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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the fiscal year ended December 31, 2020

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the transition period from to

Commission file number 0-24960

COVENANT LOGISTICS GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada | 88-0320154
(State / other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
400 Birmingham Hwy. |
Chattanooga, TN | 37419
(Address of principal executive offices) | (Zip Code)

Registrant's telephone number, including area code: | 423 - 821-1212

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
$0.01 Par Value Class A common stock | CVLG | The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

☐ Yes ☒ No

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 ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☒
Non-accelerated filer | ☐ | Smaller reporting company | ☒
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extending transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

The aggregate market value of the common equity held by non-affiliates of the registrant as of June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $137.0 million (based upon the $14.43 per share closing price on that date as reported by NASDAQ). In making this calculation the registrant has assumed, without admitting for any purpose, that all executive officers, directors, and affiliated holders of more than 10% of a class of outstanding common stock, and no other persons, are affiliates.

As of March 2, 2021, the registrant had 14,450,002 shares of Class A common stock and 2,350,000 shares of Class B common stock outstanding.

EXPLANATORY NOTE

Covenant Logistics Group, Inc. (the “Company”) files this Amendment No. 1 (“Amendment No. 1”) to its Annual Report on Form 10-K filed on March 5, 2021 for the fiscal year ended December 31, 2020 (the “Original 10-K”) to provide an amended report of KPMG LLP (KPMG), its previous independent registered public accounting firm, that includes a statement inadvertently omitted from the previously filed version that confirms KPMG did not audit the financial statements of Transport Enterprise Leasing, LLC (“TEL”) in 2019. In addition, this Amendment No. 1 includes as exhibits: (i) the TEL financial statements as of and for the years ended December 31, 2019 and 2018 and for the year ended December 31, 2017, (ii) consents of Coulter & Justus, P.C. related to the TEL financial statements, (iii) a new consent of KPMG, and (iv) in accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications from the Company’s Principal Executive Officer and Principal Financial Officer dated as of the date of filing of this Amendment No. 1.

This Amendment No. 1 consists solely of the preceding cover page, this explanatory note, Part II., Item 8., “Financial Statements and Supplementary Data,” in its entirety, Part IV., Item 15., “Exhibits and Financial Statement Schedules,” in its entirety, and the signature page. The consolidated financial statements and notes to consolidated financial statements have remained the same as that previously filed in the Original 10-K.

This Amendment No. 1 speaks as of the date of the Original 10-K, does not reflect events that may have occurred after the date of the Original 10-K and does not modify or update in any way the disclosures made in the Original 10-K, except as described above. This Amendment No. 1 should be read in conjunction with the Original 10-K and with the Company’s subsequent filings with the SEC.

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ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of Covenant Logistics Group, Inc. and subsidiaries, including the consolidated balance sheets as of December 31, 2020 and 2019, and the related statements of operations, statements of comprehensive income, statements of stockholders' equity, and statements of cash flows for each of the years in the three-year period ended December 31, 2020, together with the related notes, and the report of Grant Thornton LLP, our independent registered public accounting firm as of December 31, 2020, and for the year ended December 31, 2020, and the report of KPMG LLP, our independent registered public accounting firm as of December 31, 2019, and for each of the years in the two year period ended December 31, 2019, are set forth at pages 7 through 34 elsewhere in this report.

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PART IV

ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a) | 1. | Financial Statements. |
|  | Our audited consolidated financial statements are set forth at the following pages of this report: |
|  | Report of Independent Registered Public Accounting Firm - Opinion on the Consolidated Financial Statements | 7
|  | Report of Independent Registered Public Accounting Firm - Opinion on Internal Control Over Financial Reporting | 8
|  | Consolidated Balance Sheets | 10
|  | Consolidated Statements of Operations | 11
|  | Consolidated Statements of Comprehensive Income | 12
|  | Consolidated Statements of Stockholders' Equity | 13
|  | Consolidated Statements of Cash Flows | 14
|  | Notes to Consolidated Financial Statements | 15
| 2. | Financial Statement Schedules. |
|  | Financial statement schedules are not required because all required information is included in the financial statements or is not applicable.
| 3. | Exhibits. |
|  | The exhibits required to be filed by Item 601 of Regulation S-K are listed under paragraph (b) below and on the Exhibit Index appearing at the end of this report. Management contracts and compensatory plans or arrangements are indicated by an asterisk.
(b) |  | Exhibits. |
|  | The following exhibits are filed with this Form 10-K or incorporated by reference to the document set forth next to the exhibit listed below.

Exhibit Number | Reference | Description
2.1 |  | Accounts Receivable Purchase Agreement by and between Covenant Transport Solutions, LLC and Advance Business Capital LLC, dated as of July 8, 2020 (Incorporated by reference to Exhibit 2.1 to the Company's Form 10-Q, filed November 3, 2020)
3.1 |  | Third Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company's Report on Form 8-K, filed July 2, 2020)
3.2 |  | Fifth Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Company's Report on Form 8-K, filed July 2, 2020)
4.1 |  | Third Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company's Report on Form 8-K, filed July 2, 2020)
4.2 |  | Fifth Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Company's Report on Form 8-K, filed July 2, 2020)
4.3 | # | Description of the Registrant's Securities
10.1 | * | Form of Indemnification Agreement between Covenant Transport, Inc. and each officer and director, effective May 1, 2004 (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q, filed August 5, 2004)
10.2 | * | Form of Restricted Stock Award Notice under the 2006 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.22 to the Company's Form 10-Q, filed August 9, 2006)
10.3 | * | Form of Restricted Stock Special Award Notice under the 2006 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.23 to the Company's Form 10-Q, filed August 9, 2006)
10.4 |  | Third Amended and Restated Credit Agreement, dated September 23, 2008, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A., and Textron Financial Corporation (Incorporated by reference to Exhibit 10.14 to the Company's Form 10-K, filed March 30, 2010)
10.5 | * | Covenant Transportation Group, Inc. Third Amended and Restated 2006 Omnibus Incentive Plan (Incorporated by reference to Appendix A to the Company's Schedule 14A, filed April 19, 2013)
10.6 |  | Amendment No. 1 to Third Amended and Restated Credit Agreement, dated March 27, 2009, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A., and Textron Financial Corporation (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed May 15, 2009)

10.7 |  | Second Amendment to Third Amended and Restated Credit Agreement, dated February 25, 2010, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A., and Textron Financial Corporation (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed May 17, 2010)
10.8 |  | Third Amendment to Third Amended and Restated Credit Agreement, dated July 30, 2010, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed November 9, 2010)
10.9 |  | Fourth Amendment to Third Amended and Restated Credit Agreement, dated August 31, 2010, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q, filed November 9, 2010)
10.10 |  | Fifth Amendment to Third Amended and Restated Credit Agreement, dated September 1, 2011, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Report on Form 8-K, filed October 28, 2011)

3

10.11 |  | Sixth Amendment to Third Amended and Restated Credit Agreement, dated effective as of October 24, 2011, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.2 to the Company's Report on Form 8-K, filed October 28, 2011)
10.12 |  | Seventh Amendment to Third Amended and Restated Credit Agreement, dated effective as of March 29, 2012, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Report on Form 8-K, filed April 2, 2012)
10.13 |  | Eighth Amendment to Third Amended and Restated Credit Agreement, dated effective as of December 31, 2012, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JP Morgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Report on Form 8-K, filed January 31, 2013)
10.14 |  | Ninth Amendment to Third Amended and Restated Credit Agreement and Related Security Documents, dated effective as of August 6, 2014, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed November 13, 2014)
10.15 |  | Tenth Amendment to Third Amended and Restated Credit Agreement and Related Security Documents, dated effective as of September 8, 2014, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, Inc., Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q, filed November 13, 2014)
10.16 |  | Joinder, Supplement and Eleventh Amendment to Third Amended and Restated Credit Agreement, dated effective as of August 6, 2015, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Driven Analytic Solutions, LLC, Covenant Properties, LLC, Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed November 9, 2015)
10.17 |  | Twelfth Amendment to Third Amended and Restated Credit Agreement, dated effective as of February 25, 2016, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Driven Analytic Solutions, LLC, Covenant Properties, LLC, Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q, filed May 10, 2016)
10.18 |  | Thirteenth Amendment to Third Amended and Restated Credit Agreement, dated effective as of December 16, 2016, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Driven Analytic Solutions, LLC, Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.26 to the Company's Form 10-K, filed March 14, 2017)

10.19 |  | Fourteenth Amendment to Third Amended and Restated Credit Agreement, dated effective as of November 28, 2017, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Driven Analytic Solutions, LLC, Transport Management Services, LLC, Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.27 to the Company's Form 10-K, filed February 28, 2018)
10.20 |  | Fifteenth Amendment to Third Amended and Restated Credit Agreement, dated effective as of June 19, 2018, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, LLC, Star Transportation, Inc., Covenant Logistics, Inc., Driven Analytic Solutions, LLC, Transport Management Services, LLC, Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed August 8, 2018)
10.21 |  | Sixteenth Amendment to Third Amended and Restated Credit Agreement, dated effective as of July 3, 2018, among Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, LLC, Star Transportation, Inc., Covenant Logistics, Inc., Driven Analytic Solutions, LLC, Transport Management Services, LLC, Landair Holdings, Inc., Landair Transport, Inc., Landair Logistics, Inc., Landair Leasing, Inc., Bank of America, N.A., and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed November 9, 2018)
10.22 |  | Seventeenth Amendment to Third Amended and Restated Credit Agreement, dated as of September 23, 2020, among Covenant Logistics Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, LLC, Star Transportation, Inc., Covenant Logistics, Inc., Transport Management Services, LLC, Landair Holdings, Inc., Landair Transport, Inc., Landair Logistics, Inc., Landair Leasing, Inc., and Bank of America, N.A. (Incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q, filed November 3, 2020)
10.23 | # | Eighteenth Amendment to Third Amended and Restated Credit Agreement, dated as of October 23, 2020, among Covenant Logistics Group, Inc., Covenant Transport, Inc., CTG Leasing Company, Covenant Asset Management, LLC, Southern Refrigerated Transport, Inc., Covenant Transport Solutions, LLC, Star Transportation, Inc., Covenant Logistics, Inc., Transport Management Services, LLC, Landair Holdings, Inc., Landair Transport, Inc., Landair Logistics, Inc., Landair Leasing, Inc., and Bank of America, N.A.
10.24 | * | First Amendment to the Covenant Transportation Group, Inc. Third Amended and Restated 2006 Omnibus Incentive Plan (Incorporated by reference to Appendix A to the Company's Definitive Proxy Statement filed with the SEC on April 8, 2019 in connection with the 2019 Annual Meeting of Stockholders)
10.25 | * | Second Amendment to the Company’s Third Amended and Restated 2006 Omnibus Incentive Plan (Incorporated by reference to Appendix A to the Company's Schedule 14A, filed June 8, 2020)

4

10.26 | * | Form of Restricted Stock Award Notice under the Third Amended and Restated 2006 Omnibus Incentive Plan, as amended (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q, filed August 9, 2019)
10.27 | * | Form of Restricted Stock Award Notice under the Third Amended and Restated 2006 Omnibus Incentive Plan, as amended (Double Trigger Change in Control) (Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q, filed August 10, 2020)
10.28 | #* | Form of Option Award Notice under the Third Amended and Restated 2006 Omnibus Incentive Plan, as amended
10.29 | * | Form of Executive Severance Agreement (Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q, filed November 3, 2020)
10.30 | * | Separation Agreement between Richard Cribbs and Transport Management Services, LLC (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed November 3, 2020)
10.31 |  | Account Management Agreement, Amendment to Purchase Agreement and Mutual Release, by and among Covenant Transport Solutions, LLC, Covenant Logistics Group, Inc., Triumph Bancorp, Inc., and Advance Business Capital LLC, dated as of September 23, 2020 (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q, filed November 3, 2020)
10.32 |  | Draw Note in the face amount of $45.0 million by Covenant Logistics Group, Inc. and Covenant Transport Solutions, LLC with TBK Bank, SSB as Lender and Agent, dated as of September 23, 2020 (Incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q, filed November 3, 2020)
21 | # | List of Subsidiaries
23.1 | # | Consent of Independent Registered Public Accounting Firm – Grant Thornton LLP
23.2 | ## | Consent of Independent Registered Public Accounting Firm - KPMG LLP
23.3 | ## | Consent of Independent Registered Public Accounting Firm – Coulter & Justus, P.C.
23.4 | ## | Consent of Independent Auditor – Coulter & Justus, P.C.
31.1 | ## | Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Principal Executive Officer
31.2 | ## | Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by M. Paul Bunn, the Company's Principal Financial Officer
32.1 | ### | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Chief Executive Officer
32.2 | ### | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by M. Paul Bunn, the Company's Chief Financial Officer
99 |  | Financial Statements of Transport Enterprise Leasing, LLC. (Incorporated by reference to Exhibit 99 to the Company's Form 10-K, filed March 9, 2020)
101.INS |  | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

References:

# | Filed as an exhibit to the Original 10-K.
## | Filed herewith.
### | Furnished herewith.
* | Management contract or compensatory plan or arrangement.

5

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| COVENANT Logistics GROUP, INC. |
Date: April 6, 2021 | By: | /s/ M. Paul Bunn |
|  | M. Paul Bunn |
|  | Executive Vice President, Chief Financial Officer, and Secretary in his capacity as such and as duly authorized on behalf of the issuer. |

6

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Covenant Logistics Group, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheet of Covenant Logistics Group, Inc. (a Nevada holding company) (and subsidiaries) (the “Company”) as of December 31, 2020, the related consolidated statements of comprehensive income, changes in stockholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 5, 2021 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Auto Liability Self-Insurance Reserves

As described further in Note 1 to the consolidated financial statements, the Company has significant self-insured amounts related to its auto liability and has exposure to fluctuations in the number and severity of claims and to variations between estimated and actual ultimate payouts. The Company records a liability for the uninsured portion of pending claims and claims related expenses, including legal and other direct costs associated with the claim, based on estimates made by management. Estimates require judgment concerning the nature and severity of the claim, historical trends, and other relevant information based on specific facts and circumstances for individual claims. We identified the estimation of the Company’s auto liability accrual subject to self-insured insurance retention amounts as a critical audit matter. Incurred auto claim liabilities are determined by projecting the estimated ultimate loss related to a claim, less actual costs paid to date, based on the assumption that historical claim patterns are an accurate representation of future claim development.

The principal considerations for assessing auto liability claims as a critical audit matter are the high level of estimation uncertainty related to determining the severity of these types of claims, as well as the inherent subjectivity in management’s judgment in estimating the total costs to settle or dispose of these claims.

Our audit procedures related to this critical audit matter included the following, among others:

| ● | We tested the design and operating effectiveness of key controls over the accrued auto liability, including, but not limited to, controls to validate that claims were reported and recorded accurately and controls related to the review and approval of initial claim reserves, subsequent changes to claim reserves, and projected claim liabilities.

| ● | We tested a sample of underlying claims through analysis of accident reports and insurance and legal records to validate information utilized by management in determining the accrual was complete and accurate.

| ● | We reconciled claims data to the actuarial software used to determine loss development factors and tested management’s estimation methodology.

| ● | We utilized a specialist in evaluating management’s calculated loss development factors to test that the factors provide a reasonable basis for determining estimated loss reserves.

| ● | We performed a retrospective review of prior year and current year reserves to validate that changes in estimated losses were appropriate and supported by current year claim development.

/s/ Grant Thornton LLP

We have served as the Company's auditor since 2020.

