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Acquisitions, Goodwill and Other Long-Lived Assets (Notes) | 12 Months Ended
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Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract] |
Acquisitions, Goodwill and Other Long-Lived Assets | Acquisitions, Goodwill and Other Long-Lived Assets Acquisition of Towne On March 9, 2015, the Company acquired CLP Towne Inc. (“Towne”) pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) resulting in Towne becoming an indirect, wholly-owned subsidiary of the Company. For the acquisition of Towne, the Company paid $61,878 in net cash and assumed $59,544 in debt and capital leases. With the exception of assumed capital leases, the assumed debt was immediately paid in full after funding of the acquisition. Of the total aggregate cash consideration paid, $16,500 was placed into an escrow account, with $2,000 of such amount being available to settle any shortfall in Towne’s net working capital and with $14,500 of such amount being available for a period of time to settle certain possible claims against Towne’s common stockholders for indemnification. To the extent the escrow fund is insufficient, certain equity holders have agreed to indemnify Forward Air, subject to certain limitations set forth in the Merger Agreement, as a result of inaccuracies in or breaches of certain of Towne’s representations, warranties, covenants and agreements and other matters. Forward Air financed the Merger Agreement with a $125,000 2 year term loan available under the senior credit facility discussed in note 5. Towne was a full-service trucking provider offering time-sensitive less-than-truckload shipping, full truckload service, an extensive cartage network, container freight stations and dedicated trucking. Towne’s airport-to-airport network provided scheduled deliveries to 61 service points. A fleet of approximately 525 independent contractor tractors provided the line-haul between those service points. The acquisition of Towne provides the Forward Air segment with opportunities to expand its service points and service offerings, such as pick up and delivery services. Additional benefits of the acquisition include increased linehaul network shipping density and a significant increase to our owner operator fleet, both of which are key to the profitability of Forward Air. Towne had 2014 revenue of approximately $230,000. The assets, liabilities, and operating results of Towne have been included in the Company's consolidated financial statements from the date of acquisition and have been assigned to the Forward Air reportable segment. As the operations of Towne were fully integrated into the existing Forward Air network and operations, the Company is not able to provide the revenue and operating results from Towne included in the consolidated revenue and results since the date of acquisition. Effective with the acquisition of Towne, the Company immediately entered into a restructuring plan to remove duplicate costs, primarily in the form of, but not limited to salaries, wages and benefits and facility leases. As a result of these plans, during the year ended December 31, 2015 the Company recognized expense of $2,624 and $11,722 for severance obligations and reserves for idle facilities, respectively. The expenses associated with the severance obligations and idle facilities were recognized in the salaries, wages and benefits and operating lease line items, respectively. The Company also incurred expense of $9,197 for various other integration and transaction related costs which are largely included in other operating expenses. The Company vacated certain duplicate facilities under long-term non-cancelable leases and recorded contract termination costs. As of December 31, 2015, the Company reserve for remaining payments on vacated facilities was $6,731. 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 |
Acquisition of CST On February 2, 2014, the Company acquired all of the outstanding capital stock of Central States Trucking Co. and Central States Logistics, Inc. (collectively referred to as “CST”). 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 CST in exchange for $82,998 in net cash and $11,215 in assumed debt. With the exception of capital leases, the assumed debt was immediately paid in full after funding of the acquisition. The acquisition and settlement of the assumed debt were funded using the Company's cash on hand. Under the purchase agreement, $10,000 of the purchase price was paid into an escrow account to protect the Company against potential unknown liabilities. The amount held in escrow was remitted to the sellers in February 2015. CST provides industry leading container and intermodal drayage services primarily within the Midwest region of the United States. CST also provides dedicated contract and Container Freight Station (“CFS”) warehouse and handling services. The acquisition of CST provides us with a scalable platform for which to enter the intermodal drayage space and thereby continuing to expand and diversify our service offerings. As part of our strategy to scale CST's operations, in September 2014, CST acquired certain assets of Recob Great Lakes Express, Inc. ("RGL") for $1,350 and in November 2014, acquired Multi-Modal Trucking, Inc. and Multi-Modal Services, Inc. (together referred to as "MMT") for approximately $5,825 in cash and $1,000 in available earn out. The MMT earn out is based on acquired operations exceeding 2015 earnings goals, and the earn out was fully accrued as of December 31, 2014. The acquisition