UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2013
Commission File No. 000-22490


FORWARD AIR CORPORATION
(Exact name of registrant as specified in its charter)


Tennessee
 
62-1120025
(State or other jurisdiction of incorporation)
 
(I.R.S. Employer Identification No.)
430 Airport Road
Greeneville, Tennessee
 
37745
(Address of principal executive offices)
 
(Zip Code)
 

Registrant’s telephone number, including area code: (423) 636-7000
 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x  No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer x
 
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes o No x
 
The number of shares outstanding of the registrant’s common stock, $0.01 par value, as of October 21, 2013 was 30,615,604.




Table of Contents
 
 
 
Forward Air Corporation
 
 
 
 
 
Page
 
 
Number
Part I.
Financial Information
 
 
 
 
Item 1.
Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Part II.
Other Information
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 

2



Part I.
Financial Information
 
 
Item 1.
Financial Statements (Unaudited).
Forward Air Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
 
September 30,
2013
 
December 31,
2012
Assets
 
 
 
Current assets:
 
 
 
Cash
$
98,551

 
$
112,182

Accounts receivable, less allowance of $1,671 in 2013 and $1,444 in 2012
83,224

 
75,262

Other current assets
18,849

 
10,952

Total current assets
200,624

 
198,396

 
 
 
 
Property and equipment
270,113

 
239,138

Less accumulated depreciation and amortization
112,514

 
105,581

Total property and equipment, net
157,599

 
133,557

Goodwill and other acquired intangibles:
 

 
 

Goodwill
88,404

 
43,332

Other acquired intangibles, net of accumulated amortization of $30,276 in 2013 and $26,028 in 2012
41,624

 
22,102

Total net goodwill and other acquired intangibles
130,028

 
65,434

Other assets
2,551

 
1,800

Total assets
$
490,802

 
$
399,187

 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
17,067

 
$
11,168

Accrued expenses
19,490

 
16,476

Current portion of debt and capital lease obligations
92

 
276

Total current liabilities
36,649

 
27,920

 
 
 
 
Long-term debt and capital lease obligations, less current portion
4

 
58

Other long-term liabilities
9,129

 
7,098

Deferred income taxes
26,576

 
12,440

 
 
 
 
Shareholders’ equity:
 

 
 

Preferred stock

 

Common stock, $0.01 par value: Authorized shares - 50,000,000, Issued and outstanding shares - 30,415,873 in 2013 and 29,194,761 in 2012
304

 
292

Additional paid-in capital
102,465

 
64,644

Retained earnings
315,675

 
286,735

Total shareholders’ equity
418,444

 
351,671

Total liabilities and shareholders’ equity
$
490,802

 
$
399,187

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


3



Forward Air Corporation
Condensed Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)
 
 
 
 
 
Three months ended
 
Nine months ended
 
September 30,
2013
 
September 30,
2012
 
September 30,
2013
 
September 30,
2012
Operating revenue:
 
 
 
 
 
 
 
Airport-to-airport
$
100,960

 
$
96,914

 
$
288,457

 
$
290,006

Logistics
32,562

 
20,878

 
87,474

 
63,315

Other
6,862

 
6,528

 
19,624

 
19,498

Pool distribution
29,649

 
19,194

 
75,841

 
56,102

Total operating revenue
170,033

 
143,514

 
471,396

 
428,921

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 

 
 
Purchased transportation
 
 
 
 
 
 
 
Airport-to-airport
42,407

 
40,150

 
118,605

 
119,546

Logistics
22,152

 
15,954

 
59,696

 
47,756

Other
2,039

 
1,822

 
5,707

 
5,252

Pool distribution
8,613

 
5,176

 
22,454

 
14,989

Total purchased transportation
75,211

 
63,102

 
206,462

 
187,543

Salaries, wages and employee benefits
39,165

 
31,698

 
109,149

 
97,408

Operating leases
6,991

 
6,895

 
20,923

 
20,826

Depreciation and amortization
6,220

 
5,425

 
17,377

 
15,940

Insurance and claims
3,290

 
3,098

 
9,164

 
8,132

Fuel expense
3,871

 
2,318

 
10,535

 
7,271

Other operating expenses
12,428

 
11,352

 
36,634

 
32,303

Total operating expenses
147,176

 
123,888

 
410,244

 
369,423

Income from operations
22,857

 
19,626

 
61,152

 
59,498

 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 

 
 
Interest expense
(145
)
 
(111
)
 
(401
)
 
(241
)
Other, net
27

 
(21
)
 
72

 
(6
)
Total other expense
(118
)
 
(132
)
 
(329
)
 
(247
)
Income before income taxes
22,739

 
19,494

 
60,823

 
59,251

Income taxes
8,542

 
7,227

 
21,941

 
22,544

Net income and comprehensive income
$
14,197


$
12,267

 
$
38,882

 
$
36,707

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 

 
 
Basic
$
0.47

 
$
0.42

 
$
1.30

 
$
1.27

Diluted
$
0.46

 
$
0.41

 
$
1.27

 
$
1.24

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
30,374

 
29,088

 
30,017

 
28,895

Diluted
30,986

 
29,660

 
30,677

 
29,484

 
 
 
 
 
 
 
 
Dividends per share:
$
0.10

 
$
0.10

 
$
0.30

 
$
0.24


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

4



Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
 
Nine months ended
 
September 30,
2013
 
September 30,
2012
 
 
Operating activities:
 
 
 
Net income
$
38,882

 
$
36,707

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Depreciation and amortization
17,377

 
15,940

Share-based compensation
4,619

 
4,550

(Gain) loss on disposal of property and equipment
(468
)
 