Atlanta, Georgia

March 5, 2021

7

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Covenant Logistics Group, Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Covenant Logistics Group, Inc. (a Nevada holding company) and subsidiaries (the “Company”) as of December 31, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2020, and our report dated March 5, 2021 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Grant Thornton LLP

Atlanta, Georgia
March 5, 2021

8

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Covenant Logistics Group, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Covenant Logistics Group, Inc. (and subsidiaries) (the Company) as of December 31, 2019, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, based on our audit and the report of the other auditors, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We did not audit the financial statement of Transport Enterprise Leasing, LLC (a 49% percent owned investee company). The Company's investment in Transport Enterprise Leasing, LLC was $31.9 million as of December 31, 2019, and its equity in earnings of Transport Enterprise Leasing, LLC was $7.0 million for the year ended December 31, 2019. The financial statement of Transport Enterprise Leasing, LLC were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Transport Enterprise Leasing, LLC, is based solely on the report of the other auditors.

Adoption of ASU 2016-02

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of ASU 2016-02 Leases, and subsequently issued additional ASU's amending this ASU (collectively ASC 842, Leases).

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit and the report of the other auditors provides a reasonable basis for our opinion.

/s/ KPMG LLP

We served as the Company’s auditor from 2001 to 2020.

Nashville, Tennessee

March 9, 2020 except for Notes 1 (Segment Realignment), 2, and 15, as to which the date is March 5, 2021

9

COVENANT Logistics GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2020 and 2019
(In thousands, except share data)

|  | 2020 |  |  | 2019 |
ASSETS |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 8,407 |  |  | $ | 43,591 |
Accounts receivable, net of allowance of $2,992 in 2020 and $1,440 in 2019 |  |  | 91,295 |  |  |  | 81,207 |
Drivers' advances and other receivables, net of allowance of $764 in 2020 and $692 in 2019 |  |  | 13,624 |  |  |  | 8,507 |
Inventory and supplies |  |  | 3,119 |  |  |  | 4,210 |
Prepaid expenses |  |  | 11,924 |  |  |  | 11,705 |
Assets held for sale |  |  | 15,007 |  |  |  | 12,010 |
Income taxes receivable |  |  | 4,155 |  |  |  | 5,403 |
Other short-term assets |  |  | 265 |  |  |  | 1,132 |
Current assets from discontinued operations |  |  | - |  |  |  | 86,620 |
Total current assets |  |  | 147,796 |  |  |  | 254,385 |
Property and equipment, at cost |  |  | 541,276 |  |  |  | 725,383 |
Less: accumulated depreciation and amortization |  |  | (149,824 | ) |  |  | (208,180 | )
Net property and equipment |  |  | 391,452 |  |  |  | 517,203 |
Goodwill |  |  | 42,518 |  |  |  | 42,518 |
Other intangibles, net |  |  | 24,518 |  |  |  | 29,615 |
Other assets |  |  | 60,897 |  |  |  | 37,919 |
Noncurrent assets from discontinued operations |  |  | 9,535 |  |  |  | - |
Total assets |  | $ | 676,716 |  |  | $ | 881,640 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Checks outstanding in excess of bank balances |  | $ | 1,215 |  |  | $ | 592 |
Accounts payable |  |  | 31,695 |  |  |  | 19,500 |
Accrued expenses |  |  | 38,538 |  |  |  | 31,840 |
Current maturities of long-term debt |  |  | 7,577 |  |  |  | 54,377 |
Current portion of finance lease obligations |  |  | 5,687 |  |  |  | 7,258 |
Current portion of operating lease obligations |  |  | 16,989 |  |  |  | 19,460 |
Current portion of insurance and claims accrual |  |  | 30,221 |  |  |  | 21,800 |
Other short-term liabilities |  |  | 643 |  |  |  | 185 |
Current liabilities of discontinued operations, net |  |  | 816 |  |  |  | 6,245 |
Total current liabilities |  |  | 133,381 |  |  |  | 161,257 |
Long-term debt |  |  | 47,888 |  |  |  | 200,177 |
Long-term portion of finance lease obligations |  |  | 10,756 |  |  |  | 26,010 |
Long-term portion of operating lease obligations |  |  | 21,474 |  |  |  | 40,882 |
Insurance and claims accrual |  |  | 44,077 |  |  |  | 20,295 |
Deferred income taxes |  |  | 74,553 |  |  |  | 80,330 |
Other long-term liabilities |  |  | 9,794 |  |  |  | 2,578 |
Other long-term liabilities of discontinued operations |  |  | 44,151 |  |  |  | - |
Total liabilities |  |  | 386,074 |  |  |  | 531,529 |
Commitments and contingencies |  |  | - |  |  |  | - |
Stockholders' equity: |  |  |  |  |  |  |  |
Class A common stock, $.01 par value; 40,000,000 shares authorized; 16,183,139 shares issued and 14,784,214 outstanding as of December 31, 2020; and 40,000,000 authorized; 16,165,145 shares issued and outstanding as of December 31, 2019 |  |  | 173 |  |  |  | 173 |
Class B common stock, $.01 par value; 5,000,000 shares authorized; 2,350,000 shares issued and outstanding |  |  | 24 |  |  |  | 24 |
Additional paid-in-capital |  |  | 143,438 |  |  |  | 141,885 |
Treasury stock at cost; 1,398,925 and no shares as of December 31, 2020 and 2019, respectively |  |  | (17,067 | ) |  |  | - |
Accumulated other comprehensive loss |  |  | (2,251 | ) |  |  | (1,014 | )
Retained earnings |  |  | 166,325 |  |  |  | 209,043 |
Total stockholders' equity |  |  | 290,642 |  |  |  | 350,111 |
Total liabilities and stockholders' equity |  | $ | 676,716 |  |  | $ | 881,640 |

The accompanying notes are an integral part of these consolidated financial statements.

10

COVENANT Logistics GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2020, 2019, and 2018

(In thousands, except per share data)

|  | 2020 |  |  | 2019 |  |  | 2018 |
Revenues |  |  |  |  |  |  |  |  |  |  |  |
Freight revenue |  | $ | 776,218 |  |  | $ | 791,260 |  |  | $ | 774,691 |
Fuel surcharge revenue |  |  | 62,343 |  |  |  | 94,127 |  |  |  | 105,726 |
Total revenue |  | $ | 838,561 |  |  | $ | 885,387 |  |  | $ | 880,417 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Salaries, wages, and related expenses |  |  | 315,023 |  |  |  | 320,498 |  |  |  | 303,441 |
Fuel expense |  |  | 77,443 |  |  |  | 115,307 |  |  |  | 121,264 |
Operations and maintenance |  |  | 48,368 |  |  |  | 59,506 |  |  |  | 55,505 |
Revenue equipment rentals and purchased transportation |  |  | 222,705 |  |  |  | 204,655 |  |  |  | 183,645 |
Operating taxes and licenses |  |  | 11,621 |  |  |  | 13,024 |  |  |  | 11,831 |
Insurance and claims |  |  | 53,052 |  |  |  | 47,719 |  |  |  | 43,328 |
Communications and utilities |  |  | 5,898 |  |  |  | 6,968 |  |  |  | 7,059 |
General supplies and expenses |  |  | 34,143 |  |  |  | 30,089 |  |  |  | 22,787 |
Depreciation and amortization |  |  | 65,472 |  |  |  | 80,502 |  |  |  | 75,843 |
(Gain) loss on disposition of property and equipment, net |  |  | (7,706 | ) |  |  | (1,650 | ) |  |  | 298 |
Impairment of long lived property, equipment, and right-of-use assets |  |  | 26,569 |  |  |  | - |  |  |  | - |
Total operating expenses |  |  | 852,588 |  |  |  | 876,618 |  |  |  | 825,001 |
Operating (loss) income |  |  | (14,027 | ) |  |  | 8,769 |  |  |  | 55,416 |
Interest expense, net |  |  | 6,841 |  |  |  | 8,218 |  |  |  | 7,344 |
Income from equity method investment |  |  | (3,944 | ) |  |  | (7,017 | ) |  |  | (7,732 | )
(Loss) income from continuing operations |  |  | (16,924 | ) |  |  | 7,568 |  |  |  | 55,804 |
Income tax (benefit) expense |  |  | (2,804 | ) |  |  | 2,349 |  |  |  | 14,944 |
(Loss) income from continuing operations |  |  | (14,120 | ) |  |  | 5,219 |  |  |  | 40,860 |
(Loss) income from discontinued operations, net of tax |  |  | (28,598 | ) |  |  | 3,258 |  |  |  | 1,643 |
Net (loss) income |  | $ | (42,718 | ) |  | $ | 8,477 |  |  | $ | 42,503 |
Basic (loss) income per share: |  |  |  |  |  |  |  |  |  |  |  |
(Loss) income from continuing operations |  | $ | (0.81 | ) |  | $ | 0.28 |  |  | $ | 2.23 |
(Loss) income from discontinued operations |  | $ | (1.65 | ) |  | $ | 0.18 |  |  | $ | 0.09 |
Net (loss) income |  | $ | (2.46 | ) |  | $ | 0.46 |  |  | $ | 2.32 |
Diluted (loss) income per share: |  |  |  |  |  |  |  |  |  |  |  |
(Loss) income from continuing operations |  | $ | (0.81 | ) |  | $ | 0.28 |  |  | $ | 2.21 |
(Loss) income from discontinued operations |  | $ | (1.65 | ) |  | $ | 0.17 |  |  | $ | 0.09 |
Net (loss) income |  | $ | (2.46 | ) |  | $ | 0.45 |  |  | $ | 2.30 |
Basic weighted average shares outstanding |  |  | 17,358 |  |  |  | 18,435 |  |  |  | 18,340 |
Diluted weighted average shares outstanding |  |  | 17,358 |  |  |  | 18,635 |  |  |  | 18,469 |

The accompanying notes are an integral part of these consolidated financial statements

11

COVENANT Logistics GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019, and 2018

(In thousands)

|  | 2020 |  |  | 2019 |  |  | 2018 |
Net (loss) income |  | $ | (42,718 | ) |  | $ | 8,477 |  |  | $ | 42,503 |
Other comprehensive (loss): |  |  |  |  |  |  |  |  |  |  |  |
Unrealized (loss) gain on effective portion of cash flow hedges, net of tax of $548, $437, and $377 in 2020, 2019 and 2018, respectively |  |  | (1,898 | ) |  |  | (1,278 | ) |  |  | 993 |
Reclassification of cash flow hedge losses (gains) into statement of operations, net of tax of ($189), ($5), and $408 in 2020, 2019 and 2018, respectively |  |  | 655 |  |  |  | 15 |  |  |  | (1,076 | )
Unrealized holding loss on investments classified as available-for-sale |  |  | 6 |  |  |  | 45 |  |  |  | (6 | )
Total other comprehensive (loss) |  |  | (1,237 | ) |  |  | (1,218 | ) |  |  | (89 | )
Comprehensive (loss) income |  | $ | (43,955 | ) |  | $ | 7,259 |  |  | $ | 42,414 |

The accompanying notes are an integral part of these consolidated financial statements.

12

COVENANT Logistics GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019, and 2018

(In thousands)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Additional |  |  |  |  |  |  | Other |  |  |  |  |  |  | Total |
|  | Common Stock |  |  | Paid-In |  |  | Treasury |  |  | Comprehensive |  |  | Retained |  |  | Stockholders |
|  | Class A |  |  | Class B |  |  | Capital |  |  | Stock |  |  | Income (Loss) |  |  | Earnings |  |  | Equity |
Balances at December 31, 2017 |  | $ | 171 |  |  | $ | 24 |  |  | $ | 137,242 |  |  | $ | - |  |  | $ | 293 |  |  | $ | 157,471 |  |  | $ | 295,201 |
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 42,503 |  |  |  | 42,503 |
Effect of adoption of ASU 2014-09 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 592 |  |  |  | 592 |
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (89 | ) |  |  | - |  |  |  | (89 | )
Stock-based employee compensation expense |  |  | - |  |  |  | - |  |  |  | 4,802 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,802 |
Issuance of restricted shares, net |  |  | - |  |  |  | - |  |  |  | 133 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 133 |
Balances at December 31, 2018 |  | $ | 171 |  |  | $ | 24 |  |  | $ | 142,177 |  |  | $ | - |  |  | $ | 204 |  |  | $ | 200,566 |  |  | $ | 343,142 |
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8,477 |  |  |  | 8,477 |
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,218 | ) |  |  | - |  |  |  | (1,218 | )
Stock-based employee compensation expense |  |  | - |  |  |  | - |  |  |  | 819 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 819 |
Issuance of restricted shares, net |  |  | 2 |  |  |  | - |  |  |  | (1,111 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,109 | )
Balances at December 31, 2019 |  | $ | 173 |  |  | $ | 24 |  |  | $ | 141,885 |  |  | $ | - |  |  | $ | (1,014 | ) |  | $ | 209,043 |  |  | $ | 350,111 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (42,718 | ) |  |  | (42,718 | )
Share repurchase |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (17,486 | ) |  |  | - |  |  |  | - |  |  |  | (17,486 | )
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,237 | ) |  |  | - |  |  |  | (1,237 | )
Stock-based employee compensation expense |  |  | - |  |  |  | - |  |  |  | 2,270 |  |  |  | 419 |  |  |  | - |  |  |  | - |  |  |  | 2,689 |
Issuance of restricted shares, net |  |  | - |  |  |  | - |  |  |  | (717 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (717 | )
Balances at December 31, 2020 |  | $ | 173 |  |  | $ | 24 |  |  | $ | 143,438 |  |  | $ | (17,067 | ) |  | $ | (2,251 | ) |  | $ | 166,325 |  |  | $ | 290,642 |

The accompanying notes are an integral part of these consolidated financial statements.

13

COVENANT Logistics GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019, and 2018

(In thousands)

