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Note 7 - Goodwill and Other Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Text Block]

7.	GOODWILL AND OTHER ASSETS

AAT's results have been included in the consolidated financial statements since the date of acquisition within our Expedited reportable segment.

The Landair trade name has a residual value of $0.5 million.

Amortization expense of $4.3 million and $4.0 million for the years ended December 31, 2022 and 2021, respectively, was included in depreciation and amortization in the consolidated statements of operations.

A summary of other intangible assets, by reportable segment as of December 31, 2022 and 2021 is as follows:

(in thousands)	December 31, 2022
	Gross intangible assets		Accumulated amortization			Net intangible assets		Remaining Life (months)
Trade name:
Dedicated	$	2,402	$	(2,130	)	$	272
Managed Freight		999		(885	)		114
Warehousing		999		(885	)		114
Total trade name		4,400		(3,900	)		500		-
Customer relationships:
Dedicated		14,072		(5,277	)		8,795
Managed Freight		1,692		(635	)		1,057
Warehousing		12,436		(4,663	)		7,773
Total customer relationships:		28,200		(10,575	)		17,625		90
Credentialing:
Expedited		32,000		(1,956	)		30,044		169
Total credentialing		32,000		(1,956	)		30,044
Total other intangible assets	$	64,600	$	(16,431	)	$	48,169		138

(in thousands)	December 31, 2021
	Gross intangible assets		Accumulated amortization			Net intangible assets		Remaining Life (months)
Trade name:
Dedicated	$	2,402	$	(2,130	)	$	272
Managed Freight		999		(885	)		114
Warehousing		999		(885	)		114
Total trade name		4,400		(3,900	)		500		-
Customer relationships:
Dedicated		14,072		(4,104	)		9,968
Managed Freight		1,692		(494	)		1,198
Warehousing		12,436		(3,627	)		8,809
Total customer relationships		28,200		(8,225	)		19,975		102
Total other intangible assets	$	32,600	$	(12,125	)	$	20,475

The above finite-lived intangible assets have a weighted average remaining life of 138 months and 102 months as of December 31, 2022 and 2021, respectively.

The expected amortization expense of these assets for the next five years is as follows:

	(In thousands)
2023	$	4,483
2024		4,483
2025		4,483
2026		4,483
2027		4,483
Thereafter		25,254

The assignment of goodwill and intangible assets to our reportable segments was not complete as of December 31, 2022. The carrying amount of goodwill was $58.2 million at December 31, 2022, compared to $42.5 million at December 31, 2021, as a result of the AAT acquisition. A summary of the changes in carrying amount of goodwill by reportable segment is as follows:

(in thousands)	December 31, 2021						December 31, 2022
	Gross/net goodwill		Acquired goodwill for AAT		Accumulated impairment loss		Gross/net goodwill
Expedited	$	-	$	15,699	$	-	$	15,699
Dedicated		15,320		-		-		15,320
Managed Freight		5,448		-		-		5,448
Warehousing		21,750		-		-		21,750
Total goodwill	$	42,518	$	15,699	$	-	$	58,217

A summary of other assets as of December 31, 2022 and 2021 is as follows:

(in thousands)	2022		2021
Investment in TEL	$	54,727	$	44,196
Other long-term receivables		1,260		7,329
Other assets, net		2,856		859
Total other assets, net	$	58,843	$	52,384

Other long-term receivables primarily represents amounts related to extended warranties on our revenue equipment on our consolidated balance sheet as of December 31, 2022, as well as 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 as of December 31, 2021, 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, 2022. 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. As a result of the most recent goodwill impairment analysis performed ( October 1, 2022), the Company determined that it was not more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount.

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. No such events were identified as of December 31, 2022.