259

Provision for loss on receivables
234

 
226

Provision for revenue adjustments
1,705

 
1,417

Deferred income tax
4,658

 
2,460

Excess tax benefit for stock options exercised
(3,207
)
 
(354
)
Changes in operating assets and liabilities
 
 
 
Accounts receivable
(4,262
)
 
(5,599
)
Prepaid expenses and other current assets
(1,575
)
 
(1,629
)
Accounts payable and accrued expenses
2,524

 
(8,298
)
Net cash provided by operating activities
60,487

 
45,679

 
 
 
 
Investing activities:
 
 
 
Proceeds from disposal of property and equipment
1,665

 
867

Purchases of property and equipment
(33,266
)
 
(20,499
)
Acquisition of businesses, net of cash acquired
(45,328
)
 

Other
(111
)
 
(267
)
Net cash used in investing activities
(77,040
)
 
(19,899
)
 
 
 
 
Financing activities:
 
 
 
Payments of debt and capital lease obligations
(20,351
)
 
(411
)
Proceeds from exercise of stock options
29,866

 
15,740

Payments of cash dividends
(9,071
)
 
(7,009
)
Common stock issued under employee stock purchase plan
137

 
119

Cash settlement of share-based awards for minimum tax withholdings
(866
)
 
(386
)
Excess tax benefit for stock options exercised
3,207

 
354

Net cash provided by financing activities
2,922

 
8,407

Net (decrease) increase in cash
(13,631
)
 
34,187

Cash at beginning of period
112,182

 
58,801

Cash at end of period
$
98,551

 
$
92,988

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


5

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013


1.    Basis of Presentation

Forward Air Corporation's (“the Company”) services can be classified into three principal reporting segments:  Forward Air, Inc. (“Forward Air”), Forward Air Solutions, Inc. (“FASI”) and Total Quality, Inc. ("TQI").  

Through the Forward Air segment, the Company is a leading provider of time-definite transportation and related logistics services to the North American deferred air freight market and its activities can be classified into three categories of service: airport-to-airport, logistics, and other.  Forward Air’s airport-to-airport service operates a comprehensive national network for the time-definite surface transportation of expedited ground freight.  The airport-to-airport service offers customers local pick-up and delivery and scheduled surface transportation of cargo as a cost effective, reliable alternative to air transportation.  Forward Air’s logistics services provide expedited truckload brokerage and dedicated fleet services.  Forward Air’s other services include shipment consolidation and deconsolidation, warehousing, customs brokerage, and other handling.  The Forward Air segment primarily provides its transportation services through a network of terminals located at or near airports in the United States and Canada.  

FASI provides pool distribution services throughout the Mid-Atlantic, Southeast, Midwest and Southwest continental United States.  Pool distribution involves managing high-frequency handling and distribution of time-sensitive product to numerous destinations in specific geographic regions.  FASI’s primary customers for this service are regional and nationwide distributors and retailers, such as mall, strip mall and outlet based retail chains.  

TQI is a provider of maximum security and temperature-controlled logistics services, primarily truckload services, to the pharmaceutical and life science industries. In addition to core pharmaceutical services, TQI provides truckload and less-than-truckload brokerage transportation services.

The accompanying unaudited condensed 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 when measured on a quarterly basis; therefore operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. 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, 2012.

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

2.    Acquisitions and Goodwill

Acquisition of TQI

On March 4, 2013, the Company entered into a Stock Purchase Agreement ("Agreement") with all of the shareholders of TQI to acquire 100% of the outstanding stock. Pursuant to the terms of the Agreement and concurrently with the execution of the Agreement, the Company acquired all of the outstanding capital stock of TQI in exchange for $45,328 in net cash, $20,113 in assumed debt and an available earn-out of $5,000. The assumed debt was immediately paid in full after funding of the acquisition. The acquisition and settlement of the assumed debt were funded using the Company's cash on hand. Under the purchase agreement, $4,500 of the purchase price was paid into an escrow account to protect the Company against potential unknown liabilities. The amount held in escrow will be remitted to the sellers on September 4, 2014.
Pursuant to the terms of the Agreement, the Company could pay the former shareholders of TQI additional cash consideration from $0 to $5,000 if certain earnings before interest, taxes, depreciation and amortization ("EBITDA") goals are exceeded. The ultimate payout is based on the level by which TQI operating results exceed specified thresholds as defined by the Agreement in both 2013 and 2014. The Company has recognized an estimated earn-out liability of $614 based on the most probable outcomes as of the acquisition date and September 30, 2013. The fair value of the earn-out liability (level 3) was estimated using an income

6

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013

approach based on the present value of probability-weighted amounts payable under a range of performance scenarios for 2013 and 2014 and a discount rate of 10.9%. If TQI's 2013 or 2014 EBITDA performance fails to meet or exceeds the projections used in our valuation of the earn out liability the final value of the liability could be significantly lower or higher than the liability the Company has currently recorded.
The Company incurred total transaction costs related to the acquisition of approximately $943, which was expensed during the nine months ended September 30, 2013, in accordance with U.S. GAAP. These transaction costs were primarily included in "Other operating expenses" expense in the consolidated statements of comprehensive income.
The acquisition allows the Company to expand and diversify its complimentary truckload operations while maintaining its goal of offering high-value added services.
The following table presents the preliminary allocation of the TQI purchase price to the assets acquired and liabilities assumed based on their estimated fair values and resulting residual goodwill (in thousands):
 
March 4, 2013
Tangible assets:
 
Accounts receivable
$
5,639

Prepaid expenses and other current assets
1,201

Property and equipment
5,103

Other assets
728

Deferred income taxes
937

Total tangible assets
13,608

Intangible assets:
 