|  | 2020 |  |  | 2019 |  |  | 2018 |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Net (loss) income |  | $ | (42,718 | ) |  | $ | 8,477 |  |  | $ | 42,503 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Provision for losses on accounts receivable |  |  | 3,134 |  |  |  | 255 |  |  |  | 507 |
Deferral (reversal) of gain on sales to equity method investee, net |  |  | 14 |  |  |  | (7 | ) |  |  | (189 | )
Depreciation and amortization |  |  | 65,480 |  |  |  | 80,529 |  |  |  | 75,859 |
Impairment of property and equipment |  |  | 26,569 |  |  |  | - |  |  |  | - |
Amortization of deferred financing fees |  |  | 154 |  |  |  | 147 |  |  |  | 148 |
Deferred income tax (benefit) expense |  |  | (15,092 | ) |  |  | 3,454 |  |  |  | 13,840 |
Income tax benefit (expense) arising from restricted share vesting and stock options exercised |  |  | 167 |  |  |  | (105 | ) |  |  | (44 | )
Stock-based compensation expense |  |  | 2,270 |  |  |  | 819 |  |  |  | 5,177 |
Equity in income of affiliate |  |  | (3,944 | ) |  |  | (7,017 | ) |  |  | (7,732 | )
Return on investment in affiliated company |  |  | 1,470 |  |  |  | 1,225 |  |  |  | 1,960 |
(Gain) loss on disposition of property and equipment |  |  | (7,677 | ) |  |  | (2,829 | ) |  |  | 298 |
Loss on disposition of reportable segment |  |  | 40,431 |  |  |  | - |  |  |  | - |
Return on investment in available-for-sale securities |  |  | (25 | ) |  |  | 13 |  |  |  | (13 | )
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Receivables and advances |  |  | (60,849 | ) |  |  | (6,706 | ) |  |  | (27,199 | )
Prepaid expenses and other assets |  |  | 531 |  |  |  | 487 |  |  |  | (2,127 | )
Inventory and supplies |  |  | 1,091 |  |  |  | (143 | ) |  |  | 168 |
Insurance and claims accrual |  |  | 32,203 |  |  |  | 945 |  |  |  | 2,412 |
Accounts payable and accrued expenses |  |  | 19,831 |  |  |  | (15,513 | ) |  |  | 19,232 |
Net cash flows provided by operating activities |  |  | 63,040 |  |  |  | 64,031 |  |  |  | 124,800 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |
Acquisition of Landair Holdings, Inc., net of cash acquired |  |  | - |  |  |  | - |  |  |  | (105,946 | )
Redemption (purchase) of available-for-sale securities |  |  | 1,442 |  |  |  | (1,365 | ) |  |  | (1,496 | )
Acquisition of property and equipment |  |  | (94,049 | ) |  |  | (138,273 | ) |  |  | (75,142 | )
Proceeds from disposition of reportable segment |  |  | 108,375 |  |  |  | - |  |  |  | - |
Proceeds from disposition of property and equipment |  |  | 122,278 |  |  |  | 46,609 |  |  |  | 61,687 |
Net cash flows provided (used in) investing activities |  |  | 138,046 |  |  |  | (93,029 | ) |  |  | (120,897 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |
Change in checks outstanding in excess of bank balances |  |  | 839 |  |  |  | (1,265 | ) |  |  | 1,857 |
Proceeds from issuance of notes payable |  |  | 75,591 |  |  |  | 107,251 |  |  |  | 100,811 |
Repayments of notes payable |  |  | (289,834 | ) |  |  | (44,278 | ) |  |  | (89,569 | )
Repayments of capital lease obligations |  |  | (20,083 | ) |  |  | (7,225 | ) |  |  | (3,883 | )
Proceeds under revolving credit facility |  |  | 1,341,678 |  |  |  | 1,734,338 |  |  |  | 1,598,213 |
Repayments under revolving credit facility |  |  | (1,326,678 | ) |  |  | (1,738,249 | ) |  |  | (1,603,309 | )
Payment of minimum tax withholdings on stock compensation |  |  | (297 | ) |  |  | (1,110 | ) |  |  | (242 | )
Debt refinancing costs |  |  | - |  |  |  | - |  |  |  | (10 | )
Common stock repurchased |  |  | (17,486 | ) |  |  | - |  |  |  | - |
Net cash flows (used in) provided by financing activities |  |  | (236,270 | ) |  |  | 49,462 |  |  |  | 3,868 |
Net change in cash and cash equivalents |  |  | (35,184 | ) |  |  | 20,464 |  |  |  | 7,771 |
Cash and cash equivalents at beginning of year |  |  | 43,591 |  |  |  | 23,127 |  |  |  | 15,356 |
Cash and cash equivalents at end of year |  | $ | 8,407 |  |  | $ | 43,591 |  |  | $ | 23,127 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |  |  |  |  |
Cash paid (received) during the year for: |  |  |  |  |  |  |  |  |  |  |  |
Interest, net of capitalized interest |  | $ | 7,365 |  |  | $ | 11,026 |  |  | $ | 8,568 |
Income taxes |  | $ | 870 |  |  | $ | 752 |  |  | $ | (5,388 | )
Non-cash transactions during the year for: |  |  |  |  |  |  |  |  |  |  |  |
Equipment purchased under finance leases |  | $ | 3,258 |  |  | $ | - |  |  | $ | 19,638 |
Contingent liabilities |  | $ | 44,151 |  |  | $ | - |  |  | $ | - |

The accompanying notes are an integral part of these consolidated financial statements.

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COVENANT Logistics GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020, 2019, and 2018

1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

On July 1, 2020, the stockholders of Covenant Transportation Group, Inc. approved the amendment to the organization’s Articles of Incorporation to change the Company’s name to Covenant Logistics Group, Inc. All references herein reflect the change of name to Covenant Logistics Group, Inc.

Covenant Logistics Group, Inc., a Nevada holding company, together with its wholly owned subsidiaries offers transportation and logistics services to customers throughout the continental United States.

Principles of Consolidation

The consolidated financial statements include the accounts of Covenant Logistics Group, Inc., a holding company incorporated in the state of Nevada in 1994, and its wholly owned subsidiaries: Covenant Transport, Inc., a Tennessee corporation; Star Transportation, LLC, a Tennessee limited liability company, each d/b/a Covenant Transport Services and Covenant Logistics; Southern Refrigerated Transport, LLC, an Arkansas limited liability company; Covenant Transport Solutions, LLC, a Nevada limited liability company; Covenant Logistics, Inc., a Nevada corporation; Covenant Asset Management, LLC, a Nevada limited liability company; CTG Leasing Company, a Nevada corporation; IQS Insurance Risk Retention Group, Inc., a Vermont corporation; Heritage Insurance, Inc., a Tennessee corporation; Landair Holdings, Inc., a Tennessee corporation; Landair Transport, Inc., a Tennessee corporation; Landair Logistics, Inc., a Tennessee corporation; Landair Leasing, Inc., a Tennessee corporation; and Transport Management Services, LLC, a Tennessee limited liability company.

References in this report to "it," "we," "us," "our," the "Company," and similar expressions refer to Covenant Logistics Group, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Segment Realignment

In 2020, we made a number of changes to our organizational structure in an effort to streamline our business in a manner that we believe will allow us to significantly lower our fixed costs, pay down debt and produce consistent acceptable margins. These changes impacted the Company’s reportable operating segments but did not impact the Company’s Consolidated Financial Statements. We have recast prior year information to conform to the realignment. Under this revised reporting structure, we have four reportable operating segments, which include:

● | Non-dedicated truckload services ("Expedited"), which services customers with high service freight and delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows.

● | Dedicated contract truckload services (“Dedicated”), which consists of our truckload business that involves longer-term contracts that allocate a specified number of tractors and trailers to a specific customer, with fixed and variable compensation.

● | Managed Freight services, which consists of our brokerage and transportation management services ("TMS") and provides logistics capacity by outsourcing the carriage of customers' freight to third parties, as well as, comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.

● | Warehousing services (“Warehousing”), provides day-to-day warehouse management services to customers who have chosen to outsource this function.

The following table summarizes our revenue by our four reportable operating segment, at the service offering level, as used by our chief operating decision maker in making decisions regarding allocation of resources, etc., for the years ended December 31, 2020, 2019, and 2018:

|  | Year ended December 31, |
(in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
Expedited |  | $ | 320,202 |  |  | $ | 356,521 |  |  | $ | 469,308 |
Dedicated |  |  | 288,652 |  |  |  | 342,473 |  |  |  | 257,739 |
Managed Freight |  |  | 177,579 |  |  |  | 138,616 |  |  |  | 129,790 |
Warehousing |  |  | 52,128 |  |  |  | 47,777 |  |  |  | 23,580 |
Total revenues |  | $ | 838,561 |  |  | $ | 885,387 |  |  | $ | 880,417 |

Investment in Transport Enterprise Leasing, LLC

Transport Enterprise Leasing, LLC ("TEL") is a tractor and trailer equipment leasing company and used equipment reseller. We evaluated our investment in TEL to determine whether it should be recorded on a consolidated basis. Our percentage of ownership interest (49%), an evaluation of control, and whether a variable interest entity ("VIE") existed were all considered in our consolidation assessment. Based on the analysis, the Company is not the primary beneficiary of TEL and TEL should not be consolidated. We have accounted for our investment in TEL using the equity method of accounting given our 49% ownership interest and ability to exercise significant influence over operating and financial policies. Under the equity method, the cost of our investment is adjusted for our share of equity in the earnings of TEL and reduced by distributions received and our proportionate share of TEL's net income is included in our earnings.

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On a periodic basis, we assess whether there are any indicators that the fair value of our investment in TEL may be impaired. The investment is impaired only if the estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss would be measured as the excess of the carrying amount of the investment over the fair value of the investment. As a result of TEL's earnings, no impairment indicators were noted that would provide for impairment of our investment during the years ended December 31, 2020 and 2019.

Risks and Uncertainties

We are continuing to monitor the progression of the COVID-19 pandemic, further government response, and development of treatments and vaccines and their potential effect on our short-term and long-term financial position, results of operations, cash flows and liquidity. These events could have an impact in future periods on certain estimates used in the preparation of our 2020 financial results, including, but not limited to impairment of goodwill, other intangible assets and other long-lived assets, income tax provision and recoverability of certain receivables. Local, state and national governments continue to emphasize the importance of transportation and have designated it as an essential service. The health and safety of our team members and the community is our first priority, as such, we've put certain measures into place, including remote work arrangements, enforced social distancing and increased sanitation protocols, among others. Should the pandemic continue for an extended period of time, the impact on our operations could have a material adverse effect on our financial condition, results of operations, cash flows and liquidity.

Our insurance program includes multi-year policies with specific insurance limits that may be eroded over the course of the policy term. If that occurs, we will be operating with less liability coverage insurance at various levels of our insurance tower. For the current policy period ( April 1, 2018 to March 31, 2021), the aggregate limits available in the coverage layer $9.0 million in excess of $1.0 million were estimated to be fully eroded based on claims expense accruals. We have replaced our $9.0 million in excess of $1.0 million layer with a new $7.0 million in excess of $3.0 million policy that runs from January 28, 2021 to April 1, 2024. Due to the erosion of the $9.0 million in excess of $1.0 million layer, any adverse developments in claims filed between April 1, 2018 and March 31, 2021, could result in additional expense accruals. Effective April 1, 2020, consistent with an extremely difficult insurance market for the industry, our insurance renewal terms include a higher fixed premium expense of approximately $0.5 million per quarter, greater self-insured retention, and lower aggregate limits than prior coverage. Due to these developments, we may experience additional expense accruals, increased insurance and claims expenses, and greater volatility in our insurance and claims expenses, which could have a material adverse effect on our business, financial condition, and results of operations.

On July 8, 2020, we sold a portfolio of accounts receivable, contract rights, and associated assets consisting of approximately $103.3 million in net funds employed (the “Portfolio”) previously held by Transport Financial Services ("TFS"), a division of Covenant Transport Solutions, LLC, an indirect wholly owned subsidiary of the Company, to a subsidiary of Triumph Bancorp, Inc. ("Triumph") for approximately $122.3 million, consisting of $108.4 million in cash and $13.9 million in Triumph stock, plus an earn-out opportunity of up to $9.9 million. After the transaction closed, the Company and Triumph became involved in a dispute over the nature of approximately $66.0 million of the assets included in the Portfolio. The dispute was resolved on September 23, 2020 with an amendment of the purchase agreement and related funding arrangements that reduced the purchase price of the Portfolio to approximately $108.4 million, representing the cash amount received by us at closing. Additionally, the earnout opportunity was terminated and we were required to sell, and subsequently sold, the Triumph stock we received at closing for $28.1 million and remitted the proceeds to Triumph upon settlement.

The amended purchase agreement specifically identified approximately $62.0 million of accounts within the Portfolio, which related to advances on services that had not yet been performed, that were placed in a loss sharing pool to be repaid with proceeds other than those generated from ordinary working capital factoring. To the extent losses on covered accounts are incurred, we will indemnify Triumph on a dollar for dollar basis for up to the first $30.0 million of losses, and on a 50% basis for up to the next $30.0 million of losses, for total indemnification exposure of up to $45.0 million. The amended purchase agreement resulted in a gain on the sale of the Portfolio of $3.7 million, net of related expenses. During the fourth quarter of 2020, the Company recorded $44.2 million of contingent liabilities, reflected as other long-term liabilities from discontinued operations in our consolidated balance sheet, because as of December 31, 2020 it was probable and estimable that such amount would be due to Triumph under the amended purchase agreement.

To date no indemnification obligations have been required to be funded and the Company and Triumph are cooperating to manage the covered accounts and assist the clients with, among other things, operational improvements in an attempt to minimize losses on the covered accounts.

Revenue Recognition

Revenue, drivers' wages, and other direct operating expenses generated by our Expedited and Dedicated reportable segments are recognized proportionally as the transportation service is performed based on the percentage of miles completed as of the period end. Revenue is recognized on a gross basis at amounts charged to our customers because we control and are primarily responsible for the fulfillment of the promised service. Revenue includes transportation revenue, fuel surcharges, loading and unloading activities, equipment detention, and other accessorial services.

Revenue generated by our Managed Freight reportable segment is recognized upon completion of the services provided. Revenue is recorded on a gross basis, without deducting third party purchased transportation costs, as we act as a principal with substantial risks as primary obligor. Revenue for the Warehousing reportable segment is generally recognized as the service is performed, based upon a weekly rate.

There are no assets or liabilities recorded in conjunction with revenue recognized, other than accounts receivable and allowance for doubtful accounts. We recognized in-process revenue of $1.2 million, $0.8 million, and $1.3 million for the years ended December 31, 2020, 2019, and 2018, respectively. We had accounts receivable, net of allowance for doubtful accounts, of $91.3 million, $81.2 million, and $97.5 million at December 31, 2020, 2019, and 2018, respectively.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make decisions based upon estimates, assumptions, and factors we consider as relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of our estimates and assumptions. Accordingly, actual results could differ from those anticipated.

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Cash and Cash Equivalents

We consider all highly liquid investments with a maturity of three months or less at acquisition to be cash equivalents. Additionally, we are also subject to concentrations of credit risk related to deposits in banks in excess of the Federal Deposit Insurance Corporation limits.

Accounts Receivable and Concentration of Credit Risk

We extend credit to our customers in the normal course of business, which are generally due within 30-45 days of the services performed. We perform ongoing credit evaluations and generally do not require collateral. Trade accounts receivable are recorded at their invoiced amounts, net of allowance for doubtful accounts. We evaluate the adequacy of our allowance for doubtful accounts quarterly. Accounts outstanding longer than contractual payment terms are considered past due and are reviewed individually for collectability. We maintain reserves for potential credit losses based upon loss history and specific receivables aging analysis. Receivable balances are written off when collection is deemed unlikely.

Accounts receivable are comprised of a diversified customer base that mitigates the level of concentration of credit risk. During 2020, 2019, and 2018, our top ten customers generated 48%, 45%, and 49% of total revenue, respectively. In 2020, 2019, and 2018 one customer accounted for more than 10% of our consolidated revenue in each year. The carrying amount reported in the consolidated balance sheet for accounts receivable approximates fair value based on the fact that the receivables collection averaged approximately 38 days and 33 days in 2020 and 2019, respectively.

The following table provides a summary (in thousands) of the activity in the allowance for doubtful accounts for 2020, 2019, and 2018:

Years ended December 31: |  | Beginning balance January 1, |  |  | Additional provisions to allowance |  |  | Write-offs and other adjustments |  |  | Ending balance December 31, |
2020 |  | $ | 1,440 |  |  | $ | 3,011 |  |  | $ | (1,459 | ) |  | $ | 2,992 |
2019 |  | $ | 1,577 |  |  | $ | 141 |  |  | $ | (278 | ) |  | $ | 1,440 |
2018 |  | $ | 1,258 |  |  | $ | 182 |  |  | $ | 137 |  |  | $ | 1,577 |

Inventories and Supplies

Inventories and supplies consist of parts, tires, fuel, and supplies. Tires on new revenue equipment are capitalized as a component of the related equipment cost when the tractor or trailer is placed in service and recovered through depreciation over the life of the vehicle. Replacement tires and parts on hand at year end are recorded at the lower of cost or net realizable value with cost determined using the first-in, first-out (FIFO) method. Replacement tires are expensed when placed in service.

Assets Held for Sale

Assets held for sale include property and revenue equipment no longer utilized in continuing operations which are available and held for sale. Assets held for sale are no longer subject to depreciation, and are recorded at the lower of depreciated book value or fair market value less selling costs. We periodically review the carrying value of these assets for possible impairment. We expect to sell these assets within twelve months.

Change in Estimates

The Company reviews the estimated useful lives and salvage values of its assets on an ongoing basis, based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice. During the second quarter of 2020, the Company adjusted the useful lives of certain intangible finite-lived assets, including the Landair trade name and non-compete agreement, and certain revenue equipment held under operating leases as the result of management changes, a change in the branding of the organization, and the forward looking use of these assets. These changes are being treated as a change in accounting estimate, which during the twelve months ended December 31, 2020, resulted in an increase in depreciation and amortization expense of approximately $3.2 million, or a $2.5 million, or $0.14, per diluted share decrease to net income.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation for book purposes is determined using the straight-line method over the estimated useful lives of the assets. Depreciation of revenue equipment is our largest item of depreciation. We generally depreciate new tractors over five years to salvage values that range from 10% to 35% of their cost. We generally depreciate new trailers over seven years for refrigerated trailers and ten years for dry van trailers to salvage values of approximately 28% and 21% of their cost, respectively. We annually review the reasonableness of our estimates regarding useful lives and salvage values of our revenue equipment and other long-lived assets based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice. Changes in the useful life or salvage value estimates, or fluctuations in market values that are not reflected in our estimates, could have a material effect on our results of operations.

