Forward Air Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Acquisitions, Goodwill and Other Long-Lived Assets Acquisitions, Goodwill and Other Long-Lived Assets (Tables)

Acquisitions, Goodwill and Other Long-Lived Assets Acquisitions, Goodwill and Other Long-Lived Assets (Tables)

12 Months Ended

Dec. 31, 2015

Vacated Facility Reserve [Table Text Block]

The following is a summary of the vacated facility reserve:



Acquired Towne Liability	$	1,355
Reserves for vacated facilities	11,722
Payments	(6,346		)
Balance at December 31, 2015	$	6,731

Purchase Price Allocation [Table Text Block]

The following table presents the allocations of the Towne, CST, RGL, MMT and TQI purchase prices to the assets acquired and liabilities assumed based on their estimated fair values and resulting residual goodwill (in thousands):



	Towne		CST		RGL & MMT		TQI
	March 9, 2015		February 2, 2014		September & November 2014		March 4, 2013
Tangible assets:
Accounts receivable	$	24,068	$	9,339	$	—	$	5,639
Prepaid expenses and other current assets	2,916		101		—		1,093
Property and equipment	2,095		2,132		287		5,103
Other assets	614		35		—		728
Deferred income taxes	—		—		—		947
Total tangible assets	29,693		11,607		287		13,510
Intangible assets:
Non-compete agreements	—		930		92		470
Trade name	—		500		—		1,000
Customer relationships	66,000		36,000		3,590		22,300
Goodwill	61,197		51,710		4,206		45,164
Total intangible assets	127,197		89,140		7,888		68,934
Total assets acquired	156,890		100,747		8,175		82,444

Liabilities assumed:
Current liabilities	28,920		6,535		1,000		4,725
Other liabilities	3,886		—		—		1,735
Debt and capital lease obligations	59,544		11,215		—		20,113
Deferred income taxes	2,662		—		—		10,543
Total liabilities assumed	95,012		17,750		1,000		37,116
Net assets acquired	$	61,878	$	82,997	$	7,175	$	45,328

Business Acquisition, Pro Forma Information [Table Text Block]

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



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

The fair value of the non-compete agreements and customer relationships assets were estimated using an income approach (level 3). Under this method, an intangible asset's fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate 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 acquired trade names were estimated using an income approach, specifically known as the relief from royalty method. The relief from royalty method is based on a hypothetical royalty stream that would be paid if the Company did not own the applicable names and had to license the trade name. The Company derived the hypothetical royalty income from the projected revenues of CST and TQI. Cash flows were assumed to extend through the remaining economic useful life of each class of intangible asset.

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



	Year ended
	December 31, 2015		December 31, 2014		December 31, 2013
Operating revenue	$	993,352	$	1,017,005	$	964,673
Income from operations	79,465		89,650		67,529
Net income	53,096		56,092		30,363
Net income per share
Basic	$	1.72	$	1.82	$	1.00
Diluted	$	1.70	$	1.79	$	0.98

Schedule of Goodwill [Table Text Block]

The following is a summary of the changes in goodwill for the year ended December 31, 2015. Approximately $99,248 of goodwill, not including the goodwill acquired with the Towne and TQI acquisitions, is deductible for tax purposes.



	Forward Air				FASI					TQI				Total
			Accumulated				Accumulated					Accumulated
	Goodwill		Impairment		Goodwill		Impairment			Goodwill		Impairment		Net
Beginning balance, December 31, 2014	$	93,842	$	—	$	12,359	$	(6,953	)	$	45,164	$	—	$	144,412
Towne acquisition	61,197		—		—		—			—		—		61,197
Ending balance, December 31, 2015	$	155,039	$	—	$	12,359	$	(6,953	)	$	45,164	$	—	$	205,609

Definite-Lived Intangible Assets [Member]

Goodwill [Line Items]

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

As of December 31, 2015, definite-lived intangible assets are comprised of the following:



	Acquired Intangibles		Accumulated Amortization		Net Acquired Intangibles
Customer relationships	$	174,240	$	47,773	$	126,467
Non-compete agreements	3,272		2,393		879
Trade name	1,500		1,046		454
Total	$	179,012	$	51,212	$	127,800

The estimated amortization expense for the next five years on definite-lived intangible assets as of December 31, 2015 is as follows:



	2016		2017		2018		2019		2020
Customer relationships	$	10,156	$	10,041	$	8,536	$	8,456	$	8,456
Non-compete agreements	318		310		220		30		—
Trade name	221		200		33		—		—
Total	$	10,695	$	10,551	$	8,789	$	8,486	$	8,456

CST [Member]

Goodwill [Line Items]

Business Acquisition, Pro Forma Information [Table Text Block]

The results of CST, RGL and MMT operations are reflected in the Company's consolidated statements of comprehensive income for the year ended December 31, 2014 from the dates of acquisition are as follows (in thousands, except per share data):



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

TQI [Member]

Goodwill [Line Items]

Business Acquisition, Pro Forma Information [Table Text Block]

The results of TQI reflected in the Company's consolidated statements of comprehensive income are as follows (in thousands, except per share data):



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