Annual report pursuant to Section 13 and 15(d)

Discontinued Operation and Held for Sale (Notes)

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Discontinued Operation and Held for Sale (Notes)
 12 Months Ended
Dec. 31, 2020
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operation and Held for Sale Discontinued Operation and Held for Sale
As previously disclosed in Note 1, on April 23, 2020, the Company made a decision to divest of Pool. The Pool business met the criteria for held for sale classification. As a result, the assets and liabilities of Pool are presented separately under the captions “Current assets held for sale”, “Noncurrent assets held for sale”, “Current liabilities held for sale” and “Noncurrent liabilities held for sale” in the Consolidated Balance Sheets as of December 31, 2020 and 2019. The results of Pool were reclassified to “(Loss) income from discontinued operation, net of tax” in the Consolidated Statements of Comprehensive Income for the years ended December, 31, 2020, 2019 and 2018. Certain corporate overhead and other costs previously allocated to Pool for segment reporting purposes did not qualify for classification within discontinued operation and have been reallocated to continuing operations. These costs were reclassified to the eliminations and other column in the segment reconciliation in Note 11, Segment Reporting.

Upon meeting the criteria for held for sale classification and in each subsequent reporting period, the Company evaluated whether Pool’s estimated fair value, less costs to sell, exceeded the net carrying value. The annual goodwill impairment analysis conducted as of June 30, 2020 indicated that the fair value in excess of the carrying value related to the Pool reporting unit was approximately 5% and in the third quarter of 2020, the Company concluded the estimated fair value, less costs to sell, exceeded the net carrying value and there were no indicators of impairment for the Pool reporting unit.
However, in response to the longer than expected macroeconomic conditions caused by the COVID-19 pandemic and status of negotiations to sell the Pool business, a strategic review of the business was completed in the fourth quarter of 2020 along with revised forecasts to include updated market conditions and strategic operating decisions. The revised forecasts indicated an impairment of the entire goodwill balance of the Pool reporting unit was necessary as of December 31, 2020. A non-cash charge of approximately $5,406 was recorded as an “Impairment charge” in the summarized discontinued operation financial information for the year ended December 31, 2020. In addition, the Company recorded a valuation allowance against the net assets held for sale to write down the carrying value to the estimated fair value less costs to sell. A non-cash valuation allowance of approximately $22,978 was recorded as an “Impairment charge” in the summarized discontinued operation financial information for the year ended December 31, 2020.

The fair value was estimated based on a combination of an income approach using a discounted cash flow model, and a market approach, which considers comparable companies. Estimates of future cash flows are based on various factors, including current operating results, expected market trends and competitive influences. Refer to Note 3, Acquisitions, Goodwill, Intangible Assets and Other Long-Lived Assets for further discussion about the estimation of fair value.

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 an earnings before interest, taxes, depreciation and amortization attainment. See Note 13, Subsequent Events, for further discussion.
Summarized Held for Sale and Discontinued Operation Financial Information
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 Consolidated Balance Sheets, is as follows:

  December 31,
2020		 December 31,
2019
Assets
Current assets:    
Accounts receivable, less allowance of $86 in 2020 and $48 in 2019 $ 19,740  $ 13,983 
Other current assets 1,262  969 
Total current assets held for sale $ 21,002  $ 14,952 
Property and equipment $ 48,905  $ 53,166 
Less accumulated depreciation and amortization 28,890  32,891 
Net property and equipment 20,015  20,275 
Operating lease right-of-use assets 46,865  46,487 
Goodwill —  5,406 
Other acquired intangibles, net of accumulated amortization of $12,679 in 2020 and $12,359 in 2019 2,621  2,941 
Deferred income taxes 3,253  — 
Other assets 3,321  1,595 
Valuation allowance on assets held for sale (22,978) — 
Total noncurrent assets held for sale $ 53,097  $ 76,704 
Liabilities    
Current liabilities:    
Accounts payable $ 4,002  $ 4,575 
Accrued expenses 5,070  5,668 
Other current liabilities 27  2 
Current portion of operating lease liabilities 16,825  14,729 
Total current liabilities held for sale $ 25,924  $ 24,974 
  Operating lease liabilities, less current portion $ 30,024  $ 31,847 
  Other long-term liabilities 4,551  2,368 
  Deferred income taxes —  2,728 
Total noncurrent liabilities held for sale $ 34,575  $ 36,943 
A summary of the results of operations classified as a discontinued operation, net of tax, in the Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018 is as follows:

  Year ended
  December 31,
2020		 December 31,
2019		 December 31,
2018
Operating revenue $ 141,433  $ 195,208  $ 183,273 
Operating expenses:    
Purchased transportation 33,979  52,867  49,323 
Salaries, wages and employee benefits 65,695  77,162  70,596 
Operating leases 21,982  18,918  17,488 
Depreciation and amortization 1,657  5,715  6,352 
Insurance and claims 6,205  6,707  5,611 
Fuel expense 4,279  6,462  6,961 
Other operating expenses 17,587  20,969  22,126 
Impairment charge 28,384  —  — 
Total operating expenses 179,768  188,800  178,457 
(Loss) income from discontinued operation before income taxes (38,335) 6,408  4,816 
Income tax (benefit) expense (9,301) 1,631  1,328 
(Loss) income from discontinued operation, net of tax $ (29,034) $ 4,777  $ 3,488