We lease certain revenue equipment under finance and operating leases with terms of approximately 48 to 84 months. Amortization of assets under finance and operating leases are included in depreciation and amortization expense and revenue and equipment rentals and purchased transportation, respectively.

Pursuant to applicable accounting standards, revenue equipment and other long-lived assets are tested for impairment whenever an event occurs that indicates impairment may exist. Expected future cash flows are used to analyze whether an impairment has occurred. If the sum of expected undiscounted cash flows is less than the carrying value of the long-lived asset, then an impairment loss is recognized. We measure the impairment loss by comparing the fair value of the asset to its carrying value. Fair value is determined based on a discounted cash flow analysis or the appraised value of the assets, as appropriate. We recognized an impairment of $26.6 million during the twelve months ended December 31, 2020. See Note 3, "Cost Savings and Restructuring" for additional discussion around the impairment.

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A portion of our tractors are protected by non-binding indicative trade-in values or binding trade-back agreements with the manufacturers. The remainder of our tractors and substantially all of our owned trailers are subject to fluctuations in market prices for used revenue equipment. Moreover, our trade-back agreements are contingent upon reaching acceptable terms for the purchase of new equipment. Declines in the price of used revenue equipment or failure to reach agreement for the purchase of new tractors with the manufacturers issuing trade-back agreements could result in impairment of, or losses on the sale of, revenue equipment.

Goodwill and Other Intangible Assets

We classify intangible assets into two categories: (i) intangible assets with finite lives subject to amortization and (ii) goodwill. We test goodwill for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred. We test intangible assets with finite lives for impairment if conditions exist that indicate the carrying value may not be recoverable. Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations. We record an impairment charge when the carrying value of the finite lived intangible asset is not recoverable by the cash flows generated from the use of the asset.

We determine the useful lives of our identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful lives include the contractual term of any agreement, the history of the asset, our long-term strategy for the use of the asset, any laws or other local regulations which could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have finite lives are amortized, generally on a straight-line basis, over their remaining useful lives, ranging from 3 to 15 years.

Impairment of Long-Lived Assets

Pursuant to applicable accounting standards, revenue equipment and other long-lived assets are tested for impairment whenever an event occurs that indicates an impairment may exist. Expected future cash flows are used to analyze whether an impairment has occurred. If the sum of expected undiscounted cash flows is less than the carrying value of the long-lived asset, then an impairment loss is recognized. We measure the impairment loss by comparing the fair value of the asset less its disposal cost to its carrying value. Fair value is determined based on a discounted cash flow analysis or the appraised value of the assets, as appropriate.

Insurance and Other Claims

The primary claims arising against us consist of auto liability (personal injury and property damage), workers' compensation, cargo, commercial liability, and employee medical expenses. At December 31, 2020, our insurance program involves self-insurance with the following risk retention levels (before giving effect to any commutation of an auto liability policy):

| ● | auto liability - the aggregate limits available in the coverage layer $9.0 million in excess of $1.0 million were estimated to be fully eroded based on claims expense accruals at December 31, 2020 and we replaced such layer with a new $7.0 million in excess of $3.0 million policy that runs from January 28, 2021 to April 1, 2024

| ● | workers' compensation - $1.3 million

| ● | cargo - $0.3 million

| ● | employee medical - $0.4 million

| ● | physical damage - 100%

Due to our significant self-insured retention amounts, we have exposure to fluctuations in the number and severity of claims and to variations between our estimated and actual ultimate payouts. We record a liability for the estimated cost of the uninsured portion of pending claims and the estimated allocated loss adjustment expenses including legal and other direct costs associated with a claim. Estimates require judgments concerning the nature and severity of the claim, historical trends, advice from third-party administrators and insurers, the size of any potential damage award based on factors such as the specific facts of individual cases, the jurisdictions involved, the prospect of punitive damages, future medical costs, and inflation estimates of future claims development, and the legal and other costs to settle or defend the claims. We have significant exposure to fluctuations in the number and severity of claims. If there is an increase in the frequency and severity of claims, or we are required to accrue or pay additional amounts if the claims prove to be more severe than originally assessed, or any of the claims would exceed the limits of our insurance coverage, our profitability could be adversely affected.

In addition to estimates within our self-insured retention layers, we also must make judgments concerning claims where we have third party insurance and for claims outside our coverage limits. Upon settling claims and expenses associated with claims where we have third party coverage, we are generally required to initially fund payment to the claimant and seek reimbursement from the insurer. Receivables from insurers for claims and expenses we have paid on behalf of insurers were $0.0 and $0.3 million at December 31, 2020 and 2019, respectively, and are included in drivers' advances and other receivables on our consolidated balance sheet. Additionally, we accrue claims above our self-insured retention and record a corresponding receivable for amounts we expect to collect from insurers upon settlement of such claims. We have $7.4 million and $0.0 million as other short-term assets and a corresponding accrual in the short-term portion of insurance and claims accruals and $24.4 million and $2.1 million as other long-term assets and as a corresponding accrual in the long-term portion of insurance and claims accruals on our consolidated balance sheet for claims above our self-insured retention for which we believe it is reasonably assured that the insurers will provide their portion of such claims at December 31, 2020 and 2019, respectively. We evaluate collectability of the receivables based on the credit worthiness and surplus of the insurers, along with our prior experience and contractual terms with each. If any claim occurrence were to exceed our aggregate coverage limits, we would have to accrue for the excess amount. Our critical estimates include evaluating whether a claim may exceed such limits and, if so, by how much.

We also make judgments regarding the ultimate benefit versus risk of commuting certain periods within our auto liability policy. If we commute a policy, we assume 100% risk for covered claims in exchange for a policy refund.

Effective April 2018, we entered into new auto liability policies with a three-year term. The policy includes a limit for a single loss of $9.0 million, an aggregate of $18.0 million for each policy year, and a $30.0 million aggregate for the 36 month term ended March 31, 2021. The policy included a policy release premium refund or commutation option of up to $14.0 million, less any future amounts paid on claims by the insurer. A decision with respect to commutation of the policy could be made before April 1, 2021. Additionally, our prior auto liability policy that ran from October 1, 2014 through March 31, 2018, was commuted, resulting in a premium release of $7.3 million. Management cannot predict whether or not future claims or the development of existing claims will justify a commutation of either policy period, and accordingly, no related amounts were recorded at December 31, 2020. We carry excess policy layers above the primary auto liability policy described above.

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Interest

We capitalize interest on major projects during construction. Interest is capitalized based on the average interest rate on related debt. Capitalized interest was less than $0.1 million in 2020 and 2018 and approximately $0.1 million in 2019, respectively.

Fair Value of Financial Instruments

Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, available-for-sale securities, accounts payable, debt, and interest rate swaps. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, and current debt approximates their fair value because of the short-term maturity of these instruments. The carrying value of the factored receivables approximates the fair value, as the receivables are generally repaid directly to us by the client's customer within 30–40 days due to the combination of the short-term nature of the financing transaction and the underlying quality of the receivables. Interest rates that are currently available to us for issuance of long-term debt with similar terms and remaining maturities are used to estimate the fair value of our long-term debt, which primarily consists of revenue equipment installment notes. The fair value of our revenue equipment installment notes approximated the carrying value at December 31, 2020, as the weighted average interest rate on these notes approximates the market rate for similar debt. Borrowings under our revolving Credit Facility approximate fair value due to the variable interest rate on the facility. Additionally, certain investments intended to serve the purposes of capital preservation and to fund insurance losses are designated as available-for-sale and are valued based on quoted prices in active markets. The fair value of our interest rate swap agreements is determined using the market-standard methodology of netting the discounted future fixed-cash payments and the discounted expected variable-cash receipts. The variable-cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These analyses reflect the contractual terms of the swap, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatilities. The fair value calculation also includes an amount for risk of non-performance of our counterparties using "significant unobservable inputs" such as estimates of current credit spreads to evaluate the likelihood of default, which we have determined to be insignificant to the overall fair value of our interest rate swap agreements.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We have reflected the net liability after offsetting our deferred tax assets and liabilities in the deferred income taxes line in the accompanying consolidated balance sheets. We believe the future tax deductions will be realized principally through future reversals of existing taxable temporary differences and future taxable income, except for when a valuation allowance has been provided as discussed in Note 10.

In the ordinary course of business there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Potential accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense.

Our policy is to recognize income tax benefit arising from the exercise of stock options and restricted share vesting based on the ordering provisions of the tax law as prescribed by the Internal Revenue Code, including indirect tax effects, if any.

Lease Accounting

At the commencement date of a new lease agreement with contractual terms longer than twelve months, we recognize an asset and a lease liability on the balance sheet and categorize the lease as either finance or operating. Certain lease agreements have lease and non-lease components, and we have elected to account for these components separately.

Right-of-use assets and lease liabilities are initially recorded based on the present value of lease payments over the term of the lease. When the rate implicit in the lease is readily determinable, this rate is used for calculating the present value of remaining lease payments; otherwise, our incremental borrowing rate is used. The incremental borrowing rate represents an estimate of the interest rate we would incur at the lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. Right-of-use assets also include prepaid lease expenses and initial direct costs of executing the leases, which are reduced by landlord incentives. Options to extend or terminate a lease agreement are included in or excluded from the lease term, respectively, when those options are reasonably certain to be exercised. Right-of-use assets are tested for impairment in the same manner as long-lived assets.

Finance lease obligations are utilized to finance a portion of our revenue equipment and are entered into with certain finance companies who are not parties to our Credit Facility and may contain guarantees of the residual value of the related equipment by us. As such, the residual guarantees are included in the related debt balance as a balloon payment at the end of the related term as well as included in the future minimum finance lease payments. These lease agreements require us to pay personal property taxes, maintenance, and operating expenses. Our operating lease obligations do not typically include residual value guarantees or material restrictive covenants.

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Right-of-use assets are included in net property and equipment. For finance leases, right-of-use assets are amortized on a straight-line basis over the shorter of the expected useful life or the lease term, and the carrying amount of the lease liability is adjusted to reflect interest expense, which is recorded in interest expense, net. Operating lease right-of-use assets are amortized over the lease term on a straight-line basis, and the lease liability is measured at the present value of the remaining lease payments. Variable lease payments not included in the lease liability for mileage charges on leased revenue equipment are expensed as incurred. Operating lease costs are recognized on a straight-line basis over the term of the lease within operating expenses.

Capital Structure

The shares of Class A and B common stock are substantially identical except that the Class B shares are entitled to two votes per share and immediately convert to Class A shares if beneficially owned by anyone other than our Chief Executive Officer or certain members of his immediate family, while Class A shares are entitled to one vote per share. The terms of any future issuances of preferred shares will be set by our Board of Directors.

Income Per Share

Basic income per share excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted income per share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. There were approximately 195,000; 200,000; and 129,000 shares issuable upon conversion of unvested restricted shares for the years ended December 31, 2020, 2019, and 2018, respectively. Of such shares, 195,000 unvested shares have been excluded from the calculation of diluted earnings per share since the effect of any assumed exercise of the related awards would be anti-dilutive for the year ended December 31, 2020. There were approximately 70,000; 0; and 0 shares issuable upon conversion of unvested employee stock options for the years ended December 31, 2020, 2019, and 2018, respectively. Of such options, 70,000 unvested options have been excluded from the calculation of diluted earnings per share since the effect of any assumed exercise of the related options would be anti-dilutive for the year ended December 31, 2020. Income per share is the same for both Class A and Class B shares.

The following table sets forth the calculation of net income per share included in the consolidated statements of operations for each of the three years ended December 31:

(in thousands except per share data) |  |  |  |  |  |  |  |  |  |  |  |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Numerators: |  |  |  |  |  |  |  |  |  |  |  |
(Loss) income from continuing operations |  | $ | (14,120 | ) |  | $ | 5,219 |  |  | $ | 40,860 |
(Loss) income from discontinued operations |  |  | (28,598 | ) |  |  | 3,258 |  |  |  | 1,643 |
Net (loss) income |  | $ | (42,718 | ) |  | $ | 8,477 |  |  | $ | 42,503 |
Denominator: |  |  |  |  |  |  |  |  |  |  |  |
Denominator for basic income per share – weighted-average shares |  |  | 17,358 |  |  |  | 18,435 |  |  |  | 18,340 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |  |  |  |
Equivalent shares issuable upon conversion of unvested restricted shares |  |  | - |  |  |  | 200 |  |  |  | 129 |
Equivalent shares issuable upon conversion of unvested employee stock options |  |  | - |  |  |  | - |  |  |  | - |
Denominator for diluted income per share adjusted weighted-average shares and assumed conversions |  |  | 17,358 |  |  |  | 18,635 |  |  |  | 18,469 |
Basic (loss) income per share: |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | (0.81 | ) |  | $ | 0.28 |  |  | $ | 2.23 |
(Loss) income from discontinued operations |  | $ | (1.65 | ) |  | $ | 0.18 |  |  | $ | 0.09 |
Net (loss) income per basic share |  | $ | (2.46 | ) |  | $ | 0.46 |  |  | $ | 2.32 |
Diluted (loss) income per share: |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | (0.81 | ) |  | $ | 0.28 |  |  | $ | 2.21 |
(Loss) income from discontinued operations |  | $ | (1.65 | ) |  | $ | 0.17 |  |  | $ | 0.09 |
Diluted income per share |  | $ | (2.46 | ) |  | $ | 0.45 |  |  | $ | 2.30 |

Stock-Based Employee Compensation

We issue several types of stock-based compensation, including awards that vest based on service, market, and performance conditions or a combination of the conditions. Performance-based and market-based awards vest contingent upon meeting certain performance or market criteria, respectively, established by the Compensation Committee of the Board of Directors. All awards require future service. For performance-based awards, determining the appropriate amount to expense in each period is based on likelihood and timing of achieving the stated targets for performance-based awards and requires judgment, including forecasting future financial results. The estimates are revised periodically based on the probability and timing of achieving the required performance and adjustments are made as appropriate. Awards that are only subject to time vesting provisions are amortized using the straight-line method.

Recent Accounting Pronouncements

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Accounting Standards not yet adopted

In June 2016, FASB issued ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. This update will be effective for us for our annual reporting period beginning January 1, 2023, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impacts the adoption of this standard will have on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing the exceptions to the incremental approach for intra-period tax allocation in certain situations, the requirement to recognize a deferred tax liability for a change in the status of a foreign investment, and the general methodology for computing income taxes in an interim period when year-to date loss exceeds the anticipated loss for the year. The amendments also simplify the accounting for income taxes with regard to franchise tax, the evaluation of step up in the tax basis goodwill in certain business combinations, allocating current and deferred tax expense to legal entities that are not subject to tax and enacted change in tax laws or rates. The Company adopted these provisions in the first quarter of 2021 and the adoption did not have a material impact on its consolidated financial statements.

There are no other new accounting pronouncements that are expected to have a significant impact on our consolidated financial statements.

2. | DISCONTINUED OPERATIONS

As of June 30, 2020, our previously identified Factoring reportable segment was classified as discontinued operations as it: (i) was a component of the entity, (ii) met the criteria as held for sale, and (iii) had a material effect on the Company's operations and financial results. On July 8, 2020, we closed on the disposition of substantially all of the operations and assets of TFS, which included substantially all of the assets and operations of our Factoring reportable segment. The sale consisted primarily of $103.3 million of net accounts receivable, which included $108.7 million of gross accounts receivable, less advances and rebates of $5.4 million.

We have reflected the former Factoring reportable segment as discontinued operations in the consolidated statements of operations for all periods presented. Prior periods have been adjusted to confirm to the current presentation.

