SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~September 30, 2020~~March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 000-22490

FORWARD AIR CORPORATION

Registrant’s telephone number, including area code: (423) 636-7000

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

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.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and ~~"emerging~~“emerging growth ~~company"~~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 extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

The number of shares outstanding of the registrant’s common stock, $0.01 par value, as of ~~October 27, 2020~~April 30, 2021 was ~~27,507,750.~~27,317,840.


Part I.			Financial Information

Item 1.			Financial Statements (Unaudited).

Net income per share1

1Rounding may impact summation of amounts.

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

Forward Air Corporation
Consolidated Statements of Shareholders' Equity
(In thousands)
(Unaudited)
Common Stock Additional Paid-in
Capital Retained Earnings Total Shareholders' Equity
Shares Amount
Balance at December 31, 2019 27,850 $ 279 $ 226,869 $ 350,034 $ 577,182
Net income and comprehensive income — — — 8,375 8,375
Share-based compensation — — 3,266 — 3,266
Dividends ($0.18 per share) — — 2 (5,052) (5,050)
Cash settlement of share-based awards for tax withholdings (42) — — (2,672) (2,672)
Share repurchases (268) (3) — (15,256) (15,259)
Vesting of previously non-vested shares 139 1 (2) — (1)
Balance at March 31, 2020 27,679 $ 277 $ 230,135 $ 335,429 $ 565,841
Net income and comprehensive income — — — 3,155 3,155
Common stock issued under employee stock purchase plan 7 — 295 — 295
Share-based compensation — — 2,654 — 2,654
Dividends ($0.18 per share) — — 3 (5,042) (5,039)
Cash settlement of share-based awards for tax withholdings (13) — — (613) (613)
Vesting of previously non-vested shares 56 — (1) — (1)
Balance at June 30, 2020 27,729 $ 277 $ 233,086 $ 332,929 $ 566,292
Net income and comprehensive income — — — 16,647 16,647
Exercise of stock options 42 1 1,901 — 1,902
Share-based compensation — — 2,507 — 2,507
Dividends ($0.18 per share) — — 3 (5,008) (5,005)
Cash settlement of share-based awards for tax withholdings (3) — — (158) (158)
Share repurchases (519) (5) — (29,984) (29,989)
Vesting of previously non-vested shares 9 — — — —
Balance at September 30, 2020 27,258 273 237,497 314,426 552,196

~~Table of Contents~~


Forward Air Corporation
Condensed Consolidated Statements of Shareholders’ Equity
(In thousands)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount
Balance at December 31, 2020	27,316	$	273	$	242,916	$	304,140	$	547,329
Net income	—	—		—		11,181		11,181

Stock options exercised	40	—		2,147		—		2,147

Share-based compensation expense	—	—		2,613		—		2,613
Payment of dividends to shareholders	—	—		3		(5,800)		(5,797)
Payment of minimum tax withholdings on share-based awards	(35)	—		—		(2,744)		(2,744)
Repurchases and retirement of common stock	(114)	(1)		—		(9,997)		(9,998)
Issuance of share-based awards	111	1		(1)		—		0

Balance at March 31, 2021	27,318	$	273	$	247,678	$	296,780	$	544,731

Forward Air Corporation
Consolidated Statements of Shareholders' Equity, continued
(In thousands, except share data)
Common Stock Additional Paid-in
Capital Retained Earnings Total Shareholders' Equity
Shares Amount
Balance at December 31, 2018 28,535 $ 285 $ 210,296 $ 342,663 $ 553,244
Net income and comprehensive income — — — 18,407 18,407
Other — 2 — — 2
Exercise of stock options 18 — 830 — 830
Share-based compensation — — 3,047 — 3,047
Dividends ($0.18 per share) — — 1 (5,190) (5,189)
Cash settlement of share-based awards for tax withholdings (44) (1) — (2,720) (2,721)
Share repurchases (230) (2) — (14,179) (14,181)
Vesting of previously non-vested shares 136 — — — —
Balance at March 31, 2019 28,415 $ 284 $ 214,174 $ 338,981 $ 553,439
Net income and comprehensive income — — — 22,330 22,330
Other — — (2) (2) (4)
Exercise of stock options 10 — 448 — 448
Common stock issued under employee stock purchase plan 5 — 261 — 261
Share-based compensation — — 3,197 — 3,197
Dividends ($0.18 per share) — — 2 (5,146) (5,144)
Cash settlement of share-based awards for tax withholdings (1) — — (49) (49)
Share repurchases (407) (4) — (24,432) (24,436)
Vesting of previously non-vested shares 18 — — — —
Balance at June 30, 2019 28,040 $ 280 $ 218,080 $ 331,682 $ 550,042
Net income and comprehensive income — — — 22,195 22,195
Exercise of stock options 17 — 785 — 785
Share-based compensation — — 2,762 — 2,762
Dividends ($0.18 per share) — — 2 (5,090) (5,088)
Cash settlement of share-based awards for tax withholdings (4) — — (262) (262)
Share repurchases (152) (1) — (9,288) (9,289)
Vesting of previously non-vested shares 14 — — — —
Balance at September 30, 2019 27,915 279 221,629 339,237 561,145
The accompanying notes are an integral part of the financial statements.


	Common Stock			Additional Paid-in Capital		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount
Balance at December 31, 2019	27,850	$	279	$	226,869	$	350,034	$	577,182
Net income	—	—		—		8,375		8,375



Share-based compensation expense	—	—		3,266		—		3,266
Payment of dividends to shareholders	—	—		2		(5,052)		(5,050)
Payment of minimum tax withholdings on share-based awards	(42)	—		—		(2,672)		(2,672)
Repurchases and retirement of common stock	(268)	(3)		—		(15,256)		(15,259)
Issuance of share-based awards	139	1		(2)		—		(1)

Balance at March 31, 2020	27,679	$	277	$	230,135	$	335,429	$	565,841

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

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

1. Description of Business and Basis of Presentation

Basis of Presentation and Principles of Consolidation

Forward Air Corporation ("and its subsidiaries (“Forward Air” or the ~~Company", "We", "Our"~~“Company”) is a leading asset-light freight and logistics company. Prior to the Company’s Board of Directors’ (the "Board") approval of a strategy to divest the Company's Pool Distribution business (“Pool”), its services were classified into 3 principal reportable segments: Expedited Freight, Intermodal and Pool. As a result of the decision to divest Pool, whichThe Company has ~~been classified as a discontinued operation, the Company now has~~ 2 ~~principal~~ reportable segments: Expedited Freight and ~~Intermodal (see Note 14,~~ ~~Segment Reporting). See Note 4,~~ ~~Discontinued Operations~~Intermodal. The Company conducts business in the United States and ~~Held for Sale, for additional information regarding the decision to divest Pool.~~Canada.

~~Through the~~The Expedited Freight segment ~~the Company~~ operates a comprehensive national network to provide expedited regional, inter-regional and national less-than-truckload ~~("LTL"~~(“LTL”) services. Expedited Freight offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.

The ~~Company's~~ Intermodal segment provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads. Intermodal also offers dedicated contract and ~~container freight station ("CFS"~~Container Freight Station (“CFS”) warehouse and handling services. ~~Today, Intermodal operates primarily in the Midwest and Southeast, with a smaller operational presence in the Southwest United States.~~

The condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position, results of operations, and cash flows at the dates and for the periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Results for interim periods are not necessarily indicative of the results for the year.

The Board approved a strategy to divest the Pool ~~which has been classified as a discontinued operation, provides~~Distribution business (“Pool”) on April 23, 2020, and the sale of Pool was completed on February 12, 2021. Pool provided high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region. Pool ~~offers~~offered this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest United States.

The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by United States generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Company’s operating results are subject to seasonal trends (as described in the Company's 2019 Form 10-K) when measured on a quarterly basis; therefore operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. For further information, refer to the consolidated financial statements and notes thereto included in the Forward Air Corporation Annual Report on Form 10-K for the year ended December 31, 2019.

The accompanying unaudited consolidated financial statements of the Company include Forward Air Corporation and its subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to the prior period financial information to conform to the current year presentation.

~~Discontinued Operations~~

On April 23, 2020, the Board approved a strategy to divest Pool within the next year and accordingly, has been classified as assets held for sale as of September 30, 2020 and for all prior periods presented. Pool assets and liabilities are reflected as “Assets and liabilities held for sale” on the Consolidated Balance Sheets in this report. In addition, the results of operations for Pool have been presented as a discontinued operation in ~~this report as discontinued operations. Amounts~~our Consolidated Statements of Comprehensive Income for all period presented. In addition, the assets and liabilities were presented as held for sale in the Consolidated Balance Sheets for the prior period. Unless otherwise noted, amounts, percentages and discussion for all periods ~~discussed below~~ reflect the results of operations, financial condition and cash flows from ~~Forward Air’s~~our continuing ~~operations, unless otherwise noted. See Note 4,~~ operations.

~~Discontinued Operations~~

2. Revenue Recognition

Revenue is recognized when the Company satisfies the performance obligation by the delivery of a shipment in accordance with contractual agreements, bill of lading (“BOL”) and ~~Held~~general tariff provisions. The amount of revenue recognized is measured as the consideration the Company expects to receive in exchange for ~~Sale~~those services pursuant to a contract with a customer. A contract exists once the Company enters into a contractual agreement with a customer. The Company does not recognize revenue in cases where collectibility is not probable, and defers recognition until collection is probable or payment is received.

The Company generates revenue from the delivery of a shipment and the completion of related services. Revenue for the delivery of a shipment is recorded over time to coincide with when customers simultaneously receive and consume the benefits of the delivery services. Accordingly, revenue billed to a customer for the transportation of freight are recognized over the transit period as the performance obligation to the customer is satisfied. The Company determines the transit period for a shipment based on the pick-up date and the delivery date, which may be estimated if delivery has not occurred as of a reporting period. The determination of the transit period and how much of it has been completed as of a given reporting date may require the Company to make judgments that impact the timing of revenue recognized. For delivery of shipments with a pick-up date in one reporting period and a delivery date in another reporting period, the Company recognizes revenue based on relative transit time in each reporting period. A portion of the total revenue to be billed to the customer after completion of a delivery is

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

~~Use~~recognized in each reporting period based on the percentage of ~~Estimates~~

~~The preparation~~total transit time that has been completed at the end of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

~~In particular, management has made estimates and assumptions~~applicable reporting period. Upon delivery of a shipment or related service, customers are billed according to the impact of the novel coronavirus ("COVID-19") on its business. The current environment resulting from COVID-19 is unprecedented and comes with a great deal of uncertainty as discussed further throughout this document.

~~2. Recent Accounting Pronouncements~~

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which replaces the incurred loss methodology previously employed to measure credit losses for most financial assets and requires the use of a forward-looking expected loss model. Under current accounting guidance, credit losses are recognized when it is probable a loss has been incurred. The updated guidance will require financial assets to be measured at amortized costs less a reserve, equal to the net amount expected to be collected. This standard is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The Company adopted this standard as of January 1, 2020, which resulted in the Company revising its allowance for doubtful accounts policy on a prospective basis. The adoption of this standard did not have a material impact on the Company's financial statements.

The Company has a broad range of customers, including freight forwarders, third-party logistics (“3PL”) companies, passenger and cargo airlines, steamship lines, and retailers, located across a diverse geography. In addition, the Company does not have a significant concentration of credit risk; no single customer accounts for more than 10% of its consolidated revenue. In circumstances in which the Company is aware of a specific customer’s inability to meet its financial obligations to the Company (for example, bankruptcy filings, accounts turned over for collection, or litigation), the Company records a specific reserve for these bad debts against amounts due, in order to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company recognizes a general reserve based on a percentage of revenue to ensure accounts receivables are properly recorded at the net amount expected to be collected. Management evaluates the collectability of its accounts receivables at least quarterly and sets the reserve based on historical and current collection history and reasonable and supportable forecasts about any expected changes to our collection experience in the future due to changing economic conditions. If circumstances change (i.e., the Company experiences higher than expected defaults or an unexpected material adverse change in a customer’s ability to meet its financial obligations to the Company), the estimates of the recoverability of amounts due to the Company could be changed by a material amount. Accounts are written off after all means of collection, including legal action, have been exhausted.

~~3. Revenue~~

The Company's revenue is generated from providing transportation and related services to customers in accordance with contractual agreements, bill of lading ("BOL") contracts and general tariff provisions.applicable payment terms. Related services are a separate performance obligation and include accessorial charges such as terminal handling, storage, equipment rentals and customs brokerage. These services are distinct and are accounted for as separate performance obligations. Generally, the Company's performance obligations begin when a customer's BOL is received and are satisfied when the delivery of a shipment and related services are completed. The Company generally recognizes revenue for its services over time to coincide with when its customers simultaneously receive and consume the benefits of these services. Performance obligations are short-term with transit days typically less than a week. Upon delivery of a shipment or related service, customers are billed and remit payment according to payment terms.

~~Excluding Pool,~~Revenue is classified based on the ~~Company's~~line of business as the Company believes this best depicts the nature, timing and amount of revenue ~~from contracts with customers~~and cash flows. For all lines of business, the Company records revenue on a gross basis as it is ~~disclosed within 2 reportable segments: Expedited Freight~~the principal in the transaction as the Company has discretion to determine the amount of consideration. Additionally, the Company has the discretion to select drivers and ~~Intermodal. This is consistent with disclosures~~other vendors for the services provided to customers. These factors, discretion in ~~earnings releases~~the amount of consideration and ~~annual reports~~the selection of drivers and ~~with the information regularly reviewed by the Chief Operating Decision Maker ("CODM") for evaluating financial performance. See additional discussion in Note 14,~~ ~~Segment Reporting~~.other vendors, support revenue recognized on a gross basis.

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

4.3. Discontinued ~~Operations~~Operation and Held for Sale

OnAs previously disclosed, on April 23, 2020, the ~~Board approved~~Company made a ~~strategy~~decision to divest of Pool. The Pool ~~within~~business met the ~~next year. Accordingly,~~criteria for held for sale classification. As a result, the assets and liabilities of Pool ~~has been classified as~~were presented separately under the captions “Current assets held for ~~sale as of September 30, 2020 and~~sale”, “Noncurrent assets held for ~~all prior periods presented. Pool assets and liabilities are reflected as “Assets and~~sale”, “Current liabilities held for sale” onand “Noncurrent liabilities held for sale” in the Condensed Consolidated Balance Sheets ~~in this report. In addition, the results~~as of ~~operations for Pool have been presented in this report as discontinued operations.~~

Upon meeting the assets held for sale criteria and during its annual goodwill impairment analysis, the Company evaluated whether Pool's estimated fair value, less costs to sell, exceeded the carrying value of its assets and liabilities. As a result of that assessment, we determined that the fair value of Pool exceeded its carrying value by approximately 5%. In addition, during the three months ended September 30, 2020, no indicators of goodwill impairment were identified, and the Company believes the fair value of Pool exceeds its carrying value.

December 31, 2020. The results of Pool were ~~previously included~~reclassified to “Loss from discontinued operation, net of tax” in ~~its own segment. The Company will continue to have 2 reporting segments: Expedited Freight~~the Condensed Consolidated Statements of Comprehensive Income for three months ended March 31, 2021 and ~~Intermodal, which is consistent with the way the CODM reviews operating results and makes resource decisions (See Note 14,~~ ~~Segment Reporting~~).2020. Certain corporate overhead and other costs previously allocated to Pool for segment reporting purposes did not qualify for classification within discontinued ~~operations~~operation and have been reallocated to continuing operations. These costs ~~have been~~were reclassified to the eliminations and other column in the segment reconciliation ~~that appears~~ in Note ~~14,~~13, Segment Reporting.

Sale of Pool

On February 12, 2021, the Company completed the sale of the Pool business for $8,000 in cash and up to a $12,000 earn-out based on earnings before interest, taxes, depreciation and amortization. The sale agreement for Pool included an earn-out based on the achievement of certain earnings before interest, taxes, depreciation and amortization attainment over an eleven-month period, beginning February 1, 2021. The Company will receive payment for the amount earned in the first quarter of 2022, and if elected, the buyer may defer the payment of up to half of the amount earned to first quarter of 2023. The preliminary estimated fair value of the earn-out asset on the date of sale was $6,967. The fair value was based on the estimated eleven-month period of the earnings before interest, taxes, depreciation and amortization and was calculated using a Monte Carlo simulation model.

The weighted-average assumptions under the Monte Carlo simulation model were as follows:


			February 12, 2021
Counterparty credit spread			1.2%
Earnings before interest, taxes, depreciation and amortization discount rate			15.0%
Asset volatility			55.0%

Subsequent to the date of sale, the Company will recognize any increases in the carrying value of the earn-out asset when the change is realized and will evaluate the earn-out asset for impairment at each reporting period. As of March 31, 2021, the Company recorded $3,508 in “Other receivables” and $3,459 in “Other assets” in the Condensed Consolidated Balance Sheets.

Transition Services Agreement

On February 12, 2021, the Company entered into a Transition Services Agreement (“TSA”) with TOG FAS Holdings LLC, the buyer of the Pool business. Under the TSA, the Company performs certain services on an interim basis in order to facilitate the orderly transition of the Pool business. The effective date of the TSA was February 12, 2021 and will remain in effective until the date all services have been completed, but no more than six months following effective date. The TSA provides the right to extend the term of the TSA with no limit on the number of the mutually agreed upon extensions. In exchange for the services performed by the Company under the TSA, the Company receives a monthly service charge. For the

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

three months ended March 31, 2021, the Company recorded $171 of the fee received, in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income, for the services performed under the TSA.

