---

---

---

---

---

---

1	Reflects cash and cash equivalents that are primarily restricted for claims payments.

---

---

Certain acronyms and terms used throughout this Quarterly Report are specific to the Company, commonly used in the trucking industry, or are otherwise frequently used throughout this document. Definitions for these acronyms and terms are provided in the "Glossary of Terms," available in the front of this document.

Description of Business

Knight-Swift is a transportation solutions provider, headquartered in Phoenix, Arizona. During the quarter ended March 31, 2020, the Company operated an average of 18,462 tractors (comprised of 16,339 company tractors and 2,123 independent contractor tractors) and 57,716 trailers within the Trucking segment. Additionally, the Company operated an average of 601 tractors and 9,856 containers in the Intermodal segment. The Company's three reportable segments are Trucking, Logistics, and Intermodal.

Basis of Presentation

The condensed consolidated financial statements and footnotes included in this Quarterly Report include the accounts of Knight-Swift Transportation Holdings Inc. and its subsidiaries and should be read in conjunction with the consolidated financial statements and footnotes included in Knight-Swift's 2019 Annual Report. In management's opinion, these condensed consolidated financial statements were prepared in accordance with GAAP and include all adjustments necessary (consisting of normal recurring adjustments) for the fair statement of the periods presented.

With respect to transactional/durational data, references to years pertain to calendar years. Similarly, references to quarters pertain to calendar quarters.

Changes in Presentation

Changes in presentation associated with adopting accounting pronouncements are included in Note 2.

Beginning in the second quarter of 2019, the Company presents fuel surcharge revenue generated within only its Trucking segment within "Trucking fuel surcharge" in the condensed consolidated statements of comprehensive income. Fuel surcharge revenue generated within the remaining segments is included in "Revenue, excluding trucking fuel surcharge." Prior period amounts have been reclassified to align with the current period presentation.

Seasonality

In the transportation industry, results of operations generally follow a seasonal pattern. Freight volumes in the first quarter are typically lower due to less consumer demand, customers reducing shipments following the holiday season, and inclement weather. At the same time, operating expenses generally increase, and tractor productivity of the Company's fleet, independent contractors, and third-party carriers decreases during the winter months due to decreased fuel efficiency, increased cold weather-related equipment maintenance and repairs, and increased insurance claims and costs attributed to higher accident frequency from harsh weather. These factors typically lead to lower operating profitability, as compared to other parts of the year. Additionally, beginning in the latter half of the third quarter and continuing into the fourth quarter, the Company typically experiences surges pertaining to holiday shopping trends toward delivery of gifts purchased over the Internet, as well as the length of the holiday season (consumer shopping days between Thanksgiving and Christmas). However, cyclical changes in the trucking industry, including imbalances in supply and demand, can override the seasonality faced in the industry.

Impact of COVID-19

During the first quarter of 2020, COVID-19 became a global pandemic, which triggered a significant downturn in the global economy. The Company continues to operate its business through the COVID-19 pandemic and has taken many additional precautions to ensure the safety of its employees, customers, vendors, and the communities in which it operates. As part of the Company's efforts to safeguard its employees and promote business continuity, management has taken additional precautions to enhance the sanitization process of its equipment and properties, increase the social distancing of its employees by working remotely where possible, and provide driving associates with essential

---

provisions and enhanced bonus opportunities while they are over the road delivering freight to Knight-Swift's customers. During the first quarter of 2020, we incurred $2.3 million of incremental costs directly associated with COVID-19.

There are various uncertainties that have arisen from the COVID-19 pandemic. While management is continuing to monitor the impact of the pandemic on Knight-Swift, including its employees, customers, independent contractors, stockholders, and other business partners and stakeholders, it is difficult to predict the impact that the pandemic will have on future results of its operations, financial position, and liquidity. This has caused some uncertainties around various accounting estimates. Due to these uncertainties, our accounting estimates may change, as management's assessment of the impacts of the COVID-19 pandemic continues to evolve.

