced the ~~impact of COVID-19 on~~London Interbank Offered Rate with the Bloomberg Short-Term Bank Yield Index rate as the reference rate in our ~~liquidity and ability~~revolving credit facility to ~~access capital. To improve~~calculate interest due to our financial flexibility, we executed a $75 million amendment to increase this line on April 16, 2020. In addition, we have deferred payroll and federal and state income tax payments as allowed by the CARES Act, which resulted in an approximately $5 million cash flow benefit forlender. Additionally, under the second ~~quarter of 2020 and is expected to result in an approximately $12 million cash flow benefit for 2020. This includes cash flow benefits for~~amendment, the ~~Company as a whole, including cash flows related to discontinued operations. Note that payroll taxes~~credit facility may be ~~deferred for all~~increased by up to $75,000 to a maximum aggregate principal amount of ~~2020, while federal and state income tax payments were only permitted~~$300,000 pursuant to ~~be deferred for~~ the ~~second quarter~~terms of ~~2020 and were due and payable on or before July 15, 2020. In addition, we took advantage~~the amended credit agreement, subject to the lenders’ agreement to

Table of ~~employee retention credits as allowed by the CARES Act of $0.8 million, which primarily benefited our discontinued operations.~~

Contents

increase their commitments or the addition of new lenders extending such commitments. As of June 30, ~~2020, the Company had $80.9 million in cash, which is approximately four times its target cash levels. As a result,~~2021, we ~~do not believe we have had significant limitations on accessing capital despite the current environment. Further, the Company is~~are in compliance with ~~all debt covenants as~~our financial convents contained in the revolving credit facility and expect to maintain such compliance. In the event that we encounter difficulties, our historical relationships with our lenders has been strong and we anticipate their continued long-term support of June 30, 2020. In addition, the Company’s accounts receivables are stable and there are no known collection issues from its key customers as of June 30, 2020. There are also no customer or vendor concentration risksour business. Refer to Note 7, Indebtedness, to our Condensed Consolidated Financial Statements for ~~which the loss of the applicable relationship would have a significant impact to the Company's cash flows from operations. See~~ additional ~~discussion in Item 1A,~~ ~~Risk Factors.~~information regarding our revolving credit facility.

~~Six Months Ended June 30, 2020 Cash Flows compared to Six Months Ended June 30, 2019~~ Cash Flows

Continuing Operations

Net cash provided by continuing operating activities was ~~approximately $59.9 million~~$39,661 for the six months ended June 30, ~~2020~~2021 compared to ~~approximately $64.3 million~~$59,929 for the six months ended June 30, ~~2019.~~2020. The ~~$4.3 million~~ decrease in the net cash provided by continuing operating activities was mainly attributable to a $19.0 million decrease in continuing net earnings after consideration of non-cash items, partly offset by a $6.9 million improvement in the collection of receivables, a $5.2 million increase primarily due to the ~~timing of prepaid insurance expense payments~~increase in the accounts receivable and ~~a $1.8 million increase~~other receivable balances. The accounts receivable balance changed due to the ~~timing~~increase in operating revenues for the six months ended June 30, 2021. The other receivables balance changed as a result of ~~tax~~the Transition Services Agreement entered into with the buyer of the Pool business. Under the Transition Services Agreement, we remit payments ~~as discussed above.~~to outside vendors on behalf of the buyer for expenses incurred by the Pool business, up to a limit of $18,000, and we are reimbursed by the buyer within 60 days from the end of the month in which the payment is remitted.

Net cash used in continuing investing activities was ~~approximately $69.2 million~~$29,804 for the six months ended June 30, ~~2020~~2021 compared to ~~approximately $40.2 million during~~$69,157 for the six months ended June 30, ~~2019. Continuing investing activities during~~2020. Capital expenditures for the first six months ~~ended June 30, 2020 and 2019 included the acquisition~~ of ~~Linn Star for $55.9 million and FSA for $27.0 million, net of cash acquired, respectively. In addition the six months ended June 30, 2020 included net capital expenditures of $13.2 million, of~~2021 were $8,575, which ~~approximately $9.8 million~~primarily related to an organic investment to expand the capacity of ~~the Company's~~our national hub in Columbus, ~~Ohio (CMH), which~~Ohio. Capital expenditures for the ~~Company announced on July 27, 2020. The~~first six months ~~ended June 30, 2019 included net capital expenditures~~ of ~~$13.2 million~~2020 were $14,214, which primarily related to the organic investment to expand the capacity of our national hub in Columbus, Ohio. Continuing investing activities for ~~new trailers, information technology and facility equipment. The proceeds from disposal of property and equipment during~~ the first six months ~~ended June 30,~~of 2021 included the acquisition of Proficient Transport for $15,000 and J&P Hall Express Delivery for $7,543 while continuing investing activities for the first six months of 2020 included the acquisition of Linn Star Holdings, Inc., Linn Star Transfer, Inc. and ~~2019 were primarily from sales of older tractors and trailers.~~Linn Star Logistics, LLC for $55,931.