Additionally, under the TSA, the Company remits payments to outside vendors on behalf of TOG FAS Holdings LLC for expenses incurred by the Pool business up to a limit of $18,000. The Company is reimbursed by TOG FAS Holdings LLC within 60 days from the end of the month in which the payment is remitted. As of March 31, 2021, the Company recorded a receivable in the amount of $13,339 in “Other receivables” in the Condensed Consolidated Balance Sheets for the reimbursement due to the Company.

Summarized ~~Held for Sale and~~ Discontinued ~~Operations~~Operation Financial Information

~~The following table provides a reconciliation~~A summary of the ~~carrying amounts~~results of ~~major classes~~operations classified as a discontinued operation, net of ~~assets and liabilities which are included in assets and liabilities held for sale~~tax, in the ~~accompanying~~Condensed Consolidated ~~Balance Sheets~~Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020 is as ~~of each of the periods presented below:~~follows:

September 30,
2020 December 31,
2019
Assets
Current assets:
Accounts receivable, less allowance of $108 in 2020 and $49 in 2019 $ 16,164 $ 13,983
Other current assets 761 969
Total current assets held for sale $ 16,925 $ 14,952
Property and equipment $ 51,199 $ 53,166
Less accumulated depreciation and amortization 31,480 32,891
Total property and equipment, net 19,719 20,275
Operating lease right-of-use assets 47,568 46,487
Goodwill and other acquired intangibles:
Goodwill 5,406 5,406
Other acquired intangibles, net of accumulated amortization of $12,679 in 2020 and $12,359 in 2019 2,621 2,941
Total goodwill and other acquired intangibles, net 8,027 8,347
Other assets 2,749 1,595
Total noncurrent assets held for sale $ 78,063 $ 76,704
Liabilities
Current liabilities:
Accounts payable $ 3,501 $ 4,575
Accrued expenses 5,720 5,668
Other current liabilities 0 2
Current portion of operating lease obligations 16,785 14,729
Total current liabilities held for sale $ 26,006 $ 24,974
  Operating lease obligations, less current portion $ 30,851 $ 31,847
  Other long-term liabilities 4,192 2,368
  Deferred income taxes 4,184 2,728
Total noncurrent liabilities held for sale $ 39,227 $ 36,943







	Three Months Ended
	March 31, 2021		March 31, 2020






Operating revenue	$	17,087	$	36,952

Operating expenses:
Purchased transportation	4,290		9,536
Salaries, wages and employee benefits	9,674		17,113
Operating leases	2,907		5,680
Depreciation and amortization	0		1,295
Insurance and claims	929		1,726
Fuel expense	644		1,327
Other operating expenses	2,087		4,345
Total operating expenses	20,531		41,022
Loss from discontinued operation	(3,444)		(4,070)
Loss on sale of business	(2,860)		0
Loss from discontinued operation before income taxes	(6,304)		(4,070)






Income tax benefit	(771)		(1,030)

Loss from discontinued operation, net of tax	$	(5,533)	$	(3,040)

119

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

The following table summarizes the results of operations classified as discontinued operations, net of tax, in the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019:

Three months ended Nine months ended
September 30,
2020 September 30,
2019 September 30,
2020 September 30,
2019
Operating revenue $ 37,521 $ 47,980 $ 88,447 $ 133,359
Operating expenses:
Purchased transportation 8,700 13,310 21,383 36,461
Salaries, wages and employee benefits 17,012 18,727 42,519 51,569
Operating leases 5,304 4,661 15,950 13,159
Depreciation and amortization 0 1,512 1,657 4,505
Insurance and claims 1,525 1,398 4,538 4,254
Fuel expense 1,045 1,468 2,785 4,423
Other operating expenses 4,467 5,401 12,309 14,975
Total operating expenses 38,053 46,477 101,141 129,346
(Loss) income from discontinued operations before income taxes (532) 1,503 (12,694) 4,013
Income tax (benefit) expense (187) 362 (3,236) 1,068
(Loss) income from discontinued operations, net of tax $ (345) $ 1,141 $ (9,458) $ 2,945

5.4. Acquisitions ~~and Long-Lived Assets~~

Expedited Freight ~~Acquisitions~~Acquisition

As part of the ~~Company's~~Company’s strategy to expand final mile pickup and delivery operations, in January 2020, the Company acquired certain assets and liabilities of Linn Star Holdings, Inc., Linn Star Transfer, Inc. and Linn Star Logistics, LLC (collectively, “Linn Star”) for $57,239. This acquisition increased the Company's Final Mile capabilities with an additional 20 locations. In addition, in April 2019, the Company acquired certain assets and liabilities of FSA Network, Inc., doing business as FSA Logistix (“FSA”), for $27,000 and a potential ~~earnout~~earn-out of up to $15,000. ~~Both transactions were funded using cash flows from operations.~~ The ~~assets, liabilities, and operating results of these acquisitions have been~~purchase agreement for FSA included ~~in the Company's consolidated financial statements from the date of acquisition and have been assigned to the Expedited Freight reportable segment.~~

~~The FSA acquisition agreement provides the sellers~~ an ~~earnout opportunity of~~earn-out up to $15,000 based on the achievement of certain revenue milestones over ~~two~~2 one-year periods, beginning May 1, 2019. ~~Upon~~The estimated fair value of the earn-out liability on the date of acquisition was $11,803. The fair value was based on the estimated two-year performance of the acquired customer revenue and was calculated using a Monte Carlo simulation model. The fair value of the earn-out liability was adjusted at each reporting period based on changes in the expected cash flows and related assumptions used in the Monte Carlo simulation model. During the three months ended March 31, 2021 and 2020, the fair value of the earn-out changed by ($48) and ($594), respectively, and the change in fair value was recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income. The first one-year period ended in the second quarter of 2020 and the Company paid $5,284 based on the terms of the purchase agreement. The second one-year period will end in the second quarter of 2021. As of March 31, 2021 and December 31, 2020, the fair value of the earn-out liability was ~~$11,803~~$6,817 and $6,865, respectively, which was reflected in “Other current liabilities” in the Condensed Consolidated Balance Sheets.

Intermodal Acquisition

In February 2021, the Company acquired certain assets and liabilities of Proficient Transport Incorporated and Proficient Trucking, Inc. (together “Proficient Transport”) for $15,000 and a potential earn-out up to $2,000. Proficient Transport is an intermodal drayage company headquartered in Chicago, Illinois. The acquisition of Proficient Transport supports the Company’s strategic growth plan by expanding the intermodal footprint in Georgia, Illinois, North Carolina, and Texas, and introduces a new location in Ohio. The acquisition was financed by cash flows from operations. The results of Proficient Transport have been included in ~~other current~~the Company’s Condensed Consolidated Financial Statements as of and ~~long-term liabilities~~from the date of acquisition. The associated goodwill has been included in the ~~opening consolidated balance sheet.~~ Company’s Intermodal reportable segment.

The purchase agreement for Proficient Transport included an earn-out up to $2,000 based on the achievement of certain revenue milestones over a one-year period, beginning March 1, 2021. The estimated fair value of the earn-out liability on the date of acquisition was classified as level 3 of the fair value hierarchy as defined in the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“the FASB Codification”) and the value was determined based on estimated revenues and the probability of achieving them.$815. The fair value was based on the ~~two-year~~estimated one-year performance of ~~FSA's~~the acquired customer revenue and was ~~estimated~~calculated using a Monte Carlo ~~simulation.~~simulation model. The weighted-average assumptions under the Monte Carlo simulation model were as follows:


			February 28, 2021
Risk-free rate			0.1%
Revenue discount rate			8.8%
Revenue volatility			27.3%

As of March 31, 2021, the fair value of the earn-out liability was $815, which was reflected in “Other current liabilities” in the Condensed Consolidated Balance Sheets.

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

March 31, 2021

Fair Value of Assets Acquired and Liabilities Assumed

Assets acquired and liabilities assumed as of the acquisition date are presented in the following table:


	Proficient Transport
	February 28, 2021
Tangible assets:

Accounts receivable, net	$	3,865


Property and equipment	140
Other assets	10


Total tangible assets	4,015
Intangible assets:
Customer relationships	6,060
Non-compete agreements	18

Goodwill	5,754
Total intangible assets	11,832
Total assets acquired	15,847

Liabilities assumed:
Current liabilities	32




Total liabilities assumed	32
Net assets acquired	$	15,815

The fair value of the assets acquired and liabilities assumed are preliminary based on the information available as of the acquisition date through the date of this filing.

The weighted-average useful life of acquired intangible assets as of the acquisition date are summarized in the following table:


			Weighted-Average Useful Lives
Customer relationships			8 years
Non-compete agreements			1 year

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

March 31, 2021

5. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill during the three months ended March 31, 2021 are summarized as follows (in thousands):


	Expedited Freight		Intermodal		Consolidated




Balance as of December 31, 2020	$	165,268	$	79,714	$	244,982
Acquisition	0		5,754		5,754
Balance as of March 31, 2021	$	165,268	$	85,468	$	250,736

Goodwill is tested for impairment on an annual basis and more often if indications of impairment exist. The Company conducts its annual impairment analyses as of June 30 each year. Based on the current macroeconomic conditions, the Company assessed its goodwill and other intangible assets for indications of impairment as of March 31, 2021 and concluded there were no indicators of impairment during the three months ended March 31, 2021.

Other Intangible Assets

Changes in the carrying amount of acquired intangible assets during the three months ended March 31, 2021 are summarized as follows (in thousands):


	Gross Carrying Amount
	Customer Relationships1		Non-Compete Agreements		Trade Names		Total
Balance as of December 31, 2020	$	228,416	$	8,125	$	1,500	$	238,041
Acquisition	6,060		18		0		6,078
Balance as of March 31, 2021	$	234,476	$	8,143	$	1,500	$	244,119


	Accumulated Amortization
	Customer Relationships1		Non-Compete Agreements		Trade Names		Total
Balance as of December 31, 2020	$	85,930	$	5,579	$	1,500	$	93,009
Amortization expense	3,104		338		0		3,442
Balance as of March 31, 2021	$	89,034	$	5,917	$	1,500	$	96,451

1Carrying value as of March 31, 2021 and December 31, 2020 is inclusive of $16,501 of accumulated impairment.

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

~~The initial weighted average assumptions used in the Monte Carlo simulation are summarized in the following table:~~

FSA Earn-out
April 21, 2019 December 31, 2019 September 30, 2020
Risk-free rate 2.9% 2.2% 2.0%
Revenue discount rate 4.4% 4.4% 3.2%
Revenue volatility 3.0% 5.0% 7.0%

~~In June 2020, the~~

6. Stock Incentive Plans

The Company ~~paid the first period earn-out payment of $5,284; the second and final payment is expected to be paid in the second quarter of 2021. During~~recorded shared-based compensation expense as follows for the three months ended ~~September 30,~~March 31, 2021 and 2020 ~~the earn-out fair valu~~e increased $493 to $4,277, which is classified as a current liability. The change in fair value is included in other operating expenses and is based on changes in expected cash flows and expected new business wins.(in thousands):


	Three Months Ended
	March 31, 2021		March 31, 2020
Salaries, wages and employee benefits - continuing operations	$	2,269	$	2,817
Salaries, wages and employee benefits - discontinued operation	16		188
Total share-based compensation expense	$	2,285	$	3,005

~~Intermodal Acquisitions~~Stock Incentive Plan

In May 2016, the Company adopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) for the issuance of up to 2,000 common shares. As of March 31, 2021, approximately 793 shares remain available for grant under the Omnibus Plan.

Stock Options

Share-based compensation expense associated with stock options is amortized ratably over the requisite service period. The Company estimates the fair value of the grants using the Black-Scholes option-pricing model. Stock option transactions during the three months ended March 31, 2021 on a continuing operations basis were as follows:


	Stock Options	Weighted-Average Exercise Price
Outstanding as of December 31, 2020	359	$	55.79
Granted	39	75.05
Exercised	(26)	54.26
Forfeited	0	0
Outstanding as of March 31, 2021	372	$	58.06

As ~~part~~ of March 31, 2021, the ~~Company's strategy~~total share-based compensation expense related to ~~expand its Intermodal operations, in July 2019,~~unvested stock options net yet recognized was approximately $1,250, and the ~~Company acquired certain assets and liabilities of O.S.T. Logistics, Inc. and O.S.T. Trucking Co., Inc. (together referred~~weighted average period over which it is expected to ~~as “OST”) for $12,000. OST~~be recognized is a drayage company and expanded the Company's intermodal footprint on the East Coast, primarily in Baltimore, Maryland, with additional locations in Pennsylvania, Virginia, South Carolina and Georgia. This transaction was funded using cash flows from operations. The assets, liabilities, and operating results of the acquisition have been included in the Company's consolidated financial statements from the date of acquisition and have been included in the Intermodal reportable segment.approximately two years.

Stock option transactions during the three months ended March 31, 2021 on a discontinued operation basis were as follows:


	Stock Options	Weighted-Average Exercise Price
Outstanding at December 31, 2020	14	$	52.15
Granted	0	0
Exercised	(14)	52.15
Forfeited	0	0
Outstanding at March 31, 2021	0	$	0

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

~~Allocations of Purchase Price~~

The following table presents the allocations of the previously discussed acquisition purchase prices to the assets acquired and liabilities assumed based on their estimated fair values and resulting residual goodwill (in thousands):

FSA OST Linn Star
April 21, 2019 July 14, 2019 January 12, 2020
Tangible assets:
Cash $ 202 $ — $ 1,308
Other receivables 1,491 — —
Prepaid expenses and other current assets — — 1,182
Property and equipment 40 10,371 605
Operating lease right-of-use assets 3,209 1,672 10,011
Total tangible assets 4,942 12,043 13,106
Intangible assets:
Non-compete agreements 900 850 450
Customer relationships 17,900 5,700 29,800
Goodwill 19,963 2,050 25,234
Total intangible assets 38,763 8,600 55,484
Total assets acquired 43,705 20,643 68,590
Liabilities assumed:
Current liabilities 8,466 — 1,340
Other liabilities 5,030 — —
Debt and finance lease obligations — 6,971 —
Operating lease obligations 3,209 1,672 10,011
Total liabilities assumed 16,705 8,643 11,351
Net assets acquired $ 27,000 $ 12,000 $ 57,239
Restricted Shares

~~The above purchase price allocation for Linn Star~~Restricted shares are restricted from sale or transfer until vesting, and restrictions lapse in three equal installments beginning one year after the date of grant. Share-based compensation expense associated with these awards is ~~preliminary~~amortized ratably over the requisite service period. Restricted share transactions during the three months ended March 31, 2021 on a continuing operations basis were as follows:


	Restricted Shares	Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2020	213	$	62.78
Granted	108	75.14
Vested	(96)	61.38
Forfeited	(11)	69.13
Outstanding as of March 31, 2021	214	$	69.31

As of March 31, 2021, the ~~Company~~total share-based compensation expense related to the restricted shares net yet recognized was approximately $13,179, and the weighted-average period over which it is ~~still in~~expected to be recognized is approximately two years.

Restricted share transactions during the ~~process of finalizing the valuation of the acquired assets and liabilities assumed. The above estimated fair values of assets acquired and liabilities assumed~~three months ended March 31, 2021 on a discontinued operation basis were as follows:


	Restricted Shares	Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2020	8	$	60.83
Granted	0	0
Vested	(4)	61.78
Forfeited	(4)	61.37
Outstanding as of March 31, 2021	0	$	0

Performance Awards

Performance awards are based on achieving certain financial targets, such as targets for earnings before interest, taxes, depreciation and amortization, and the ~~information that was available~~Company’s total shareholder return as compared to the total shareholder return of a selected peer group, as determined by the Company’s Board of Directors. Performance targets are set at the beginning of each three-year measurement period. Share-based compensation expense associated with these awards is amortized ratably over the vesting period. Depending on the financial target, the compensation expense is based on the projected assessment of the ~~acquisition date through the date~~level of ~~this filing. The acquired definite-lived intangible assets have the following useful lives:~~


	~~Useful Lives~~
	~~FSA~~	~~OST~~	~~Linn Star~~
~~Non-compete agreements~~	~~5 years~~	~~3 years~~	~~1 year~~
~~Customer relationships~~	~~15 years~~	~~10 years~~	~~15 years~~

performance that will be achieved.

~~The fair value~~Performance award transactions during the three months ended March 31, 2021 on a continuing operations basis were as follows assuming target levels of the non-compete agreements and customer relationships were estimated using an income approach (level 3). Under this method, an intangible asset's fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To estimate fair value, the Company used cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believed the level and timing of cash flows appropriately reflected market participant assumptions. Cash flows were assumed to extend through the remaining economic useful life of each class of intangible asset.

performance:

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

~~Goodwill~~


	Performance Awards	Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2020	65	$	67.62
Granted	36	87.33

Earned	(11)	92.89
Forfeited	(11)	70.22
Outstanding as of March 31, 2021	79	$	75.61

~~Goodwill~~As of March 31, 2021, the total share-based compensation expense related to unearned performance awards not yet recognized, assuming the Company's current projected assessment of the level of performance that will be achieved, was approximately $3,652, and the weighted-average period over which it is ~~allocated to reporting units that are~~ expected to ~~benefit from the business combinations generating the goodwill. Excluding Pool, the Company has 4 reporting units - Expedited LTL, Truckload, Final Mile and Intermodal. As discussed in Note 4,~~ ~~Discontinued Operations and Held for Sale~~, the carrying amounts of Pool's assets and liabilities, including goodwill, are classified as held for sale in the accompanying Consolidated Balance Sheets and its operating results are not part of the continuing operations of the Company.

~~In evaluating whether events or changes in circumstances indicate that an interim impairment assessment~~be recognized is ~~required, management considers if there were any indicators that exist that may impair the carrying value of the Company’s goodwill. During the~~approximately three months ended September 30, 2020, no indicators of goodwill impairment were identified and an interim impairment test was not required as the Company does not believe it is more likely than not that the carrying value of any of its reporting units exceeds its fair value.