Non-compete agreements
470

Trade name
1,000

Customer relationships
22,300

Goodwill
45,072

Total intangible assets
68,842

Total assets acquired
82,450

 
 
Liabilities assumed:
 
Current liabilities
4,833

Other liabilities
1,735

Debt
20,113

Deferred income taxes
10,441

Total liabilities assumed
37,122

Net assets acquired
$
45,328

The above estimated fair values of assets acquired and liabilities assumed are based on the information that was available as of the TQI acquisition date through the date of this filing. The Company is still in the process of finalizing the valuation of income tax related assets and liabilities and certain disputed charges for other taxes and associated professional fees. The acquired non-compete agreements and trade names are being amortized on straight-line basis over a 5 year life. Customer relationships acquired are being amortized on straight-line basis over a 15 year life.
The fair value of the non-compete agreements, trade name and customer relationship assets were estimated using an income approach (level 3). Under this method, an intangible asset's fair value is equal to the present value of the incremental after-tax

7

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013

cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, the Company used cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes that the level and timing of cash flows appropriately reflect market participant assumptions. The fair value of the TQI trade name was estimated using an income approach, specifically known as the relief from royalty method. The relief from royalty method is based on a hypothetical royalty stream that would be paid if the Company did not own the TQI name and had to license the trade name. The Company derived the hypothetical royalty income from the projected revenues of TQI. Cash flows were assumed to extend through the remaining economic useful life of each class of intangible asset.
Included in the assumed liabilities of TQI is a liability for unrecognized tax benefits for $1,120. The liability is attributable to TQI not filing income tax returns in all jurisdictions in which it operated. The $1,120 consists of unrecognized tax benefits of $853 and related penalties and interest of $174 and $93, respectively. In accordance with the Agreement, the former shareholders of TQI have indemnified the Company against this tax exposure. As a result, the Company also recognized an offsetting receivable net of the estimated federal tax benefit for $728.
The assets, liabilities, and operating results of TQI have been included in the Company's consolidated financial statements from the date of acquisition and have been assigned to a new TQI reportable segment. The results of TQI reflected in the Company's consolidated statements of comprehensive income are as follows (in thousands, except per share data):
 
Three months ended September 30, 2013
 
Since acquisition date to September 30, 2013
Logistics revenue
$
12,431

 
$
28,545

Operating income
934

 
1,936

Net income
547

 
1,180

Net income per share
 
 
 
Basic
$
0.02

 
$
0.04

Diluted
$
0.02

 
$
0.04

The following unaudited pro forma information presents a summary of the Company's consolidated results of operations as if the TQI acquisition occurred as of January 1, 2012 (in thousands, except per share data).
 
Three months ended
 
September 30, 2013
September 30, 2012
Operating revenue
$
170,033

$
158,499

Income from operations
22,857

21,333

Net income
14,197

13,317

Net income per share
 
 
Basic
$
0.47

$
0.46

Diluted
$
0.46

$
0.45


8

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013

 
Nine months ended
 
September 30, 2013
September 30, 2012
Operating revenue
$
479,940

$
472,186

Income from operations
61,461

63,355

Net income
39,073

39,079

Net income per share
 
 
Basic
$
1.30

$
1.35

Diluted
$
1.27

$
1.33

Goodwill
The following is a summary of the changes in goodwill for the nine months ended September 30, 2013. All goodwill, except the goodwill assigned to TQI, is deductible for tax purposes.
 
Forward Air
 
FASI
 
TQI
 
Total
 
 
Accumulated
 
 
Accumulated
 
 
Accumulated
 
 
 
Goodwill
Impairment
 
Goodwill
Impairment
 
Goodwill
Impairment
 
Net
Beginning balance, December 31, 2012
$
37,926

$

 
$
12,359

$
(6,953
)
 
$

$

 
$
43,332

TQI acquisition


 


 
45,072


 
45,072

Ending balance, September 30, 2013
$
37,926

$

 
$
12,359

$
(6,953
)
 
$
45,072

$

 
$
88,404

The Company conducted its annual impairment assessments and tests of goodwill for each reporting unit as of June 30, 2013 and no impairment charges were required. The Company conducts an annual (or more frequently if circumstances indicate possible impairment) impairment test of goodwill for each reporting unit at June 30 of each year.  The first step of the goodwill impairment test is the Company assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, including goodwill. When performing the qualitative assessment, the Company considers the impact of factors including, but not limited to, macroeconomic and industry conditions, overall financial performance of each reporting unit, litigation and new legislation. If based on the qualitative assessments, the Company believes it more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, or periodically as deemed appropriate by management, the Company will prepare an estimation of the respective reporting unit's fair value utilizing a quantitative approach.  If a quantitative fair value estimation is required, the Company calculates the fair value of the applicable reportable units, using a combination of discounted projected cash flows and market valuations for comparable companies as of the valuation date.  The Company's inputs into the fair value calculations for goodwill are classified within level 3 of the fair value hierarchy as defined in the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“the FASB Codification”). If this estimation of fair value indicates that impairment potentially exists, the Company will then measure the amount of the impairment, if any.  Goodwill impairment exists when the calculated implied fair value of goodwill is less than its carrying value.  Changes in strategy or market conditions could significantly impact these fair value estimates and require adjustments to recorded asset balances.