ASU 2016-13: Financial Instruments – Credit Losses (Topic 326) — Measurements of Credit Losses on Financial Instruments

Summary of the Standard — In June 2016, the FASB issued ASU 2016-13, which, in addition to several clarifying ASUs, established the new ASC Topic 326, Financial Instruments — Credit Losses ("CECL"). The new CECL standard amends the FASB's guidance on the impairment of financial instruments. Specifically, it adds the CECL impairment model to GAAP which is based on expected losses rather than incurred losses. This is intended to result in more timely recognition of such losses. Under the new CECL standard, an entity recognizes as an allowance its estimate of lifetime expected credit losses. The new CECL standard is also intended to reduce the complexity of GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. Further, the new CECL standard makes targeted changes to the impairment model for available-for-sale debt securities and moves the guidance from ASC Topic 320 to ASC Subtopic 326-30. For public business entities, the new standard was effective for annual and interim reporting periods beginning after December 15, 2019. For most debt instruments, entities are required to adopt the new CECL standard using a modified retrospective approach, meaning that entities will record a cumulative-effect adjustment to equity as of the beginning of the first reporting period in which the guidance is effective.

Practical Expedient — As permitted under ASU 2016-13 (and related ASUs), management elected to apply the collateral dependent financial asset practical expedient which allows entities to measure the expected credit losses for the financial asset by comparing the amortized cost basis with the fair value of the collateral at the reporting date, rather than using the fair value of the financial asset.

Current Period Impact of Adoption — The Company adopted ASC Topic 326 on January 1, 2020 using the modified retrospective approach. Upon adoption of the standard management assessed the potential impact of the CECL model on each type of the Company's financial assets and determined that there was no material impact on the Company's financial statements or accounting policies.

ASU 2018-15: Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

Summary of the Standard — In August 2018, the FASB issued ASU 2018-15, which amends ASC Subtopic 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract ("Service CCA"). The amendments in ASU 2018-15 align the accounting for costs incurred to implement a Service CCA with previously codified guidance on capitalizing costs associated with developing or obtaining internal-use software.

Specifically, the ASU amends ASC Subtopic 350-40 to include in its scope implementation costs incurred with a Service CCA. This addition clarifies that a customer should apply the guidance from ASC Paragraph 350-40-25 to determine which stage the project is in before assessing whether implementation costs should be capitalized in a Service CCA that is considered a service contract. These capitalized items should be recorded within the same balance sheet line item as a prepayment for any fees.

---

Any capitalized costs from the Service CCA should be expensed over the term of the hosting arrangement, which includes the noncancelable period and any options to extend that are reasonably certain to be exercised and recorded in the same line item as fees associated with the hosting element of the arrangement. The amendments in this ASU were effective for public business entities for fiscal years beginning after December 15, 2019 and could be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

Current Period Impact of Adoption — The Company adopted the amendments in ASU 2018-15 on January 1, 2020 and elected to apply the amendments on a prospective basis to implementation costs incurred after the date of adoption. Upon review of the Service CCA's entered into during the first quarter of 2020, management has determined that adoption of the amendments has not had a material impact on the Company's financial statements and related accounting policies.

ASU 2017-04: Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment

Summary of the Standard — In January 2017, the FASB issued ASU 2017-04, which amends ASC Topic 350 by simplifying the goodwill impairment test. The amendments in this ASU are intended to simplify subsequent measurement of goodwill. The key amendment in the ASU eliminates Step 2 from the goodwill impairment test, in which entities measured a goodwill impairment loss by comparing the implied fair value to the carrying amount of a reporting unit's goodwill. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value with the carrying amount of a reporting unit and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. The amendments also require companies to disclose the amounts of goodwill allocated to each reporting unit with a zero or negative carrying amount of assets. The amendments were effective for public business entities for fiscal years beginning after December 15, 2019 and should be applied on a prospective basis.

Current Period Impact of Adoption — The Company adopted the amendments in ASU 2017-14 on January 1, 2020 on a prospective basis. Management has updated the Company's accounting policy to incorporate the amendments in the ASU and has included the revised disclosure requirements below.

Refer to Note 7 for disclosures about the Company's goodwill balances.

Accounting Policy Update

Goodwill — Management evaluates goodwill on an annual basis as of June 30^th, or more frequently if indicators of impairment exist. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company conducts a quantitative goodwill impairment test. Management estimates the fair values of its reporting units using a combination of the income and market approaches. If the carrying amount of a reporting unit exceeds the fair value, then management will recognize an impairment loss of the same amount. This loss is only limited to the total amount of goodwill allocated to that reporting unit.

Other ASUs

There were various other ASUs that became effective during the quarter ended March 31, 2020, which did not have a material impact on the Company's results of operations, financial position, cash flows, or disclosures.