~~The following is a summary of the Company's goodwill as of September 30, 2020. Approximately $161,789 of goodwill is deductible for tax purposes.~~

Beginning balance, December 31, 2019 Linn Star Acquisition Ending balance, September 30, 2020
Expedited LTL
Goodwill $ 97,593 $ — $ 97,593
Accumulated Impairment — — —
Truckload
Goodwill 45,164 — 45,164
Accumulated Impairment (25,686) — (25,686)
Final Mile
Goodwill 19,963 25,234 45,197
Accumulated Impairment — — —
Intermodal
Goodwill 78,665 — 78,665
Accumulated Impairment — — —
Total
Goodwill 241,385 25,234 266,619
Accumulated Impairment (25,686) — (25,686)
$ 215,699 $ 25,234 $ 240,933

~~Other Long-Lived Assets~~

The Company tests its long-lived assets (asset groups) for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Management evaluates long-lived assets for impairment at the lowest level for which cashflows are identifiable. In general, these assets are reviewed at the reporting unit level, discussed above, by significant asset category. Examples of significant asset categories include land, buildings, tractors, trailers, other equipment, leasehold improvements, right-of-use lease assets, customer relationships, non-compete agreements, software and inventory.

During the three months ended September 30, 2020, the Company determined no indicators of an impairment existed and all of its assets were recoverable. As such, no impairments to the Company's long-lived assets were identified.years.

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~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

~~6. Share-Based Payments~~

The Company’s general practice has been to make a single annual grant of share-based compensation in the first quarter to key employees and to make other employee grants only in connection with new employment or promotions. Forms of share-based compensation granted to employees by the Company include stock options, non-vested shares of common stock (“non-vested shares”), and performance shares. The Company also typically makes a single annual grant of non-vested shares to non-employee directors in conjunction with the annual election of non-employee directors to the Board of Directors. Share-based compensation is based on the grant date fair value of the instrument and is recognized ratably over the requisite service period or vesting period. All share-based compensation expense is recognized in salaries, wages and employee benefits. Share-based compensation amounts below are disclosed on both a continuing and discontinuing basis.

~~Employee Activity - Stock Options~~

Stock option grants to employees generally expire seven years from the grant date and typically vest ratably over a three-year period. All forfeitures were recognized as they occurred. The Company used the Black-Scholes option-pricing model to estimate the grant-date fair value of options granted. On a continuing basis, there were no options granted during the nine months ended September 30, 2019. Further, there were no options granted to employees of the Company's discontinued operations during the nine months ended September 30, 2020 or 2019. The weighted-average fair value of options granted and assumptions used to estimate their fair value during the nine months ended September 30, 2020 were as follows (on a continuing basis):


	~~Nine months ended~~
	~~September 30, 2020~~
~~Expected dividend yield~~	~~1.1~~		%
~~Expected stock price volatility~~	~~24.1~~		%
~~Weighted average risk-free interest rate~~	~~1.5~~		%
~~Expected life of options (years)~~	~~5.9~~
~~Weighted average grant date fair value~~	$	15

~~The following tables summarize the Company’s employee stock option activity and related information on a continuing basis:~~

Nine months ended September 30, 2020
Weighted-
Weighted- Average
Average Aggregate Remaining
Exercise Intrinsic Contractual
Options Price Value Term
Outstanding at December 31, 2019 417 $ 53
Granted 36 66
Exercised (42) 46
Forfeited (4) 60
Outstanding at September 30, 2020 407 $ 55 $ (133) 3.8
Exercisable at September 30, 2020 311 $ 53 $ 682 3.4

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~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

Nine months ended
September 30,
2020 September 30,
2019
Share-based compensation for options $ 869 $ 1,178
Tax benefit for option compensation $ 225 $ 304
Unrecognized compensation cost for options $ 1,065 $ 1,846
Weighted average period over which unrecognized compensation will be recognized (years) 1.4

~~The following tables summarize the Company’s employee stock option activity and related information on a discontinued basis:~~

Nine months ended September 30, 2020
Weighted-
Weighted- Average
Average Aggregate Remaining
Exercise Intrinsic Contractual
Options Price Value Term
Outstanding at December 31, 2019 14 $ 52
Granted — —
Exercised — —
Forfeited — —
Outstanding at September 30, 2020 14 $ 52 $ 37 3.0
Exercisable at September 30, 2020 12 $ 52 $ 41 2.9

Nine months ended
September 30,
2020 September 30,
2019
Share-based compensation for options $ 16 $ 31
Tax benefit for option compensation $ 4 $ 8
Unrecognized compensation cost for options $ 6 $ 32
Weighted average period over which unrecognized compensation will be recognized (years) 0.4

~~Employee Activity - Non-vested Shares~~

The fair value of non-vested shares issued was estimated using the closing market prices for the business day of the grant. The share-based compensation for the non-vested shares is recognized ratably over the requisite service period or vesting period, which is a three-year period. All forfeitures were recognized as they occurred.

~~The following tables summarize the Company’s employee non-vested share activity and related information on a continuing basis:~~

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

Nine months ended September 30, 2020
Weighted-
Average Aggregate
Non-vested Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 264 $ 58
Granted 114 66
Vested (149) 57
Forfeited (16) 62
Outstanding and non-vested at September 30, 2020 213 $ 63 $ 13,409

Nine months ended
September 30,
2020 September 30,
2019
Share-based compensation for non-vested shares $ 5,416 $ 5,934
Tax benefit for non-vested share compensation $ 1,399 $ 1,510
Unrecognized compensation cost for non-vested shares $ 9,397 $ 10,243
Weighted average period over which unrecognized compensation will be recognized (years) 1.9

~~The following tables summarize the Company’s employee non-vested share activity and related information on a discontinued basis:~~

Nine months ended September 30, 2020
Weighted-
Average Aggregate
Non-vested Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 13 $ 58
Granted 6 63
Vested (8) 58
Forfeited — —
Outstanding and non-vested at September 30, 2020 11 $ 61 $ 678

Nine months ended
September 30,
2020 September 30,
2019
Share-based compensation for non-vested shares $ 282 $ 276
Tax benefit for non-vested share compensation $ 73 $ 71
Unrecognized compensation cost for non-vested shares $ 471 $ 462
Weighted average period over which unrecognized compensation will be recognized (years) 1.9

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~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

~~Employee Activity - Performance Shares~~

The Company annually grants performance shares to key employees. Under the terms of the performance share agreements, following the end of a three-year performance period, the Company may issue to these employees a calculated number of common stock shares if certain performance targets are met. For shares granted during the three and nine months ended September 30, 2020 and 2019, 50% of the performance share issuances will be based on meeting three-year earnings before interest, taxes, depreciation and amortization ("EBITDA") per share targets and the remaining 50% of the performance share issuances will be based on the three-year performance of the Company’s total shareholder return ("TSR") as compared to the TSR of a selected peer group. All forfeitures were recognized as they occurred.

Depending upon the EBITDA per share targets met, 0% to 200% of the granted shares may ultimately be issued. For shares granted based on total shareholder return, 0% of the shares will be issued if the Company's total shareholder return outperforms 25% or less of the peer group, but 200% of the shares will be issued if the Company's total shareholder return performs better than 90% of the peer group.

The fair value of the performance shares granted based on meeting EBITDA per share targets were estimated using the closing market prices on the day of grant and the probability of meeting these targets as of the measurement date. The fair value of the performance shares granted based on the three-year performance of the Company’s total shareholder return was estimated using a Monte Carlo simulation. The following table contains the weighted-average assumptions, on both a continuing and discontinued basis, used to estimate the fair value of performance shares granted using the Monte Carlo simulation. These assumptions are subjective and changes in these assumptions can materially affect the fair value estimate.

Nine months ended
September 30,
2020 September 30,
2019
Expected stock price volatility 23.5 % 23.4 %
Weighted average risk-free interest rate 1.4 % 2.5 %

~~The following tables summarize the Company’s employee performance share activity, assuming median share awards, and related information on a continuing basis:~~

Nine months ended September 30, 2020
Weighted-
Average Aggregate
Performance Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 58 $ 62
Granted 38 69
Additional shares awarded based on performance 13 51
Vested (33) 51
Forfeited (11) 66
Outstanding and non-vested at September 30, 2020 65 $ 68 $ 4,425

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~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

Nine months ended
September 30,
2020 September 30,
2019
Share-based compensation for performance shares $ 1,007 $ 767
Tax benefit for performance share compensation $ 260 $ 198
Unrecognized compensation cost for performance shares $ 2,466 $ 1,766
Weighted average period over which unrecognized compensation will be recognized (years) 2.1

~~The following tables summarize the Company’s employee performance share activity, assuming median share awards, and related information on a discontinued basis:~~

Nine months ended September 30, 2020
Weighted-
Average Aggregate
Performance Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 4 $ 62
Granted 2 69
Additional shares awarded based on performance 1 51
Vested (2) 51
Forfeited — —
Outstanding and non-vested at September 30, 2020 5 $ 66 $ 275

Nine months ended
September 30,
2020 September 30,
2019
Share-based compensation for performance shares $ 62 $ 54
Tax benefit for performance share compensation $ 16 $ 14
Unrecognized compensation cost for performance shares $ 142 $ 118
Weighted average period over which unrecognized compensation will be recognized (years) 1.9

~~Employee Activity –~~ Employee Stock Purchase Plan

Under the 2005 Employee Stock Purchase Plan (the “ESPP”), ~~which has been approved by shareholders,~~ the Company is authorized to issue up to a remaining ~~344~~335 shares of common stock to ~~employees of the Company.~~employees. These shares may be issued at a price equal to 90% of the lesser of the market value on the first day or the last day of each six-month purchase period. Common stock purchases are paid for through periodic payroll deductions and/or up to 2 large lump sum contributions. NaN shares were issued during the three months ended March 31, 2021.

Director Restricted Shares

~~The following table summarizes~~Under the ~~Company's employee stock purchase activity~~Amended and Restated Non-Employee Director Stock Plan (the “Amended Plan”), approved in May 2007 and further amended in February 2013 and January 2016, up to 360 common shares may be issued. As of March 31, 2021, approximately 90 shares remain available for grant under the Amended Plan.

Director restricted share transactions during the three months ended March 31, 2021 were as follows:


	Director Restricted Shares	Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2020	24	$	43
Granted	2	93
Vested	0	0
Forfeited	0	0
Outstanding as of March 31, 2021	26	$	47

For the three-months ended March 31, 2021 and 2020, the Company recorded $328 and $261, respectively, of share-based compensation expense associated with these grants. As of March 31, 2021, the total share-based compensation expense related ~~information on a continuing basis:~~to the restricted shares net yet recognized was approximately $256.

2015

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Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

Nine months ended
September 30,
2020 September 30,
2019
Shares purchased by participants under plan 6 4
Average purchase price $ 45 $ 49
Weighted-average fair value of each purchase right under the ESPP granted ¹ $ 5 $ 10
Share-based compensation for ESPP shares $ 30 $ 46
¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period

~~The following table summarizes the Company's employee stock purchase activity and related information on a discontinued basis:~~

Nine months ended
September 30,
2020 September 30,
2019
Shares purchased by participants under plan 1 1
Average purchase price $ 45 $ 49
Weighted-average fair value of each purchase right under the ESPP granted ¹ $ 5 $ 10
Share-based compensation for ESPP shares $ 3 $ 6
¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period

~~Non-employee Director Activity - Non-vested Shares~~

In May 2006, the Company’s shareholders approved the Company’s 2006 Non-Employee Director Stock Plan (the “2006 Plan”). The Company’s shareholders then approved the Company’s Amended and Restated Non-Employee Director Stock Plan (the “Amended Plan”) on May 22, 2007. The Amended Plan was then further amended and restated on December 17, 2008. Under the Amended Plan, on the first business day after each Annual Meeting of Shareholders, each non-employee director will automatically be granted an award (the “Annual Grant”), in such form and size as the Board determines from year to year. Unless otherwise determined by the Board, Annual Grants will become vested and nonforfeitable on the earlier of (a) the day immediately prior to the first Annual Meeting that occurs after the Grant Date or (b) the first anniversary of the Grant Date so long as the non-employee director’s service with the Company does not earlier terminate. Each director may elect to defer receipt of the shares under a non-vested share award until the director terminates service on the Board of Directors. If a director elects to defer receipt, the Company will issue deferred stock units to the director, which do not represent actual ownership in shares and the director will not have voting rights or other incidents of ownership until the shares are issued. However, the Company will credit the director with dividend equivalent payments in the form of additional deferred stock units for each cash dividend payment made by the Company. All forfeitures were recognized as they occurred.

In May 2016, with the approval of shareholders, the Company further amended the Amended Plan to reserve for issuance an additional 160 common shares, increasing the total number of reserved common shares under the Amended Plan to 360. As of September 30, 2020, there were approximately 92 shares remaining available for grant. There were no shares granted to non-employee directors classified as discontinued operations in any period.

~~The following tables summarize the Company’s non-employee non-vested share activity and related information on a continuing basis:~~

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

Nine months ended September 30, 2020
Weighted-
Average Aggregate
Non-vested Grant Date Grant Date
Shares Fair Value Fair Value
Outstanding and non-vested at December 31, 2019 16 $ 62
Granted 24 43
Vested (16) 62
Forfeited — —
Outstanding and non-vested at September 30, 2020 24 $ 43 $ 1,035

Nine months ended
September 30,
2020 September 30,
2019
Share-based compensation for non-vested shares $ 766 $ 714
Tax benefit for non-vested share compensation $ 198 $ 184
Unrecognized compensation cost for non-vested shares $ 636 $ 554
Weighted average period over which unrecognized compensation will be recognized (years) 0.6

7. ~~Senior Credit Facility~~Indebtedness

As of both March 31, 2021 and December 31, 2020, the Company had $112,500 in borrowings outstanding under the revolving credit facility, $18,326 utilized for outstanding letters of credit and $94,174 of available borrowing capacity under the revolving credit facility. The interest rate on the outstanding borrowings under the revolving credit facility was 3.25% and 2.30% as of March 31, 2021 and March 31, 2020, respectively.

In September 2017, the Company ~~has~~entered into a ~~5-year~~five-year senior unsecured revolving credit facility (the “Facility”) ~~that was entered into on September 29, 2017 and amended on April 16, 2020. The Facility has~~with a maximum aggregate principal amount of ~~$225,000,~~$150,000, with a sublimit of $30,000 for letters of credit and a sublimit of $30,000 for swing line loans. The maturity date of the Facility is September 29, 2022. In April 2020, the Company entered into an amendment to the Facility, which increased the maximum aggregate principal amount to $225,000. The Facility may be increased by up to $25,000 to a maximum aggregate principal amount of $250,000 pursuant to the terms of the amended credit agreement, subject to the lenders’ agreement to increase their commitments or the addition of new lenders extending such commitments. Such increases to the Facility may be in the form of additional revolving credit loans, term loans or a combination thereof, and are contingent upon there being no events of default under the ~~Facility and satisfaction of other conditions precedent and are subject to the other limitations set forth in the credit agreement.~~

The Facility is scheduled to mature in September 2022 and may be used to refinance existing indebtedness of the Company and for working capital, capital expenditures and other general corporate purposes. The Facility refinanced the Company’s obligations for its unsecured credit facility under the credit agreement dated as of February 4, 2015, as amended, which was terminated as of the date of the new Facility.

~~Unless~~Under the ~~Company elects otherwise~~amended Facility, interest accrues on the amounts outstanding under the credit ~~agreement, interest on borrowings under the Facility will be~~facility, at the Company’s option, at either (1) London Interbank Offered Rate (“LIBOR”) rate, not less than 1.00%, plus a margin ranging from 2.25% to 2.75% based on the Company’s leverage ratio, or (2) base ~~interest~~ rate, ~~(which~~which cannot be less than 3.00%~~) and will be~~. The base rate is the highest of ~~(a)~~(i) the federal funds rate, ~~(which cannot be~~not less than ~~0.00%)~~zero, plus 0.50%, ~~(b)~~(ii) the administrative agent's prime rate and ~~(c)~~(iii) the LIBOR ~~Rate (which cannot be~~rate, not less than 1.00%) , plus 1.00% ~~and, in each case,~~, plus a margin ~~for LIBOR Rate Loans and Letter of Credit Fees that can range~~ranging from ~~1.25%~~0.25% to ~~1.75% with respect to the Facility depending~~0.75% based on the Company’s ~~ratio of consolidated funded indebtedness to earnings before interest, taxes, depreciation and amortization, as set forth~~leverage ratio. Interest is payable in ~~the credit agreement. Payments of interest~~arrears for each loan that is based on the LIBOR ~~Rate are due in arrears~~rate on the last day of the interest period applicable to ~~such~~each loan, ~~(with~~and interest ~~periods of one, two or three months being available, at the Company’s option). Payments of interest~~is payable in arrears on loans ~~that are~~ not based on the LIBOR ~~Rate are due~~rate on the last day of each ~~quarter ended March 31, June 30, September 30 and December 31 of each year. All unpaid amounts of principal and interest are due at maturity.~~quarter.

As of September 30, 2020, the Company had $112,500 in borrowings outstanding under the revolving credit facility, $15,367 utilized for outstanding letters of credit and $97,133 of available borrowing capacity under the revolving credit facility. The interest rate on the outstanding borrowing under the revolving credit facility was 3.27% as of September 30, 2020.