Net cash provided by continuing financing activities was ~~approximately $25.4 million~~$733 for the six months ended June 30, ~~2020~~2021 compared to ~~net cash used in continuing financing activities of $34.9 million~~$25,395 for the six months ended June 30, ~~2019.~~2020. The ~~$60.3 million increase~~change in the net cash provided by continuing financing activities was ~~attributable~~primarily due to ~~a $55.0 million increase in borrowings on~~decreased proceeds from the revolving credit facility for the first six months of 2021, increased repurchases and ~~a $23.4 million decrease in the repurchase~~retirement of common ~~stock. These increases are partly~~stock for the first six months of 2021, partially offset by ~~a $10.7 million increase in distributions to a subsidiary (Pool Distribution),~~ the ~~$5.3 million~~ payment onof the ~~FSA~~ earn-out ~~and a $1.8 million decrease in proceeds from share-based award activity.~~liability for the six months of 2020.

Discontinued ~~Operations~~Operation

Net cash used in discontinued operating activities was ~~approximately $4.7 million~~$6,902 for the six months ended June 30, ~~2020~~2021 compared to $4,672 for the six months ended June 30, 2020. The change in net cash used in discontinued operating activities was primarily related to a decrease in discontinued net income after consideration of non-cash items.

Net cash provided by discontinued investing activities was $8,020 for the six months ended June 30, 2021 compared to net cash used in discontinued investing activities was $635 for the six months ended June 30, 2020. The change in the net cash provided by discontinued investing activities was due to the proceeds of $8,000 received from the sale of the Pool business for the first six months of 2021.

Net cash used in discontinued financing activities was $1,118 for the six months ended June 30, 2021 compared to net cash provided by discontinued ~~operating~~financing activities was ~~approximately $7.5 million~~$5,307 for the six months ended June 30, ~~2019.~~2020. The ~~$12.2 million decrease~~change in ~~cash provided by discontinued operating activities was primarily attributable to a decrease in discontinued net earnings after consideration of non-cash items.~~

~~Net cash used in discontinued investing activities was approximately $0.6 million for~~ the six months ended June 30, 2020 compared to approximately $2.1 million during the six months ended June 30, 2019 due to changes in net capital expenditures primarily for trailers and facility equipment. Proceeds from disposal of property and equipment during the six months ended June 30, 2020 and 2019 were primarily from sales of older tractors and trailers.

~~Table of Contents~~

~~Net cash provided by discontinued financing activities was approximately $5.3 million for the six months ended June 30, 2020 compared to~~ net cash used in discontinued financing activities ~~of $5.4 million for~~was due to decreased contributions from the parent.

Share Repurchase Program

During the six months ended June 30, ~~2019. The $10.7 million increase in cash provided by discontinued financing activities was attributable to contributions from a subsidiary as discussed above.~~

~~Credit Facility~~

~~See Note 7,~~ ~~Senior Credit Facility, to~~2021 and 2020, we repurchased 366 and 268 shares of our ~~Consolidated Financial Statements~~common stock, respectively, for ~~a discussion~~approximately $33,992 and $15,259, respectively, through open market transactions. All shares received were retired upon receipt, and the excess of the ~~senior credit facility.~~purchase price over the par value per share was recorded to “Retained Earnings” in our Condensed Consolidated Balance Sheets.

~~Share Repurchases~~

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~~See Note 12,~~ ~~Shareholders' Equity, to our Consolidated Financial Statements for a discussion of our share repurchases and dividends during the period.~~

Forward-Looking Statements

This report contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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-Q, forward-looking statements include, but are not limited to, any statements regarding the impact of the COVID-19 pandemic on our business, results of operations and financial condition, ~~including the impacts on our LTL, Intermodal and Pool businesses, our ability to emerge as a stronger LTL competitor,~~ our pursuit of new revenue opportunities and steps to bolster our liquidity; any projections of earnings, revenues, dividends, or other financial items or methods of interpretation or measurement; any statements of plans, strategies, and objectives of management for future ~~operations, including, without limitation, future plans for~~operations; any statements regarding the ~~divesture~~estimated earn-out from the sale of our Pool business; any statements regarding future performance; any statements regarding future insurance, claims and litigation and any associated estimates or projections; any statements concerning proposed or intended new services or developments and related integration costs; any statements regarding intended expansion through acquisition or greenfield start-ups; any statements regarding future economic conditions or performance based on our business strategy, including acquisitions; any statements related to the sufficiency of our credit facility; any statements related to our ESG and sustainability initiatives and operations; any statements regarding certain tax and accounting matters, including the impact on our financial statements; 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 impact of the COVID-19 pandemic on our business, results of operations and financial condition, the creditworthiness of our customers and their ability to pay for services rendered, more limited liquidity than expected which limits our ability to make key investments, the availability and compensation of qualified ~~independent owner-operators~~Leased Capacity Providers 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, loss of a major customer, increasing competition and pricing pressure, our ability to secure terminal facilities in desirable locations at reasonable rates, our inability to successfully integrate acquisitions, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental and tax matters, insurance matters, the handling of hazardous materials, and the risks described in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 3.			Quantitative and Qualitative Disclosures About Market Risk.

~~Our exposure~~For quantitative and qualitative disclosures about market risks, see “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of Part II of our Annual Report on Form 10-K for the year ended December 31, 2020. As of the second quarter 2021, there has been no material changes in our exposures to market ~~risk related to our outstanding debt is not significant and has not changed materially from the information provided in our 2019 Form 10-K.~~risk.



Item 4.			Controls and Procedures.

Disclosure Controls and Procedures

We maintain controls and procedures designed to ensure that we are able to collect the information required to be disclosed in the reports we file with the Securities and Exchange Commission (“SEC”), and to process, summarize and disclose this information within the time periods specified in the rules of the SEC. Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this report conducted by management, with the participation of the Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer believe that these controls and procedures are effective to ensure that we are able to collect, process and disclose the information we are required to disclose in the reports we file with the SEC within the required time periods.