Date Issued		Reference		Description		Adoption Date and Method		Financial Statement Impact
March 2020		2020-04: Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting 1		The amendments in this Update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU are effective for any interim period after March 12, 2020 and should be applied on a prospective basis.		March 2020		No material impact 2
March 2020		2020-03: Codification Improvements Financial Instruments 1		The amendments within this ASU updated several sections of the codification and how various topics and subtopics interacted due to new guidance on financial instruments. This includes addressing issues related to fair value option disclosures, line-of-credit or revolving-debt arrangements and leases among others. The amendments should be applied prospectively and have varying effective dates which were all in effect for public business entities prior to issuance of the ASU.		March 2020, Adoption Prospective		No material impact
February 2020		2020-02: Financial Instruments – Credit Losses (Topic 326), Leases – (Topic 842) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) 1		The amendments in this ASU incorporate discussion from SEC Staff Accounting Bulletin No. 119 about expected implementation practices related to ASC Topic 326. The amendments also codify SEC Staff announcement that it would not object to the FASB's update to effective dates for major updates which were amended within ASU 2019-10.		January 2021, Adoption method varies by amendment		Adopted January 1, 2020, no material impact
January 2020		2020-01: Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815		The amendments clarify that an entity should consider observable transactions when determining to apply or discontinue the equity method for the purposes of applying the measurement alternative. The amendments also clarify that an entity would not consider whether a purchased option would be accounted for under the equity method when applying ASC 815-10-15-141(a).		January 2021, Prospective		Currently under evaluation, but not expected to be material

1	Adopted during the first quarter of 2020.

2	As identified within the 2018 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement for LIBOR. The Company's Term Loan also references LIBOR and management is currently underway with refinancing, as the Term Loan matures in October of 2020.

---

On January 1, 2020, pursuant to a stock purchase agreement (the "SPA") the Company acquired 100.0% of the equity interests of a warehousing-related company (the "Warehousing Co.") with locations throughout the Central US.

The total purchase price consideration of $66.9 million consisted of approximately $48.2 million in cash to the sellers at closing, and contingent consideration consisting of three additional annual payments of up to $8.1 million each (or $24.3 million in total), representing the maximum possible annual deferred payments to the sellers based on Warehousing Co.'s earnings before interest and taxes ("EBIT") for each of the calendar years ending December 31, 2020, December 31, 2021, and the annualized six-month period ending June 30, 2022. In order to estimate Warehousing Co.'s future performance, the Company utilized the Monte Carlo simulation method using certain inputs, including Warehousing Co.'s forecasted EBIT, discount rate, dividend yields, expected volatility, and expected stock returns during the above measurement periods. Based on the above inputs, the present value of the total contingent consideration was estimated to equal $18.7 million as of January 1, 2020. The Company funded the acquisition through cash-on-hand and borrowing on the Revolver on the date of the transaction. At closing, $6.8 million of the cash consideration was placed in escrow to secure certain of the sellers' indemnification obligations and remains subject to further adjustments.

The SPA included an election under the Internal Revenue Code Section 338(h)(10). Accordingly, the book and tax basis of the acquired assets and liabilities are the same as of the purchase date. The SPA contains customary representations, warranties, covenants, and indemnification provisions.

The goodwill recognized represents expected synergies from combining the operations of Warehousing Co. with the Company, including enhanced service offerings, as well as other intangible assets that did not meet the criteria for separate recognition. The goodwill is expected to be deductible for tax purposes.

The purchase price allocation for the acquisition is preliminary and has been allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date, pending the completion of valuation of acquired tangible assets, an independent valuation of certain acquired intangible assets, assessment of lease agreements, assessment of certain liabilities, the calculation of deferred taxes based upon the underlying tax basis of assets acquired and liabilities assumed, and assessment of other tax related items. As the Company obtains more information, the preliminary purchase price allocation disclosed below is subject to change. Any future adjustments to the preliminary purchase price allocation, including changes within identifiable intangible assets or estimation uncertainty impacted by market conditions, may impact future net earnings. The purchase price allocation adjustments can be made through the end of the measurement period, which is not to exceed one year from the acquisition date.