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

The Facility contains customary events of default including, among other things, payment defaults, breach of covenants, cross acceleration to material indebtedness, bankruptcy-related defaults, material judgment defaults, and the occurrence of certain change of control events. The occurrence of an event of default may result in, among other things, the termination of the Facilities, acceleration of repayment obligations and the exercise of remedies by the lenders with respect to the Company and its subsidiaries that are party to the Facility. The Facility also contains financial covenants and other covenants that, among other things, restrict the ability of the Company, ~~and its subsidiaries,~~ without the approval of the required lenders, to engage in certain mergers, consolidations, asset sales, dividends and stock repurchases, investments, and other transactions or to incur liens or indebtedness in excess of agreed thresholds, as set forth in the credit agreement. The Company also has to fulfill financial covenants with respect to a leverage ratio and an interest coverage ratio. As of ~~September 30, 2020,~~March 31, 2021, the Company was in compliance with the aforementioned covenants.

~~8. Net Income Per Share~~

~~The following table sets forth~~In April 2021, the ~~computation of basic and diluted net income per share:~~

Three months ended Nine months ended
September 30,
2020 September 30,
2019 September 30,
2020 September 30,
2019
Numerator:
Net income and comprehensive income from continuing operations $ 16,992 $ 21,054 $ 37,634 $ 59,987
Net (loss) income and comprehensive (loss) income from discontinued operations (345) 1,141 (9,458) 2,945
Net income attributable to Forward Air shareholders $ 16,647 $ 22,195 $ 28,176 $ 62,932
Income allocated to participating securities (150) (236) (184) (696)
Numerator for basic and diluted net income per share for continuing operations $ 16,842 $ 20,818 $ 37,450 $ 59,291
Numerator for basic and diluted net (loss) income per share for discontinued operations $ (345) $ 1,141 $ (9,458) $ 2,945
Denominator:
Denominator for basic income per share - weighted-average shares 27,559 27,981 27,732 28,286
Effect of dilutive stock options 32 74 34 76
Effect of dilutive performance shares 15 27 23 31
Denominator for diluted income per share - adjusted weighted-average shares 27,606 28,082 27,789 28,393
Basic net income (loss) per share:
     Continuing operations $ 0.61 $ 0.74 $ 1.35 $ 2.10
     Discontinued operations (0.01) 0.04 (0.34) 0.10
Net income per share $ 0.60 $ 0.78 $ 1.01 $ 2.20
Diluted net income (loss) per share:
     Continuing operations $ 0.61 $ 0.74 $ 1.35 $ 2.09
     Discontinued operations (0.01) 0.04 (0.34) 0.10
Net income per share $ 0.60 $ 0.78 $ 1.01 $ 2.19
Company borrowed $20,000 under the revolving credit facility.

2316

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

8. Net Income (Loss) Per Share

A reconciliation of net income attributable to Forward Air and weighted-average common shares outstanding for purposes of calculating basic and diluted net income per share during the three months ended March 31, 2021 and 2020 is as follows:


	Three Months Ended
	March 31, 2021		March 31, 2020

Numerator:
Net income and comprehensive income from continuing operations	$	16,714	$	11,415
Net loss and comprehensive loss from discontinued operation	(5,533)		(3,040)
Net income attributable to Forward Air	$	11,181	$	8,375

Income allocated to participating securities	(101)		(67)

Numerator for basic and diluted net income per share for continuing operations	$	16,613	$	11,348
Numerator for basic and diluted net loss per share for discontinued operation	$	(5,533)	$	(3,040)

Denominator:
Denominator for basic net income per share - weighted-average number of common shares outstanding	27,361		27,846
Dilutive stock options and performance share awards	136		102
Denominator for diluted net income per share - weighted-average number of common shares and common share equivalents outstanding	27,497		27,948

Basic net income (loss) per share:
Continuing operations	$	0.61	$	0.41
Discontinued operation	(0.20)		(0.11)
Net income per share1	$	0.40	$	0.30

Diluted net income (loss) per share:
Continuing operations	$	0.60	$	0.41
Discontinued operation	(0.20)		(0.11)
Net income per share	$	0.40	$	0.30

1 Rounding may impact summation of amounts.

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

March 31, 2021

The number of ~~instruments that could potentially dilute net income per basic share in the future, but~~shares that were not included in the ~~computation~~calculation of net income per diluted share because to do so would have been anti-dilutive for the ~~periods presented,~~three months ended March 31, 2021 and 2020 are as follows:


		September 30, 2020	September 30, 2019		March 31, 2021	March 31, 2020
Anti-dilutive stock options	Anti-dilutive stock options	219	188	Anti-dilutive stock options	25	203
Anti-dilutive performance shares	Anti-dilutive performance shares	31	—	Anti-dilutive performance shares	3	24
Anti-dilutive non-vested shares and deferred stock units		100	—
Anti-dilutive restricted shares and deferred stock units				Anti-dilutive restricted shares and deferred stock units	1	75
Total anti-dilutive shares	Total anti-dilutive shares	350	188	Total anti-dilutive shares	29	302

For the three months ended March 31, 2021, the Company recorded income tax expense of $4,845 and $3,504, respectively, for continuing operations. The effective tax rate of 22.5% for the three months ended March 31, 2021 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards. The effective tax rate of 23.5% for the three months ended March 31, 2020 varied from the statutory United States federal income tax rate of 21% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards and a refund for Tennessee tax credits.

As of both March 31, 2021 and December 31, 2020, the Company had $544 of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized. The Company ~~or one~~accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of ~~its subsidiaries files income~~both March 31, 2021 and December 31, 2020, the Company had accrued interest and penalties related to unrecognized tax ~~returns in the U.S. federal jurisdiction, various states and Canada.~~benefits of $168. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or Canadian examinations by tax authorities for years before ~~2012.~~2013.

~~For~~The sale of Pool resulted in a capital loss in the ~~nine months ended September 30, 2020~~amount of $2,426. The capital loss expires in 2026. The Company concluded that it was more likely than not the capital loss carryforward will not be realized and ~~2019, the effective income tax rates varied from the statutory federal income tax rate~~therefore, established a valuation allowance of ~~21.0%, primarily as~~$2,426 to reserve against its capital loss carryforward. The Company also maintains a ~~result~~valuation allowance to reserve against its state net operating loss carryforwards. A valuation allowance is established when it is more likely than not that some portion or all of the ~~effect of state~~deferred tax assets will not be realized. The Company assessed the likelihood that its deferred tax assets would be recovered from estimated future taxable income ~~taxes,~~and available tax planning strategies. In making this assessment, all available evidence was considered including economic climate, as well as reasonable tax planning strategies. The Company believes it is more likely than not that it will realize its remaining net deferred tax assets, net of the federal benefit, and permanent differences between book and tax net income. The combined federal and state effective tax rate for continuing operations for the nine months ended September 30, 2020 was 24.5% compared to a rate of 25.1%~~for the same period~~valuation allowance, in ~~2019.~~ The lower tax rate for the nine months ended September 30, 2020 was primarily due to decreased stock based compensation vesting and exercises and return to provision adjustments that were recorded in the current period when compared to the same period in 2019.future years.

~~A contract is or contains a lease if the contract conveys the right to control the use~~Fair Value of an identified asset for a period of time in exchange for consideration. An entity controls the use of the identified asset if both of the following are true: (1) the entity obtains the right to substantially all of the economic benefits from use of the identified asset and (2) the entity has the right to direct the use of the identified asset. For the three and nine months ended September 30, 2020, the Company leased facilities and equipment under operating and finance leases, which were accounted for in accordance with ASU 2016-02, Leases.Financial Instruments

The Company ~~elected~~categorizes its assets and liabilities into one of three levels based on the ~~practical expedients as allowed per~~assumptions used in valuing the asset or liability. Estimates of fair value financial assets and liabilities are based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with this guidance, ~~to combine lease and non-lease components and to keep leases with an initial term of 12 months or less, after~~fair value measurements are classified under the consideration of options, off the balance sheet. Additionally, variable lease and variable nonlease components were not contemplated in the calculation of the right-of-use asset and corresponding liability.following hierarchy:

~~For leases and subleases with terms greater than 12 months, the Company records the related right-of-use asset as the balance of the related lease liability, adjusted~~•Level 1 - Quoted prices in active markets for any prepaid or accrued lease payments. Unamortized initial direct costs and lease incentives were not significant as of September 30, 2020. The lease liability was recorded at the present value of the lease payments over the term. Many of the Company's leases include rental escalation clauses, renewal options and/or termination options that were contemplated in the determination of lease payments when appropriate. As of September 30, 2020, the Company was not reasonably certain of exercising any renewal options. Further, as of September 30, 2020, it was reasonably certain that all termination options would not be exercised. As such, there were no adjustments made to its right-of-use leaseidentical assets or ~~corresponding liabilities as a result. In addition, the Company does not have any leases with residual value guarantees or material restrictions or covenants as of September 30, 2020.~~liabilities.

~~For these leases with an initial~~•Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of ~~12 months~~the assets or ~~less, after the consideration of options, the Company recognizes the corresponding lease expense on a straight-line basis over the lease term.~~liabilities.

•Level 3 - Model-derived valuations in which one or more significant inputs are unobservable.

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

~~Operating Leases~~As previously discussed in Note 4, Acquisitions, the fair value of the earn-out liability was determined using a Monte-Carlo simulation model. The significant inputs used in the model are derived from a combination of observable and unobservable market data. Observable inputs used in the Monte Carlo simulation model include the risk-free rate and the revenue volatility while unobservable inputs used in the Monte Carlo simulation model include the revenue discount rate and the estimated revenue projections.

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 are summarized below:


	As of March 31, 2021
	Level 1		Level 2		Level 3		Total
Earn-out liability	$	0	$	0	$	7,632	$	7,632

	As of December 31, 2020
	Level 1		Level 2		Level 3		Total
Earn-out liability	$	0	$	0	$	6,865	$	6,865

~~The Company leases some~~Cash and cash equivalents, accounts receivable, and accounts payable are valued at their carrying amounts in the Company’s Condensed Consolidated Balance Sheets, due to the immediate or short-term maturity of its facilities under noncancelable operating leases that expire in various years through 2028. Certain leases may be renewed for periods varying from 1 to 10 years. In conjunction with the acquisition of Linn Star in January 2020, discussed further in Note 5, ~~Acquisitions and Long-Lived Assets, the Company assumed operating facility leases that expire in various years through 2025 and had a right-of-use asset and corresponding lease liability of approximately $10,011 at acquisition.~~these financial instruments.

The carrying amount of long-term debt under the Company’s credit facility approximate fair value based on the borrowing rates currently available to the Company ~~has also historically entered into or assumed through acquisition several equipment operating leases~~ for ~~assets including tractors, straight trucks~~a loan with similar terms and trailers with original lease terms between 2 and 6 years. These leases expire in various years through 2025 and certain leases may be renewed for periods varying from 1 to 3 years. The Company did not enter into any material equipment leases outside the normal course of business during the nine months ended September 30, 2020.average maturity.

As of ~~September 30,~~March 31, 2021, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $6,892, compared to its carrying value of $6,652. As of December 31, 2020, the ~~Company has certain obligations~~estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $7,009, compared to ~~lease tractors, which will be delivered throughout 2020. These leases are expected to have terms~~its carrying value of ~~approximately 3 to 4 years and are not expected to materially impact the Company's right-of-use lease assets or liabilities as of September 30, 2020.~~$6,811.

Primarily through acquisitions, the Company assumes equipment leases that meet the criteria for classification as a finance lease with remaining lease terms between 2 and 7 years. These leases expire in various years through 2025 with no options to renew. The finance leased equipment is being amortized over the shorter of the lease term or useful life. The Company did not enter into any new finance leases during the nine months ended September 30, 2020.

11. ~~Financial Instruments~~Shareholders’ Equity

~~Off Balance Sheet Risk~~Cash Dividends

AsDuring the first quarter of ~~September 30,~~2021 and the fourth quarter of 2020, the Company’s Board of Directors declared and the Company ~~had letters~~has paid a quarterly cash dividend of ~~credit outstanding totaling $15,367.~~$0.21 per share of common stock.

~~Fair Value~~On April 26, 2021, the Company's Board of ~~Financial Instruments~~Directors declared a quarterly cash dividend of $0.21 per common share that will be paid in second quarter of 2021.

~~The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:~~

~~Accounts receivable and accounts payable: The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximate their fair value based on their short-term nature.~~

Revolving credit facility: The Company’s revolving credit facility bears variable interest rates plus additional basis points based upon covenants related to total indebtedness to earnings. As the revolving credit facility bears a variable interest rate, the carrying value approximates fair value.Share Repurchase Program

On July 21, 2016, the Company’s Board of Directors approved a stock repurchase program for up to 3,000 shares of the Company’s common stock (the “2016 Repurchase Plan”). On February 5, 2019, the Board of Directors canceled the Company’s 2016 Repurchase Plan and approved a revised stock repurchase plan authorizing up to 5,000 shares of the Company’s common stock (the “2019 Repurchase Plan”). The ~~fair value estimates of earn-outs~~2019 Repurchase Plan expires when the shares authorized for repurchase are ~~discussed in Note 5,~~ ~~Acquisitions and Long-Lived Assets~~.

~~Using interest rate quotes and discounted cash flows,~~exhausted or the ~~Company estimated the fair value of its outstanding finance lease obligations as follows:~~

2019 Repurchase Plan is canceled.

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

~~The carrying value~~

During the three months ended March 31, 2021, the Company repurchased through open market transactions 114 shares of common stock for $9,997, or $87.89 per share, and during the three months ended March 31, 2020, the Company repurchased 268 shares of common stock for $15,259, or $56.93 per share. All shares received were retired upon receipt, and the excess of the ~~finance lease obligations are included within~~purchase price over the ~~Equipment section of Property and equipment on~~par value per share was recorded to “Retained Earnings” in the ~~Company’s~~Condensed Consolidated Balance Sheets. ~~The Company's fair value estimates for~~

As of March 31, 2021, the ~~above financial instruments are classified within level 3 of~~remaining shares to be repurchased under the ~~fair value hierarchy as defined in the FASB Codification.~~2019 Repurchase Plan were approximately 3,254 shares.

12. ~~Shareholders' Equity~~

During the fourth quarter of 2020, the Company’s Board of Directors declared a cash dividend of $0.21 per share of common stock. During each quarter of 2019 and the first, second and third quarter of 2020, the Company's Board of Directors declared a cash dividend of $0.18 per share of common stock. The Company expects to continue to pay regular quarterly cash dividends, though each subsequent quarterly dividend is subject to review and approval by the Board of Directors.

On July 21, 2016, the Company's Board of Directors approved a stock repurchase authorization for up to 3,000 shares of the Company’s common stock (the "2016 Repurchase Plan"). On February 5, 2019, the Company's Board of Directors canceled the Company’s 2016 Repurchase Plan and approved a new stock repurchase plan authorizing the repurchase of up to 5,000 shares of the Company’s common stock (the “2019 Repurchase Plan”) that shall remain in effect until such time as the shares authorized for repurchase are exhausted or the plan is canceled. The Company is not obligated to repurchase any specific number of shares and may suspend or cancel the plan at any time. The Company does not expect to repurchase any shares under this plan during the third quarter of 2020.

~~The following tables summarize the Company's share repurchases for the three and nine months ended September 30, 2020 and 2019 (shares and dollars in thousands, except average cost per share).~~

Nine months ended
September 30, 2020 September 30, 2019
Shares repurchased Cost of shares repurchased Average cost per share Shares repurchased Cost of shares repurchased Average cost per share
2016 Repurchase Plan — $ — $ — 68 $ 3,850 $ 56.97
2019 Repurchase Plan 787 45,248 57.53 721 44,056 61.07
Total 787 $ 45,248 $ 57.53 789 $ 47,906 $ 60.72

~~As of September 30, 2020, 3,368 shares were available to be purchased under the 2019 Plan.~~

~~13.~~ Commitments and Contingencies

~~Self-Insurance Reserves~~Contingencies

~~From time to time, the~~The Company is party to ~~ordinary, routine litigation~~various legal claims and actions incidental to ~~and arising in the normal course of~~its business. The Company ~~does not believe that any~~believes none of these ~~pending~~claims or actions, either individually or in the aggregate, ~~will have a~~is material ~~adverse effect on~~to its business or financial ~~condition,~~statements as a whole, including its results of operations ~~or cash flows.~~ and financial condition.

The ~~primary~~Company is liable for claims ~~in the Company’s business relate~~related to vehicle liability, workers’ compensation, property damage ~~vehicle liability~~ and employee medical benefits. ~~Most of the Company’s insurance~~Insurance coverage provides ~~for self-insurance levels~~the Company with primary and excess coverage, which ~~management~~the Company believes is sufficient to ~~adequately~~ protect the Company from catastrophic claims. ~~Such~~

For vehicle liability, the Company retains a portion of the risk. Below is a summary of the Company’s risk retention on vehicle liability insurance coverage ~~above~~maintained by the ~~applicable self-insurance levels continues~~Company through $10,000:

Company
Risk Retention

Frequency

Layer

Policy Term

Expedited Freight¹

LTL business

3,000

Occurrence/Accident²

$0 to $3,000

10/1/2020 to 10/1/2021

Truckload business

2,000

Occurrence/Accident²

$0 to $2,000

10/1/2020 to 10/1/2021

LTL and Truckload businesses

6,000

Policy Term Aggregate³

$3,000 to $5,000

10/1/2020 to 10/1/2021

LTL and Truckload businesses

5,000

Policy Term Aggregate³

$5,000 to $10,000

10/1/2020 to 10/1/2021

Intermodal

250

Occurrence/Accident²

$0 to $250

4/1/2020 to 10/1/2021

¹ Excluding the Final Mile business, which is primarily a brokered service.

² For each and every accident, the Company is responsible for damages and defense up to bethese amounts, regardless of the number of claims associated with any accident.