Changes in Internal Control

During the three months ended June 30, 2020, as part of the preparation of the discontinued operations and held for sale presentation in the consolidated financial statements, the Company implemented changes to internal controls to meet the related reporting and disclosure requirements. Management believes that these controls were effective as of June 30, 2020. There were no ~~other~~ changes in our internal control over financial reporting identified in connection with the evaluation described above that occurred during the ~~six~~three months ended June 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



Part II.			Other Information

Item 1.			Legal Proceedings.

From time to time, we are a party to ordinary, routine litigation incidental to and arising in the normal course of our business, most of which involve claims for personal injury and property damage related to the transportation and handling of freight, or workers’ compensation. We doaccrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Based on the knowledge of the facts, we believe the resolution of claims and pending litigation, taking into account existing reserves, will not ~~believe that any of these pending actions, individually or in the aggregate, will~~ have a material adverse effect on our business, financial condition or results of operations.



~~Item 1A.~~	~~Risk Factors.~~

~~Our business faces many risks and uncertainties that we cannot control. The risk factors described in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for~~ Moreover, the year ended December 31, 2019, as revised below, should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC, in connection with evaluating the Company, our business, and the forward-looking statements contained in this Quarterly Report on Form 10-Q. Other risks that we do not presently know about or that we presently believe are not material could also adversely affect us.

The risk factor described below updates the risk factors disclosed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, to include additional information.

~~The ongoing coronavirus outbreak, and measures taken in response thereto, could continue to have a material adverse effect on our business,~~ results of ~~operations and financial condition.~~

~~Our business is highly susceptible~~complex legal proceedings are difficult to changes in economic conditions. Our products and services are directly tied to the production and sale of goods and, more generally, to the North American economy. The COVID-19 pandemic has adversely impacted economic activity and conditions worldwide and created significant volatility and disruption to financial markets. Efforts to control the spread of COVID-19 have led governments and other authorities to impose restrictions which have resulted in business closures and disrupted supply chains worldwide. As a result, transportation and supply chain companies such as ours have experienced slowdowns and reduced demand, and could continue to further negatively impact our business.

~~Table of Contents~~

Furthermore, quarantines, shelter in place orders, labor shortages due to illness and otherwise, business and facility closures or other disruptions to our operations, or our customers’ operations, have also adversely impacted demand for our servicespredict, and our ~~ability to provide services to our customers. We have seen deterioration in volumes across all~~view of our segments given that the freight we move is typically not considered “essential” under current regulatory orders. Further or extended stay at home orders or closures could have a material negative impact on our revenues and earnings. If demand for our services increases and we are unable to hire qualified personnel due to labor shortages and other impacts of the COVID-19 outbreak, we would be unable to fulfill the increased demand for our services which could negatively impact our ability to increase revenue, cause harm to our reputation and have a material adverse impact on our operating results.

The extent to which the COVID-19 outbreak impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity and impact of the COVID-19 outbreak, the effects of the outbreak on our customers and suppliers and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. In particular, the continued spread of COVID-19 and efforts to contain the virus could:

~~continue to impact customer demand of the Company’s transportation services;~~

~~cause the Company to experience an increase in costs as a result of the Company’s emergency measures, delayed payments from customers and uncollectable accounts;~~

~~cause delays and disruptions in the supply chain resulting in disruptions in the commercial operation dates of certain projects; and~~

~~cause other unpredictable events.~~

~~In addition, our results of operations~~these matters may be materially affected by conditions in the credit and financial markets. Global credit and financial markets have experienced extreme volatility and disruptions as a result of COVID-19 including diminished liquidity and credit availability. Failure by us or our customers to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon current or expected investments. In the event of a prolonged significant economic downturn which has a material negative impact on our earnings and free cash flow, we may not be able to comply with our financial covenant in our global revolving credit facility which, in the absence of a bank waiver, would negatively impact our ability to borrow under that facility and our liquidity position.

The situation surrounding COVID-19 remains fluid. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of any economic recession or depression that has occurred or may occurchange in the future as the litigation and the potential for a material impact on the Company’s results of operations, financial condition, and liquidity increases the longer the virus impacts activity levels in the United States and globally. For this reason, we cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company’s results of operations, financial position, and liquidity. The extent to which the COVID-19 pandemic may impact the Company’s business, operating results, financial condition, or liquidity will depend on future developments, including the duration of the outbreak, travel restrictions, business and workforce disruptions, and the effectiveness of actions taken to contain and treat the disease.related events unfold.

We periodically evaluate factors including but not limited to macroeconomic conditions, changes in our industry and the markets in which we operate and our market capitalization, as well as our reporting units’ expected future financial performance for purposes of evaluating asset impairments, including goodwill. We believe that the impact of COVID-19 will negatively affect certain key assumptions used in our analysis; however, we will need to assess the severity and nature of the long-term impacts to determine if we may be required to record charges for asset impairments in the future. At this time, it remains uncertain whether and to what extent we will need to record charges for impairments as a result of the recent and ongoing COVID-19 outbreak.