3.    Share-Based Payments

The Company’s general practice has been to make a single annual grant of share-based compensation to key employees and to make other employee grants only in connection with new employment or promotions.  Forms of share-based compensation granted to employees by the Company include stock options, non-vested shares of common stock (“non-vested share”), and performance shares.  The Company also typically makes a single annual grant of non-vested shares to non-employee directors in conjunction with the annual election of non-employee directors to the Board of Directors.  Share-based compensation is based on the grant

9

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013

date fair value of the instrument and is recognized, net of estimated forfeitures, ratably over the requisite service period, or vesting period. The Company estimates forfeitures based upon historical experience.  All share-based compensation expense is recognized in salaries, wages and employee benefits.

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.  The Company used the Black-Scholes option-pricing model to estimate the grant-date fair value of options granted.  The weighted-average fair value of options granted and assumptions used to calculate their fair value during the three and nine months ended September 30, 2013 and 2012 were as follows:


Three months ended

September 30,
2013

September 30,
2012
Expected dividend yield
1.2
%

-
Expected stock price volatility
43.4
%

-
Weighted average risk-free interest rate
1.5
%

-
Expected life of options (years)
4.5


-
Weighted average grant date fair value
$
13


-


Nine months ended

September 30,
2013

September 30,
2012
Expected dividend yield
1.2
%

0.9
%
Expected stock price volatility
43.7
%

46.6
%
Weighted average risk-free interest rate
0.9
%

0.8
%
Expected life of options (years)
5.3


4.2

Weighted average grant date fair value
$
13


$
13


The following tables summarize the Company’s employee stock option activity and related information:


Three months ended September 30, 2013







Weighted-



Weighted-

Aggregate

Average



Average

Intrinsic

Remaining

Options

Exercise

Value

Contractual

(000)

Price

(000)

Term
Outstanding at June 30, 2013
1,902


$
27





Granted
5


37





Exercised
(69
)

24





Forfeited







Outstanding at September 30, 2013
1,838


$
27


$
19,715


2.6
Exercisable at September 30, 2013
1,622


$
26


$
19,159


2.2
 

10

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013


Three months ended

September 30,
2013

September 30,
2012
Shared-based compensation for options
$
329


$
575

Tax benefit for option compensation
124


167

Unrecognized compensation cost for options, net of estimated forfeitures
1,899


2,052



Nine months ended September 30, 2013







Weighted-



Weighted-

Aggregate

Average



Average

Intrinsic

Remaining

Options

Exercise

Value

Contractual

(000)

Price

(000)

Term
Outstanding at December 31, 2012
2,874


$
26





Granted
114


37





Exercised
(1,150
)

26





Forfeited


$






Outstanding at September 30, 2013
1,838


$
27


$
19,715


2.6
Exercisable at September 30, 2013
1,622


$
26


$
19,159


2.2

Nine months ended

September 30,
2013

September 30,
2012
Shared-based compensation for options
$
1,076


$
1,994

Tax benefit for option compensation
381


546

Unrecognized compensation cost for options, net of estimated forfeitures
1,899


2,052


Employee Activity - Non-vested Shares

Non-vested share grants to employees vest ratably over a three-year period.  The non-vested shares’ fair values were estimated using closing market prices on the day of grant. The following tables summarize the Company’s employee non-vested share activity and related information:


Three months ended September 30, 2013



Weighted-

Aggregate

Non-vested

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at June 30, 2013
189


$
35



Granted





Vested





Forfeited
(2
)

35



Outstanding and non-vested at September 30, 2013
187


$
35


$
6,638



11

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013


Three months ended

September 30,
2013

September 30,
2012
Shared-based compensation for non-vested shares
$
781


$
506

Tax benefit for non-vested share compensation
297


196

Unrecognized compensation cost for non-vested shares, net of estimated forfeitures
4,508


4,035



Nine months ended September 30, 2013



Weighted-

Aggregate

Non-vested

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at December 31, 2012
168


$
33



Granted
98


37



Vested
(68
)

37



Forfeited
(11
)

36



Outstanding and non-vested at September 30, 2013
187


$
35


$
6,638



Nine months ended

September 30,
2013

September 30,
2012
Shared-based compensation for non-vested shares
$
2,289


$
1,502

Tax benefit for non-vested share compensation
872


581

Unrecognized compensation cost for non-vested shares, net of estimated forfeitures
4,508


4,035


Employee Activity - Performance Shares

In 2013 and 2012, the Company granted performance shares to key employees.  Under the terms of the performance share agreements, on the third anniversary of the grant date, the Company will issue to the employees a calculated number of common stock shares based on the three year performance of the Company’s common stock share price as compared to the share price performance of a selected peer group.  No shares may be issued if the Company share price performance outperforms 30% or less of the peer group, but the number of shares issued may be doubled if the Company share price performs better than 90% of the peer group.  The fair value of the performance shares was estimated using a Monte Carlo simulation. The weighted average assumptions used in the Monte Carlo calculation were as follows:


Nine months ended

September 30,
2013

September 30,
2012
Expected stock price volatility
34.5
%

40.8
%
Weighted average risk-free interest rate
0.4
%

0.4
%






12

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013

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

Three months ended September 30, 2013



Weighted-

Aggregate

Performance

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at June 30, 2013
88


$
37



Granted





Vested





Outstanding and non-vested at September 30, 2013
88


$
37


$
3,278



Three months ended

September 30,
2013

September 30,
2012
Shared-based compensation for performance shares
$
275


$
185

Tax benefit for performance share compensation
105


72

Unrecognized compensation cost for performance shares, net of estimated forfeitures
1,465


1,356



Nine months ended September 30, 2013



Weighted-

Aggregate

Performance

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at December 31, 2012
62


$
36



Granted
26


40



Vested





Outstanding and non-vested at September 30, 2013
88


$
37


$
3,278



Nine months ended

September 30,
2013

September 30,
2012
Shared-based compensation for performance shares
$
780


$
515

Tax benefit for performance share compensation
297


199

Unrecognized compensation cost for performance shares, net of estimated forfeitures
1,465


1,356


Employee Activity - Employee Stock Purchase Plan

Under the 2005 Employee Stock Purchase Plan (the “ESPP”), which has been approved by shareholders, the Company is authorized to issue up to a remaining 416,881 shares of common stock to employees of the Company. These shares may be issued at a price equal to 90% of the lesser of the market value on the first day or the last day of each six-month purchase period. Common stock purchases are paid for through periodic payroll deductions and/or up to two large lump sum contributions. For the nine months ended September 30, 2013, participants under the plan purchased 4,241 shares at an average price of $32.34 per share. For the nine months ended September 30, 2012, participants under the plan purchased 4,121 shares at an average price of $29.04 per share.

