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Smith Transport Acquisition | May 31, 2022
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Business Combinations [Abstract] |
Business Combination Disclosure [Text Block] | Acquisition of Smith Transport On May 31, 2022, Heartland Express, Inc. of Iowa (the “Buyer”) and Heartland Express, Inc., as guarantor, entered into a Stock Purchase Agreement with Smith Transport. Smith Transport is a truckload carrier headquartered in Roaring Spring, Pennsylvania, providing asset-based dry van truckload transportation services, including local, regional, and dedicated services. Pursuant to the Stock Purchase Agreement, the Buyer acquired all of Smith Transport’s outstanding equity (the “Transaction”) under an Internal Revenue Code Section 338(h)(10) election. The Buyer's purchase price of $169.4 million includes total cash consideration and assumed indebtedness of Smith Transport subject to purchase accounting adjustments including final valuation of intangibles. Gross cash paid in transaction was $140.6 million. Net cash paid was $122.0 million after consideration of $18.6 million of Smith Transport cash on the date of acquisition. Gross cash paid was funded out of the Company’s available cash. The transaction included the assumption of $46.8 million of Smith Transport's indebtedness, including finance leases, of which $45.7 million was outstanding at June 30, 2022. The Stock Purchase Agreement contains customary representations, warranties, covenants, escrow, and indemnification provisions. The results of the acquired business have been included in the consolidated financial statements since the date of acquisition and represented 20.3% of consolidated total assets as of June 30, 2022, and represented 10.4% and 5.8% of operating revenue for the three and six months ended June 30, 2022, respectively. Acquisition related expenses of $0.7 million and $1.0 million are included in the consolidated statement of comprehensive income for the three and six months ended June 30, 2022, respectively. The allocation of the purchase price is detailed in the table below. The final purchase price allocation remains subject to other purchase accounting adjustments which may be identified, such as the final valuation of intangible assets, and therefore may differ materially from that reflected below. The goodwill recognized represents expected synergies from combining the operations of the Company with Smith Transport, as well as other intangible assets that did not meet the criteria for separate recognition. Goodwill and intangible assets recognized in the transaction are deductible for tax purposes. The assets and liabilities associated with Smith Transport were recorded at their fair values as of the acquisition date and the amounts are as follows:
| (in thousands)
Trade and other accounts receivable | $ | 32,300 |
Other current assets | 6,238 |
Property and equipment | 68,196 |
Operating lease right of use assets | 27,133 |
Other non-current assets | 3,848 |
Intangible assets | 28,070 |
Goodwill | 40,505 |
Total assets | 206,290 |
Accounts payable and accrued expenses | (8,379) |
Insurance accruals | (1,946) |
Long-term debt | (11,424) |
Finance lease liabilities | (35,359) |
Operating lease liabilities | (27,133) |
Net cash paid | $ | 122,049 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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