~~Table of Contents~~



Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

~~Information regarding repurchases~~The table below sets forth information with respect to purchases of our ~~shares~~common stock made by or on behalf of us during the ~~second quarter of 2020 is as follows:~~three months ended June 30, 2021:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs1
April 1, 2021 through April 30, 2021	—	$	—	—	3,254,695
May 1, 2021 through May 31, 2021	115,625	95.15		115,625	3,139,070
June 1, 2021 through June 30, 2021	137,064	94.79		137,064	3,002,006
Total	252,689	$	94.96	252,689	3,002,006

1On February 5, 2019, our Board of Directors approved the 2019 Repurchase Plan authorizing up to 5.0 million shares of our common stock. The 2019 Share Repurchase Plan expires when the shares authorized for repurchase are exhausted or the 2019 Repurchase Plan is canceled.

~~Period~~

~~Total Number of Shares Purchased~~

~~Average Price Paid per Share~~

~~Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)~~

~~Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)~~

~~April 1-30, 2020~~

—

~~3,886,950~~

~~May 1-31, 2020~~

—

~~3,886,950~~

~~June 1-30, 2020~~

—

~~3,886,950~~

~~Total~~

—

~~3,886,950~~

(1) On February 5, 2019, the Board of Directors canceled the Company’s remaining 2016 share repurchase authorization and approved a share repurchase authorization for up to 5.0 million shares of the Company’s common shares that shall remain in effect until such time as the shares authorized for repurchase are exhausted or until earlier terminated.



Item 3.			Defaults Upon Senior Securities.

Not applicable.



Item 4.			Mine Safety Disclosures.

Not applicable.



~~Item 5.~~	Item 5. Other Information.

On July 28, 2020, the Company entered into an amended and restated consulting agreement with Matthew J. Jewell, one of its former executive officers, effective July 1, 2020 through December 31, 2020 unless earlier terminated (the “Consulting Agreement”). The Consulting Agreement amended and restated, in its entirety, a consulting agreement between Mr. Jewell and the Company dated June 14, 2020. The Consulting Agreement is automatically renewed for successive 30-day periods unless (i) either party provides written notice of non-renewal at least five days prior to the end of the expiring term or (ii) the Consulting Agreement has been earlier terminated. Pursuant to the Consulting Agreement, Mr. Jewell will provide certain consulting services to the Company and will receive a monthly fee of $20,000. Additionally, the Company will pay Mr. Jewell an acquisition fee in accordance with the terms and conditions set forth in the Consulting Agreement. Mr. Jewell will continue to be subject to the restrictive covenants set forth in his existing Participation and Restrictive Covenants Agreement, dated May 31, 2019, until the later of (i) June 30, 2021 or (ii) six months following the end of the consulting period. Pursuant to the Consulting Agreement, the time period for Mr. Jewell to exercise his vested stock options shall extend to the earlier of (i) the termination of the Consulting Agreement or (ii) the original term of each vested stock option as provided in the applicable stock option agreement; provided, however, that in no event will the exercise period for any vested stock option expire prior to September 28, 2020.Not applicable.

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Item 6.			Exhibits.

In accordance with SEC Release No. 33-8212, ~~Exhibits~~Exhibit 32.1 ~~and 32.2 are~~is to be treated as “accompanying” this report rather than “filed” as part of the report.



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 Current Report on Form 8-K filed with the Securities and Exchange Commission on July 31, 2017 (File No. 0-22490))
10.1		Advisory Agreement effective April 5, 2021, between Forward Air Corporation and Michael J. Morris (incorporated here in by reference to Exhibit 10.1 to the registra nt ’s Qua rterly R eport on Form 10-Q filed with the S e curities and Exchange Commission on May 4 , 2021)
~~First~~10.2		Rebecca J. Garbrick Offer Letter dated as of Jun e 21, 2021 (incor porated herein by reference to Exhibit 10.1 to the registrant ’s Current Report on Form 8-K filed with the S ecurities and Exchange Commission on June 25, 2021 (File No. 0-22490))
10.3		Second Amendment dated ~~April 16, 2020~~July 20, 2021 to Credit Agreement dated September 29, 2017 by and among Forward Air Corporation and Forward Air, Inc., as borrowers, certain subsidiaries of the borrowers as guarantors, Bank of America, N.A., as administrative agent and lender, U.S. Bank National Association, as lender and the other lenders ~~party thereto (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 May 1, 2020 (File No. 0-22490))~~part thereto.
~~10.2~~31.1		~~Amended and Restated Consulting Agreement effective July 28, 2020, between Forward Air Corporation and Matthew J. Jewell~~
~~31.1~~	Certification of ~~Chief~~Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a) (17 CFR 240.13a-14(a))
31.2		Certification of ~~Chief~~ Pri ncipal Financial Officer Pursuant to Exchange Act Rule 13a-14(a) (17 CFR 240.13a-14(a))
32.1		Certification of ~~Chief~~Principal 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~~ Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive File (formatted in Inline XBRL and contained in Exhibit 101).