³ During the Policy Term, the Company is responsible for damages and defense within the stated Layer up to the stated, aggregate amount of Company Risk Retention before insurance will respond.

Also, from time to time, when brokering freight, the Company may face claims for the “negligent selection” of outside, contracted carriers that are involved in accidents, and the Company maintains third-party liability insurance coverage with a $100 deductible per occurrence for most of its brokered services. Additionally, the Company maintains workers’ compensation insurance with a self-insured retention of $500 per occurrence.

Insurance coverage in excess of the self-insured retention limit is an important part of the ~~Company's~~Company’s risk management process.

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

In The Company believes the ~~opinion of management, adequate provision has been made~~recorded reserves are sufficient for all incurred claims up to the self-insured retention limits, including ~~provision~~an estimate for ~~estimated~~ claims incurred but not reported. The Company is responsible for the first $7,500 per incident until it meets the $6,000 aggregate deductible for incidents resulting in claims between $3,000 and $5,000 and the $2,500 aggregate deductible for incidents resulting in claims between $5,000 and $10,000. Due to the uncertainty ofSince the ultimate resolution of outstanding claims as well as ~~uncertainty regarding~~ claims incurred but not reported is uncertain, it is possible that ~~management’s provision~~the reserves recorded for these losses could change materially in the near term. However, noan estimate ~~can currently~~cannot be made of the range of additional loss that is at least reasonably possible.

Table of Contents

~~Litigation~~Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

Occasionally, the Company is a party to various legal proceedings, regulatory examinations, investigations, administrative actions, and other legal matters, arising for the most part in the ordinary course of business, incidental to its operations. The Company aggressively defends these matters and has established liability provisions that management believes are adequate to cover expected costs. The outcome of litigation and other legal matters is always uncertain. The Company believes it has valid defenses to the legal matters currently pending against it, is defending itself vigorously, and has recorded accruals determined in accordance with U.S. GAAP, where appropriate. (In making a determination regarding accruals, using available information, the Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which it is a party to and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of the Company’s defenses and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from the current estimates. It is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to the Company’s consolidated results of operations, liquidity or financial condition.thousands, except per share data)

(Unaudited)

March 31, 2021

~~14.~~13. Segment Reporting

The Company ~~operates in~~has 2 reportable ~~segments based on information available to~~segments: Expedited Freight and ~~used by the CODM. This classification is consistent with how the CODM makes decisions about resource allocation and assesses the Company's performance.~~Intermodal. The Company evaluates ~~the~~segment performance ~~of its segments~~ based on income from operations. ~~The Company’s business is conducted in the U.S. and Canada.~~

Expedited Freight operates a comprehensive national network to provide expedited regional, inter-regional and national LTL services and offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling. Intermodal primarily provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads.

~~Except for certain insurance activity, the accounting policies of the segments are the same as those described in the summary of significant accounting policies disclosed in Note 1,~~ ~~Description of Business and Basis of Presentation,~~ to the Forward Air Corporation Annual Report on Form 10-K for the year ended December 31, 2019. For workers compensation and vehicle claims, each segment is charged an insurance premium and is also charged a deductible that corresponds with each segment's individual self-retention limit. However, any losses beyond these deductibles and any loss development factors applied to outstanding claims as a result of actuary analysis are not passed to the segments, but recorded at the corporate level ("Eliminations & other").

Segment ~~data includes~~results include intersegment revenues and shared costs. Costs ofrelated to the corporate headquarters, shared services and shared assets, such as trailers, are allocated to ~~the segments~~each segment based on usage. ~~The cost basis of shared~~Shared assets are not ~~allocated. Instead,~~allocated to each segment, but rather the ~~cost basis for the majority of~~ shared assets, such as trailers, are ~~included in~~allocated to the Expedited ~~Freight.~~ Freight segment.

The ~~following tables summarize~~accounting policies applied to each segment ~~information~~are the same as those described in the Summary of Significant Accounting Policies as disclosed in Note 1 to the Annual Report on Form 10-K for the year ended December 31, 2020, except for certain self-insurance loss reserves related to vehicle liability and workers’ compensation. Each segment is allocated an insurance premium and deductible that corresponds to the self-insured retention limit for that particular segment. Any self-insurance loss exposure beyond the deductible allocated to each segment is recorded in Eliminations & Other.

Segment results from ~~continuing~~ operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019:~~are as follows:



	Three Months Ended March 31, 2021
	Expedited Freight		Intermodal		Eliminations & Other		Consolidated
External revenues	$	303,531	$	58,502	$	—	$	362,033
Intersegment revenues	655		12		(498)		169
Depreciation	4,993		799		3		5,795
Amortization	1,805		1,637		0		3,442
Income (loss) from continuing operations	24,530		4,509		(6,315)		22,724
Purchases of property and equipment	2,411		284		0		2,695

	Three Months Ended March 31, 2020
	Expedited Freight		Intermodal		Eliminations & Other		Consolidated
External revenues	$	253,140	$	52,455	$	—	$	305,595
Intersegment revenues	485		5		(528)		(38)
Depreciation	4,908		1,053		18		5,979
Amortization	1,787		1,568		0		3,355
Income (loss) from continuing operations	15,179		3,713		(3,120)		15,772
Purchases of property and equipment	2,405		246		0		2,651

Total Assets
As of March 31, 2021	$	934,602	$	204,178	$	(122,879)	$	1,015,901
As of December 31, 2020	905,081		221,963		(153,750)		973,294

Table of Contents

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

~~September 30, 2020~~March 31, 2021

Three Months Ended September 30, 2020
Expedited Freight Intermodal Eliminations & other Continuing Operations
External revenues $ 283,025 $ 48,940 $ 34 $ 331,999
Intersegment revenues 489 8 (499) (2)
Depreciation 4,981 789 36 5,806
Amortization 1,799 1,567 — 3,366
Share-based compensation expense 2,208 415 (278) 2,345
Interest expense 3 38 1,263 1,304
Income (loss) from operations 23,461 4,837 (4,788) 23,510
Total assets 882,214 217,813 (146,805) 953,222
Capital expenditures 2,037 188 — 2,225
Three months ended September 30, 2019 (As Adjusted)
Expedited Freight Intermodal Eliminations & other Continuing Operations
External revenues $ 255,404 $ 58,317 $ — $ 313,721
Intersegment revenues 711 29 (778) (38)
Depreciation 5,256 1,050 (27) 6,279
Amortization 1,195 1,542 — 2,737
Share-based compensation expense 1,895 340 392 2,627
Interest expense 2 67 692 761
Income (loss) from operations 27,131 6,900 (4,845) 29,186
Total assets 706,632 205,444 (25,489) 886,587
Capital expenditures 8,818 207 — 9,025

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

~~The following table summarizes revenue~~Revenue from the ~~defined~~individual services ~~included~~ within the Expedited Freight ~~revenue~~segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019:~~are as follows:

~~Table of Contents~~

~~Forward Air Corporation~~

~~Notes to Consolidated Financial Statements~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

~~September 30, 2020~~

~~15.~~14. Subsequent ~~Events~~Event

On ~~October 11, 2020,~~April 28, 2021, the Company ~~acquired substantially all~~entered into an agreement to acquire certain assets and liabilities of ~~the assets of CLW~~J&P Hall Express Delivery ~~Inc.~~ (“~~CLW”~~J&P”) for ~~$5,500. This transaction was funded using cash flows from operations. CLW specializes~~$7,400. J&P, headquartered in ~~last mile logistics~~Atlanta, Georgia with a second terminal in Albany, Georgia, offers a portfolio of transportation services including less than truckload, truckload, less than container load, container freight station warehousing, and in-home installation services for national retailers and manufacturers. The Company anticipates CLW will contribute approximately $20,000 of revenue and $1,000 of operating income on an annualized basis.

airport transfers across the Southeastern United States.


Item 2.			~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~Forward Air Corporation is~~We are a leading asset-light freight and logistics ~~company. As a result of~~company providing less-than-truckload (“LTL”), final mile truckload and intermodal drayage services across the ~~Company’s decision~~United States and in Canada. We offer premium services that typically require precision execution, such as expedited transit, delivery during tight time windows and special handling. We utilize an asset-light strategy to ~~divest Pool,~~minimize our investments in equipment and facilities and to reduce our capital expenditures.

Our services are ~~now~~ classified into two reportable segments: Expedited Freight and Intermodal.

Through the Expedited Freight segment, we operate a comprehensive national network to provide expedited regional, inter-regional and national LTL services. Expedited Freight offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling. We plan to grow our LTL and final mile geographic footprints through greenfield start-ups as well as acquisitions. Since July 2020, as part of our previously announced organic growth initiative, we now offer LTL service in Savannah, Georgia; Columbia, Missouri; and Roanoke, Virginia. With this expansion, our LTL network began its evolution toward broader market coverage beyond its legacy airport-to-airport footprint.

Our Intermodal segment provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads. Intermodal also offers dedicated contract and container freight station ~~("CFS"~~(“CFS”) warehouse and handling services. Today, Intermodal operates primarily in the Midwest and Southeast, with smaller operational presence in Southwest and Mid-Atlantic United States. We plan to grow Intermodal’s geographic footprint through acquisitions as well as greenfield start-ups where we do not have an acceptable acquisition target. ~~On April 16, 2020, we announced a greenfield start-up in Front Royal, Virginia, which furthered our growth objectives.~~

Our operations, particularly our network of hubs and terminals, represent substantial fixed costs. Consequently, our ability to increase our earnings depends in significant part on our ability to increase the amount of freight and the revenue per pound for the freight shipped through our networks and to grow other services, such as LTL pickup and delivery, final mile solutions and intermodal services, which will allow us to maintain revenue growth in challenging shipping environments. In addition, we are continuing to execute synergies across our services, particularly with service offerings in the Expedited Freight segment. Synergistic opportunities include the ability to share resources, particularly our fleet resources.

~~On April 23, 2020, the~~The Board approved a strategy to divest the Pool ~~within~~Distribution business (“Pool”) on April 23, 2020, and the ~~next year. As a result~~sale of ~~this decision, Forward Air reclassified~~ Pool ~~from continuing operations to discontinued operations in accordance with ASC 205-20.~~was completed on February 12, 2021. Pool ~~provides~~provided high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region. Pool ~~offers~~offered this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest United States.

Accordingly, the results of operations for Pool ~~has~~have been ~~reported~~presented as a discontinued ~~operations~~operation in our Consolidated Statements of Comprehensive Income ~~and~~for all period presented. In addition, the ~~related~~ assets and liabilities ~~have been~~were presented as held for sale in the Consolidated Balance ~~Sheets. These changes have been applied to all periods presented.~~Sheets for the prior period. Unless otherwise noted, amounts, percentages and discussion for all periods ~~included below~~ reflect the results of operations, financial condition and cash flows from ~~Forward Air’s~~our continuing operations. Refer to Note 4, Discontinued ~~Operations~~Operation and Held for Sale, to the ~~Company’s consolidated financial statements~~our Condensed Consolidated Financial Statements for additional information on our discontinued ~~operations.~~operation.

Trends and Developments

~~Impact of~~ COVID-19

Our business is highly susceptible to changes in the economic conditions. Our products and services are directly tied to the production and sale of goods and, more generally, to the North American economy. The COVID-19 ~~was characterized as a~~ pandemic byhas adversely impacted economic activity and conditions worldwide and created significant volatility and disruption to the ~~World Health Organization on March 11, 2020. To help lessen its~~financial markets. Efforts to control the spread ~~many countries implemented travel~~of COVID-19 led governments and other authorities to impose restrictions ~~and/or required companies to limit or suspend~~which resulted in business ~~operations. These actions~~closures and disrupted supply chains worldwide. As a result, transportation and ~~company~~supply chain companies such as ours experienced slowdowns and reduced demand for our services.

Although our business and operations ~~around~~have returned to pre-COVID levels, the ~~world. Although these restrictions have since lessened,~~situation surrounding COVID-19 remains fluid and may be further impacted by the policies of President Biden’s administration and the availability and success of a vaccine. The extent to which the COVID-19 outbreak impacts our business, results of operations and financial condition in 2021 will depend on future developments, which are highly uncertain and cannot be predicted by, including, but not limited to the duration, spread, severity and impact of the COVID-19 outbreak, the effects ~~are still being felt. The current environment resulting from COVID-19 is unprecedented and comes with a great deal of uncertainty.~~

The Forward Air team is actively managing through the COVID-19 pandemic, with a paramount focus on team member and customer safety. Given our modal exposures to air freight, ocean freight and physical retail, and that much of the ~~freight that typically moves through~~outbreak on our ~~LTL network is not classified as “essential goods” - such as staples, consumables or consumer packaged goods,~~customers and suppliers and the impact of COVID-19 presents a meaningful challenge that we are addressing through our asset-light business model. In addition, declining fuel prices have resulted in decreased fuel surcharge revenue as comparedremedial actions and stimulus measures adopted by local and federal governments, and to ~~prior periods. Despite these challenges, our networks have remained fully operational.~~what extent normal economic and operating conditions can resume.

~~We are making key investments that~~

In addition, although we believe ~~will enable us~~we have sufficient capital and liquidity to ~~emerge from this episode~~manage our business over the short- and long-term, our liquidity may be materially affected if conditions in the credit and financial markets deteriorate as a ~~stronger LTL competitor (amid~~result of COVID-19 including failure by us or our customers to secure any necessary financing in a potentially reduced field of service providers). Our Truckload team is becoming more integrated in our LTL operations, and our Truckload brokerage group is growing by generating opportunities amid supply chain disruptions. We are also integrating Final Mile into our LTL operations while organically growing in an environment where more heavy-bulky items are being ordered online. We are presently operating six terminals that service both our Final Mile and LTL operations and expect this number to grow in the future. In addition, our Final Mile fleet is supporting LTL operations by performing pickup and delivery services on their behalf in nine terminals. In Intermodal, we made significant cost reductions to address volume declines.

Beyond lowering our costs through our flexible business model, we are actively pursuing new revenue opportunities in line with our medium-term growth objectives. We believe that we have the most reliable networks for moving freight that is bigger-than-a-box, and we are stretching these capabilities to “essential goods,” small and midsize businesses, business-to-consumer shipments, new verticals and warehousing opportunities.timely manner.

The Company's phased reintegration back into the workplace of non-essential office employees who had been working remotely is nearing completion. Preventative measures that serve to minimize the risk of exposure to COVID-19 remain in effect, including modifying our workspace to implement physical distancing measures, and continuously reevaluating our efforts with safety as a top priority.

As discussed above, on April 23, 2020, the Company's Board approved a strategy to divest Pool within the next year. This represents a strategic shift for the Company that will have a major effect on its operations and financial results. The Company is currently exploring all options to divest of these assets, but has not entered into a material definitive agreement to sell these assets as of the date of this report. However, the Company does believe it is probable that these assets will be divested within a year of receiving this authority from the Board. As a result, the Company has reported Pool as a Discontinued Operation in this report. COVID-19’s impact on our Pool business has been significant. Reduced US demand, coupled with temporary retail mall closures, have materially reduced Pool’s revenue. We remain committed to serving our current and additional Pool customers as volumes improve while we are pursuing divestiture options for this business unit.

Despite results improving from the second quarter of 2020, year-on-year growth is expected to be negative for the remainder of 2020. Pool’s results drove a discontinued operations loss for the three and nine months ended September 30, 2020, however on a continuing operations and consolidated basis, the Company was profitable and expects to be profitable for the remainder of the year ended December 31, 2020.Intermodal Acquisition

The duration and severity of the COVID-19 pandemic are uncertain and difficult to predict. The pandemic could continue to impede global economic activity for an extended period, even as restrictions are beginning to be lifted in many jurisdictions, leading to decreased per capita income and disposable income, increased and sustained unemployment or a decline in consumer confidence, all of which could significantly reduce discretionary spending by individuals and businesses and may create a recession in the United States or globally. In these circumstances, there may be developments outside the Company’s control requiring adjustments to operating plans. As such, given the dynamic nature of this situation, the Company cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company’s results of operations, financial position, and liquidity. See Part II, Item 1A - “Risk Factors” - “The ongoing coronavirus outbreak, and measures taken in response thereto, could continue to have a material adverse effect on our business, results of operations and financial condition.”

~~Expedited LTL Acquisitions~~

As part of ~~our~~the inorganic growth strategy, ~~to expand our final mile pickup and delivery operations,~~ in ~~January 2020,~~February 2021, we acquired certain assets and liabilities of ~~Linn Star~~Proficient Transport Incorporated and Proficient Trucking, Inc. (together “Proficient Transport”) for ~~$57.2 million. This acquisition increased our Final Mile capabilities with an additional 20 locations. In addition, in April 2019, we acquired certain assets and liabilities of FSA for $27.0 million~~$15,000 and a potential earn-out of up to ~~$15.0 million based upon future revenue generation. We paid the first installment on this earn-out of $5.3 million in June 2020.~~$2,000. The ~~remaining expected payment had a~~estimated fair value of ~~$4.3 million as~~the earn-out liability on the date of ~~September 30, 2020. These acquisitions provided~~acquisition was $815. The fair value was based on the estimated one-year performance of the acquired customer revenue and was calculated using a Monte Carlo simulation model. Proficient Transport is an ~~opportunity for~~intermodal drayage company headquartered in Chicago, Illinois. The acquisition of Proficient Transport will expand our ~~Expedited Freight segment to expand its final mile service offering into additional geographic markets, form relationships with~~intermodal footprint in Georgia, Illinois, North Carolina, and Texas, and will introduce a new ~~customers, and add volumes to our existing locations.~~

~~These acquisitions were~~location in Ohio. The acquisition was funded using cash flows from operations. The ~~assets, liabilities, and operating~~ results of ~~these acquisitions~~Proficient Transport have been included in ~~the Company's consolidated financial statements~~our Condensed Consolidated Financial Statements as of and from the date of ~~acquisition and have been assigned to the Expedited Freight reportable segment. See additional discussion in Note 5,~~ ~~Acquisitions and Long-Lived Assets, to our Consolidated Financial Statements.~~acquisition.