The following table summarizes the results of our discontinued operations for the twelve months ended December 31, 2020, 2019, and 2018:

(in thousands) |  | Twelve months ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Total revenue |  | $ | 5,397 |  |  | $ | 9,140 |  |  | $ | 5,038 |
Operating expenses |  |  | 1,149 |  |  |  | 1,876 |  |  |  | 1,467 |
Gain on disposal |  |  | (3,720 | ) |  |  | - |  |  |  | - |
Loss contingency |  |  | 44,151 |  |  |  | - |  |  |  | - |
Operating (loss) income |  |  | (36,183 | ) |  |  | 7,264 |  |  |  | 3,571 |
Interest expense |  |  | 1,950 |  |  |  | 2,892 |  |  |  | 1,363 |
(Loss) income before income taxes |  |  | (38,133 | ) |  |  | 4,372 |  |  |  | 2,208 |
Income tax (benefit) expense |  |  | (9,535 | ) |  |  | 1,114 |  |  |  | 565 |
Net (loss) income from discontinued operations, net of tax |  | $ | (28,598 | ) |  | $ | 3,258 |  |  | $ | 1,643 |

As of December 31, 2020, we had a contingent liability due to Triumph recorded in other long-term liabilities from discontinued operations on our consolidated balance sheet of $44.2 million. Based on the terms of the amended purchase agreement, as described in Note 1, we estimate our possible indemnification exposure to be from $44.2 million to $45.0 million.

Interest expense not directly attributable to or related to other operations has been allocated to discontinued operations in a manner consistent with debt needed to finance the net average funds employed by the Factoring reportable segment, multiplied by the company's weighted average interest rate.

The following table summarizes the major classes of assets and liabilities included as discontinued operations as of December 31, 2020 and 2019:

(in thousands) |  | December 31, 2020 |  |  | December 31, 2019 |
Current assets: |  |  |  |  |  |  |  |
Accounts receivable, net of allowance of $0 in 2020 and $408 in 2019 |  | $ | - |  |  | $ | 86,620 |
Current assets of discontinued operations |  |  | - |  |  |  | 86,620 |
Noncurrent deferred tax asset |  |  | 9,535 |  |  |  | - |
Noncurrent assets from discontinued operations |  |  | 9,535 |  |  |  | - |
Total assets from discontinued operations |  | $ | 9,535 |  |  | $ | 86,620 |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 816 |  |  | $ | 6,245 |
Current liabilities of discontinued operations |  |  | 816 |  |  |  | 6,245 |
Contingent liabilities |  |  | 44,151 |  |  |  | - |
Total liabilities |  | $ | 44,967 |  |  | $ | 6,245 |

The net cash flows for operating activities related to discontinued operations provided $11.7 million and used $28.1 million and $17.3 million for the years ended December 31, 2020, 2019, and 2018, respectively. There were $108.4 million investing and no financing cash flows related to discontinued operations for the year ended December 31, 2020 and no investing or financing cash flows related to discontinued operations for the same 2019 and 2018 periods.

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The following unaudited summary information is presented on a consolidated pro forma basis as if the Factoring assets were sold as of January 1, 2018:

(in thousands) |  | Twelve months ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Total revenue |  | $ | 838,561 |  |  | $ | 885,387 |  |  | $ | 880,417 |
(Loss) income from continuing operations |  |  | (14,120 | ) |  |  | 5,219 |  |  |  | 40,860 |
(Loss) income per basic share from continuing operations |  | $ | (0.81 | ) |  | $ | 0.28 |  |  | $ | 2.23 |
(Loss) income per diluted share from continuing operations |  | $ | (0.81 | ) |  | $ | 0.28 |  |  | $ | 2.21 |

Refer to Note 1, "Significant Accounting Policies" of the accompanying consolidated financial statements for further information about the amended TFS purchase agreement.

3. | RESTRUCTURING AND COST SAVINGS INITIATIVES

Since the first quarter of 2020, we made significant changes to our operational business units, overhead structure and branding strategy in an effort to streamline our business in a manner that we believe will allow us to significantly lower our fixed costs, pay down debt and produce consistent acceptable margins. These changes include (i) a reduction in our fleet of tractors and refrigerated trailers, which have historically produced unacceptable or unprofitable operating income, (ii) reallocation of our operating fleet toward our more profitable expedited, dedicated and irregular route operations, (iii) the sale of our Hutchins, Texas terminal and discontinued use of our Texarkana, Arkansas terminal, (iv) changes to key management and reductions to headcount, (v) the closure and early termination of our leased office space in Chattanooga, Tennessee that our brokerage group occupied, (vi) the installation of new operational processes allowing us to abandon or discontinue the use of a number of peripheral information technology infrastructure and applications and (vii) a change in our branding strategy to focus on one company name, phasing out the use of the Landair trade name.

Although the significant majority of restructuring and cost savings initiatives were completed in the second quarter of 2020, we incurred additional costs in the third and fourth quarters of 2020 as we continued to optimize our fleet profile and management team.

In the second quarter of 2020 we discontinued the use of a significant amount of property and equipment, including assets owned and held under operating leases. We adjusted the carrying value of the owned property and equipment down to fair market value less estimated costs of disposal and classified them as available held for sale as of June 30, 2020. We expect to sell all the assets within the next twelve months. We terminated the lease agreement on a leased office facility in Chattanooga, TN during the second quarter of 2020 and recognized the related loss on the termination of the right of use asset and the abandonment of leasehold improvements within the impairment of property and equipment line item of the consolidated statements of operations. The following table provides a summary of the asset groups impaired, amount of the impairment and a description of the valuation technique used to determine fair value. We believe that these impairment activities are substantially complete. Accordingly, we incurred no additional charges during the third and fourth quarters of 2020 and do not expect to incur additional charges in connection with this activity. There were no such charges in 2019 or 2018.

(in thousands) |  | Twelve months ended December 31, |  |  |
Description |  | 2020 |  | Segment(s) Impacted | Value Determination
Revenue equipment |  | $ | 16,779 |  | Expedited and Dedicated | Third Party Market Appraisal
Terminal facility, leasehold improvements, and equipment, Texarkana, AR |  |  | 7,319 |  | Expedited and Dedicated | Third Party Market Appraisal
Leased office facility, Chattanooga, TN |  |  | 2,236 |  | Managed Freight | Loss on ROU Asset and Leasehold Improvements
Training and orientation center, Chattanooga, TN |  |  | 235 |  | Expedited and Dedicated | Quoted Market Price
Impairment of right-of use asset, long lived properties, and equipment |  | $ | 26,569 |  |  |

Other restructuring related gains and charges incurred during the twelve months ended December 31, 2020 are summarized in the table below. Unless noted below, we believe that these other restructuring related gains and charges are substantially complete. Accordingly, we do not expect to incur additional charges in connection with this activity. There were no such activities in 2019 or 2018.

(in thousands) |  | Twelve months ended December 31, |  |
Description |  | 2020 |  | Segment(s) Impacted
Gain on disposal of terminals, net |  | $ | (4,740 | ) | Expedited and Dedicated
Restructuring related separation and other |  |  | 4,334 |  | Expedited, Dedicated, and Managed Freight
Abandonment of information technology infrastructure |  |  | 1,048 |  | Expedited and Dedicated
Change in useful life/abandonment of intangible assets |  |  | 1,331 |  | Dedicated, Managed Freight, and Warehousing
Abandonment of revenue equipment held under operating leases |  |  | 825 |  | Expedited and Dedicated
Contract exit costs and restructuring related costs and professional fees |  |  | 695 |  | Expedited and Dedicated
Total restructuring |  | $ | 3,493 |  |

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4. | STOCK-BASED COMPENSATION

Our Third Amended and Restated 2006 Omnibus Incentive Plan, as amended (the "Incentive Plan") governs the issuance of equity awards and other incentive compensation to management and members of the board of directors. On July 1, 2020, the stockholders, upon recommendation of the board of directors, approved the Second Amendment (the “Second Amendment”) to our Third Amended and Restated 2006 Omnibus Incentive Plan (the "Incentive Plan"). The Second Amendment (i) increased the number of shares of Class A common stock available for issuance under the Incentive Plan by an additional 1,900,000 shares, (ii) added a fungible share reserve feature, under which shares subject to stock options and stock appreciation rights will be counted as one share for every share granted and shares subject to all other awards will be counted as 1.80 shares for every share granted, (iii) added a double-trigger vesting requirement upon a change in control, (iv) eliminated the Compensation Committee’s discretion to accelerate vesting, except in cases involving death or disability, (v) increased the maximum award granted or payable to any one participant under the Incentive Plan for a calendar year from 200,000 shares of Class A common stock or $2,000,000, in the event the award is paid in cash, to 500,000 shares of Class A common stock or $4,000,000, in the event the award is paid cash, (vi) re-set the date through which awards may be made under the Incentive Plan to June 1, 2030, and (vii) made other miscellaneous, administrative and conforming changes.

The Incentive Plan permits annual awards of shares of our Class A common stock to executives, other key employees, non-employee directors, and eligible participants under various types of options, restricted share awards, or other equity instruments. At December 31, 2020, 1,785,014 of the 4,200,000 shares noted above were available for award under the amended Incentive Plan. No participant in the Incentive Plan may receive awards of any type of equity instruments in any calendar-year that relates to more than 500,000 shares of our Class A common stock or $4,000,000. No awards may be made under the Incentive Plan after March 31, 2023. To the extent available, we have issued treasury stock to satisfy all share-based incentive plans.

Included in salaries, wages, and related expenses within the consolidated statements of operations is stock-based compensation expense of $1.8 million, $0.4 million, and $4.8 million in 2020, 2019, and 2018, respectively. Included in general supplies and expenses within the consolidated statements of operations is stock-based compensation expenses for non-employee directors of $0.4 million in 2020, 2019, and 2018, respectively. All the stock compensation expense recorded in 2020, 2019, and 2018 relates to restricted shares granted, other than less than $0.1 million in 2020, as no options were granted during 2019 or 2018. Associated with stock compensation expense was $0.2 million, $0.1 million, and $0.3 million of income tax expense in 2020, 2019, and 2018, respectively, related to the exercise of restricted share vesting as no stock options were eligible to vest during those years.

The Incentive Plan allows participants to pay the federal and state minimum statutory tax withholding requirements related to awards that vest or allows the participant to deliver to us shares of Class A common stock having a fair market value equal to the minimum amount of such required withholding taxes. To satisfy withholding requirements for shares that vested, certain participants elected to deliver to us 20,570, 62,255, and 11,052 Class A common stock shares, which were withheld at weighted average per share prices of $14.65, $17.75, and $21.89, respectively, based on the closing prices of our Class A common stock on the dates the shares vested in 2020, 2019, and 2018, respectively, in lieu of the federal and state minimum statutory tax withholding requirements. We remitted $0.3 million, $1.1 million, and $0.8 million in 2020, 2019, and 2018, respectively, to the proper taxing authorities in satisfaction of the employees' minimum statutory withholding requirements. The payment of minimum tax withholdings on stock compensation are reflected within the issuances of restricted shares from treasury stock in the accompanying consolidated statement of stockholders' equity.

The following table summarizes our restricted share award activity for the fiscal years ended December 31, 2020, 2019, and 2018:

|  | Number of stock awards (in thousands) |  |  | Weighted average grant date fair value |
Unvested at December 31, 2017 |  |  | 587 |  |  | $ | 18.14 |
Granted |  |  | 153 |  |  | $ | 30.32 |
Vested |  |  | (35 | ) |  | $ | 25.97 |
Forfeited |  |  | (30 | ) |  | $ | 27.58 |
Unvested at December 31, 2018 |  |  | 675 |  |  | $ | 20.08 |
Granted |  |  | 351 |  |  | $ | 15.42 |
Vested |  |  | (191 | ) |  | $ | 19.22 |
Forfeited |  |  | (48 | ) |  | $ | 19.33 |
Unvested at December 31, 2019 |  |  | 787 |  |  | $ | 18.25 |
Granted |  |  | 119 |  |  | $ | 13.43 |
Vested |  |  | (65 | ) |  | $ | 23.82 |
Forfeited |  |  | (196 | ) |  | $ | 20.05 |
Unvested at December 31, 2020 |  |  | 645 |  |  | $ | 16.25 |

The unvested shares at December 31, 2020 will vest based on when and if the related vesting criteria are met for each award. All awards require continued service to vest, and 192,472 of these awards vest solely based on continued service, in varying increments between 2021 and 2026. Performance based awards account for 397,499 of the unvested shares at December 31, 2020, for which we have not recognized any compensation cost as vesting is not probable. Market based awards account for 55,000 of the unvested shares at December 31, 2020 and have no unrecognized compensation cost as the cost has been fully recognized based on the market targets having been achieved for the year ended December 31, 2020.

The fair value of restricted share awards that vested in 2020, 2019, and 2018 was approximately $0.9 million, $3.4 million, and $0.7 million, respectively. As of December 31, 2020, we had approximately $1.9 million of unrecognized compensation expense related to 192,472 service-based shares, which is probable to be recognized over a weighted average period of approximately 30 months. All restricted shares awarded to executives and other key employees pursuant to the Incentive Plan provide the holder with voting and other stockholder-type rights, but will not be issued until the relevant restrictions are satisfied. Forfeitures are recognized as they're incurred.

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There were no outstanding options at December 31, 2019 or 2018. The following table summarizes our stock option activity for the fiscal year ended December 31, 2020:

|  | Number of options (in thousands) |  |  | Weighted average exercise price |  |  | Weighted average remaining contractual term |  |  | Aggregate intrinsic value (in thousands) |
Outstanding at December 31, 2019 |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |
Options granted |  |  | 721 |  |  | $ | 15.77 |  |  |  |  |  |  |  |  |
Options exercised |  |  | - |  |  | $ | - |  |  |  |  |  |  |  |  |
Options forfeited |  |  | - |  |  | $ | - |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2020 |  |  | 721 |  |  | $ | 15.77 |  |  | 9.8 years |  |  | $ | (692 | )
Exercisable at December 31, 2020 |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |

5. | PROPERTY AND EQUIPMENT

A summary of property and equipment, at cost, as of December 31, 2020 and 2019 is as follows:

(in thousands) |  | Estimated Useful Lives (Years) |  |  | 2020 |  |  | 2019 |
Revenue equipment |  |  | 3 - 10 |  |  | $ | 435,865 |  |  | $ | 588,828 |
Communications equipment |  |  | 5 - 10 |  |  |  | 5,492 |  |  |  | 6,189 |
Land and improvements |  |  | 0 - 15 |  |  |  | 16,602 |  |  |  | 23,398 |
Buildings and leasehold improvements |  |  | 7 - 40 |  |  |  | 57,308 |  |  |  | 75,471 |
Construction in-progress |  |  | - |  |  |  | 695 |  |  |  | 400 |
Other |  |  | 2 - 10 |  |  |  | 25,314 |  |  |  | 31,097 |
|  |  |  |  |  | $ | 541,276 |  |  | $ | 725,383 |

Depreciation expense was $60.4 million, $77.6 million, and $74.4 million, in 2020, 2019, and 2018, respectively. This depreciation expense excludes net gains on the sale of property and equipment totaling $7.7 million and $1.7 million in 2020 and 2019, respectively, and net losses of $0.3 million in 2018.

We lease certain revenue equipment under finance and operating leases with terms of approximately 48 to 84 months. At December 31, 2020 and 2019, property and equipment included finance and operating leases. Our finance leases had capitalized costs of $50.2 million and $55.0 million and accumulated amortization of $20.8 million and $21.0 million at December 31, 2020 and 2019, respectively. Amortization of these leased assets is included in depreciation and amortization expense in the consolidated statement of operations and totaled $4.1 million, $5.5 million, and $5.4 million during 2020, 2019, and 2018, respectively. See Note 9. Leases for additional information about our finance and operating leases.