---

The following table summarizes the fair value of the consideration transferred as of the acquisition date:

	January 1, 2020 Opening Balance Sheet as Reported at March 31, 2020
	(in thousands)
Fair value of the consideration transferred	$	66,854
Cash and cash equivalents	1,388
Trade and other receivables	3,301
Prepaid expenses	608
Other current assets	78
Property and equipment	1,938
Operating lease right-of-use assets	12,356
Identifiable intangible assets ¹	55,681
Deferred tax assets	54
Other noncurrent assets	404
Total assets	75,808
Accounts payable	(347		)
Accrued liabilities	(644		)
Operating lease liabilities – current portion	(4,451		)
Operating lease liabilities – less current portion	(7,905		)
Total liabilities	(13,347		)
Goodwill	$	4,393

1	Includes $53.8 million in customer relationships, $0.7 million in noncompete agreements, $0.6 million in internally developed software, and a $0.6 million trade name.

---

The following tables present the cost or amortized cost, gross unrealized gains and temporary losses, and estimated fair value of the Company's restricted investments, held-to-maturity:

	March 31, 2020
					Gross Unrealized
	Cost or Amortized Cost				Gains				Temporary Losses				Estimated Fair Value
	(In thousands)
US corporate securities	$	8,836			$	1			$	(31	)		$	8,806
Restricted investments, held-to-maturity	$	8,836			$	1			$	(31	)		$	8,806

	December 31, 2019
					Gross Unrealized
	Cost or Amortized Cost				Gains				Temporary Losses				Estimated Fair Value
	(In thousands)
US corporate securities	$	8,912			$	4			$	(1	)		$	8,915
Restricted investments, held-to-maturity	$	8,912			$	4			$	(1	)		$	8,915

As of March 31, 2020, the contractual maturities of the restricted investments, held-to-maturity, were one year or less. There were 12 securities and 7 securities that were in an unrealized loss position for less than twelve months as of March 31, 2020 and December 31, 2019, respectively. The Company did not recognize any impairment losses related to its held-to-maturity investments during the quarters ended March 31, 2020 or 2019, respectively.

Refer to Note 16 for additional information regarding fair value measurements of the Company's investments.

The Company expects to sell its assets held for sale, which primarily consist of revenue equipment, within the next twelve months. Revenue equipment held for sale totaled $38.0 million and $41.8 million as of March 31, 2020 and December 31, 2019, respectively. Net gains on disposals, including disposals of property and equipment classified as assets held for sale, reported in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income, were $3.0 million and $11.8 million for the quarters ended March 31, 2020 and 2019, respectively.

The Company recognized impairment losses related to assets held for sale of $0.1 million during the quarter ended March 31, 2020. The Company did not recognize any impairment losses related to assets held for sale during the quarter ended March 31, 2019.

---

Goodwill

The changes in the carrying amount of goodwill were as follows:

	(In thousands)
Goodwill, balance at December 31, 2019	$	2,918,992
Adjustments relating to deferred tax assets	(3		)
Acquisition ¹	4,393
Goodwill, balance at March 31, 2020	$	2,923,382

1	The goodwill associated with the acquisition referenced in Note 4 was allocated to the non-reportable segment.

The Company did not record any goodwill impairments during the quarter ended March 31, 2020 or 2019.

Other Intangible Assets

Other intangible asset balances were as follows:

	March 31, 2020				December 31, 2019
	(In thousands)
Definite-lived intangible assets ¹
Gross carrying amount	$	894,597			$	839,516
Accumulated amortization	(111,431		)		(99,957		)
Definite-lived intangible assets, net	$	783,166			$	739,559
Trade names:
Gross carrying amount	640,500				639,900
Intangible assets, net	$	1,423,666			$	1,379,459

1	The major categories of the Company's definite-lived intangible assets include customer relationships, non-compete agreements, internally developed software, and others.

Identifiable intangible assets subject to amortization have been recorded at fair value. Intangible assets related to acquisitions other than the 2017 Merger are amortized over a weighted-average amortization period of 18.9 years. The Company's customer relationship intangible assets related to the 2017 Merger are being amortized over a weighted average amortization period of 19.9 years.

As of March 31, 2020, management anticipates that the composition and amount of amortization associated with intangible assets will be $34.4 million for the remainder of 2020, $45.9 million in 2021, $45.8 million in 2022, and $45.2 million for each of the years 2023 and 2024. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets, and other events.

---

Effective Tax Rate — The effective tax rate was 27.2% for the first quarter of 2020, compared to 24.0% for the first quarter of 2019. The Company recognized discrete items relating to foreign currency fluctuations and stock compensation deductions during the quarter ended March 31, 2020.