~~Intermodal Acquisitions~~Pool

~~As part~~On February 12, 2021, we sold Pool for an $8,000 cash payment and up to a $12,000 earn-out based on 2021 earnings before interest, taxes, depreciation and amortization attainment, beginning February 1, 2021. The preliminary estimated fair value of ~~our strategy to expand our Intermodal operations, in July 2019, we acquired certain assets and liabilities of OST for $12.0 million. OST is a drayage company and expanded our intermodal footprint~~the earn-out on the East Coast, primarily in Baltimore, Maryland, with additional locations in Pennsylvania, Virginia, South Carolina and Georgia. This acquisition was funded using cash flows from operations and provide an opportunity for our Intermodal segment to expand into additional geographic markets and add volumes to our existing locations. The assets, liabilities, and operating results of this acquisition have been included in the Company's consolidated financial statements from the date of ~~acquisition~~sale was $6,967, and ~~have been assigned to~~was calculated based on the ~~Intermodal reportable segment. See additional discussion~~estimated performance of Pool using a Monte Carlo simulation model. A loss on the sale of Pool in ~~Note 5,~~ ~~Acquisitions and Long-Lived Assets, to our Consolidated Financial Statements.~~

~~Table~~the amount of ~~Contents~~$2,860 was recorded in discontinued operation.

Environmental Protection and Community Support

~~At Forward Air,~~We embrace a comprehensive definition of sustainability that addresses Environmental, Social, and Governance factors (“ESG”). To our ~~mission is to create long-term value for~~employees, our ~~shareholders,~~communities, our customers, our suppliers, and ~~employees while having a positive~~our investors, each impact on the communities in which we live and work. We strive to integrate social responsibility and environmental sustainability into every aspect of our strategy - from how we engage with employees and local communities to offering more sustainable products and services to customers. Our commitment to this mission requires us to adhere to a strong corporate governance program that includes policies and principles that integrate environmental, social and governance (“ESG”) matters into our broader risk management and strategic planning initiatives.area matters.

~~During~~In 2019, ~~the~~our Board amended the Corporate Governance and Nominating (“CG&N”) Committee ~~charter~~Charter to ~~reflect that the committee would review and discuss with management the Company’s (i)~~oversee our efforts related to environmental, social, and governance matters, and ~~(ii)~~ management of sustainability-related risks and opportunities. At least twice a year, the CG&N Committee is updated on each of these ~~reviews~~topics and ~~discussions occur at least quarterly. The~~provides feedback and recommendations that it deems appropriate.

In 2020, we created and staffed the Head of Corporate ~~Governance and Nominating Committee provides leadership and~~ESG role to provide oversight of our ESG ~~practices, including oversight of our policies~~vision, strategic planning, performance management and ~~programs related to environmental sustainability, health~~improvement activities. Shortly after, we initiated an ESG market analysis and ~~safety, diversity~~benchmarking exercise that explored the ESG issues that most impact transportation and ~~inclusion,~~logistics industries and ~~charitable giving.~~marketplaces.

~~To facilitate our ESG initiatives, we appointed a head of Corporate ESG~~We began in ~~the first quarter of 2020. We also have engaged a third-party~~2020 to conduct an ESG ~~materiality~~ assessment, ~~during the first half of 2020. Our intent is~~starting with a third-party stakeholder assessment that served as a basis for identifying and prioritizing ESG topics most relevant to ~~build upon this work to develop~~our industry, our business, and our stakeholders. The assessment’s findings yielded initial topics that we recognized as important. We followed with a more ~~robust~~in-depth assessment of risks and opportunities, utilizing Sustainable Accounting Standards Board (“SASB”) standards as a guide, in order to further refine our disclosure topics and gain stakeholder alignment. This more detailed assessment yielded clarity of our ESG ~~strategy, institutionalize processes~~topics and ~~begin~~prioritization based on the degree of both qualitative and quantitative impact to ~~provide more public disclosure around activities~~our business.

We identified ten ESG topic priority areas relevant to our business and ~~performance going forward.~~mapped each to widely adopted ESG reporting standards as identified by SASB. Within these ten topic areas, we identified specific related risks and opportunities, and aligned on improvement activities. In first quarter of 2021, we published our first ESG report that describes our sustainability focus and plan. We are committed to making our ~~presence~~results count across the ~~country.~~country and will continue to update our future disclosures accordingly.

~~Environmental Protection~~: We have already taken a variety of steps to improve the sustainability of our operations. For example, as a partner of the U.S. Environmental Protection Agency ("EPA") SmartWay program since 2008, Forward Air has continued to adopt new environmentally safe policies and innovations to improve fuel efficiency and reduce emissions. We actively seek to utilize equipment with reduced environmental impact. We utilize trailers with light weight composites and employ trailer skirts to decrease aerodynamic drag, both of which improve fuel efficiency. We are also increasing our use of electric forklifts and transitioning to automatic transmission tractors, which will decrease our fuel consumption.

Through vendor partnerships, we are implementing new solutions to manage waste and improve recycling across our facilities. Annually, we recycle tons of dunnage and thousands of aluminum load bars. Forward Air also participates in ReCaps, providing and purchasing recycled trailer tires. We also focus on increasing our landfill diversion rate through our partnership with Waste Harmonics.

~~Community Support~~: On Veteran’s Day 2019, Forward Air launched Operation: Forward Freedom - providing support to our Veterans primarily through partnering with Hope for the Warriors. Hope for the Warriors is a nonprofit organization that is dedicated to restoring a sense of self, family and hope to United States military veterans. This is an important cause for us as many of our employees, independent contractors, customers and vendors are or have a family member who is a military veteran. During the second quarter of 2020, as part of Operation: Forward Freedom, Forward Air allocated $10 million of its cash balances to a $249 billion U.S. Government money market fund through its account at Drexel Hamilton, a service-disabled veteran-owned and operated broker-dealer founded on the principal of offering meaningful employment opportunities to disabled veterans.

In addition, we are a corporate partner of Truckers Against Trafficking, a nonprofit organization that educates, equips, empowers and mobilizes members of the trucking and busing industries to combat human trafficking. In November 2019, we also joined Women in Trucking, which is a nonprofit organization, supporting and celebrating women in the trucking industry.

Results from Operations

The following table sets forth our consolidated ~~historical~~ financial data from operations for the three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in ~~millions)~~thousands):

Note: Prior period balances have been adjusted to conform with the Company's revised segment reporting classification. See additional discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2019 Annual Report on Form 10-K and in Note 14, ~~Segment Reporting, to our Consolidated Financial Statements.~~

Operating revenue increased ~~$18.2 million,~~$56,645, or ~~5.8%~~18.5%, to ~~$331.9 million~~$362,202 for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$313.7 million~~$305,557 for the three months ended ~~September 30, 2019.~~March 31, 2020. The increase was primarily driven by an increase atin our Expedited Freight segment of ~~$27.4 million~~$50,561 due to increased ~~final mile revenue as discussed in the following sections.~~Network and Final Mile revenue.

Operating expenses increased ~~$23.9 million,~~$49,693, or ~~8.4%~~17.1%, to ~~$308.4 million~~$339,478 for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$284.5 million~~$289,785 for the three months ended ~~September 30, 2019.~~March 31, 2020. The increase was primarily driven by a purchased transportation increase of ~~$22.8 million.~~$34,010 in our Expedited Freight segment. Purchased transportation includes owner operators and third party carriers. Purchased transportation expense increased due to an increase at our Expedited Freight segment. The increase was mostly due to an increase in final mile purchased transportation due to the acquisition of Linn Star.

Income from Continuing Operations and Segment Operations

Income from continuing operations ~~decreased $5.7 million,~~increased $6,952, or ~~19.5%~~44.1%, to ~~$23.5 million~~$22,724 for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$29.2 million~~$15,772 for the three months ended ~~September 30, 2019.~~March 31, 2020. The ~~decrease~~increase was primarily driven by ~~decreases~~increases at our Expedited Freight segment and Intermodal segment of ~~$3.6 million~~$9,351 and ~~$2.1 million,~~$796, respectively. The results for our two reportable segments are discussed in detail in the following sections.

Interest expense was ~~$1.3 million~~$1,165 for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$0.8 million~~$853 for the three months ended ~~September 30, 2019.~~March 31, 2020. The increase in interest expense was attributable to ~~additional~~a higher interest rate on the outstanding borrowings onunder our revolving credit facility. The interest rate on the outstanding borrowings under the revolving credit facility was 3.25% and 2.3%, respectively, at March 31, 2021 and 2020.

Income Taxes on a Continuing Basis

The combined federal and state effective tax rate on a continuing basis for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~23.5%~~22.5% compared to a rate of ~~25.9%~~23.5% for the three months ended ~~September 30, 2019.~~March 31, 2020. The lower effective tax rate for the three months ended ~~September 30, 2020~~March 31, 2021 was primarily due to ~~decreased~~increased vesting of restricted shares as well as exercises of stock ~~based compensation vesting and exercises and return to provision adjustments that were recorded~~options in the current period when compared to the same period in ~~2019.~~2020.

~~(Loss) Income~~Loss from Discontinued ~~Operations,~~Operation, net of tax

~~(Loss) income~~Loss from discontinued ~~operations,~~operation, net of tax ~~decreased $1.4 million~~increased $2,493 to a ~~$0.3 million~~$5,533 loss for the three months ended ~~September 30, 2020 from $1.1 million of income~~March 31, 2021 compared to a $3,040 loss for the three months ended ~~September 30, 2019. (Loss) income from discontinued operations includes the Company's~~March 31, 2020. The Pool business was sold on February 12, 2021, and ~~as discussed above, Pool's operations were negatively impacted by COVID-19 as many of its customers were affected by retail mall closures. As a result, there continued to be a decline~~the loss on sale recorded in ~~Pool's operating revenue during the third quarter of 2020, resulting in an operating loss for Pool during the three months ended September 30, 2020.~~discontinued operation was $2,860.

As a result of the foregoing factors, net income ~~decreased by $5.5 million,~~increased $2,806, or ~~24.8%~~33.5%, to ~~$16.7 million~~$11,181 for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$22.2 million~~$8,375 for the three months ended ~~September 30, 2019.~~March 31, 2020.

Expedited Freight - Three Months Ended ~~September 30, 2020~~March 31, 2021 compared to Three Months Ended ~~September 30, 2019~~March 31, 2020

The following table sets forth the ~~historical~~ financial data of our Expedited Freight segment for the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019 (in millions):~~2020:

1 Includes revenues and operating expenses from the acquisition of Linn Star which was acquired in January 2020. Linn Star results are not included in the prior period.

2 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

1Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

Revenue per hundredweight 3

Revenue per hundredweight, ex fuel 3

Revenue per shipment 3

Revenue per shipment, ex fuel 3

Network revenue from door-to-door shipments as a percentage of network revenue 3,4

Network gross margin 5

2 Excludes accessorial, Truckload and Final Mile products

3 Includes intercompany revenue between the Network and Truckload revenue streams

4 Door-to-door shipments include all shipments with a pickup and/or delivery

5 Network revenue less Network purchased transportation as a percentage of Network revenue

Expedited Freight operating revenue increased ~~$27.4 million,~~$50,561, or ~~10.7%~~19.9%, to ~~$283.5 million~~$304,186 for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$256.1 million~~$253,625 for the three months ended ~~September 30, 2019.~~March 31, 2020. The increase was attributable to increased ~~final mile~~Network, Truckload and ~~truckload~~Final Mile revenue. Network revenue ~~was flat~~increased due to a ~~3.6%~~14.3% increase in tonnage, a ~~4.2%~~15.9% increase in shipments and a ~~2.9% decrease~~1.5% increase in revenue per hundredweight ~~from~~as compared to the prior year.

~~In addition, fuel~~ Fuel surcharge revenue ~~decreased $4.7 million,~~increased $863, or ~~17.8%, due to declining~~3.7% as a result of the rising fuel prices. Truckload revenue increased ~~by $1.7 million~~$4,851 primarily due to an increase in revenue per mile. Final Mile revenue increased $14,454 due to the combination of organic growth and the acquisition of CLW in October 2020. Other revenue, which includes warehousing and terminal handling, increased ~~$0.3 million~~$4,638 due to the higher linehaul tonnage and shipment counts. ~~Final mile revenue increased $25.4 million primarily due to the acquisition of Linn Star in January 2020.~~

Purchased Transportation

Expedited Freight purchased transportation increased ~~$26.3 million,~~$31,574, or ~~20.3%~~23.8%, to ~~$156.1 million~~$164,364 for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$129.8 million~~$132,790 for the three months ended ~~September 30, 2019.~~March 31, 2020. Purchased transportation was ~~55.1%~~54.0% of Expedited Freight operating revenue for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~50.7%~~52.4% for the same period in ~~2019.~~2020. Expedited Freight purchased transportation includes owner operators and third party carriers, while Company-employed drivers are included in salaries, wages and benefits. The increase in purchased transportation as a percentage of revenue was ~~mostly due to an increase in final mile purchased transportation~~primarily due to the ~~acquisition~~mix of ~~Linn Star.~~owner operators, third party carriers and Company-employed drivers.

Salaries, Wages and Employee Benefits

Expedited Freight salaries, wages and employee benefits increased ~~$1.9 million,~~$6,252, or ~~3.6%~~11.3%, to ~~$54.1 million~~$61,687 for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$52.2 million~~$55,435 for the three months ended ~~September 30, 2019.~~March 31, 2020. Salaries, wages and employee benefits were ~~19.1%~~20.3% of Expedited Freight operating revenue for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~20.4%~~21.9% for the same period in ~~2019.~~2020. The ~~increase~~decrease in ~~expense~~salaries, wages and employee benefits as a percentage of revenue was primarily due ~~a $3.8 million increase related~~ to ~~the acquisition of Linn Star partially offset by~~ cost-control measures and operating efficiencies.

Expedited Freight operating leases increased ~~$1.9 million,~~$616, or ~~16.5%~~4.5%, to ~~$13.4 million~~$14,218 for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$11.5 million~~$13,602 for the three months ended ~~September 30, 2019.~~March 31, 2020. Operating leases were 4.7% of Expedited Freight operating revenue for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~4.5%~~5.4% for the same period in ~~2019.~~2020. The increase in ~~expense~~operating leases was primarily due to ~~an increase in~~additional truck leases and facility leases ~~mostly from additional facilities~~ acquired from ~~Linn Star.~~CLW.

Depreciation and Amortization

Expedited Freight depreciation and amortization increased ~~$0.3 million,~~$103, or ~~4.6%~~1.5%, to ~~$6.8 million~~$6,798 for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$6.5 million~~$6,695 for the three months ended ~~September 30, 2019.~~March 31, 2020. Depreciation and amortization was ~~2.4%~~2.2% of Expedited Freight operating revenue for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~2.5%~~2.6% for the same period in ~~2019.~~2020. The increase in amortization expense was primarily due to ~~$0.8 million of increased~~the amortization of ~~acquired~~ intangibles ~~and depreciation of fixed assets~~resulting from the acquisition of Linn Star partially offset by a reduction of depreciation expense of $0.5 million related to extending the useful lives of its trailers from seven to ten years due to the impact of a useful life study in the third quarter of 2019.CLW.

Insurance and Claims

Expedited Freight insurance and claims increased ~~$0.4 million,~~$998, or ~~7.4%~~15.1%, to ~~$5.8 million~~$7,611 for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$5.4 million~~$6,613 for the three months ended ~~September 30, 2019.~~March 31, 2020. Insurance and claims were ~~2.0%~~2.5% of Expedited Freight operating revenue for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~2.1%~~2.6% for the same period in ~~2019.~~2020. The increase in insurance and claims expense was primarily attributable to an increase in vehicle ~~liability claims.~~insurance premiums. See ~~additional~~additional discussion over the consolidated ~~increase~~change in self-insurance reserves ~~related to vehicle claims~~ in the ~~"Other operations"~~“Other Operation” section below.

Expedited Freight fuel expense decreased $151, or 7.0%, to $1,993 for the three months ended March 31, 2021 from $2,144 for the three months ended March 31, 2020. Fuel expense was 0.7% of Expedited Freight operating revenue for the three months ended March 31, 2021 compared to 0.8% for the same period in 2020. Expedited Freight fuel expense decreased due to a decline in our mileage and the average price of fuel in 2021.