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Signatures

Pursuant to the requirements 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: ~~July 31, 2020~~August 9, 2021	By:	/s/ ~~Michael J. Morris~~Thomas Schmitt
		Thomas Schmitt President and Chief Executive Officer (Principal Executive Officer and Duly Authorized Officer)

~~Michael~~


		Forward Air Corporation
Date: August 9, 2021	By:	/s/ Rebecca J. ~~Morris~~ Garbrick
		Rebecca J. Garbrick Chief Financial Officer and Treasurer (Principal Financial Officer and Duly Authorized Officer)



			~~Forward Air Corporation~~
~~Date: July 31, 2020~~		~~By:~~	~~/s/ Christina W. Bottomley~~
	~~Christina W. Bottomley~~ ~~Vice President, Chief Accounting Officer and Controller~~ ~~(Principal Accounting Officer and Duly Authorized Officer)~~



Table of Contents

Forward Air Corporation

				Page
				Number
Part I.			Financial Information

Item 1.			Financial Statements (Unaudited)

			Condensed Consolidated Balance Sheets – June ~~30, 2020~~ 3 0 , 2021 and December 31, ~~2019~~2020	3

			Condensed Consolidated Statements of Comprehensive Income - Three M onths E nded June 3 0 , 2021 and ~~six months ended~~2020	4

			Condensed Consolidated Statements of Comprehensive Income - Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	45

			Condensed Consolidated Statements of Cash Flows – Six ~~months ended~~ M onths E nded June ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020	56

			Condensed Consolidated Statements of Shareholders' Equity – Three and Six ~~months ended~~ M onths E nded June ~~30, 2020~~ 3 0, 2021 and ~~2019~~2020	67

			Notes to Condensed Consolidated Financial Statements – June ~~30, 2020~~ 3 0 , 2021	78

Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	3027

Item 3.			Quantitative and Qualitative Disclosures About Market Risk	5348

Item 4.			Controls and Procedures	5348

Part II.			Other Information

Item 1.			Legal Proceedings	5348

Item ~~1A.~~2.			~~Risk Factors~~	53

~~Item 2.~~	Unregistered Sales of Equity Securities and Use of Proceeds	5549

Item 3.			Defaults Upon Senior Securities	5549

Item 4.			Mine Safety Disclosures	5549

Item 5.			Other ~~Information~~	5549

Item 6.			Exhibits	5650

Signatures				5751



Forward Air Corporation
Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	80,916	$	64,749
Accounts receivable, less allowance of $2,637 in 2020 and $2,053 in 2019	130,759		136,214
Other current assets	23,745		20,403
Current assets held for sale	11,871		14,952
Total current assets	247,291		236,318

Property and equipment	381,834		373,571
Less accumulated depreciation and amortization	187,239		180,815
Total property and equipment, net	194,595		192,756
Operating lease right-of-use assets	123,925		105,170
Goodwill and other acquired intangibles:
Goodwill	240,933		215,699
Other acquired intangibles, net of accumulated amortization of $86,174 in 2020 and $79,250 in 2019	148,452		124,857
Total goodwill and other acquired intangibles, net	389,385		340,556
Other assets	42,710		39,374
Noncurrent assets held for sale	74,593		76,704
Total assets	$	1,072,499	$	990,878


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	27,682	$	25,411
Accrued expenses	48,041		44,154
Other current liabilities	3,784		5,318
Current portion of debt and finance lease obligations	1,445		1,421
Current portion of operating lease obligations	42,108		35,886
Current liabilities held for sale	23,792		24,974
Total current liabilities	146,852		137,164

Debt and finance lease obligations, less current portion	136,549		72,249
Operating lease obligations, less current portion	82,404		69,678
Other long-term liabilities	58,194		56,448
Deferred income taxes	45,883		41,214
Noncurrent liabilities held for sale	36,325		36,943

Shareholders’ equity:
Preferred stock	—		—
Common stock, $0.01 par value: Authorized shares - 50,000,000, Issued and outstanding shares - 27,729,013 in 2020 and 27,850,233 in 2019	277		279
Additional paid-in capital	233,086		226,869
Retained earnings	332,929		350,034
Total shareholders’ equity	566,292		577,182
Total liabilities and shareholders’ equity	$	1,072,499	$	990,878

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



Forward Air Corporation
Consolidated Statements of Comprehensive Income
(Dollars in thousands, except share and per share amounts)
(Unaudited)

	Three months ended						Six months ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Operating revenue	$	281,678		$	302,887		$	587,235		$	581,848

Operating expenses:
Purchased transportation	142,069			143,436			292,667			275,987
Salaries, wages and employee benefits	63,772			63,841			133,331			123,798
Operating leases	17,387			16,124			35,271			31,001
Depreciation and amortization	9,413			9,227			18,747			18,515
Insurance and claims	7,722			11,757			17,766			19,745
Fuel expense	2,519			4,467			6,532			8,582
Other operating expenses	24,882			24,965			53,234			51,448
Total operating expenses	267,764			273,817			557,548			529,076
Income from continuing operations	13,914			29,070			29,687			52,772

Other expense:
Interest expense	(1,198		)	(581		)	(2,051		)	(1,156		)
Other, net	—			(1		)	—			(2		)
Total other expense	(1,198		)	(582		)	(2,051		)	(1,158		)
Income before income taxes	12,716			28,488			27,636			51,614
Income tax expense	3,491			7,244			6,995			12,683
Net income from continuing operations	9,225			21,244			20,641			38,931
(Loss) income from discontinued operations, net of tax	(6,071		)	1,086			(9,112		)	1,806
Net income and comprehensive income	$	3,154		$	22,330		$	11,529		$	40,737

Basic net income (loss) per share:
Continuing operations	$	0.33		$	0.74		$	0.72		$	1.35
Discontinued operations	(0.22		)	0.04			(0.31		)	0.07
Net income per share	$	0.11		$	0.78		$	0.41		$	1.42

Diluted net income (loss) per share:
Continuing operations	$	0.33		$	0.74		$	0.72		$	1.35
Discontinued operations	(0.22		)	0.04			(0.32		)	0.06
Net income per share	$	0.11		$	0.78		$	0.40		$	1.41

