Note 6 - Goodwill, Other Intangibles, and Other Assets

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

6. GOODWILL, OTHER INTANGIBLES, AND OTHER ASSETS

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

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

A summary of indefinite-lived goodwill, by reportable operating segment as of  December 31, 2021 and 2020 is as follows:

(in thousands)	December 31, 2021		December 31, 2020
	Gross/net goodwill		Gross/net goodwill
Dedicated	$	15,320	$	15,320
Managed Freight		5,448		5,448
Warehousing		21,750		21,750
Total goodwill	$	42,518	$	42,518

A summary of other intangible assets, by reportable operating segment as of  December 31, 2021 and 2020 is as follows:

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

(in thousands)	December 31, 2020
	Gross intangible assets		Accumulated amortization			Net intangible assets		Remaining Life (months)
Trade name:
Dedicated	$	2,402	$	(1,204	)	$	1,198
Managed Freight		999		(501	)		498
Warehousing		999		(501	)		498
Total trade name		4,400		(2,206	)		2,194		9
Customer relationships:
Dedicated		14,072		(2,931	)		11,141
Managed Freight		1,692		(354	)		1,338
Warehousing		12,436		(2,591	)		9,845
Total customer relationships		28,200		(5,876	)		22,324		114
Total other intangible assets	$	32,600	$	(8,082	)	$	24,518

The above finite-lived intangible assets have a weighted average remaining life of 102 months and 105 months as of  December 31, 2021 and 2020, respectively as a result of the change in estimated useful life as discussed above. Amortization expense was $4.0 million and $5.1 million for the years ended December 31, 2021 and 2020, respectively. The expected amortization expense of these assets for the next five years is as follows:

	(In thousands)
2022	$	2,350
2023		2,350
2024		2,350
2025		2,350
2026		2,350
Thereafter		8,225

A summary of other assets as of December 31, 2021 and 2020 is as follows:

(in thousands)	2021		2020
Investment in TEL	$	44,196	$	34,365
Other long-term receivables		7,329		24,378
Other assets, net		859		2,154
Total other assets, net	$	52,384	$	60,897

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

The Company conducted its annual impairment assessments and tests of goodwill for each reporting unit as of October 1, 2021. The first step of the goodwill impairment test is the Company's assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, including goodwill. When performing the qualitative assessment, the Company considers the impact of factors including, but not limited to, macroeconomic and industry conditions, overall financial performance of each reporting unit, litigation and new legislation. If based on the qualitative assessments, the Company believes it more likely than not that the fair value of a reporting unit is less than the reporting unit's carrying amount, or periodically as deemed appropriate by management, the Company will prepare an estimation of the respective reporting unit's fair value utilizing a quantitative approach.

If the estimation of fair value indicates that impairment potentially exists, the Company will then measure the amount of the impairment, if any. Goodwill impairment exists when the estimated implied fair value of goodwill is less than its carrying value. Changes in strategy or market conditions could significantly impact these fair value estimates and require adjustments to recorded asset balances. As a result of the most recent goodwill impairment analysis performed ( October 1, 2021), the fair value of the Dedicated reporting unit exceeded its carrying amount by approximately 8.5%.

Additionally, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Impairment is recognized on assets classified as held and used when the sum of undiscounted estimated cash flows expected to result from the use of the asset is less than the carrying value. If such measurement indicates a possible impairment, the estimated fair value of the asset is compared to its net book value to measure the impairment charge, if any.