Table of Contents

Forward Air Corporation

		Page
		Number
Part I.	Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets – ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020	3

	Condensed Consolidated Statements of Comprehensive Income - Three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	4

	Condensed Consolidated Statements of Cash Flows – ~~Nine~~Three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	5

	Condensed Consolidated Statements of Shareholders' Equity – ~~Nine~~Three months ended ~~September~~ ~~30,~~March 31, 2021 and 2020 ~~and 2019~~	6

	Notes to Condensed Consolidated Financial Statements – ~~September 30, 2020~~March 31, 2021	87

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3123

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5536

Item 4.	Controls and Procedures	5536

Part II.	Other Information

Item 1.	Legal Proceedings	5536

Item 1A.	Risk Factors	5536

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5737

Item 3.	Defaults Upon Senior Securities	5737

Item 4.	Mine Safety Disclosures	5737

Item 5.	Other ~~Information~~	5737

Item 6.	Exhibits	5838

Signatures		5939


Forward Air Corporation	Forward Air Corporation					Forward Air Corporation
Consolidated Balance Sheets
Condensed Consolidated Balance Sheets						Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)	(Dollars in thousands, except share and per share amounts)					(Dollars in thousands, except share and per share amounts)
(Unaudited)	(Unaudited)					(Unaudited)
		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	42,990	$	64,749	Cash and cash equivalents	$	24,396	$	40,254
Accounts receivable, less allowance of $2,448 in 2020 and $2,053 in 2019		153,070		136,214
Accounts receivable, less allowance of $2,071 in 2021 and $2,273 in 2020						Accounts receivable, less allowance of $2,071 in 2021 and $2,273 in 2020	186,504		156,490
Other receivables						Other receivables	16,847		0
Other current assets	Other current assets	22,062		20,403		Other current assets	20,239		28,150
Current assets held for sale	Current assets held for sale	16,925		14,952		Current assets held for sale	0		21,002
Total current assets	Total current assets	235,047		236,318		Total current assets	247,986		245,896

Property and equipment	Property and equipment	379,306		373,571		Property and equipment	379,566		380,519
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	189,042		180,815		Less accumulated depreciation and amortization	192,622		190,652
Total property and equipment, net	Total property and equipment, net	190,264		192,756		Total property and equipment, net	186,944		189,867
Operating lease right-of-use assets	Operating lease right-of-use assets	115,551		105,170		Operating lease right-of-use assets	130,859		123,338
Goodwill and other acquired intangibles:

Goodwill	Goodwill	240,933		215,699		Goodwill	250,736		244,982
Other acquired intangibles, net of accumulated amortization of $89,540 in 2020 and $79,250 in 2019		145,086		124,857
Total goodwill and other acquired intangibles, net		386,019		340,556
Other acquired intangibles, net of accumulated amortization of $96,451 in 2021 and $93,009 in 2020						Other acquired intangibles, net of accumulated amortization of $96,451 in 2021 and $93,009 in 2020	147,668		145,032

Other assets	Other assets	43,266		39,374		Other assets	51,708		45,181
Noncurrent assets held for sale	Noncurrent assets held for sale	78,063		76,704		Noncurrent assets held for sale	0		53,097
Total assets	Total assets	$	1,048,210	$	990,878	Total assets	$	1,015,901	$	1,047,393

Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity					Liabilities and Shareholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	32,581	$	25,411	Accounts payable	$	40,676	$	38,371
Accrued expenses	Accrued expenses	52,454		44,154		Accrued expenses	74,625		51,264
Other current liabilities	Other current liabilities	4,277		5,318		Other current liabilities	6,817		10,580
Current portion of debt and finance lease obligations	Current portion of debt and finance lease obligations	1,557		1,421		Current portion of debt and finance lease obligations	1,908		1,801
Current portion of operating lease obligations		40,258		35,886
Current portion of operating lease liabilities						Current portion of operating lease liabilities	45,107		43,680
Current liabilities held for sale	Current liabilities held for sale	26,006		24,974		Current liabilities held for sale	0		25,924
Total current liabilities	Total current liabilities	157,133		137,164		Total current liabilities	169,133		171,620

Debt and finance lease obligations, less current portion		116,583		72,249
Operating lease obligations, less current portion		76,003		69,678
Long-term debt and finance lease obligations, less current portion and debt issuance costs						Long-term debt and finance lease obligations, less current portion and debt issuance costs	117,156		117,408
Operating lease liabilities, less current portion						Operating lease liabilities, less current portion	86,212		80,346
Other long-term liabilities	Other long-term liabilities	61,536		56,448		Other long-term liabilities	57,131		54,129
Deferred income taxes	Deferred income taxes	45,532		41,214		Deferred income taxes	41,538		41,986
Noncurrent liabilities held for sale	Noncurrent liabilities held for sale	39,227		36,943		Noncurrent liabilities held for sale	0		34,575

Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Preferred stock		0		0
Common stock, $0.01 par value: Authorized shares - 50,000,000, Issued and outstanding shares - 27,258,493 in 2020 and 27,850,233 in 2019		273		279
Preferred stock, $0.01 par value: Authorized shares - 5,000,000; 0 shares issued or outstanding in 2021 and 2020						Preferred stock, $0.01 par value: Authorized shares - 5,000,000; 0 shares issued or outstanding in 2021 and 2020	0		0
Common stock, $0.01 par value: Authorized shares - 50,000,000; issued and outstanding shares - 27,318,501 in 2021 and 27,316,434 in 2020						Common stock, $0.01 par value: Authorized shares - 50,000,000; issued and outstanding shares - 27,318,501 in 2021 and 27,316,434 in 2020	273		273
Additional paid-in capital	Additional paid-in capital	237,497		226,869		Additional paid-in capital	247,678		242,916
Retained earnings	Retained earnings	314,426		350,034		Retained earnings	296,780		304,140
Total shareholders’ equity	Total shareholders’ equity	552,196		577,182		Total shareholders’ equity	544,731		547,329
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	1,048,210	$	990,878	Total liabilities and shareholders’ equity	$	1,015,901	$	1,047,393

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


Forward Air Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Nine months ended
	September 30, 2020		September 30, 2019

Operating activities:
Net income from continuing operations	$	37,634	$	59,987
Adjustments to reconcile net income of continuing operations to net cash provided by operating activities of continuing operations
Depreciation and amortization	27,919		27,531

Change in fair value of earn-out liability	(2,209)		890
Share-based compensation	7,852		8,536
Loss on disposal of property and equipment, net	108		781
Provision for loss on receivables	606		819
Provision for revenue adjustments	2,972		2,239
Deferred income tax expense	4,317		5,881

Changes in operating assets and liabilities
Accounts receivable	(20,436)		(3,778)
Prepaid expenses and other current assets	(173)		(4,380)
Income taxes	1,426		(2,557)
Accounts payable and accrued expenses	20,477		11,876
Net cash provided by operating activities of continuing operations	80,493		107,825

Investing activities:
Proceeds from disposal of property and equipment	1,415		1,693
Purchases of property and equipment	(16,439)		(23,240)
Acquisition of business, net of cash acquired	(55,931)		(39,000)

Net cash used in investing activities of continuing operations	(70,955)		(60,547)

Financing activities:

Payments of finance lease obligations	(529)		(528)
Proceeds from senior credit facility	65,000		20,000
Payments on senior credit facility	(20,000)		0
Payments on earn-out liability	(5,284)		0
Proceeds from exercise of stock options	1,901		2,063
Payments of cash dividends	(15,090)		(15,421)
Repurchase of common stock (repurchase program)	(45,248)		(47,906)

Proceeds from common stock issued under employee stock purchase plan	294		261

Cash settlement of share-based awards for tax withholdings	(3,444)		(3,032)
(Distributions to) contributions from subsidiary held for sale	(8,897)		6,452
Net cash used in financing activities from continuing operations	(31,297)		(38,111)
Net (decrease) increase in cash of continuing operations	(21,759)		9,167

Cash from discontinued operations:
Cash (used in) provided by operating activities of discontinued operations, net	(8,090)		9,906
Cash used in investing activities of discontinued operations, net	(807)		(3,454)
Cash provided by (used in) financing activities of discontinued operations, net	8,897		(6,452)
Net (decrease) increase in cash	(21,759)		9,167
Cash at beginning of period of continuing operations	64,749		25,657
Cash at beginning of period of discontinued operations/held for sale	0		0
Net (decrease) increase in cash	(21,759)		9,167
Less: cash at end of period of discontinued operations/held for sale	0		0
Cash at end of period of continuing operations	$	42,990	$	34,824


Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Three Months Ended
	March 31, 2021		March 31, 2020

Operating activities:
Net income from continuing operations	$	16,714	$	11,415
Adjustments to reconcile net income of continuing operations to net cash provided by operating activities of continuing operations
Depreciation and amortization	9,237		9,334

Change in fair value of earn-out liability	(48)		(594)
Share-based compensation expense	2,597		3,078
Provision for revenue adjustments	1,777		1,042
Deferred income tax expense	(505)		1,225
Other	92		(265)
Changes in operating assets and liabilities, net of effects from the purchase of businesses:
Accounts receivable	(28,023)		3,040
Other receivables	(13,339)		0
Other current and noncurrent assets	7,085		2,776
Accounts payable and accrued expenses	21,326		(223)
Net cash provided by operating activities of continuing operations	16,913		30,828

Investing activities:
Proceeds from sale of property and equipment	665		720
Purchases of property and equipment	(2,695)		(2,651)
Purchase of a business, net of cash acquired	(15,000)		(55,931)

Net cash used in investing activities of continuing operations	(17,030)		(57,862)

Financing activities:

Repayments of finance lease obligations	(467)		(336)
Proceeds from revolving credit facility	0		65,000


Proceeds from issuance of common stock upon stock option exercises	2,147		0
Payments of dividends to stockholders	(5,797)		(5,050)
Repurchases of common stock	(9,998)		(15,259)



Payment of minimum tax withholdings on share-based awards	(2,744)		(2,672)
Contributions from (distributions to) subsidiary held for sale	1,118		(2,153)
Net cash (used in) provided by financing activities from continuing operations	(15,741)		39,530
Net (decrease) increase in cash and cash equivalents of continuing operations	(15,858)		12,496

Cash from discontinued operation:
Net cash used in operating activities of discontinued operation	(6,902)		(1,662)
Net cash provided by (used in) investing activities of discontinued operation	8,020		(491)
Net cash (used in) provided by financing activities of discontinued operation	(1,118)		2,153
Net (decrease) increase in cash and cash equivalents	(15,858)		12,496
Cash and cash equivalents at beginning of period of continuing operations	40,254		64,749
Cash at beginning of period of discontinued operation	0		0
Net (decrease) increase in cash and cash equivalents	(15,858)		12,496
Less: cash at end of period of discontinued operation	0		0
Cash and cash equivalents at end of period of continuing operations	$	24,396	$	77,245


Forward Air Corporation
Consolidated Statements of Shareholders' Equity
(In thousands)
(Unaudited)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Total Shareholders' Equity
	Shares	Amount
Balance at December 31, 2019	27,850	$	279	$	226,869	$	350,034	$	577,182
Net income and comprehensive income	—	—		—		8,375		8,375



Share-based compensation	—	—		3,266		—		3,266
Dividends ($0.18 per share)	—	—		2		(5,052)		(5,050)
Cash settlement of share-based awards for tax withholdings	(42)	—		—		(2,672)		(2,672)
Share repurchases	(268)	(3)		—		(15,256)		(15,259)
Vesting of previously non-vested shares	139	1		(2)		—		(1)

Balance at March 31, 2020	27,679	$	277	$	230,135	$	335,429	$	565,841
Net income and comprehensive income	—	—		—		3,155		3,155


Common stock issued under employee stock purchase plan	7	—		295		—		295
Share-based compensation	—	—		2,654		—		2,654
Dividends ($0.18 per share)	—	—		3		(5,042)		(5,039)
Cash settlement of share-based awards for tax withholdings	(13)	—		—		(613)		(613)

Vesting of previously non-vested shares	56	—		(1)		—		(1)

Balance at June 30, 2020	27,729	$	277	$	233,086	$	332,929	$	566,292
Net income and comprehensive income	—	—		—		16,647		16,647

Exercise of stock options	42	1		1,901		—		1,902

Share-based compensation	—	—		2,507		—		2,507
Dividends ($0.18 per share)	—	—		3		(5,008)		(5,005)
Cash settlement of share-based awards for tax withholdings	(3)	—		—		(158)		(158)
Share repurchases	(519)	(5)		—		(29,984)		(29,989)
Vesting of previously non-vested shares	9	—		—		—		—

Balance at September 30, 2020	27,258	273		237,497		314,426		552,196


Forward Air Corporation
Consolidated Statements of Shareholders' Equity, continued
(In thousands, except share data)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Total Shareholders' Equity
	Shares	Amount
Balance at December 31, 2018	28,535	$	285	$	210,296	$	342,663	$	553,244
Net income and comprehensive income	—	—		—		18,407		18,407
Other	—	2		—		—		2
Exercise of stock options	18	—		830		—		830

Share-based compensation	—	—		3,047		—		3,047
Dividends ($0.18 per share)	—	—		1		(5,190)		(5,189)
Cash settlement of share-based awards for tax withholdings	(44)	(1)		—		(2,720)		(2,721)
Share repurchases	(230)	(2)		—		(14,179)		(14,181)
Vesting of previously non-vested shares	136	—		—		—		—

Balance at March 31, 2019	28,415	$	284	$	214,174	$	338,981	$	553,439
Net income and comprehensive income	—	—		—		22,330		22,330
Other	—	—		(2)		(2)		(4)
Exercise of stock options	10	—		448		—		448
Common stock issued under employee stock purchase plan	5	—		261		—		261
Share-based compensation	—	—		3,197		—		3,197
Dividends ($0.18 per share)	—	—		2		(5,146)		(5,144)
Cash settlement of share-based awards for tax withholdings	(1)	—		—		(49)		(49)
Share repurchases	(407)	(4)		—		(24,432)		(24,436)
Vesting of previously non-vested shares	18	—		—		—		—

Balance at June 30, 2019	28,040	$	280	$	218,080	$	331,682	$	550,042
Net income and comprehensive income	—	—		—		22,195		22,195

Exercise of stock options	17	—		785		—		785

Share-based compensation	—	—		2,762		—		2,762
Dividends ($0.18 per share)	—	—		2		(5,090)		(5,088)
Cash settlement of share-based awards for tax withholdings	(4)	—		—		(262)		(262)
Share repurchases	(152)	(1)		—		(9,288)		(9,289)
Vesting of previously non-vested shares	14	—		—		—		—

Balance at September 30, 2019	27,915	279		221,629		339,237		561,145












The accompanying notes are an integral part of the financial statements.


	FSA Earn-out
	April 21, 2019	December 31, 2019	September 30, 2020
Risk-free rate	2.9%	2.2%	2.0%
Revenue discount rate	4.4%	4.4%	3.2%
Revenue volatility	3.0%	5.0%	7.0%



	FSA		OST		Linn Star
	April 21, 2019		July 14, 2019		January 12, 2020
Tangible assets:
Cash	$	202	$	—	$	1,308

Other receivables	1,491		—		—
Prepaid expenses and other current assets	—		—		1,182
Property and equipment	40		10,371		605

Operating lease right-of-use assets	3,209		1,672		10,011

Total tangible assets	4,942		12,043		13,106
Intangible assets:
Non-compete agreements	900		850		450

Customer relationships	17,900		5,700		29,800
Goodwill	19,963		2,050		25,234
Total intangible assets	38,763		8,600		55,484
Total assets acquired	43,705		20,643		68,590

Liabilities assumed:
Current liabilities	8,466		—		1,340
Other liabilities	5,030		—		—
Debt and finance lease obligations	—		6,971		—
Operating lease obligations	3,209		1,672		10,011

Total liabilities assumed	16,705		8,643		11,351
Net assets acquired	$	27,000	$	12,000	$	57,239


	Beginning balance, December 31, 2019		Linn Star Acquisition		Ending balance, September 30, 2020
Expedited LTL
Goodwill	$	97,593	$	—	$	97,593
Accumulated Impairment	—		—		—

Truckload
Goodwill	45,164		—		45,164
Accumulated Impairment	(25,686)		—		(25,686)

Final Mile
Goodwill	19,963		25,234		45,197
Accumulated Impairment	—		—		—

Intermodal
Goodwill	78,665		—		78,665
Accumulated Impairment	—		—		—





Total
Goodwill	241,385		25,234		266,619
Accumulated Impairment	(25,686)		—		(25,686)
	$	215,699	$	25,234	$	240,933


	Nine months ended September 30, 2020
						Weighted-
		Weighted-				Average
		Average		Aggregate		Remaining
		Exercise		Intrinsic		Contractual
	Options	Price		Value		Term
Outstanding at December 31, 2019	417	$	53
Granted	36	66
Exercised	(42)	46
Forfeited	(4)	60
Outstanding at September 30, 2020	407	$	55	$	(133)	3.8
Exercisable at September 30, 2020	311	$	53	$	682	3.4


	September 30, 2020
	Carrying Value		Fair Value

Finance leases	$	5,757	$	5,827


	Three months ended
	September 30, 2020					September 30, 2019
	Shares repurchased	Cost of shares repurchased		Average cost per share		Shares repurchased	Cost of shares repurchased		Average cost per share


2019 Repurchase Plan	519	$	29,990	$	57.84	152	$	9,289	$	61.01
Total	519	$	29,990	$	57.84	152	$	9,289	$	61.01



	Three Months Ended September 30, 2020
	Expedited Freight		Intermodal		Eliminations & other		Continuing Operations
External revenues	$	283,025	$	48,940	$	34	$	331,999
Intersegment revenues	489		8		(499)		(2)
Depreciation	4,981		789		36		5,806
Amortization	1,799		1,567		—		3,366
Share-based compensation expense	2,208		415		(278)		2,345
Interest expense	3		38		1,263		1,304
Income (loss) from operations	23,461		4,837		(4,788)		23,510
Total assets	882,214		217,813		(146,805)		953,222
Capital expenditures	2,037		188		—		2,225

	Three months ended September 30, 2019 (As Adjusted)
	Expedited Freight		Intermodal		Eliminations & other		Continuing Operations
External revenues	$	255,404	$	58,317	$	—	$	313,721
Intersegment revenues	711		29		(778)		(38)
Depreciation	5,256		1,050		(27)		6,279
Amortization	1,195		1,542		—		2,737
Share-based compensation expense	1,895		340		392		2,627
Interest expense	2		67		692		761
Income (loss) from operations	27,131		6,900		(4,845)		29,186
Total assets	706,632		205,444		(25,489)		886,587
Capital expenditures	8,818		207		—		9,025