Dividends per share:	$	0.18		$	0.18		$	0.36		$	0.36



Forward Air Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Six months ended
	June 30, 2020			June 30, 2019

Operating activities:
Net income from continuing operations	$	20,641		$	38,931
Adjustments to reconcile net income of continuing operations to net cash provided by operating activities of continuing operations
Depreciation and amortization	18,747			18,515
Change in fair value of earn-out liability	(2,702		)	—
Share-based compensation	5,507			5,910
Loss (gain) on disposal of property and equipment, net	9			(218		)
Provision for loss on receivables	688			635
Provision for revenue adjustments	1,787			1,277
Deferred income tax expense	4,668			3,290
Changes in operating assets and liabilities
Accounts receivable	2,979			(3,922		)
Prepaid expenses and other current assets	312			(4,842		)
Income taxes	(341		)	(2,182		)
Accounts payable and accrued expenses	7,634			6,876
Net cash provided by operating activities of continuing operations	59,929			64,270

Investing activities:
Proceeds from disposal of property and equipment	988			1,008
Purchases of property and equipment	(14,214		)	(14,214		)
Acquisition of business, net of cash acquired	(55,931		)	(27,000		)
Net cash used in investing activities of continuing operations	(69,157		)	(40,206		)

Financing activities:
Payments of finance lease obligations	(676		)	(137		)
Proceeds from senior credit facility	65,000			10,000
Payments on earn-out liability	(5,284		)	—
Proceeds from exercise of stock options	—			1,278
Payments of cash dividends	(10,087		)	(10,333		)
Repurchase of common stock (repurchase program)	(15,259		)	(38,617		)
Proceeds from common stock issued under employee stock purchase plan	294			261
Cash settlement of share-based awards for tax withholdings	(3,286		)	(2,770		)
(Distributions to) contributions from subsidiary	(5,307		)	5,374
Net cash provided by (used in) financing activities from continuing operations	25,395			(34,944		)
Net increase (decrease) in cash of continuing operations	16,167			(10,880		)

Cash from discontinued operations:
Cash (used in) provided by operating activities of discontinued operations, net	(4,672		)	7,494
Cash used in investing activities of discontinued operations, net	(635		)	(2,120		)
Cash provided by (used in) financing activities of discontinued operations, net	5,307			(5,374		)
Net increase (decrease) in cash	16,167			(10,880		)
Cash at beginning of period of continuing operations	64,749			25,657
Cash at beginning of period of discontinued operations/held for sale	—			—
Net increase (decrease) in cash	16,167			(10,880		)
Less: cash at end of period of discontinued operations/held for sale	—			—
Cash at end of period of continuing operations	$	80,916		$	14,777



Forward Air Corporation
Consolidated Statements of Shareholders' Equity
(In thousands)
(Unaudited)

	Common Stock					Additional Paid-in Capital			Retained Earnings			Total Shareholders' Equity
	Shares		Amount			Additional Paid-in Capital			Retained Earnings			Total Shareholders' Equity
Balance at December 31, 2019	27,850		$	279		$	226,869		$	350,034		$	577,182
Net income and comprehensive income	—		—			—			8,375			8,375
Share-based compensation	—		—			3,266			—			3,266
Dividends ($0.18 per share)	—		—			2			(5,052		)	(5,050		)
Cash settlement of share-based awards for tax withholdings	(42	)	—			—			(2,672		)	(2,672		)
Share repurchases	(268	)	(3		)	—			(15,256		)	(15,259		)
Vesting of previously non-vested shares	139		1			(2		)	—			(1		)
Balance at March 31, 2020	27,679		$	277		$	230,135		$	335,429		$	565,841
Net income and comprehensive income	—		—			—			3,155			3,155
Common stock issued under employee stock purchase plan	7		—			295			—			295
Share-based compensation	—		—			2,654			—			2,654
Dividends ($0.18 per share)	—		—			3			(5,042		)	(5,039		)
Cash settlement of share-based awards for tax withholdings	(13	)	—			—			(613		)	(613		)
Vesting of previously non-vested shares	56		—			(1		)	—			(1		)
Balance at June 30, 2020	27,729		$	277		$	233,086		$	332,929		$	566,292



	FSA Earn-out
	April 21, 2019	December 31, 2019	June 30, 2020
Risk-free rate	2.9%	2.2%	2.2%
Revenue discount rate	4.4%	4.4%	3.2%
Revenue volatility	3.0%	5.0%	6.0%




	FSA		OST		Linn Star
	April 21, 2019		July 14, 2019		January 12, 2020
Tangible assets:
Cash	$	202	$	—	$	1,308
Other receivables	1,491		—		—
Prepaid expenses and other current assets	—		—		1,182
Property and equipment	40		10,371		605
Operating lease right-of-use assets	3,209		1,672		10,011
Total tangible assets	4,942		12,043		13,106
Intangible assets:
Non-compete agreements	900		850		450
Customer relationships	17,900		5,700		29,800
Goodwill	19,963		2,050		25,234
Total intangible assets	38,763		8,600		55,484
Total assets acquired	43,705		20,643		68,590

Liabilities assumed:
Current liabilities	8,466		—		1,340
Other liabilities	5,030		—		—
Debt and finance lease obligations	—		6,971		—
Operating lease obligations	3,209		1,672		10,011
Total liabilities assumed	16,705		8,643		11,351
Net assets acquired	$	27,000	$	12,000	$	57,239