of RGL and MMT's assets provided an opportunity for CST to expand into additional Midwest markets. The Company incurred total transaction costs related to the acquisitions of approximately $900, which were expensed during the year ended December 31, 2014, in accordance with U.S. GAAP. These transaction costs were primarily included in "Other operating expenses" in the consolidated statements of comprehensive income. The assets, liabilities, and operating results of CST, RGL and MMT ("CST acquisitions") have been included in the Company's consolidated financial statements from the dates of acquisition and have been assigned to the Forward Air reportable segment. The results of CST, RGL and MMT operations are reflected in the Company's consolidated statements of comprehensive income for the year ended December 31, 2014 from the dates of acquisition are as follows (in thousands, except per share data):
| Dates of Acquisition to December 31, 2014
Logistics revenue | $ | 52,061 |
Other revenues | 20,253 |
Operating income | 7,525 |
Net income | 4,586 |
Net income per share |
Basic | $ | 0.15 |
Diluted | $ | 0.15 |
Acquisition of TQI 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 up to $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 was remitted to the sellers in September 2014. Pursuant to the terms of the Agreement, the Company could have paid the former shareholders of TQI additional cash consideration from $0 to $5,000 if certain earnings before interest, taxes, depreciation and amortization ("EBITDA") goals were exceeded. The ultimate payout was based on the level by which TQI operating results exceed specified thresholds as defined by the Agreement in both 2013 and 2014. At the time of acquisition the Company recognized an estimated earn-out liability of $615. The fair value of the earn-out liability (level 3) was estimated using an income approach based on the present value of probability-weighted amounts payable under a range of performance scenarios for 2013 and 2014 and a discount rate of 10.9%. However, based on the most probable outcomes the estimated earn-out liability was reduced to $0 and recognized as a gain in our results from operations during the fourth quarter of 2013. TQI's 2014 EBITDA performance did not exceed the goals established by the Agreement and therefore no earn out payments were required. The Company incurred total transaction costs related to the acquisition of approximately $943, which was expensed during the year ended December 31, 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. Included in the assumed liabilities of TQI was a liability for unrecognized tax benefits for $1,120. The liability is attributable to TQI not filing income tax returns in all jurisdictions in which it operated. The $1,120 consists of unrecognized tax benefits of $853 and related penalties and interest of $174 and $93, respectively. In accordance with the Agreement, the former shareholders of TQI have indemnified the Company against this tax exposure. As a result, the Company also recognized an offsetting receivable net of the estimated federal tax benefit for $728. The assets, liabilities, and operating results of TQI have been included in the Company's consolidated financial statements from the date of acquisition and have been assigned to a new TQI reportable segment. The results of TQI reflected in the Company's consolidated statements of comprehensive income are as follows (in thousands, except per share data):
| March 4, 2013 to December 31, 2013
Logistics revenue | $ | 41,842 |
Operating income | 3,600 |
Net income | 1,961 |
Net income per share |
Basic | $ | 0.07 |
Diluted | $ | 0.06 |
Allocations of Purchase Prices 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 |
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 |
Goodwill 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 |
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. The Company conducted its annual impairment assessments and tests of goodwill for each reporting unit as of June 30, 2015 and no impairment charges were required. Further, due to TQI performance falling notably short of the projections used in our June 2015 impairment assessment, the Company believed there were indicators of impairment as of December 31, 2015. Therefore, the Company performed additional fair value calculations, but determined TQI's goodwill was not impaired as of December 31, 2015. Other Acquired Intangibles Through acquisitions, the Company acquired customer relationships, non-compete agreements and trade names having weighted-average useful lives of 15.9, 5.3 and 4.0 years, respectively. Amortization expense on acquired customer relationships, non-compete agreements and trade names for each of the years ended December 31, 2015, 2014 and 2013 was $10,905, $8,517 and $5,762, respectively. 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 |
Additionally, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is recognized on assets classified as held and used when the sum of undiscounted estimated cash flows expected to result from the use of the asset is less than the carrying value. If such measurement indicates a possible impairment, the estimated fair value of the asset is compared to its net book value to measure the impairment charge, if any.

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- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16373-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16323-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267 + Details
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