13

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013

The weighted-average fair value of each purchase right under the ESPP granted for the nine months ended September 30, 2013, which is equal to the discount from the market value of the common stock at the end of each six month purchase period, was $5.94 per share. The weighted-average fair value of each purchase right under the ESPP granted for the nine months ended September 30, 2012, which is equal to the discount from the market value of the common stock at the end of each six month purchase period, was $3.23 per share. Share-based compensation expense of $26 and $13 was recognized during the nine months ended September 30, 2013 and 2012, respectively.

Non-employee Director Activity - Non-vested Shares

Grants of non-vested shares to non-employee directors vest ratably over the elected term to the Board of Directors, or one year.  The following tables summarize the Company’s non-employee non-vested share activity and related information:

Three months ended September 30, 2013



Weighted-

Aggregate

Non-vested

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at June 30, 2013
15


$
38



Granted





Vested





Outstanding and non-vested at September 30, 2013
15


$
38


$
560



Three months ended

September 30,
2013

September 30,
2012
Shared-based compensation for non-vested shares
$
141


$
161

Tax benefit for non-vested share compensation
54


62

Unrecognized compensation cost for non-vested shares, net of estimated forfeitures
335


385



Nine months ended September 30, 2013



Weighted-

Aggregate

Non-vested

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at December 31, 2012
20


$
32



Granted
15


38



Vested
(20
)

32



Outstanding and non-vested at September 30, 2013
15


$
38


$
560



Nine months ended

September 30,
2013

September 30,
2012
Shared-based compensation for non-vested shares
$
448


$
526

Tax benefit for non-vested share compensation
171


204

Unrecognized compensation cost for non-vested shares, net of estimated forfeitures
335


385


14

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013


Non-employee Director Activity - Stock Options

In addition to the above activity, each May from 1995 to 2005 options were granted to the non-employee directors of the Company.  The options have terms of ten years and are fully exercisable.  At September 30, 2013, 26,250 options were outstanding and will expire between May 2014 and May 2015.  At September 30, 2013, the weighted average exercise price per share and remaining contractual term for the outstanding options of non-employee directors were $23 and 1.2 years, respectively.

4.    Senior Credit Facility
In February 2012, the Company entered into a new $150,000 credit facility. This facility has a term of five years and matures in February 2017. The Company entered into this larger credit facility in order to fund potential acquisitions, the repurchase of its common stock and the financing of other general business purposes. Interest rates for advances under the facility are LIBOR plus 1.1% based upon covenants related to total indebtedness to earnings (1.3% at September 30, 2013). The agreement contains certain covenants and restrictions, none of which are expected to significantly affect the Company's operations or ability to pay dividends. No assets are pledged as collateral against the credit facility. As of September 30, 2013, the Company had no borrowings outstanding under the senior credit facility. At September 30, 2013, the Company had utilized $9,374 of availability for outstanding letters of credit and had $140,626 of available borrowing capacity outstanding under the senior credit facility.  

5.    Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share:
 
 
Three months ended
 
Nine months ended
 
 
September 30,
2013
 
September 30,
2012
 
September 30, 2013
 
September 30, 2012
Numerator:
 
 
 
 
 
 
 
 
Numerator for basic and diluted income per share - net income
 
$
14,197

 
$
12,267

 
$
38,882

 
$
36,707

Denominator (in thousands):
 
 

 
 

 
 
 
 
Denominator for basic income per share - weighted-average shares
 
30,374

 
29,088

 
30,017

 
28,895

Effect of dilutive stock options (in thousands)
 
447

 
493

 
512

 
517

Effect of dilutive performance shares (in thousands)
 
13

 

 
9

 

Effect of dilutive non-vested shares and deferred stock units (in thousands)
 
152

 
79

 
139

 
72

Denominator for diluted income per share - adjusted weighted-average shares
 
30,986

 
29,660

 
30,677

 
29,484

Basic net income per share
 
$
0.47

 
$
0.42

 
$
1.30

 
$
1.27

Diluted net income per share
 
$
0.46

 
$
0.41

 
$
1.27

 
$
1.24


The number of instruments that could potentially dilute net income per basic share in the future, but that were not included in the computation of net income per diluted share because to do so would have been anti-dilutive for the periods presented, are as follows:
 
September 30,
2013
 
September 30,
2012
Anti-dilutive stock options (in thousands)
186

 
213

Anti-dilutive performance shares (in thousands)

 
21

Anti-dilutive non-vested shares and deferred stock units (in thousands)

 

Total anti-dilutive shares (in thousands)
186

 
234




15

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013



6.    Income Taxes

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various states and Canada. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or Canadian examinations by tax authorities for years before 2007.