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6. | GOODWILL, OTHER INTANGIBLES, AND OTHER ASSETS

On July 3, 2018, we acquired 100% of the outstanding stock of Landair Holdings, Inc., a Tennessee corporation ("Landair"). Landair is a dedicated and for-hire truckload carrier, as well as a supplier of transportation management, warehousing, and inventory management services. Landair's results have been included in the consolidated financial statements since the date of acquisition. The Company's only goodwill and other intangible assets are a result of the Landair acquisition. Landair's trucking operations' results are reported within our Dedicated reportable segment, while Landair's logistics operations' results are reported within our Managed Freight and Warehousing reportable segments.

As a result of management compensation structure changes and a change in the branding strategy of the organization, the Company revised the estimated remaining useful life of the Landair trade name to 15 months as of June 30, 2020. At the end of its useful life, the Landair trade name will have a residual value of $0.5 million. The non-compete agreement with a former Landair executive was terminated during the second quarter of 2020. These changes resulted in additional amortization of $1.3 million during the year ended December 31, 2020, or a $1.0 million, or $0.06 per diluted share, decrease in net income. The remaining useful lives as adjusted are included in the summary of other intangible assets below.

A summary of indefinite-lived goodwill, by reportable operating segment as of December 31, 2020 and 2019 is as follows:

(in thousands) |  | December 31, 2020 |  |  | December 31, 2019 |
|  | Gross/net goodwill |  |  | Gross/net goodwill |
Dedicated |  | $ | 15,320 |  |  | $ | 15,320 |
Managed Freight |  |  | 5,448 |  |  |  | 5,448 |
Warehousing |  |  | 21,750 |  |  |  | 21,750 |
Total goodwill |  | $ | 42,518 |  |  | $ | 42,518 |

A summary of other intangible assets, by reportable operating segment as of December 31, 2020 and 2019 is as follows:

(in thousands) |  | December 31, 2020 |  |  |  |  |
|  | Gross intangible assets |  |  | Accumulated amortization |  |  | Net intangible assets |  |  | Remaining Life (months) |
Trade name: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dedicated |  | $ | 2,402 |  |  | $ | (1,204 | ) |  | $ | 1,198 |  |  |  |  |
Managed Freight |  |  | 999 |  |  |  | (501 | ) |  |  | 498 |  |  |  |  |
Warehousing |  |  | 999 |  |  |  | (501 | ) |  |  | 498 |  |  |  |  |
Total trade name |  |  | 4,400 |  |  |  | (2,206 | ) |  |  | 2,194 |  |  |  | 9 |
Non-Compete agreement: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dedicated |  |  | 914 |  |  |  | (914 | ) |  |  | - |  |  |  |  |
Managed Freight |  |  | 130 |  |  |  | (130 | ) |  |  | - |  |  |  |  |
Warehousing |  |  | 356 |  |  |  | (356 | ) |  |  | - |  |  |  |  |
Total non-compete agreement |  |  | 1,400 |  |  |  | (1,400 | ) |  |  | - |  |  |  | - |
Customer relationships: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dedicated |  |  | 14,072 |  |  |  | (2,931 | ) |  |  | 11,141 |  |  |  |  |
Managed Freight |  |  | 1,692 |  |  |  | (354 | ) |  |  | 1,338 |  |  |  |  |
Warehousing |  |  | 12,436 |  |  |  | (2,591 | ) |  |  | 9,845 |  |  |  |  |
Total customer relationships: |  |  | 28,200 |  |  |  | (5,876 | ) |  |  | 22,324 |  |  |  | 114 |
Total other intangible assets |  | $ | 34,000 |  |  | $ | (9,482 | ) |  | $ | 24,518 |  |  |  |  |

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(in thousands) |  | December 31, 2019 |  |  |  |  |
|  | Gross intangible assets |  |  | Accumulated amortization |  |  | Net intangible assets |  |  | Remaining Life (months) |
Trade name: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dedicated |  | $ | 2,402 |  |  | $ | (240 | ) |  | $ | 2,162 |  |  |  |  |
Managed Freight |  |  | 999 |  |  |  | (100 | ) |  |  | 899 |  |  |  |  |
Warehousing |  |  | 999 |  |  |  | (100 | ) |  |  | 899 |  |  |  |  |
Total trade name |  |  | 4,400 |  |  |  | (440 | ) |  |  | 3,960 |  |  |  | 162 |
Non-Compete agreement: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dedicated |  |  | 914 |  |  |  | (274 | ) |  |  | 640 |  |  |  |  |
Managed Freight |  |  | 130 |  |  |  | (39 | ) |  |  | 91 |  |  |  |  |
Warehousing |  |  | 356 |  |  |  | (107 | ) |  |  | 249 |  |  |  |  |
Total non-compete agreement |  |  | 1,400 |  |  |  | (420 | ) |  |  | 980 |  |  |  | 42 |
Customer relationships: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dedicated |  |  | 14,072 |  |  |  | (1,759 | ) |  |  | 12,313 |  |  |  |  |
Managed Freight |  |  | 1,692 |  |  |  | (213 | ) |  |  | 1,479 |  |  |  |  |
Warehousing |  |  | 12,436 |  |  |  | (1,554 | ) |  |  | 10,883 |  |  |  |  |
Total customer relationships |  |  | 28,200 |  |  |  | (3,525 | ) |  |  | 24,675 |  |  |  | 126 |
Total other intangible assets |  | $ | 34,000 |  |  | $ | (4,385 | ) |  | $ | 29,615 |  |  |  |  |

The above finite-lived intangible assets have a weighted average remaining life of 105 months and 128 months as of December 31, 2020 and 2019, respectively as a result of the change in estimated useful life as discussed above. Amortization expense was $5.1 million, $2.9 million, and $1.5 million for the years ended December 31, 2020, 2019, and 2018, respectively. The expected amortization expense of these assets for the next five years is as follows:

|  | (In thousands) |
2021 |  | $ | 4,044 |
2022 |  |  | 2,350 |
2023 |  |  | 2,350 |
2024 |  |  | 2,350 |
2025 |  |  | 2,350 |
Thereafter |  |  | 10,574 |

A summary of other assets as of December 31, 2020 and 2019 is as follows:

(in thousands) |  | 2020 |  |  | 2019 |
Investment in TEL |  | $ | 34,365 |  |  | $ | 31,906 |
Other long-term receivables |  |  | 24,378 |  |  |  | 2,140 |
Other assets, net |  |  | 2,154 |  |  |  | 3,873 |
Total other assets, net |  | $ | 60,897 |  |  | $ | 37,919 |

Other long-term receivables represents amounts recorded as a receivable in other assets and as a corresponding accrual in the long-term portion of insurance and claims accruals on our consolidated balance sheet for claims above our self-insured retention for which we believe it is reasonably assured that the insurers will provide their portion of such claims.

The Company conducted its annual impairment assessments and tests of goodwill for each reporting unit as of October 1, 2020. The first step of the goodwill impairment test is the Company's assessment of 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 the 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 estimated 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.

Additionally, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate 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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7. | LIQUIDITY

Our business requires significant capital investments over the short-term and the long-term. We generally finance our capital requirements with borrowings under our Credit Facility, cash flows from operations, long-term operating leases, finance leases, secured installment notes with finance companies, and proceeds from the sale of our used revenue equipment. We had working capital (total current assets less total current liabilities) of $14.4 million and $93.1 million at December 31, 2020 and 2019, respectively. Based on our expected financial condition, net capital expenditures, and results of operations and related net cash flows, we believe our working capital and sources of liquidity will be adequate to meet our current and projected needs for at least the next year.

As of December 31, 2020, we had $15.0 million of borrowings outstanding, undrawn letters of credit outstanding of approximately $29.7 million, and available borrowing capacity of $65.3 million under the Credit Facility. Additionally, we had availability of a $45.0 million line of credit from Triumph Bank which is available solely to fund any indemnification owed to Triumph in relation to the sale of TFS. Fluctuations in the outstanding balance and related availability under our Credit Facility are driven primarily by cash flows from operations and the timing and nature of property and equipment additions that are not funded through notes payable and leases, as well as the nature and timing of collection of accounts receivable, payments of accrued expenses, and receipt of proceeds from disposals of property and equipment.

During the first half of 2020, in response to the uncertainty of the upcoming economic environment as a result of COVID-19 and as part of our strategic focus to reduce overhead costs, we took measures to preserve our liquidity, including capital reductions, financing, cost reduction, and working capital actions. During 2020 we have paid down more than $200.0 million of debt and lease obligations. If needed, we have other potential flexible sources of liquidity that we can leverage such as unencumbered owned revenue equipment.

8. | DEBT

Current and long-term debt consisted of the following at December 31, 2020 and 2019:

(in thousands) |  | December 31, 2020 |  |  | December 31, 2019 |
|  | Current |  |  | Long-Term |  |  | Current |  |  | Long-Term |
Borrowings under Credit Facility |  | $ | - |  |  | $ | 15,000 |  |  | $ | - |  |  | $ | - |
Borrowings under the Draw Note |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Revenue equipment installment notes; weighted average interest rate of 2.0% at December 31, 2020, and 3.7% December 31, 2019, due in monthly installments with final maturities at various dates ranging from January 2021 to January 2024, secured by related revenue equipment |  |  | 6,437 |  |  |  | 11,358 |  |  |  | 53,431 |  |  |  | 177,514 |
Real estate notes; interest rate of 1.9% at December 31, 2020 and 3.3% at December 31, 2019 due in monthly installments with a fixed maturity at August 2035, secured by related real estate |  |  | 1,140 |  |  |  | 21,530 |  |  |  | 1,093 |  |  |  | 22,670 |
Deferred loan costs |  |  | - |  |  |  | - |  |  |  | (147 | ) |  |  | (7 | )
Total debt |  |  | 7,577 |  |  |  | 47,888 |  |  |  | 54,377 |  |  |  | 200,177 |
Principal portion of finance lease obligations, secured by related revenue equipment |  |  | 5,687 |  |  |  | 10,756 |  |  |  | 7,258 |  |  |  | 26,010 |
Principal portion of operating lease obligations, secured by related equipment |  |  | 16,989 |  |  |  | 21,474 |  |  |  | 19,460 |  |  |  | 40,882 |
Total debt and finance lease obligations |  | $ | 30,253 |  |  | $ | 80,118 |  |  | $ | 81,095 |  |  | $ | 267,069 |

We and substantially all of our subsidiaries are parties to the Credit Facility with Bank of America, N.A., as agent (the "Agent") and JPMorgan Chase Bank, N.A. (together with the Agent, the "Lenders"). On October 23, 2020, we amended and extended the Credit Facility (the “Eighteenth Amendment”). The Credit Facility is a $110.0 million revolving credit facility (increased from $95.0 million by the Eighteenth Amendment), with an uncommitted accordion feature that, so long as no event of default exists, allows us to request an increase in the revolving credit facility of up to $50.0 million subject to Lender acceptance of the additional funding commitment. The Credit Facility includes a letter of credit sub facility in an aggregate amount of $105.0 million (increased from $95.0 million by the Eighteenth Amendment) and a swing line sub facility in an aggregate amount equal to the greater of $10.0 million or 10% of the Lenders' aggregate commitments under the Credit Facility from time-to-time. The Credit Facility matures in October 2025 (extended from September 2021 by the Eighteenth Amendment).

Borrowings under the Credit Facility are classified as either "base rate loans" or "LIBOR loans." Base rate loans accrue interest at a base rate equal to the greater of the Agent’s prime rate, the federal funds rate plus 0.5%, or LIBOR plus 1.0%, plus an applicable margin ranging from 0.25% to 0.75% (decreased from a range of 0.5% to 1.0% by the Eighteenth Amendment); while LIBOR loans accrue interest at LIBOR, plus an applicable margin ranging from 1.25% to 1.75% (decreased from a range of 1.5% to 2.0% by the Eighteenth Amendment). The applicable rates are adjusted quarterly based on average pricing availability. The unused line fee is the product of 0.25% times the average daily amount by which the Lenders' aggregate revolving commitments under the Credit Facility exceed the outstanding principal amount of revolver loans and the aggregate undrawn amount of all outstanding letters of credit issued under the Credit Facility. The obligations under the Credit Facility are guaranteed by us and secured by a pledge of substantially all of our assets, with the notable exclusion of any real estate or revenue equipment pledged under other financing agreements, including revenue equipment installment notes and finance leases.

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Borrowings under the Credit Facility are subject to a borrowing base limited to the lesser of (A) $110.0 million (increased from $95.0 million by the Eighteenth Amendment), minus the sum of the stated amount of all outstanding letters of credit; or (B) the sum of (i) 87.5% (increased from 85% by the Eighteenth Amendment) of eligible accounts receivable, plus (ii) the least of (a) 85% of the appraised net orderly liquidation value of eligible revenue equipment, (b) 100% (increased from 95% by the Eighteenth Amendment) of the net book value of eligible revenue equipment, (c) 40.9% (increased from 35% by the Eighteenth Amendment) of the Lenders' aggregate revolving commitments under the Credit Facility, or (d) following the Eighteenth Amendment, $45.0 million, plus (iii) the lesser of (a) $10.4 million (as of the date of the Eighteenth Amendment) or (b) 80% (increased from 75% by the Eighteenth Amendment) of the appraised fair market value of eligible real estate, as reduced by a periodic amortization amount. We had $15.0 million borrowings outstanding under the Credit Facility as of December 31, 2020, undrawn letters of credit outstanding of approximately $29.7 million, and available borrowing capacity of $65.3 million. Based on availability as of December 31, 2020 and 2019, there was no fixed charge coverage requirement.

The Credit Facility includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the Credit Facility may be accelerated, and the Lenders' commitments may be terminated. If an event of default occurs under the Credit Facility and the Lenders cause, or have the ability to cause, all of the outstanding debt obligations under the Credit Facility to become due and payable, this could result in a default under other debt instruments that contain acceleration or cross-default provisions. The Credit Facility contains certain restrictions and covenants relating to, among other things, debt, dividends, liens, acquisitions and dispositions outside of the ordinary course of business, and affiliate transactions. Failure to comply with the covenants and restrictions set forth in the Credit Facility could result in an event of default.

In connection with the TFS Settlement, on September 23, 2020, TBK Bank, SSB, as lender and agent for Triumph (“TBK Bank”), provided the Company with a $45 million line of credit (the “Draw Note”), the proceeds of which are to be used solely to satisfy our indemnification obligations under the TFS Settlement. We may borrow pursuant to the Draw Note until September 23, 2025. Any amount outstanding under the Draw Note will accrue interest at a per annum rate equal to one and one-half (1.5) percentage points over LIBOR, provided, however, that LIBOR shall be deemed to be at least 0.25%. Accrued interest is due monthly and the outstanding principal balance is due on September 23, 2026. To secure our obligations under the TFS Settlement and the Draw Note, we pledged certain unencumbered revenue equipment with an estimated net orderly liquidation value of $60 million. The Draw Note includes usual and customary events of default for a facility of this nature and provides that, upon occurrence and continuation of an event of default, payment of all amounts payable under the Draw Note may be accelerated.

Pricing for the revenue equipment installment notes is quoted by the respective financial affiliates of our primary revenue equipment suppliers and other lenders at the funding of each group of equipment acquired and include fixed annual rates for new equipment under retail installment contracts. The notes included in the funding are due in monthly installments with final maturities at various dates ranging from January 2021 to January 2024. The notes contain certain requirements regarding payment, insuring of collateral, and other matters, but do not have any financial or other material covenants or events of default except certain notes totaling $14.7 million are cross-defaulted with the Credit Facility. Additional borrowings from the financial affiliates of our primary revenue equipment suppliers and other lenders are expected to be available to fund new tractors expected to be delivered in 2021, while any other property and equipment purchases, including trailers, are expected to be funded with a combination of available cash, notes, operating leases, finance leases, and/or from the Credit Facility.

In April 2020, in an effort to improve our liquidity during the COVID-19 pandemic, we executed a modification to certain of our revenue equipment installment notes, exercising an option to make interest only payments for a period of 90 days, extending the due date of $177.3 million of debt by three months. Subsequently, we paid down more than $200.0 million of debt and lease obligations, including the debt we had extended the due date on.