Valuation Allowance — The Company has not established a valuation allowance as it has been determined that, based upon available evidence, a valuation allowance is not required. Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. All other deferred tax assets are expected to be realized and utilized by continued profitability in future periods.

Unrecognized Tax Benefits — Management believes it is reasonably possible that a decrease of up to $1.0 million in unrecognized tax benefits relating to federal deductions may be necessary within the next twelve months.

Interest and Penalties — Accrued interest and penalties related to unrecognized tax benefits was approximately $0.4 million for the periods ended March 31, 2020 and December 31, 2019.

Tax Examinations — The Company is currently under examination by the IRS for the 2012 tax year and management does not expect any adjustments that would have a material impact on the Company's effective tax rate. Certain of the Company's subsidiaries are also currently under examination by various state jurisdictions for tax years ranging from 2013 to 2018. At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company's effective tax rate. Years subsequent to 2014 remain subject to examination.

The 2018 RSA is a secured borrowing that is collateralized by the Company's eligible receivables, for which the Company is the servicing agent. The Company's receivable originator subsidiaries sell, on a revolving basis, undivided interests in all of their eligible accounts receivable to Swift Receivables Company II, LLC ("SRCII") who in turn sells a variable percentage ownership in those receivables to the various purchasers. The Company's eligible receivables are included in "Trade receivables, net of allowance for doubtful accounts" in the condensed consolidated balance sheets. As of March 31, 2020, the Company's eligible receivables generally have high credit quality, as determined by the obligor's corporate credit rating.

The 2018 RSA is subject to fees, various affirmative and negative covenants, representations and warranties, and default and termination provisions customary for facilities of this type. The Company was in compliance with these covenants as of March 31, 2020. Collections on the underlying receivables by the Company are held for the benefit of SRCII and the various purchasers and are unavailable to satisfy claims of the Company and its subsidiaries.

---

The following table summarizes the key terms of the 2018 RSA (dollars in thousands):

	2018 RSA
Effective date	July 11, 2018
Final maturity date	July 9, 2021
Borrowing capacity		$325,000
Accordion option ¹		$175,000
Unused commitment fee rate ²	20 to 40 basis points
Program fees on outstanding balances ³	one-month LIBOR + 80 to 100 basis points

1	The accordion option increases the maximum borrowing capacity, subject to participation of the purchasers.

2	The 2018 RSA commitment fee rate is based on the percentage of the maximum borrowing capacity utilized.

3	The 2018 RSA program fee is based on the Company's consolidated total net leverage ratio. As identified within the 2018 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement for LIBOR.

Availability under the 2018 RSA is calculated as follows:

	March 31, 2020				December 31, 2019
	(In thousands)
Borrowing base, based on eligible receivables	$	276,500			$	299,100
Less: outstanding borrowings ¹	(180,000		)		(205,000		)
Less: outstanding letters of credit	(68,841		)		(70,841		)
Availability under accounts receivable securitization facilities	$	27,659			$	23,259

1	Outstanding borrowings are included in "Accounts receivable securitization" in the condensed consolidated balance sheets, offset by $0.2 million of deferred loan costs as of March 31, 2020 and December 31, 2019. Interest accrued on the aggregate principal balance at a rate of 2.4% and 2.6% as of March 31, 2020 and December 31, 2019, respectively.

Program fees and unused commitment fees are recorded in "Interest expense" in the condensed consolidated statements of comprehensive income. The Company incurred accounts receivable securitization program fees of $1.4 million and $2.0 million during the quarters ended March 31, 2020 and 2019, respectively.

---

Purchase Commitments

As of March 31, 2020, the Company had outstanding commitments to purchase revenue equipment of $405.7 million in the remainder of 2020 ($274.0 million of which were tractor commitments) and none thereafter. These purchases may be financed through any combination of operating leases, finance leases, debt, proceeds from sales of existing equipment, and cash flows from operations.

As of March 31, 2020, the Company had outstanding commitments to purchase facilities and non-revenue equipment of $6.0 million in the remainder of 2020, $1.2 million in the two-year period 2021 through 2022, $0.2 million in the two-year period 2023 through 2024, and none thereafter. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.