For the three and nine months ended September 30, 2013 and 2012, the effective income tax rates varied from the statutory federal income tax rate of 35.0%, primarily as a result of the effect of state income taxes, net of the federal benefit, and permanent differences between book and tax net income. The combined federal and state effective tax rate for the nine months ended September 30, 2013 was 36.1% compared to a rate of 38.0% for the same period in 2012.  The reduction in the effective tax rate was primarily due to the 2013 retroactive reinstatement of alternative fuel tax credits for 2012 and benefits obtained from disqualified dispositions by employees of previously non-deductible incentive stock options.

7.    Financial Instruments

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company does not generally require collateral from its customers. Concentrations of credit risk with respect to trade accounts receivable on a consolidated basis are limited due to the large number of entities comprising the Company’s customer base and their dispersion across many different industries.  
 
Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Accounts receivable and accounts payable: The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximate their fair value based on their short-term nature.
 
The Company’s senior credit facility bears interest at LIBOR plus 1.1% based upon covenants related to total indebtedness to earnings.  Using interest rate quotes and discounted cash flows, the Company estimated the fair value of its outstanding debt and capital lease obligations as follows:
 
 
 
September 30, 2013
 
 
Carrying Value
 
Fair Value
Debt and capital leases
 
$
96

 
$
131


The Company's fair value calculations for the above financial instruments are classified within level 3 of the fair value hierarchy.

8.    Shareholders' Equity

During the first and second quarters of 2012, the Company’s Board of Directors declared a cash dividend of $0.07 per share of common stock. During the third and fourth quarters of 2012 and each quarter of 2013, the Company's Board of Directors declared a cash dividend of $0.10 per share of common stock. The Company expects to continue to pay regular quarterly cash dividends, though each subsequent quarterly dividend is subject to review and approval by the Board of Directors.

9.    Commitments and Contingencies

From time to time, the Company is party to ordinary, routine litigation incidental to and arising in the normal course of business.  The Company does not believe that any of these pending actions, individually or in the aggregate, will have a material adverse effect on its business, financial condition or results of operations.


16

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013

The primary claims in the Company’s business relate to workers’ compensation, property damage, vehicle liability and medical benefits. Most of the Company’s insurance coverage provides for self-insurance levels with primary and excess coverage which management believes is sufficient to adequately protect the Company from catastrophic claims. In the opinion of management, adequate provision has been made for all incurred claims up to the self-insured limits, including provision for estimated claims incurred but not reported.
 
The Company estimates its self-insurance loss exposure by evaluating the merits and circumstances surrounding individual known claims and by performing hindsight and actuarial analysis to determine an estimate of probable losses on claims incurred but not reported.  Such losses could be realized immediately as the events underlying the claims have already occurred as of the balance sheet dates. 

Because of the uncertainty of the ultimate resolution of outstanding claims, as well as uncertainty regarding claims incurred but not reported, it is possible that management’s provision for these losses could change materially in the near term. However, no estimate can currently be made of the range of additional loss that is at least reasonably possible.

10.    Segment Reporting

The Company operates in three reportable segments based on information available to and used by the chief operating decision maker.  Forward Air provides time-definite transportation and logistics services to the deferred air freight market.  FASI provides pool distribution services primarily to regional and national distributors and retailers. TQI is a provider of maximum security and temperature-controlled logistics services, primarily truckload services, to the pharmaceutical and life science industries.
 
The accounting policies of the segments are the same as those described in the summary of significant accounting policies disclosed in Note 1 to the Consolidated Financial Statements included in the Company’s 2012 Annual Report on Form 10-K. Segment data includes intersegment revenues.  Assets and costs of the corporate headquarters are allocated to the segments based on usage.  The Company evaluates the performance of its segments based on net income (loss).  The Company’s business is conducted in the U.S. and Canada.
 
The following tables summarize segment information about net income (loss) and assets used by the chief operating decision maker of the Company in making decisions regarding allocation of assets and resources as of and for the three and nine months ended September 30, 2013 and 2012.

17

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013

 
 
Three months ended September 30, 2013
 
 
Forward Air
 
FASI
 
TQI
 
Eliminations
 
Consolidated
External revenues
 
$
127,953

 
$
29,649

 
$
12,431

 
$

 
$
170,033

Intersegment revenues
 
838

 
179

 

 
(1,017
)
 

Depreciation and amortization
 
4,238

 
1,254

 
728

 

 
6,220

Share-based compensation expense
 
1,471

 
28

 
26

 

 
1,525

Interest expense
 
144

 
1

 

 

 
145

Interest income
 
6

 

 

 

 
6

Income tax expense
 
7,604

 
551

 
387

 

 
8,542

Net income
 
12,768

 
882

 
547

 

 
14,197

Total assets
 
464,538

 
42,043

 
84,343

 
(100,122
)
 
490,802

Capital expenditures
 
1,679

 
1,797

 
1,796

 

 
5,272

 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2012
 
 
Forward Air
 
FASI
 
TQI
 
Eliminations
 
Consolidated
External revenues
 
$
124,320

 
$
19,194

 
$

 
$

 
$
143,514

Intersegment revenues
 
186

 
274

 

 
(460
)
 

Depreciation and amortization
 
4,242

 
1,183

 

 

 
5,425

Share-based compensation expense
 
1,412

 
16

 

 

 
1,428

Interest expense
 
106

 
5

 

 

 
111

Interest income
 
5

 

 

 

 
5

Income tax expense
 
7,133

 
94

 

 

 
7,227

Net income
 
12,106

 
161

 

 

 
12,267

Total assets
 
386,462

 
36,279

 

 
(36,123
)
 
386,618

Capital expenditures
 
1,343

 
838

 

 

 
2,181


18

Table of Contents
Forward Air Corporation
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)
September 30, 2013

 
 