	Expedited LTL		Truckload		Final Mile		Intermodal
Discount rate	10.5	%	13.5	%	13.5	%	13.5	%
Terminal growth rate	4.0	%	4.0	%	4.0	%	4.0	%



	Beginning balance, December 31, 2019			Linn Star Acquisition		Ending balance, June 30, 2020
Expedited LTL
Goodwill	$	97,593		$	—	$	97,593
Accumulated Impairment	—			—		—

Truckload
Goodwill	45,164			—		45,164
Accumulated Impairment	(25,686		)	—		(25,686		)

Final Mile
Goodwill	19,963			25,234		45,197
Accumulated Impairment	—			—		—

Intermodal
Goodwill	78,665			—		78,665
Accumulated Impairment	—			—		—

Total
Goodwill	241,385			25,234		266,619
Accumulated Impairment	(25,686		)	—		(25,686		)
	$	215,699		$	25,234	$	240,933



	Six months ended
	June 30, 2020
Expected dividend yield	1.1		%
Expected stock price volatility	24.1		%
Weighted average risk-free interest rate	1.5		%
Expected life of options (years)	5.9
Weighted average grant date fair value	$	14.79



	Six months ended June 30, 2020
							Weighted-
			Weighted-				Average
			Average		Aggregate		Remaining
			Exercise		Intrinsic		Contractual
	Options		Price		Value		Term
Outstanding at December 31, 2019	417		$	53
Granted	36		66
Exercised	—		—
Forfeited	(4	)	60
Outstanding at June 30, 2020	449		$	54	$	247	3.9
Exercisable at June 30, 2020	317		$	51	$	1,379	3.3



	June 30, 2020	June 30, 2019
Anti-dilutive stock options	218	194
Anti-dilutive performance shares	29	—
Anti-dilutive non-vested shares and deferred stock units	95	—
Total anti-dilutive shares	342	194


	As of June 30, 2021
	Level 1		Level 2		Level 3		Total
Earn-out liability	$	0	$	0	$	7,309	$	7,309

	As of December 31, 2020
	Level 1		Level 2		Level 3		Total
Earn-out liability	$	0	$	0	$	6,865	$	6,865



	June 30, 2020
	Carrying Value		Fair Value
Finance leases	$	5,626	$	5,945



	Three months ended
	June 30, 2020					June 30, 2019
	Shares repurchased	Cost of shares repurchased		Average cost per share		Shares repurchased	Cost of shares repurchased		Average cost per share
2019 Repurchase Plan	—	$	—	$	—	407	$	24,436	$	60.05
Total	—	$	—	$	—	407	$	24,436	$	60.05



	Three Months Ended June 30, 2021
	Expedited Freight		Intermodal		Corporate		Eliminations		Consolidated - Continuing Operations
External revenues	$	351,551	$	69,120	$	0	$	—	$	420,671
Intersegment revenues	184		13		0		(197)		0
Depreciation	4,989		835		23		0		5,847
Amortization	1,790		1,777		0		0		3,567
Income (loss) from continuing operations	34,688		8,386		(950)		0		42,124
Purchases of property and equipment	5,724		156		0		0		5,880

	Three Months Ended June 30, 2020
	Expedited Freight		Intermodal		Corporate		Eliminations		Consolidated - Continuing Operations
External revenues	$	235,417	$	46,420	$	0	$	—	$	281,837
Intersegment revenues	241		8		0		(408)		(159)
Depreciation	5,009		1,081		25		0		6,115
Amortization	1,731		1,567		0		0		3,298
Income (loss) from continuing operations	11,753		4,413		(2,252)		0		13,914
Purchases of property and equipment	11,545		18		0		0		11,563



	Six Months Ended June 30, 2021
	Expedited Freight		Intermodal		Corporate		Eliminations		Consolidated - Continuing Operations
External revenues	$	655,308	$	127,622	$	0	$	—	$	782,930
Intersegment revenues	613		25		0		(695)		(57)
Depreciation	9,982		1,634		26		0		11,642
Amortization	3,595		3,414		0		0		7,009
Income (loss) from continuing operations	59,218		12,895		(7,265)		0		64,848
Purchases of property and equipment	8,136		439		0		0		8,575

	Six Months Ended June 30, 2020
	Expedited Freight		Intermodal		Corporate		Eliminations		Consolidated - Continuing Operations
External revenues	$	488,560	$	98,875	$	0	$	—	$	587,435
Intersegment revenues	727		13		0		(940)		(200)
Depreciation	9,916		2,134		43		0		12,093
Amortization	3,519		3,135		0		0		6,654
Income (loss) from continuing operations	26,933		8,126		(5,372)		0		29,687
Purchases of property and equipment	13,950		264		0		0		14,214

Total Assets
As of June 30, 2021	$	767,222	$	209,266	$	105,459	$	(106)	$	1,081,841
As of December 31, 2020	905,081		221,963		47,641		(201,391)		973,294


	June 30, 2021		December 31, 2020
Segment assets - continuing operations	$	1,081,841	$	973,294
Current assets held for sale	0		21,002
Noncurrent assets held for sale	0		53,097
Consolidated total assets	$	1,081,841	$	1,047,393



