Note

12.

Acquisition of Landair Holdings, Inc.

July 3, 2018,

we acquired

100%

of the outstanding stock of Landair Holdings, Inc., a Tennessee corporation (“Landair”), for

$91.2

million in cash and approximately

$15.5

million of debt of Landair, which we have paid in full. The

$91.2

million in cash includes our reimbursement obligation to Landair’s former owners of

$8.2

million related to our Internal Revenue Code Section

338

(h)(

) election, which is still subject to finalization. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions.

Landair is a leading dedicated and for-hire truckload carrier, as well as a supplier of transportation management, warehousing and logistics inventory management services. Landair’s results have been included in the condensed consolidated financial statements since the date of acquisition. Landair’s trucking operations’ results are reported within our Truckload segment, while Landair’s logistics operations’ results are reported within our Managed Freight segment.

The fair value of the total consideration transferred was

$106.7

million,

not

considering approximately

$0.8

million of cash balances acquired. The purchase price is subject to change based on finalization of the gross-up payment related to the

338

(h)(

) election as well as our ongoing evaluation of Landair's accounting principles for consistency with ours. The allocation of the preliminary purchase price is detailed as follows:

	(in thousands)
Cash paid				$	106,700

Allocated to:
Historical book value of Landair’s assets and liabilities	$	25,589
Adjustments to recognize assets and liabilities at acquisition-date fair value:
Property, plant, and equipment		(7,450	)
Other assets		(1,094	)
Liabilities		(829	)
Fair value of tangible net assets acquired					16,216
Post-acquisition goodwill adjustments					(114	)
Identifiable intangibles at acquisition-date fair value					34,000
Debt paid at closing					15,512
Excess of consideration transferred over the net amount of assets and liabilities recognized				$	41,086

Cash paid pursuant to Stock Purchase Agreement				$	106,700
Cash acquired included in historical book value of Landair assets and liabilities					(754	)
Net purchase price				$	105,946

Deferred income taxes arising from the acquisition are immaterial because of the election under Internal Revenue Code Section

338

(h)(

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date.

(in thousands)
	July 3, 2018
Cash and cash equivalents	$	754
Accounts receivable		12,610
Driver advances and other receivables		4,295
Inventory and supplies		3
Prepaid expenses		1,010
Assets held for sale		128
Net property and equipment		26,164
Other assets, net		22
Other intangibles, net		34,000
Total identifiable assets acquired		78,986

Accounts payable		(5,475	)
Accrued expenses		(5,015	)
Insurance and claims accrual		(2,645	)
Other short-term liabilities		(123	)
Total liabilities assumed		(13,258	)
Net identifiable assets acquired		65,728
Goodwill		40,972
Net assets acquired		106,700

The goodwill recognized is attributable primarily to expected cost synergies in the areas of insurance and claims, workers compensation, fuel, and purchases of revenue equipment. Additionally, Landair and the historical Company have limited customer overlap, and as such we expect to be able to cross-sell services between historical customers and those of Landair.

The amounts of revenue and earnings of Landair included in the Company’s consolidated results of operations from the acquisition date to the period ended

September 30, 2018

are as follows:

(in thousands)	Three months ended
	September 30, 2018
Total revenue	$	41,490
Net income	$	1,956

The following unaudited pro forma consolidated results of operations for the

three

and

nine

months ended

September 30, 2018

and

2017

assume that the acquisition of Landair occurred as of

January 1, 2017:

(in thousands)	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Total revenue	$	243,303	$	208,842	$	687,937	$	592,333
Net income	$	11,614	$	4,882	$	28,886	$	6,892
Basic net income per share	$	0.63	$	0.27	$	1.58	$	0.38
Diluted net income per share	$	0.63	$	0.27	$	1.57	$	0.38

For the

nine

months ended

September 30, 2018,

the pro forma results include an immaterial amount of adjustments to conform Landair to the accounting policies of the Company related to operations and maintenance and insurance and claims. In addition, salaries, wages, and related expenses decreased by

$2.1

million related to sale bonuses, restricted shares granted to key retained employees, and non-recurring compensation paid to a prior owner of Landair. General supplies and expenses decreased by

$3.4

million related to non-recurring acquisition-related expenses. Depreciation and amortization increased by

$1.1

million due to the amortization of intangible assets as detailed in Note

13,

partially offset by a net decrease resulting from the depreciation of property, plant, and equipment using useful lives consistent with those utilized by the Company. Interest expense, net increased by approximately

$2.0

million as a result of the financing obtained by the Company to fund the Landair acquisition. Income tax expense was adjusted by approximately

$0.1

million for the effect of each of the aforementioned adjustments. Results for the

three

and

nine

months ended

September 30, 2018

exclude

two

days of Landair’s operations that occurred between the period ended

June 30, 2018

and our acquisition on

July 3, 2018,

but this effect is immaterial.

For the

three

and

nine

months ended

September 30, 2017,

the pro forma results include an immaterial amount of adjustments to conform Landair to the accounting policies of the Company related to operations and maintenance and insurance and claims. Depreciation and amortization increased by approximately

$0.6

million and

$1.7

million for the quarter and

nine

months, respectively, due to the amortization of intangible assets as detailed in Note

13,

partially offset by a net decrease resulting from the depreciation of property, plant, and equipment using useful lives consistent with those utilized by the Company. Interest expense, net increased

$1.0

million and

$3.0

million for the quarter and

nine

months, respectively, as a result of the financing obtained by the Company to fund the Landair acquisition. Income tax expense was adjusted by an immaterial amount for the effect of each of the aforementioned adjustments.

The pro forma adjustments have been made solely for informational purposes. The actual results reported by the consolidated company in periods following the acquisition

may

differ significantly from that reflected in the unaudited pro forma consolidated results of operations for a number of reasons, including but

not

limited to cost savings from operating efficiencies, synergies and the impact of the incremental costs incurred in integrating the

two

companies. As a result, the unaudited pro forma consolidated results of operations are

not

intended to represent and does

not

purport to be indicative of what the combined company’s results of operations would have been had the acquisition been completed on the applicable dates of this unaudited pro forma consolidated results of operations. In addition, the unaudited pro forma consolidated results of operations do

not

purport to project the future results of operations of the consolidated company.