Nine months ended September 30, 2013
 
 
Forward Air
 
FASI
 
TQI
 
Eliminations
 
Consolidated
External revenues
 
$
367,011

 
$
75,841

 
$
28,544

 
$

 
$
471,396

Intersegment revenues
 
1,969

 
540

 

 
(2,509
)
 

Depreciation and amortization
 
12,110

 
3,621

 
1,646

 

 
17,377

Share-based compensation expense
 
4,453

 
113

 
53

 

 
4,619

Interest expense
 
395

 
6

 

 

 
401

Interest income
 
29

 

 
1

 

 
30

Income tax expense
 
20,989

 
196

 
756

 

 
21,941

Net income
 
37,481

 
221

 
1,180

 

 
38,882

Total assets
 
464,538

 
42,043

 
84,343

 
(100,122
)
 
490,802

Capital expenditures
 
23,993

 
6,302

 
2,971

 

 
33,266

 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2012
 
 
Forward Air
 
FASI
 
TQI
 
Eliminations
 
Consolidated
External revenues
 
$
372,819

 
$
56,102

 
$

 
$

 
$
428,921

Intersegment revenues
 
939

 
572

 

 
(1,511
)
 

Depreciation and amortization
 
12,455

 
3,485

 

 

 
15,940

Share-based compensation expense
 
4,399

 
151

 

 

 
4,550

Interest expense
 
223

 
18

 

 

 
241

Interest income
 
29

 

 

 

 
29

Income tax expense (benefit)
 
22,689

 
(145
)
 

 

 
22,544

Net income (loss)
 
36,993

 
(286
)
 

 

 
36,707

Total assets
 
386,462

 
36,279

 

 
(36,123
)
 
386,618

Capital expenditures
 
15,310

 
5,189

 

 

 
20,499



19

Table of Contents


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

Overview and Executive Summary
 
Our operations can be broadly classified into three principal segments:  Forward Air, Inc. (“Forward Air”), Forward Air Solutions, Inc. (“FASI”) and Total Quality, Inc. ("TQI").  
 
Through our Forward Air segment, we are a leading provider of time-definite surface transportation and related logistics services to the North American expedited ground freight market. We offer our customers local pick-up and delivery (Forward Air Complete™) and scheduled surface transportation of cargo as a cost-effective, reliable alternative to air transportation. We transport cargo that must be delivered at a specific time, but is less time-sensitive than traditional air freight. This type of cargo is frequently referred to in the transportation industry as deferred air freight. We operate our Forward Air segment through a network of terminals located on or near airports in 88 cities in the United States and Canada, including a central sorting facility in Columbus, Ohio and 12 regional hubs serving key markets.  We also offer our customers an array of logistics and other services including: expedited truckload brokerage (“TLX”); dedicated fleets; warehousing; customs brokerage; and shipment consolidation, deconsolidation and handling.

FASI provides pool distribution services throughout the Mid-Atlantic, Southeast, Midwest and Southwest continental United States.  Pool distribution involves managing high-frequency handling and distribution of time-sensitive product to numerous destinations in specific geographic regions.  Our primary customers for this service are regional and nationwide distributors and retailers, such as mall, strip mall and outlet based retail chains. We service these customers through a network of terminals and service centers located in 24 cities.
 
TQI is a provider of maximum security and temperature-controlled logistics services, primarily truckload services, to the pharmaceutical and life science industries. In addition to core pharmaceutical services, TQI provides truckload and less-than-truckload brokerage transportation services.

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 lines of businesses, such as TLX, FASI and TQI, which will allow us to maintain revenue growth in challenging shipping environments.

Trends and Developments

Acquisition of TQI

On March 4, 2013, we entered into a Stock Purchase Agreement ("Agreement") with all of the shareholders of TQI to acquire 100% of the outstanding stock. Pursuant to the terms of the Agreement and concurrently with the execution of the Agreement, we acquired all of the outstanding capital stock of TQI in exchange for $45.3 million in net cash, $20.1 million in assumed debt and an available earn-out of $5.0 million. The assumed debt was immediately paid in full after funding of the acquisition. The acquisition and settlement of the assumed debt were funded using our cash on hand.
Pursuant to the terms of the Agreement, we could pay the former shareholders of TQI additional cash consideration from $0 to $5.0 million if certain earnings before interest, taxes, depreciation and amortization ("EBITDA") goals are exceeded. The ultimate payout is based on the level by which TQI operating results exceed specified thresholds as defined by the Agreement in both 2013 and 2014.
Results from Operations
During the three months ended September 30, 2013, we experienced a 18.5% increase in our consolidated revenues compared to the three months ended September 30, 2012.  The increase in revenue is primarily attributable to revenue from our newly acquired segment, TQI, and increased revenue from FASI. In addition, during the third quarter of 2013 we experienced increased revenue from Forward Air. During the three months ended September 30, 2013, TQI contributed $12.4 million in operating revenue and approximately $0.9 million in operating income.




20

Table of Contents


FASI revenue increased 52.8% and operating results improved $1.1 million for the three months ended September 30, 2013, compared to the same period in 2012.  The FASI revenue increase was primarily the result of new business wins.  The increase in revenue drove the $1.1 million improvement in FASI’s income from operations during the three months ended September 30, 2013, compared to the three months ended September 30, 2012.

Forward Air's revenue and operating income improved 3.5% and 6.7%, respectively, for the three months ended September 30, 2013, compared to the same period in 2012. These increases were largely attributable to higher business volumes for our airport-to-airport services.