	Three months ended
	June 30,			June 30,						Percent
	2020			2019			Change			Change
				(As Adjusted)
Operating revenue:
Expedited Freight	$	235.7		$	253.3		$	(17.6	)	(6.9	)%
Intermodal	46.4			50.5			(4.1		)	(8.1	)
Eliminations and other operations	(0.4		)	(0.9		)	0.5			(55.6	)
Operating revenue	281.7			302.9			(21.2		)	(7.0	)
Operating expenses:
Purchased transportation	142.1			143.4			(1.3		)	(0.9	)
Salaries, wages, and employee benefits	63.8			63.8			—			—
Operating leases	17.4			16.1			1.3			8.1
Depreciation and amortization	9.4			9.2			0.2			2.2
Insurance and claims	7.7			11.8			(4.1		)	(34.7	)
Fuel expense	2.5			4.5			(2.0		)	(44.4	)
Other operating expenses	24.9			25.0			(0.1		)	(0.4	)
Total operating expenses	267.8			273.8			(6.0		)	(2.2	)
Income (loss) from continuing operations:
Expedited Freight	11.8			28.2			(16.4		)	(58.2	)
Intermodal	4.4			5.2			(0.8		)	(15.4	)
Other operations	(2.3		)	(4.3		)	2.0			(46.5	)
Income from continuing operations	13.9			29.1			(15.2		)	(52.2	)
Other expense:
Interest expense	(1.2		)	(0.6		)	(0.6		)	100.0
Total other expense	(1.2		)	(0.6		)	(0.6		)	100.0
Income from continuing operations before income taxes	12.7			28.5			(15.8		)	(55.4	)
Income tax expense	3.5			7.3			(3.8		)	(52.1	)
Net income from continuing operations	9.2			21.2			(12.0		)	(56.6	)
(Loss) income from discontinued operations, net of tax	(6.0		)	1.1			(7.1		)	(645.5	)
Net income and comprehensive income	$	3.2		$	22.3		$	(19.1	)	(85.7	)%



Expedited Freight Segment Information
(In millions)
(Unaudited)

	Three months ended
	June 30,		Percent of		June 30,		Percent of					Percent
	2020 ¹		Revenue		2019		Revenue		Change			Change
					(As Adjusted)
Operating revenue:
Network ²	$	134.2	56.9	%	$	172.5	68.1	%	$	(38.3	)	(22.2	)%
Truckload	41.9		17.8		48.6		19.2		(6.7		)	(13.8	)
Final Mile	53.4		22.7		25.0		9.9		28.4			113.6
Other	6.2		2.6		7.2		2.8		(1.0		)	(13.9	)
Total operating revenue	235.7		100.0		253.3		100.0		(17.6		)	(6.9	)

Operating expenses:
Purchased transportation	127.5		54.1		125.8		49.7		1.7			1.4
Salaries, wages and employee benefits	50.5		21.4		50.9		20.1		(0.4		)	(0.8	)
Operating leases	13.3		5.6		12.1		4.8		1.2			9.9
Depreciation and amortization	6.7		2.8		7.5		3.0		(0.8		)	(10.7	)
Insurance and claims	5.7		2.4		6.6		2.6		(0.9		)	(13.6	)
Fuel expense	1.4		0.6		2.7		1.1		(1.3		)	(48.1	)
Other operating expenses	18.8		8.0		19.5		7.7		(0.7		)	(3.6	)
Total operating expenses	223.9		95.0		225.1		88.9		(1.2		)	(0.5	)
Income from operations	$	11.8	5.0	%	$	28.2	11.1	%	$	(16.4	)	(58.2	)%

¹Includes revenues and operating expenses from the acquisition of FSA and Linn Star, which were acquired in April 2019 and January 2020, respectively. FSA results are partially included in the prior period. Linn Star results are not included in the prior period.
² Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.



	Six months ended June 30,
	2020			2019			Change			Percent Change
				(As Adjusted)
Operating revenue:
Expedited Freight	$	489.3		$	478.9		$	10.4		2.2	%
Intermodal	98.9			104.6			(5.7		)	(5.4	)
Eliminations and other operations	(1.0		)	(1.7		)	0.7			(41.2	)
Operating revenue	587.2			581.8			5.4			0.9
Operating expenses:
Purchased transportation	292.7			276.0			16.7			6.1
Salaries, wages, and employee benefits	133.3			123.9			9.4			7.6
Operating leases	35.3			31.0			4.3			13.9
Depreciation and amortization	18.7			18.5			0.2			1.1
Insurance and claims	17.8			19.7			(1.9		)	(9.6	)
Fuel expense	6.5			8.5			(2.0		)	(23.5	)
Other operating expenses	53.2			51.4			1.8			3.5
Total operating expenses	557.5			529.0			28.5			5.4
Income (loss) from continuing operations:
Expedited LTL	26.9			49.1			(22.2		)	(45.2	)
Intermodal	8.1			11.4			(3.3		)	(28.9	)
Other operations	(5.3		)	(7.7		)	2.4			(31.2	)
Income from continuing operations	29.7			52.8			(23.1		)	(43.8	)
Other expense:
Interest expense	(2.1		)	(1.2		)	(0.9		)	75.0
Total other expense	(2.1		)	(1.2		)	(0.9		)	75.0
Income from continuing operations before income taxes	27.6			51.6			(24.0		)	(46.5	)
Income tax expense	7.0			12.7			(5.7		)	(44.9	)
Net income from continuing operations	$	20.6		$	38.9		$	(18.3	)	(47.0	)
(Loss) income from discontinued operations, net of tax	(9.1		)	1.8			(10.9		)	(605.6	)
Net income and comprehensive income	$	11.5		$	40.7		$	(29.2	)	(71.7	)%