TRP Commitments

Since 2003, Knight has entered into partnership agreements with entities that make privately-negotiated equity investments. In these agreements, Knight committed to invest in return for an ownership percentage. During the first quarter of 2020, Knight entered into a $20.0 million commitment to invest in the newly formed TRP Capital Partners V, LP with the entire commitment outstanding as of March 31, 2020. There were no other material changes related to the previously disclosed TRP commitments during the quarter ended March 31, 2020.

Legal Proceedings

Information is provided below regarding the nature, status, and contingent loss amounts, if any, associated with the Company's pending legal matters. There are inherent uncertainties in these legal matters, some of which are beyond management's control, making the ultimate outcomes difficult to predict. Moreover, management's views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop.

The Company has made accruals with respect to its legal matters where appropriate, which are included in "Accrued liabilities" in the condensed consolidated balance sheets. The Company has recorded an aggregate accrual of approximately $27.7 million, relating to the Company's outstanding legal proceedings as of March 31, 2020.

Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on the Company's overall financial position, operating results, or cash flows after taking into account any existing accruals. However, actual outcomes could be material to the Company's financial position, operating results, or cash flows for any particular period.

---

EMPLOYEE COMPENSATION AND PAY PRACTICES MATTERS
CRST Expedited
Plaintiff alleges tortious interference with contract and unjust enrichment related to non-competition agreements entered into with certain of its drivers.
Plaintiff(s)		Defendant(s)		Date instituted		Court or agency currently pending in
CRST Expedited, Inc.		Swift Transportation Co. of Arizona LLC.		March 20, 2017		United States District Court for the Northern District of Iowa
Recent Developments and Current Status
In July 2019, a jury issued an adverse verdict in this lawsuit. The Company is reviewing all options including post-trial motions seeking to overturn the jury verdict and if necessary, an appeal. The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of March 31, 2020.
California Wage, Meal, and Rest Class Actions
The plaintiffs generally allege one or more of the following: that the Company 1) failed to pay the California minimum wage; 2) failed to provide proper meal and rest periods; 3) failed to timely pay wages upon separation from employment; 4) failed to pay for all hours worked; 5) failed to pay overtime; 6) failed to properly reimburse work-related expenses; and 7) failed to provide accurate wage statements.
Plaintiff(s)		Defendant(s)		Date instituted		Court or agency currently pending in
John Burnell 1		Swift Transportation Co., Inc		March 22, 2010		United States District Court for the Central District of California
James R. Rudsell 1		Swift Transportation Co. of Arizona, LLC and Swift Transportation Company		April 5, 2012		United States District Court for the Central District of California
Recent Developments and Current Status
In April 2019, the parties reached settlement of this matter. In January 2020, the court granted final approval of the settlement. The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of March 31, 2020.
Arizona Minimum Wage Class Action
The plaintiffs generally allege one or more of the following: 1) failure to minimum wage for the first day of orientation; 2) failure to pay minimum wage for time spent studying; 3) failure to pay minimum wage for 16 hours per day; and 4) failure to pay minimum wage for the first eight hours of sleeper berth time.
Plaintiff(s)		Defendant(s)		Date instituted		Court or agency currently pending in
Pamela Julian ¹		Swift Transportation Co., Inc. and Swift Transportation Co. of Arizona LLC		December 29, 2015		United States District Court for the District of Arizona
Recent Developments and Current Status
In December 2019, the court awarded damages for failure to pay minimum wage for 16 hours per day. The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of March 31, 2020.

1	Individually and on behalf of all others similarly situated.

---

INDEPENDENT CONTRACTOR MATTERS
Ninth Circuit Independent Contractor Misclassification Class Action
The putative class alleges that Swift misclassified independent contractors as independent contractors, instead of employees, in violation of the FLSA and various state laws. The lawsuit also raises certain related issues with respect to the lease agreements that certain independent contractors have entered into with Interstate Equipment Leasing, LLC. The putative class seeks unpaid wages, liquidated damages, interest, other costs, and attorneys' fees.
Plaintiff(s)		Defendant(s)		Date instituted		Court or agency currently pending in
Joseph Sheer, Virginia Van Dusen, Jose Motolinia, Vickii Schwalm, Peter Wood ¹		Swift Transportation Co., Inc., Interstate Equipment Leasing, Inc., Jerry Moyes, and Chad Killebrew		December 22, 2009		Unites States District Court of Arizona and Ninth Circuit Court of Appeals
Recent Developments and Current Status
In January 2020, the court granted final approval of the settlement in this matter. In March 2020 the Company paid the settlement amount approved by the court. As of March 31, 2020, the Company has a reserve accrued for anticipated costs associated with finalizing this matter.