		Three months ended
		September 30,		September 30,				Percent			Three Months Ended
		2020		2019		Change		Change			March 31,		March 31,				Percent
				(As Adjusted)							2021		2020		Change		Change
Operating revenue:	Operating revenue:									Operating revenue:
Expedited Freight	Expedited Freight	$	283.5	$	256.1	$	27.4	10.7	%	Expedited Freight	$	304,186	$	253,625	$	50,561	19.9	%
Intermodal	Intermodal	48.9		58.3		(9.4)		(16.1)		Intermodal	58,514		52,460		6,054		11.5

Eliminations and other operations	Eliminations and other operations	(0.5)		(0.7)		0.2		(28.6)		Eliminations and other operations	(498)		(528)		30		(5.7)
Operating revenue	Operating revenue	331.9		313.7		18.2		5.8		Operating revenue	362,202		305,557		56,645		18.5
Operating expenses:	Operating expenses:									Operating expenses:
Purchased transportation	Purchased transportation	173.1		150.3		22.8		15.2		Purchased transportation	184,608		150,598		34,010		22.6
Salaries, wages, and employee benefits	Salaries, wages, and employee benefits	66.9		68.5		(1.6)		(2.3)		Salaries, wages, and employee benefits	74,897		69,559		5,338		7.7
Operating leases	Operating leases	17.3		15.9		1.4		8.8		Operating leases	19,167		17,884		1,283		7.2
Depreciation and amortization	Depreciation and amortization	9.1		9.0		0.1		1.1		Depreciation and amortization	9,237		9,334		(97)		(1.0)
Insurance and claims	Insurance and claims	8.7		9.5		(0.8)		(8.4)		Insurance and claims	9,741		10,044		(303)		(3.0)
Fuel expense	Fuel expense	2.7		4.6		(1.9)		(41.3)		Fuel expense	3,702		4,013		(311)		(7.7)
Other operating expenses	Other operating expenses	30.6		26.6		4.0		15.0		Other operating expenses	38,126		28,353		9,773		34.5

Total operating expenses	Total operating expenses	308.4		284.5		23.9		8.4		Total operating expenses	339,478		289,785		49,693		17.1
Income (loss) from continuing operations:	Income (loss) from continuing operations:									Income (loss) from continuing operations:
Expedited Freight	Expedited Freight	23.5		27.1		(3.6)		(13.3)		Expedited Freight	24,530		15,179		9,351		61.6
Intermodal	Intermodal	4.8		6.9		(2.1)		(30.4)		Intermodal	4,509		3,713		796		21.4

Other operations		(4.8)		(4.8)		—		—
Other Operations										Other Operations	(6,315)		(3,120)		(3,195)		102.4
Income from continuing operations	Income from continuing operations	23.5		29.2		(5.7)		(19.5)		Income from continuing operations	22,724		15,772		6,952		44.1
Other expense:	Other expense:									Other expense:
Interest expense	Interest expense	(1.3)		(0.8)		(0.5)		62.5		Interest expense	(1,165)		(853)		(312)		36.6

Total other expense	Total other expense	(1.3)		(0.8)		(0.5)		62.5		Total other expense	(1,165)		(853)		(312)		36.6
Income from continuing operations before income taxes	Income from continuing operations before income taxes	22.2		28.4		(6.2)		(21.8)		Income from continuing operations before income taxes	21,559		14,919		6,640		44.5
Income tax expense	Income tax expense	5.2		7.3		(2.1)		(28.8)		Income tax expense	4,845		3,504		1,341		38.3
Net income from continuing operations	Net income from continuing operations	17.0		21.1		(4.1)		(19.4)		Net income from continuing operations	16,714		11,415		5,299		46.4
(Loss) income from discontinued operations, net of tax		(0.3)		1.1		(1.4)		(127.3)
Loss from discontinued operations, net of tax										Loss from discontinued operations, net of tax	(5,533)		(3,040)		(2,493)		82.0
Net income and comprehensive income	Net income and comprehensive income	$	16.7	$	22.2	$	(5.5)	(24.8)	%	Net income and comprehensive income	$	11,181	$	8,375	$	2,806	33.5	%


Expedited Freight Segment Information	Expedited Freight Segment Information													Expedited Freight Segment Information
(In millions)
(In thousands)														(In thousands)
(Unaudited)	(Unaudited)													(Unaudited)

		Three months ended													Three Months Ended
		September 30,		Percent of		September 30,		Percent of				Percent			March 31,		Percent of		March 31,		Percent of				Percent
		2020 1		Revenue		2019		Revenue		Change		Change			2021		Revenue		2020		Revenue		Change		Change
						(As Adjusted)
Operating revenue:	Operating revenue:													Operating revenue:
Network 2		$	169.3	59.7	%	$	169.3	66.1	%	$	—	—	%
Network1														Network1	$	178,627	58.7	%	$	152,009	59.9	%	$	26,618	17.5	%
Truckload	Truckload	49.8		17.6		48.1		18.8		1.7		3.5		Truckload	52,380		17.2		47,529		18.7		4,851		10.2
Final Mile	Final Mile	57.0		20.1		31.6		12.3		25.4		80.4		Final Mile	62,256		20.5		47,802		18.8		14,454		30.2
Other	Other	7.4		2.6		7.1		2.8		0.3		4.2		Other	10,923		3.6		6,285		2.5		4,638		73.8
Total operating revenue	Total operating revenue	283.5		100.0		256.1		100.0		27.4		10.7		Total operating revenue	304,186		100.0		253,625		100.0		50,561		19.9

Operating expenses:	Operating expenses:													Operating expenses:
Purchased transportation	Purchased transportation	156.1		55.1		129.8		50.7		26.3		20.3		Purchased transportation	164,364		54.0		132,790		52.4		31,574		23.8
Salaries, wages and employee benefits	Salaries, wages and employee benefits	54.1		19.1		52.2		20.4		1.9		3.6		Salaries, wages and employee benefits	61,687		20.3		55,435		21.9		6,252		11.3
Operating leases	Operating leases	13.4		4.7		11.5		4.5		1.9		16.5		Operating leases	14,218		4.7		13,602		5.4		616		4.5
Depreciation and amortization	Depreciation and amortization	6.8		2.4		6.5		2.5		0.3		4.6		Depreciation and amortization	6,798		2.2		6,695		2.6		103		1.5
Insurance and claims	Insurance and claims	5.8		2.0		5.4		2.1		0.4		7.4		Insurance and claims	7,611		2.5		6,613		2.6		998		15.1
Fuel expense	Fuel expense	1.4		0.5		2.5		1.0		(1.1)		(44.0)		Fuel expense	1,993		0.7		2,144		0.8		(151)		(7.0)
Other operating expenses	Other operating expenses	22.4		7.9		21.1		8.2		1.3		6.2		Other operating expenses	22,985		7.6		21,167		8.3		1,818		8.6

Total operating expenses	Total operating expenses	260.0		91.7		229.0		89.4		31.0		13.5		Total operating expenses	279,656		91.9		238,446		94.0		41,210		17.3
Income from operations	Income from operations	$	23.5	8.3	%	$	27.1	10.6	%	$	(3.6)	(13.3)	%	Income from operations	$	24,530	8.1	%	$	15,179	6.0	%	$	9,351	61.6	%

1 Includes revenues and operating expenses from the acquisition of Linn Star which was acquired in January 2020. Linn Star results are not included in the prior period.
2 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.
1Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.														1Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.


Expedited Freight Operating Statistics	Expedited Freight Operating Statistics									Expedited Freight Operating Statistics

		Three months ended
		September 30,			September 30,			Percent			Three Months Ended
		2020			2019			Change			March 31,			March 31,			Percent
					(As Adjusted)						2021			2020			Change
Business days	Business days	64			64			—	%	Business days	63			64			(1.6)	%

Tonnage 1,2	Tonnage 1,2									Tonnage 1,2
Total pounds	Total pounds	636,194			613,812			3.6		Total pounds	651,339			569,956			14.3
Pounds per day	Pounds per day	9,941			9,591			3.6		Pounds per day	10,339			8,906			16.1

Shipments 1,2	Shipments 1,2									Shipments 1,2
Total shipments	Total shipments	1,018			977			4.2		Total shipments	1,026			885			15.9
Shipments per day	Shipments per day	15.9			15.3			4.2		Shipments per day	16.3			13.8			18.1

Weight per shipment	Weight per shipment	625			628			(0.5)		Weight per shipment	635			644			(1.4)

Revenue per hundredweight 3	Revenue per hundredweight 3	$	26.84		$	27.65		(2.9)		Revenue per hundredweight 3	$	27.56		$	27.16		1.5
Revenue per hundredweight, ex fuel 3	Revenue per hundredweight, ex fuel 3	$	23.41		$	23.23		0.8		Revenue per hundredweight, ex fuel 3	$	23.86		$	23.09		3.3

Revenue per shipment 3	Revenue per shipment 3	$	166		$	176		(5.7)		Revenue per shipment 3	$	174		$	172		1.2
Revenue per shipment, ex fuel 3	Revenue per shipment, ex fuel 3	$	145		$	148		(2.0)		Revenue per shipment, ex fuel 3	$	151		$	145		4.1

Network revenue from door-to-door shipments as a percentage of network revenue 3,4	Network revenue from door-to-door shipments as a percentage of network revenue 3,4	51.3		%	40.7		%	26.0		Network revenue from door-to-door shipments as a percentage of network revenue 3,4	48.4		%	44.3		%	9.3
Network gross margin 5	Network gross margin 5	49.7		%	55.6		%	(10.6)	%	Network gross margin 5	51.9		%	53.4		%	(2.8)	%

1 In thousands	1 In thousands									1 In thousands
2 Excludes accessorial, Truckload and Final Mile products	2 Excludes accessorial, Truckload and Final Mile products									2 Excludes accessorial, Truckload and Final Mile products
3 Includes intercompany revenue between the Network and Truckload revenue streams	3 Includes intercompany revenue between the Network and Truckload revenue streams									3 Includes intercompany revenue between the Network and Truckload revenue streams
4 Door-to-door shipments include all shipments with a pickup and/or delivery	4 Door-to-door shipments include all shipments with a pickup and/or delivery									4 Door-to-door shipments include all shipments with a pickup and/or delivery
5 Network revenue less Network purchased transportation as a percentage of Network revenue	5 Network revenue less Network purchased transportation as a percentage of Network revenue									5 Network revenue less Network purchased transportation as a percentage of Network revenue


Intermodal Segment Information	Intermodal Segment Information													Intermodal Segment Information
(In millions)
(In thousands)														(In thousands)
(Unaudited)	(Unaudited)													(Unaudited)

		Three months ended													Three Months Ended
		September 30,		Percent of		September 30,		Percent of				Percent			March 31,		Percent of		March 31,		Percent of				Percent
		2020 1		Revenue		2019		Revenue		Change		Change			2020 1		Revenue		2020		Revenue		Change		Change
Operating revenue	Operating revenue	$	48.9	100.0	%	$	58.3	100.0	%	$	(9.4)	(16.1)	%	Operating revenue	$	58,514	100.0	%	$	52,460	100.0	%	$	6,054	11.5	%

Operating expenses:	Operating expenses:													Operating expenses:
Purchased transportation	Purchased transportation	17.3		35.4		21.0		36.0		(3.7)		(17.6)		Purchased transportation	20,603		35.2		18,166		34.6		2,437		13.4
Salaries, wages and employee benefits	Salaries, wages and employee benefits	11.6		23.7		14.2		24.4		(2.6)		(18.3)		Salaries, wages and employee benefits	14,063		24.0		12,930		24.6		1,133		8.8
Operating leases	Operating leases	3.9		8.0		4.3		7.4		(0.4)		(9.3)		Operating leases	4,837		8.3		4,428		8.4		409		9.2
Depreciation and amortization	Depreciation and amortization	2.4		4.9		2.6		4.5		(0.2)		(7.7)		Depreciation and amortization	2,436		4.2		2,621		5.0		(185)		(7.1)
Insurance and claims	Insurance and claims	2.1		4.3		1.8		3.1		0.3		16.7		Insurance and claims	2,402		4.1		1,973		3.8		429		21.7
Fuel expense	Fuel expense	1.2		2.5		2.2		3.8		(1.0)		(45.5)		Fuel expense	1,710		2.9		1,869		3.6		(159)		(8.5)
Other operating expenses	Other operating expenses	5.6		11.5		5.3		9.1		0.3		5.7		Other operating expenses	7,954		13.6		6,760		12.9		1,194		17.7
Total operating expenses	Total operating expenses	44.1		90.2		51.4		88.2		(7.3)		(14.2)		Total operating expenses	54,005		92.3		48,747		92.9		5,258		10.8
Income from operations	Income from operations	$	4.8	9.8	%	$	6.9	11.8	%	$	(2.1)	(30.4)	%	Income from operations	$	4,509	7.7	%	$	3,713	7.1	%	$	796	21.4	%

1 Includes revenues and operating expenses from the acquisition of OST, which was acquired in July 2019 (and is partially included in the prior period)
1 Includes revenues and operating expenses from the acquisition of Proficient Transport, which was acquired in February 2021.														1 Includes revenues and operating expenses from the acquisition of Proficient Transport, which was acquired in February 2021.


Intermodal Operating Statistics

	Three months ended
	September 30,		September 30,		Percent
	2020		2019		Change
Drayage shipments	74,506		84,230		(11.5)	%
Drayage revenue per shipment	$	562	$	597	(5.9)
Number of locations	24		21		14.3	%


	Nine months ended September 30,
	2020		2019		Change		Percent Change
			(As Adjusted)
Operating revenue:
Expedited Freight	$	772.8	$	735.0	$	37.8	5.1	%
Intermodal	147.8		163.0		(15.2)		(9.3)

Eliminations and other operations	(1.4)		(2.5)		1.1		(44.0)
Operating revenue	919.2		895.5		23.7		2.6
Operating expenses:
Purchased transportation	465.7		426.3		39.4		9.2
Salaries, wages, and employee benefits	200.3		192.3		8.0		4.2
Operating leases	52.6		46.8		5.8		12.4
Depreciation and amortization	27.9		27.5		0.4		1.5
Insurance and claims	26.4		29.2		(2.8)		(9.6)
Fuel expense	9.2		13.3		(4.1)		(30.8)
Other operating expenses	83.9		78.1		5.8		7.4

Total operating expenses	866.0		813.5		52.5		6.5
Income (loss) from continuing operations:
Expedited LTL	50.4		76.2		(25.8)		(33.9)
Intermodal	12.9		18.3		(5.4)		(29.5)

Other operations	(10.1)		(12.6)		2.5		(19.8)
Income from continuing operations	53.2		82.0		(28.8)		(35.1)
Other expense:
Interest expense	(3.4)		(1.9)		(1.5)		78.9

Total other expense	(3.4)		(1.9)		(1.5)		78.9
Income from continuing operations before income taxes	49.8		80.1		(30.3)		(37.8)
Income tax expense	12.2		20.1		(7.9)		(39.3)
Net income from continuing operations	37.6		60.0		(22.4)		(37.3)
(Loss) income from discontinued operations, net of tax	(9.4)		2.9		(12.3)		(424.1)
Net income and comprehensive income	$	28.2	$	62.9	$	(34.7)	(55.2)	%


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 1-31 2020	—	$	—	—	3,886,950
August 1-31, 2020	320,291	57.51		320,291	3,566,659
September 1-30, 2020	198,208	58.57		198,208	3,368,451
Total	518,499	$	57.94	518,499	3,368,451

(1) On February 5, 2019, the Board of Directors canceled the Company’s remaining 2016 share repurchase authorization and approved a share repurchase authorization for up to 5.0 million shares of the Company’s common shares that shall remain in effect until such time as the shares authorized for repurchase are exhausted or until earlier terminated.


No.						Exhibit
3.1						Restated Charter of the registrant (incorporated herein by reference to Exhibit 3 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 28, 1999 (File No. 0-22490))
3.2						Amended and Restated Bylaws of the registrant (incorporated herein by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 31, 2017 (File No. 0-22490))
10.1						Advisory Agreement effective April 5, 2021, between Forward Air Corporation and Michael J. Morris










~~10.1~~						~~Amended and Restated Consulting Agreement effective July 28, 2020, between Forward Air Corporation and Matthew J. Jewell~~ ~~(incorporated herein by reference to Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, filed with the Securities and Exchange Commission on July 31, 2020 (File No. 0-22490))~~
31.1						Certification of ~~Chief Executive~~Princi pal E xecutive Officer and Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a) (17 CFR 240.13a-14(a))
~~31.2~~						~~Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a) (17 CFR 240.13a-14(a))~~
32.1						Certification of ~~Chief Executive~~Principal Exec utive Officer and P rinci pal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~32.2~~						~~Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
101.INS						The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema
101.CAL						XBRL Taxonomy Extension Calculation Linkbase
101.DEF						XBRL Taxonomy Extension Definition Linkbase
101.LAB						XBRL Taxonomy Extension Label Linkbase
101.PRE						XBRL Taxonomy Extension Presentation Linkbase
104						Cover Page Interactive File (formatted in Inline XBRL and contained in Exhibit 101).


		Forward Air Corporation
Date: ~~October 30, 2020~~May 3, 2021	By:	/s/ ~~Michael J. Morris~~Thomas Schmitt
		~~Michael J. Morris~~Thomas Schmitt President and Chief ~~Financial~~Executive Officer (Principal Executive Officer and ~~Treasurer~~Duly Authorized Officer)


		Forward Air Corporation
Date: May 3, 2021	By:	/s/ Rebecca J. Garbrick
		Rebecca J. Garbrick Vice President, Chief Accounting Officer and Controller (Principal ~~Financial~~Accounting Officer and Duly Authorized Officer)