In August 2015, we financed a portion of the purchase of our corporate headquarters, a maintenance facility, and certain surrounding property in Chattanooga, Tennessee by entering into a $28.0 million variable rate note with a third party lender. Concurrently with entering into the note, we entered into an interest rate swap to effectively fix the related interest rate to 4.2%. The note contains certain restrictions and covenants that are usual and customary for a note of this nature. Failure to comply with the covenants and restrictions set forth in the note could result in an event of default. For the second quarter ended June 30, 2020, we obtained a waiver from the third-party lender for a financial covenant that we did not comply with. Absent the waiver we would have been in default under our covenants. During the third quarter ended September 30, 2020, there was an amendment to the calculation of the covenant and we were in compliance with the calculation as stated in the amendment. We expect to be in compliance with our debt covenants for the next 12 months.

As of December 31, 2020, the scheduled principal payments of debt, excluding finance leases for which future payments are discussed in Note 9 are as follows:

|  | (in thousands) |
2021 |  | $ | 7,577 |
2022 |  |  | 8,085 |
2023 |  |  | 5,703 |
2024 |  |  | 1,294 |
2025 |  |  | 16,350 |
Thereafter |  |  | 16,456 |

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9. | LEASES

Finance lease obligations are utilized to finance a portion of our revenue equipment and are entered into with certain finance companies who are not parties to our Credit Facility. The leases in effect at December 31, 2020 terminate in January 2021 through November 2024 and contain guarantees of the residual value of the related equipment by us. As such, the residual guarantees are included in the related debt balance as a balloon payment at the end of the related term as well as included in the future minimum finance lease payments. These lease agreements require us to pay personal property taxes, maintenance, and operating expenses. Our operating lease obligations do not typically include residual value guarantees or material restrictive covenants.

A summary of our lease obligations for the twelve months ended December 31, 2020 and 2019 are as follows:

(dollars in thousands) |  | Twelve Months Ended |  |  | Twelve Months Ended |
|  | December 31, 2020 |  |  | December 31, 2019 |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  | $ | 4,080 |  |  | $ | 5,469 |
Interest on lease liabilities |  |  | 1,003 |  |  |  | 1,107 |
Operating lease cost |  |  | 21,212 |  |  |  | 24,393 |
Variable lease cost |  |  | 414 |  |  |  | 326 |
Total lease cost |  | $ | 26,709 |  |  | $ | 31,295 |
Other information |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows from finance leases |  | $ | 1,003 |  |  | $ | 7,226 |
Operating cash flows from operating leases |  | $ | 24,325 |  |  | $ | 24,393 |
Financing cash flows from finance leases |  | $ | 20,083 |  |  | $ | 1,107 |
Right-of-use assets obtained in exchange for new finance lease liabilities |  | $ | 3,229 |  |  | $ | - |
Right-of-use assets obtained in exchange for new operating lease liabilities |  | $ | 1,730 |  |  | $ | 37,080 |
Weighted-average remaining lease term—finance leases |  | 1.8 years |  |  | 2.9 years |
Weighted-average remaining lease term—operating leases |  | 2.3 years |  |  | 3.4 years |
Weighted-average discount rate—finance leases |  |  | 2.3 | % |  |  | 3.0 | %
Weighted-average discount rate—operating leases |  |  | 5.3 | % |  |  | 5.2 | %

During the year ended December 31, 2020, we recognized $2.2 million of impairment expense related to a leased office facility in Chattanooga, TN held under an operating lease and approximately $0.8 million of additional revenue equipment and purchased transportation expense related to the abandonment of revenue equipment held under an operating lease. At December 31, 2020 and 2019, right-of-use assets of $37.4 million and $58.8 million for operating leases, respectively, and $29.4 million and $35.6 million (for finance leases are included in net property and equipment in our consolidated balance sheets. Operating lease right-of-use asset amortization is included in revenue equipment rentals and purchased transportation, communication and utilities, and general supplies and expenses, depending on the underlying asset, in the consolidated statement of operations. Amortization of finance leased assets is included in depreciation and amortization expense in the consolidated statement of operations.

Our future minimum lease payments as of December 31, 2020, summarized as follows by lease category:

(in thousands) |  | Operating |  |  | Finance |
2021 |  | $ | 18,543 |  |  | $ | 6,324 |
2022 |  |  | 15,523 |  |  |  | 6,884 |
2023 |  |  | 6,762 |  |  |  | 3,616 |
2024 |  |  | 28 |  |  |  | - |
2025 |  |  | 9 |  |  |  | - |
Thereafter |  |  | - |  |  |  | - |
Total minimum lease payments |  | $ | 40,865 |  |  | $ | 16,824 |
Less: amount representing interest |  |  | 2,402 |  |  |  | (381 | )
Present value of minimum lease payments |  |  | 38,463 |  |  |  | 16,443 |
Less: current portion |  |  | (16,989 | ) |  |  | (5,687 | )
Lease obligations, long-term |  | $ | 21,474 |  |  | $ | 10,756 |

Certain leases contain cross-default provisions with other financing agreements and additional charges if the unit's mileage exceeds certain thresholds defined in the lease agreement.

Rental expense is summarized as follows for each of the three years ended December 31:

(in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Revenue equipment rentals |  | $ | 22,505 |  |  | $ | 20,989 |  |  | $ | 14,682 |
Building and lot rentals |  |  | 2,982 |  |  |  | 2,898 |  |  |  | 1339 |
Other equipment rentals |  |  | 478 |  |  |  | 506 |  |  |  | 881 |
Total rental expense |  | $ | 25,965 |  |  | $ | 24,393 |  |  | $ | 16,902 |

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10. | INCOME TAXES

Income tax (benefit) expense for the years ended December 31, 2020, 2019, and 2018 is comprised of:

(in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Federal, current |  | $ | 63 |  |  | $ | (2,040 | ) |  | $ | (437 | )
Federal, deferred |  |  | (2,391 | ) |  |  | 3,976 |  |  |  | 14,117 |
State, current |  |  | 2,349 |  |  |  | 828 |  |  |  | 1,284 |
State, deferred |  |  | (2,825 | ) |  |  | (415 | ) |  |  | (20 | )
Income tax (benefit) expense |  | $ | (2,804 | ) |  | $ | 2,349 |  |  | $ | 14,944 |

Income tax (benefit) expense for the years ended December 31, 2020, 2019, and 2018 is summarized below:

(in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Computed "expected" income tax expense |  | $ | (3,554 | ) |  | $ | 1,642 |  |  | $ | 11,745 |
State income taxes, net of federal income tax effect |  |  | (227 | ) |  |  | (600 | ) |  |  | 2,484 |
831(b) election |  |  | (123 | ) |  |  | (393 | ) |  |  | (200 | )
Per diem allowances |  |  | 1,028 |  |  |  | 1,450 |  |  |  | 1,446 |
Tax contingency accruals |  |  | 65 |  |  |  | 601 |  |  |  | (57 | )
Valuation allowance, net |  |  | (139 | ) |  |  | 321 |  |  |  | 0 |
Tax credits |  |  | (403 | ) |  |  | (377 | ) |  |  | (968 | )
Excess tax benefits on share-based compensation |  |  | 129 |  |  |  | 105 |  |  |  | 50 |
Change in prior year estimates |  |  | 288 |  |  |  | (420 | ) |  |  | 0 |
Other, net |  |  | 132 |  |  |  | 20 |  |  |  | 444 |
Income tax (benefit) expense |  | $ | (2,804 | ) |  | $ | 2,349 |  |  | $ | 14,944 |

The amount of income tax (benefit) expense allocated to discontinued operations for TFS is $9.5 million, $1.1 million, and $0.6 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Income tax expense varies from the amount computed by applying the applicable federal corporate income tax rate of 21% for 2020, 2019, and 2018, to income before income taxes primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences, the most significant of which is the effect of the per diem pay structure for drivers. Drivers who meet the requirements to receive per diem receive non-taxable per diem pay in lieu of a portion of their taxable wages. This per diem program increases our drivers' net pay per mile, after taxes, while decreasing gross pay, before taxes. As a result, salaries, wages, and employee benefits are slightly lower and our effective income tax rate is higher than the statutory rate. Generally, as pre-tax income increases, the impact of the driver per diem program on our effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pre-tax income, while in periods where earnings are at or near breakeven, the impact of the per diem program on our effective tax rate is significant. Due to the partially nondeductible effect of per diem pay, our tax rate will fluctuate in future periods based on fluctuations in earnings.

The temporary differences and the approximate tax effects that give rise to our net deferred tax liability at December 31, 2020 and 2019 are as follows:

(in thousands) |  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Insurance and claims |  | $ | 10,970 |  |  | $ | 10,269 |
Net operating loss carryovers |  |  | 7,759 |  |  |  | 25,849 |
Tax credits |  |  | 11,395 |  |  |  | 10,942 |
Leased liability |  |  | 9,969 |  |  |  | 15,668 |
Finance lease obligation |  |  | 3,848 |  |  |  | 8,483 |
State bonus |  |  | 4,860 |  |  |  | 6,576 |
Other |  |  | 4,917 |  |  |  | 2,160 |
Valuation allowance |  |  | (242 | ) |  |  | (385 | )
Total deferred tax assets |  |  | 53,476 |  |  |  | 79,562 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  |  | (78,682 | ) |  |  | (97,066 | )
Investment in partnership |  |  | (31,585 | ) |  |  | (36,669 | )
ROU Asset- leases |  |  | (9,697 | ) |  |  | (15,280 | )
Other |  |  | (4,353 | ) |  |  | (7,462 | )
Sec. 481(a) - finance leases |  |  | (588 | ) |  |  | (449 | )
Prepaid expenses |  |  | (3,124 | ) |  |  | (2,966 | )
Total deferred tax liabilities |  |  | (128,029 | ) |  |  | (159,892 | )
Net deferred tax liability |  | $ | (74,553 | ) |  | $ | (80,330 | )

30

The net deferred tax liability of $65.0 million primarily relates to differences in cumulative book versus tax depreciation of property and equipment, partially off-set by tax credit carryovers and insurance claims that have been reserved but not paid. The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis, we assess the need for adjustment of the valuation allowance. Based on forecasted taxable income resulting from the reversal of deferred tax liabilities, primarily generated by accelerated depreciation for tax purposes in prior periods, and tax planning strategies available to us, a valuation allowance has been established at December 31, 2020 of approximately $0.3 million related to certain state net operating loss carry forwards. If these estimates and related assumptions change in the future, we may be required to modify our valuation allowance against the carrying value of the deferred tax assets.

As of December 31, 2020, we had a $1.0 million liability recorded for unrecognized tax benefits, which includes interest and penalties of $0.1 million. We recognize interest and penalties accrued related to unrecognized tax benefits in tax expense. As of December 31, 2019, we had a $0.9 million liability recorded for unrecognized tax benefits, which included interest and penalties of $0.1 million. Interest and penalties recognized for uncertain tax positions provided for no expense in 2020, a $0.8 million benefit in 2019, and a $0.1 million expense in 2018.

The following tables summarize the annual activity related to our gross unrecognized tax benefits (in thousands) for the years ended December 31, 2020, 2019, and 2018:

|  | 2020 |  |  | 2019 |  |  | 2018 |
Balance as of January 1, |  | $ | 823 |  |  | $ | 1,796 |  |  | $ | 1,924 |
Increases related to prior year tax positions |  |  | - |  |  |  | 2,969 |  |  |  | 4 |
Decreases related to prior year positions |  |  | - |  |  |  | - |  |  |  | (9 | )
Increases related to current year tax positions |  |  | 98 |  |  |  | 287 |  |  |  | - |
Decreases related to settlements with taxing authorities |  |  | - |  |  |  | (4,200 | ) |  |  | - |
Decreases related to lapsing of statute of limitations |  |  | (34 | ) |  |  | (29 | ) |  |  | (123 | )
Balance as of December 31, |  | $ | 887 |  |  | $ | 823 |  |  | $ | 1,796 |

If recognized, approximately $0.9 million of unrecognized tax benefits would impact our effective tax rate as of both December 31, 2020 and 2019. Any prospective adjustments to our reserves for income taxes will be recorded as an increase or decrease to our provision for income taxes and would impact our effective tax rate.

Our 2015 through 2019 tax years remain subject to examination by the IRS for U.S. federal tax purposes, our major taxing jurisdiction. In the normal course of business, we are also subject to audits by state and local tax authorities. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe that our reserves reflect the more likely than not outcome of known tax contingencies. We adjust these reserves, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular issue would usually require the use of cash. Favorable resolution would be recognized as a reduction to our annual tax rate in the year of resolution. We do not expect any significant increases or decreases for uncertain income tax positions during the next year.

Our federal net operating loss ("NOL") of $101.9 million is expected to be substantially consumed in the current year. The remaining $3.9 million will carryforward indefinitely. Our $3.1 million of charitable contributions are all expected to be converted to NOL carryover in the current year, thereby extending their benefit indefinitely and increasing the indefinite NOL carryforward to $7.0 million. In addition to our federal net operating losses and charitable contributions, we also have $10.9 million of federal tax credits available to offset future federal taxable income which will begin to expire in 2030.

Our state net operating loss carryforwards and state tax credits of $92.2 million and $0.5 million, respectively expire beginning in 2022 and 2028 based on jurisdiction.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. The CARES Act, among other things, includes provisions for refundable payroll tax credits, deferral for employer-side social-security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The Company considered the impacts of the legislation in the 2020 financial statements, noting that some items are continuing to be assessed through preparation of the 2020 income tax returns.

11. | EQUITY METHOD INVESTMENT

We own a 49.0% interest in TEL, a tractor and trailer equipment leasing company and used equipment reseller. There is no loss limitation on our 49.0% interest in TEL. We have not guaranteed any of TEL's debt and have no obligation to provide funding, services, or assets. In May 2016, the operating agreement with TEL was amended to, among other things, remove the previously agreed to fixed date purchase options. Our option to acquire up to the remaining 51% of TEL would have expired May 31, 2016, and TEL’s majority owners would have received the option to purchase our ownership in TEL. There are no current put rights to purchase or sell with any owners. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. There are no third party liquidity arrangements, guarantees, and/or other commitments that may affect the fair value or risk of our interest in TEL. For the years ended December 31, 2020, 2019, and 2018 we sold tractors and trailers to TEL for $2.1 million, none, and less than $0.1 million, respectively, and received $6.6 million, $9.4 million, and $8.2 million, respectively, for providing various maintenance services, certain back-office functions, and for miscellaneous equipment. Equipment purchased from TEL totaled $0.0 million, $10.5 million, and $1.8 million in 2020, 2019, and 2018, respectively. Additionally, we paid $0.6 million, $0.6 million, and $0.9 million to TEL for leases of revenue equipment in 2020, 2019, and 2018, respectively. We recorded net deferred gains of less than $0.1 million for the year ended December 31, 2020 and reversed previously deferred gains of less than $0.1 million for the same year ended and 2019, representing 49% of the gains on tractors and trailers sold to TEL less any gains previously deferred and recognized when the equipment was sold to a third party. Deferred gains totaling $0.2 million at December 31, 2020 and 2019, respectively, are being carried as a reduction in our investment in TEL.

We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income, which amounted to $3.9 million in 2020, $7.0 million in 2019, and $7.7 million in 2018. We received an equity distribution from TEL for $1.5 million, $1.3 million, and $2.0 million in 2020, 2019 and 2018, which was distributed to each member based on its respective ownership percentage.

Our accounts receivable from TEL and investment in TEL as of December 31, 2020 and 2019, are as follows:

|  |  | 2020 |  |  | 2019 |
Description: | Balance Sheet Line Item: |  |  |  |  |  |  |  |
Accounts receivable from TEL | Driver advances and other receivables |  | $ | 661 |  |  |  | 1,251 |
Investment in TEL | Other assets |  | $ | 34,365 |  |  | $ | 31,906 |

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Our accounts receivable from TEL related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL's behalf. Our investment in TEL is comprised of $4.9 million cash investment and our equity in TEL's earnings since our investment, partially offset by dividends received since our investment for minimum tax withholdings as noted above and the abovementioned deferred gains on sales of equipment to TEL.