Our net fuel surcharge revenue is the result of our fuel surcharge rates, which are set weekly using the national average for diesel price per gallon, and the tonnage transiting our network.  During the three and nine months ended September 30, 2013, total net fuel surcharge revenue increased 40.6% and 23.5%, respectively, as compared to the same period in 2012. The increase in net fuel surcharge revenue for the three and nine months ended September 30, 2013 compared to the same period in 2012 was mostly due to the acquisition of TQI and increased FASI business volumes.

Goodwill
As of September 30, 2013, the carrying value of goodwill related to the Forward Air, FASI and TQI segments was $37.9 million, $5.4 million and $45.1 million, respectively. In accordance with our accounting policy, we conducted our annual impairment assessments and tests of goodwill for each reporting unit as of June 30, 2013 and no impairment charges were required.

Results of Operations

The following table sets forth our consolidated historical financial data for the three months ended September 30, 2013 and 2012 (in millions):
 
 
Three months ended
 
September 30,
2013
 
September 30,
2012
 
Change
 
Percent Change
Operating revenue
$
170.0

 
$
143.5

 
$
26.5

 
18.5
%
Operating expenses:
 
 
 
 
 
 
 
   Purchased transportation
75.2

 
63.1

 
12.1

 
19.2

   Salaries, wages, and employee benefits
39.1

 
31.7

 
7.4

 
23.3

   Operating leases
7.0

 
6.9

 
0.1

 
1.4

   Depreciation and amortization
6.2

 
5.5

 
0.7

 
12.7

   Insurance and claims
3.3

 
3.1

 
0.2

 
6.5

   Fuel expense
3.9

 
2.3

 
1.6

 
69.6

   Other operating expenses
12.4

 
11.3

 
1.1

 
9.7

      Total operating expenses
147.1

 
123.9

 
23.2

 
18.7

Income from operations
22.9

 
19.6

 
3.3

 
16.8

Other expense:
 
 
 
 
 
 
 
   Interest expense
(0.1
)
 
(0.1
)
 

 

      Total other expense
(0.1
)
 
(0.1
)
 

 

Income before income taxes
22.8

 
19.5

 
3.3

 
16.9

Income taxes
8.6

 
7.2

 
1.4

 
19.4

Net income
$
14.2

 
$
12.3

 
$
1.9

 
15.4
%


21

Table of Contents


The following table sets forth our historical financial data by segment for the three months ended September 30, 2013 and 2012 (in millions):
 
Three months ended
 
September 30,
 
Percent of
 
September 30,
 
Percent of
 
 
 
Percent
 
2013
 
Revenue
 
2012
 
Revenue
 
Change
 
Change
Operating revenue
 
 
 
 
 
 
 
 
 
 
 
Forward Air
$
128.8

 
75.8
 %
 
$
124.5

 
86.8
 %
 
$
4.3

 
3.5
 %
FASI
29.8

 
17.5

 
19.5

 
13.6

 
10.3

 
52.8

TQI
12.4

 
7.3

 

 

 
12.4

 
100.0

Intercompany eliminations
(1.0
)
 
(0.6
)
 
(0.5
)
 
(0.4
)
 
(0.5
)
 
100.0

            Total
170.0

 
100.0

 
143.5

 
100.0

 
26.5

 
18.5

 
 
 
 
 
 
 
 
 
 
 
 
Purchased transportation
 
 
 
 
 
 
 
 
 
 
 
Forward Air
59.9

 
46.5

 
58.1

 
46.7

 
1.8

 
3.1

FASI
9.1

 
30.5

 
5.4

 
27.7

 
3.7

 
68.5

TQI
6.9

 
55.6

 

 

 
6.9

 
100.0

Intercompany eliminations
(0.7
)
 
70.0

 
(0.4
)
 
80.0

 
(0.3
)
 
75.0

            Total
75.2

 
44.2

 
63.1

 
44.0

 
12.1

 
19.2

 
 
 
 
 
 
 
 
 
 
 
 
Salaries, wages and employee benefits
 
 
 
 
 
 
 
 
 
 
 
Forward Air
27.3

 
21.2

 
24.3

 
19.5

 
3.0

 
12.3

FASI
10.0

 
33.6

 
7.4

 
37.9

 
2.6

 
35.1

TQI
1.8

 
14.5

 

 

 
1.8

 
100.0

            Total
39.1

 
23.0

 
31.7

 
22.1

 
7.4

 
23.3

 
 
 
 
 
 
 
 
 
 
 
 
Operating leases
 
 
 
 
 
 
 
 
 
 
 
Forward Air
4.9

 
3.8

 
5.2

 
4.2

 
(0.3
)
 
(5.8
)
FASI
2.1

 
7.0

 
1.7

 
8.7

 
0.4

 
23.5

TQI

 

 

 

 

 

            Total
7.0

 
4.1

 
6.9

 
4.8

 
0.1

 
1.4

 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
Forward Air
4.2

 
3.3

 
4.3

 
3.4

 
(0.1
)
 
(2.3
)
FASI
1.3

 
4.4

 
1.2

 
6.2

 
0.1

 
8.3

TQI
0.7

 
5.7

 

 

 
0.7

 
100.0

            Total
6.2

 
3.7

 
5.5

 
3.8

 
0.7

 
12.7

 
 
 
 
 
 
 
 
 
 
 
 
Insurance and claims
 
 
 
 
 
 
 
 
 
 
 
Forward Air
2.3

 
1.8

 
2.6

 
2.1

 
(0.3
)
 
(11.5
)
FASI
0.8

 
2.7

 
0.5

 
2.6

 
0.3

 
60.0

TQI
0.2

 
1.6

 

 

 
0.2

 
100.0

            Total
3.3

 
1.9

 
3.1

 
2.1

 
0.2

 
6.5

 
 
 
 
 
 
 
 
 
 
 
 
Fuel expense