See TEL's summarized financial information below.

(in thousands) |  | As of the years ended December 31, |
|  | 2020 |  |  | 2019 |
Current Assets |  | $ | 27,167 |  |  | $ | 28,577 |
Non-current Assets |  |  | 283,913 |  |  |  | 346,014 |
Current Liabilities |  |  | 66,495 |  |  |  | 85,751 |
Non-current Liabilities |  |  | 183,393 |  |  |  | 232,992 |
Total Equity |  | $ | 61,192 |  |  | $ | 55,848 |

(in thousands) |  | As of the years ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Revenue |  | $ | 95,016 |  |  | $ | 110,298 |  |  | $ | 108,801 |
Cost of Sales |  |  | 11,617 |  |  |  | 20,404 |  |  |  | 37,307 |
Operating Expenses |  |  | 64,581 |  |  |  | 65,058 |  |  |  | 47,281 |
Operating Income |  |  | 18,818 |  |  |  | 24,836 |  |  |  | 24,213 |
Net Income |  | $ | 8,344 |  |  | $ | 13,403 |  |  | $ | 16,496 |

12. | DEFERRED PROFIT SHARING EMPLOYEE BENEFIT PLAN

We have a deferred profit sharing and savings plan under which all of our employees with at least six months of service are eligible to participate. Employees may contribute a percentage of their annual compensation up to the maximum amount allowed by the Internal Revenue Code. We may make discretionary contributions as determined by a committee of our Board of Directors. We made contributions of $0.7 million in 2020, $1.9 million in 2019, and $1.7 million in 2018 to the profit sharing and savings plan. The discretionary employer contributions were temporarily suspended during the first half of 2020 in light of the uncertain impact of COVID-19 on the Company's operations.

13. | RELATED PARTY TRANSACTIONS

During the fourth quarter of 2020, we purchased a shop facility in Greeneville, TN, from WLC Properties which is owned, in part, by our Co-President and Chief Operating Officer. Other than the Greeneville, TN shop purchase and the transactions associated with TEL, there are no other material related party transactions. See Note 11 for discussions of the related party transactions associated with TEL.

14. | COMMITMENTS AND CONTINGENT LIABILITIES

From time-to-time, we are a party to ordinary, routine litigation arising in the ordinary course of business, most of which involves claims for personal injury and/or property damage incurred in connection with the transportation of freight.

Our subsidiary Covenant Transport, Inc. (“Covenant Transport”) is a defendant in a lawsuit filed on November 9, 2018, in the Superior Court of Los Angeles County, California. The lawsuit was filed on behalf of Richard Tabizon (a California resident and former driver) who is seeking to have the lawsuit certified as a class action. The complaint asserts that the time period covered by the lawsuit is from October 31, 2014 to the present and alleges claims for failure to properly pay drivers for rest breaks, failure to provide accurate itemized wage statements and/or reimbursement of business related expenses, unlawful deduction of wages, failure to pay proper minimum wage and overtime wages, failure to provide all wages due at termination, and other related wage and hour claims under the California Labor Code. Since the original filing date, the case has been removed from the Los Angeles Superior Court to the U.S. District Court in the Central District of California and subsequently the case was transferred to the U.S. District Court in the Eastern District of Tennessee where the case is now pending. Covenant Transport intends to vigorously defend itself in this matter. We do not currently have enough information to make a reasonable estimate as to the likelihood, or amount of a loss, or a range of reasonably possible losses as a result of this claim, as such there have been no related accruals recorded as of December 31, 2020.

On February, 28 2019, Covenant Transport was named in a separate (but related) lawsuit filed in the Superior Court of Los Angeles County, California requesting civil penalties under the California Private Attorneys’ General Act for the same underlying wage and hour claims at issue in the putative class action case noted above. On August 1, 2019, the Los Angeles Superior Court entered an order staying the action pending completion of the earlier-filed action that is pending in the United States District Court for the Eastern District of Tennessee. Covenant Transport intends to vigorously defend itself in this matter. We do not currently have enough information to make a reasonable estimate as to the likelihood, or amount of a loss, or a range of reasonably possible losses as a result of this claim, as such there have been no related accruals recorded as of December 31, 2020.

On August 2, 2018, Curtis Markson, et al. (collectively, “Markson”), filed a putative class action case in United States District Court, Central District of California generically claiming that five (5) specified trucking companies (including our subsidiary Southern Refrigerated Transport, Inc.) entered into a "no poaching conspiracy" in which they agreed not to solicit or hire employees in California who were "under contract" with a fellow defendant. The allegations center around new drivers in California who received their commercial driver's license through driving schools associated with, or paid for by, one of the named defendants, in exchange for agreeing to drive for that defendant carrier for a specified amount of time (typically 8-10 months). Over the ensuing 18 – 24 months, the Plaintiffs added more trucking companies as co-defendants in the lawsuit, including our subsidiary, Covenant Transport, Inc., on April 23, 2020. The lawsuit claims that the named co-defendants sent letters to one another, providing notice of "under contract" status, if these new California drivers were hired by another defendant carrier prior to the driver completing their contractual obligations. Plaintiffs contend that these notifications evidence a collusive agreement by the named defendants to restrain competition among trucking companies in California and suppress wages. Southern Refrigerated Transport, Inc. and Covenant Transport, Inc. are vigorously defending themselves against these claims. We do not currently have enough information to make a reasonable estimate as to the likelihood, or amount of a loss, or a range of reasonably possible losses as a result of this claim, as such there have been no related accruals recorded as of December 31, 2020.

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We maintain insurance to cover liabilities arising from the transportation of freight for amounts in excess of certain self-insured retentions. In management's opinion, our potential exposure under pending legal proceedings is adequately provided for in the accompanying consolidated financial statements. Refer to Note 1, "Significant Accounting Policies" of the accompanying consolidated financial statements for information about our insurance program.

Based on our present knowledge of the facts and, in certain cases, advice of outside counsel, management believes the resolution of open claims and pending litigation, discussed above, taking into account existing reserves, is not likely to have a materially adverse effect on our condensed consolidated financial statement.

We had $29.7 million and $35.2 million of outstanding and undrawn letters of credit as of December 31, 2020 and 2019, respectively. The letters of credit are maintained primarily to support our insurance programs. Additionally, we had $45.0 million of availability on a line of credit from Triumph solely to fund any indemnification owed to Triumph in relation to the sale of TFS.

We had commitments outstanding at December 31, 2020, to acquire revenue equipment totaling approximately $34.8 million in 2021 versus commitments at December 31, 2019 of approximately $68.4 million. These commitments are cancelable upon stated notice periods, subject to certain adjustments in the underlying obligations and benefits. These purchase commitments are expected to be financed by operating leases, finance leases, long-term debt, proceeds from sales of existing equipment, and/or cash flows from operations.

15. | SEGMENT INFORMATION

Until the second quarter of 2020, we had four reportable segments, Highway Services, Dedicated, Managed Freight, and Factoring. As discussed in Note 2, our Factoring reportable segment was classified as discontinued operations as of June 30, 2020. As of September 30, 2020, the segment formerly known as Highway Services is now reflected as Expedited, given the change in business mix surrounding the exit of the majority of the solo-refrigerated business in the second quarter of 2020. In addition, given management changes and growth, we have reported Warehousing as a separate reportable segment from Managed Freight. We believe the updated reportable segments reflect our service offerings, strategic directions, and how management, including our chief operating decision maker, monitors our performance.

Our four reportable segments are:

● | Expedited: The Expedited reportable operating segment primarily provides truckload services to customers with high service freight and delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows. Expedited services generally require two-person driver teams on equipment either owned or leased by the Company.

● | Dedicated: The Dedicated segment provides customers with committed truckload capacity over contracted periods with the goal of three to five years in length. Equipment is either owned or leased by the Company. Many of our Dedicated contract customers are automotive companies or shippers of produce, where the nature of the product we ship requires high service standards.

● | Managed Freight: The Managed Freight segment includes our brokerage and transport management services ("TMS"). Brokerage services provide logistics capacity by outsourcing the carriage of customers' freight to third parties. TMS provides comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.

● | Warehousing: The Warehousing segment provides day-to-day warehouse management services to customers who have chosen to outsource this function.

These changes impacted the Company’s reportable segments but did not impact the Company’s Consolidated Financial Statements. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Substantially all intersegment sales prices are market based. We evaluate performance based on operating income of the respective business units.

The following table summarizes our segment information for 2020, 2019, and 2018:

(in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Year Ended December 31, 2020 |  | Expedited |  |  | Dedicated |  |  | Managed Freight |  |  | Warehousing |  |  | Consolidated |
Total revenue from external customers |  | $ | 320,202 |  |  | $ | 288,652 |  |  | $ | 177,579 |  |  | $ | 52,128 |  |  | $ | 838,561 |
Intersegment revenue |  |  | 11,630 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 11,630 |
Operating (loss) income |  |  | (7,038 | ) |  |  | (15,534 | ) |  |  | 4,482 |  |  |  | 4,063 |  |  |  | (14,027 | )
Depreciation and amortization |  |  | 31,969 |  |  |  | 29,610 |  |  |  | 829 |  |  |  | 3,064 |  |  |  | 65,472 |
Year Ended December 31, 2019 |  | Expedited |  |  | Dedicated |  |  | Managed Freight |  |  | Warehousing |  |  | Consolidated |
Total revenue from external customers |  | $ | 356,521 |  |  | $ | 342,473 |  |  | $ | 138,616 |  |  | $ | 47,777 |  |  | $ | 885,387 |
Intersegment revenue |  |  | 10,302 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10,302 |
Operating income |  |  | (1,260 | ) |  |  | 1,188 |  |  |  | 3,323 |  |  |  | 5,518 |  |  |  | 8,769 |
Depreciation and amortization |  |  | 39,371 |  |  |  | 38,716 |  |  |  | 418 |  |  |  | 1,997 |  |  |  | 80,502 |
Year Ended December 31, 2018 |  | Expedited |  |  | Dedicated |  |  | Managed Freight |  |  | Warehousing |  |  | Consolidated |
Total revenue from external customers |  | $ | 469,308 |  |  | $ | 257,739 |  |  | $ | 129,790 |  |  | $ | 23,580 |  |  | $ | 880,417 |
Intersegment revenue |  |  | 7,298 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,298 |
Operating income |  |  | 32,693 |  |  |  | 12,699 |  |  |  | 7,150 |  |  |  | 2,874 |  |  |  | 55,416 |
Depreciation and amortization |  |  | 44,564 |  |  |  | 30,604 |  |  |  | 286 |  |  |  | 389 |  |  |  | 75,843 |

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(in thousands) |  | For the years ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Total external revenues for reportable segments |  | $ | 838,561 |  |  | $ | 885,387 |  |  | $ | 880,417 |
Intersegment revenues for reportable segments |  |  | 11,630 |  |  |  | 10,302 |  |  |  | 7,298 |
Elimination of intersegment revenues |  |  | (11,630 | ) |  |  | (10,302 | ) |  |  | (7,298 | )
Total consolidated revenues |  | $ | 838,561 |  |  | $ | 885,387 |  |  | $ | 880,417 |

Balance sheet data by reportable segment is not maintained by the Company.

16. | QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

(in thousands except per share amounts) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Mar. 31, |  |  | June 30, |  |  | Sep. 30, |  |  | Dec. 31, |
Quarters ended |  | 2020 |  |  | 2020 |  |  | 2020 |  |  | 2020 (1) |
Total revenue |  | $ | 210,813 |  |  | $ | 191,689 |  |  | $ | 210,830 |  |  | $ | 225,229 |
Operating (loss) income |  |  | (1,454 | ) |  |  | (28,950 | ) |  |  | 6,811 |  |  |  | 9,566 |
(Loss) income from continuing operations |  |  | (4,087 | ) |  |  | (30,504 | ) |  |  | 6,052 |  |  |  | 11,615 |
Income (loss) from discontinued operations, net of tax |  |  | 871 |  |  |  | 825 |  |  |  | 2,788 |  |  |  | (33,082 | )
Net (loss) income |  |  | (2,213 | ) |  |  | (22,343 | ) |  |  | 7,501 |  |  |  | (25,663 | )
Basic (loss) income per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Loss) income from continuing operations |  | $ | (0.17 | ) |  | $ | (1.36 | ) |  | $ | 0.28 |  |  | $ | 0.43 |
Income (loss) from discontinued operations |  | $ | 0.05 |  |  | $ | 0.05 |  |  | $ | 0.16 |  |  | $ | (1.93 | )
Net (loss) income |  | $ | (0.12 | ) |  | $ | (1.31 | ) |  | $ | 0.44 |  |  | $ | (1.50 | )
Diluted (loss) income per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Loss) income from continuing operations |  | $ | (0.17 | ) |  | $ | (1.36 | ) |  | $ | 0.27 |  |  | $ | 0.43 |
Income (loss) from discontinued operations |  | $ | 0.05 |  |  | $ | 0.05 |  |  | $ | 0.16 |  |  | $ | (1.93 | )
Net (loss) income |  | $ | (0.12 | ) |  | $ | (1.31 | ) |  | $ | 0.43 |  |  | $ | (1.50 | )

(in thousands except per share amounts) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Mar. 31, |  |  | June 30, |  |  | Sep. 30, |  |  | Dec. 31, |
Quarters ended |  | 2019 |  |  | 2019 |  |  | 2019 |  |  | 2019 (1) |
Total revenue |  | $ | 217,333 |  |  | $ | 217,040 |  |  | $ | 220,459 |  |  | $ | 230,555 |
Operating income (loss) |  |  | 3,946 |  |  |  | 7,030 |  |  |  | (3,870 | ) |  |  | 1,663 |
Income (loss) from continuing operations |  |  | 3,758 |  |  |  | 5,245 |  |  |  | (4,042 | ) |  |  | 258 |
Income from discontinued operations, net of tax |  |  | 675 |  |  |  | 826 |  |  |  | 853 |  |  |  | 904 |
Net income (loss) |  |  | 4,433 |  |  |  | 6,071 |  |  |  | (3,189 | ) |  |  | 1,162 |
Basic income (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | 0.20 |  |  | $ | 0.28 |  |  | $ | (0.22 | ) |  | $ | 0.01 |
Income from discontinued operations |  | $ | 0.04 |  |  | $ | 0.04 |  |  | $ | 0.05 |  |  | $ | 0.05 |
Net income (loss) |  | $ | 0.24 |  |  | $ | 0.33 |  |  | $ | (0.17 | ) |  | $ | 0.06 |
Diluted income (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | 0.20 |  |  | $ | 0.28 |  |  | $ | (0.22 | ) |  | $ | 0.01 |
Income from discontinued operations |  | $ | 0.04 |  |  | $ | 0.04 |  |  | $ | 0.05 |  |  | $ | 0.05 |
Net income (loss) |  | $ | 0.24 |  |  | $ | 0.33 |  |  | $ | (0.17 | ) |  | $ | 0.06 |

17. | SUBSEQUENT EVENTS

On January 6, 2021 the Company sold its terminal location in Allentown, PA, which resulted in an approximately $1.0 million gain on disposal.

On January 25, 2021, the Board of Directors of the Company approved a stock repurchase program authorizing the purchase of up to $40 million of the Company's Class A common stock from time-to-time based upon market conditions and other factors. The stock may be repurchased on the open market or in privately negotiated transactions. The repurchased shares will be held as treasury stock and may be used for general corporate purposes as the Board may determine. The Company did not place a limit on the duration of the repurchase program. The stock repurchase program does not obligate the Company to repurchase any specific number of shares and the Company may suspend or terminate the program at any time without prior notice. As of March 2, 2021, 362,988 shares had been repurchased.

Effective January 28, 2021, we have purchased an auto-liability insurance policy that covers the $7.0 million in excess of $3.0 million layer.

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