1	Individually and on behalf of all others similarly situated.

Self Insurance

Automobile Liability, General Liability, and Excess Liability — Effective November 1, 2019, the Company has $130.0 million excess auto liability ("AL") coverage. For prior years, Swift and Knight maintained separately varying excess AL and general liability limits. During prior policy periods, Swift AL claims are subject to a $10.0 million self-insured retention ("SIR") per occurrence and Knight AL claims were subject to a $1.0 million to $3.0 million SIR per occurrence.  Additionally, Knight carries a $2.5 million aggregate deductible for any loss or losses within the $5.0 million excess of $5.0 million layer of coverage. Effective March 1, 2020, Knight and Swift retain the same $10.0 million SIR per occurrence.

Cargo Damage and Loss — The Company is insured against cargo damage and loss with liability limits of $2.0 million per truck or trailer with a $10.0 million limit per occurrence. This coverage also includes a $1.0 million limit for tobacco loads and a $250 thousand deductible.

Workers' Compensation and Employers' Liability — The Company is self-insured for workers' compensation coverage. Swift maintains statutory coverage limits, subject to a $5.0 million SIR for each accident or disease. Effective March 1, 2019, Knight maintains statutory coverage limits, subject to a $2.0 million SIR for each accident or disease. Prior to March 1, 2019, the Knight SIR was $1.0 million per occurrence.

Medical — Knight maintains primary and excess coverage for employee medical expenses and hospitalization, with a $0.3 million self-insured retention per claimant. Through December 31, 2019, Swift was fully insured on its medical benefits (subject to contributed premiums). Effective January 1, 2020, Swift provides primary and excess coverage for employee medical expenses and hospitalization, with self-insured retention of $0.5 million per claimant to all employees.

---

On May 31, 2019, the Company announced that the Board approved the repurchase of up to $250.0 million worth of the Company's outstanding common stock (the "2019 Knight-Swift Share Repurchase Plan"), which replaced the previous share repurchase plan.

The following table presents the Company's repurchases of its common stock under the 2019 Knight-Swift Share Repurchase Plan, excluding advisory fees:

Share Repurchase Plan				Quarter Ended March 31, 2020
Board Approval Date		Authorized Amount		Shares			Amount
		(in thousands)
May 30, 2019 ¹		$250,000		1,139			$	34,630
				1,139			$	34,630

1	$199.0 million and $233.6 million remained available under the 2019 Knight-Swift Share Repurchase Plan as of March 31, 2020 and December 31, 2019, respectively.

Earnings per share, basic and diluted, as presented in the condensed consolidated statements of comprehensive income, are calculated by dividing net income attributable to Knight-Swift by the respective weighted average common shares outstanding during the period.

The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:

	Quarter Ended March 31,
	2020			2019
	(In thousands)
Basic weighted average common shares outstanding	170,617			172,971
Dilutive effect of equity awards	665			637
Diluted weighted average common shares outstanding	171,282			173,608
Anti-dilutive shares excluded from diluted earnings per share ¹	256			997

1	Shares were excluded from the dilutive-effect calculation because the outstanding awards' exercise prices were greater than the average market price of the Company's common stock for the periods presented.

---

The following table presents Knight-Swift's transactions with companies controlled by and/or affiliated with its related parties:

	Quarter Ended March 31,
	2020								2019
	Provided by Knight-Swift				Received by Knight-Swift				Provided by Knight-Swift				Received by Knight-Swift
	(In thousands)
Freight Services:
Central Freight Lines ¹	$	6,816			$	—			$	3,116			$	—
SME Industries ¹	—				—				155				—
Total	$	6,816			$	—			$	3,271			$	—
Facility and Equipment Leases:
Central Freight Lines ¹	$	—			$	92			$	244			$	93
Other Affiliates ¹	5				73				4				—
Total	$	5			$	165			$	248			$	93
Other Services:
Central Freight Lines ¹	$	15			$	—			$	—			$	—
DPF Mobile ¹	—				12				—				44
Other Affiliates ¹	9				—				10				618
Total	$	24			$	12			$	10			$	662

1

Entities affiliated with former Board member Jerry Moyes include Central Freight Lines, SME Industries, Compensi Services, and DPF Mobile. "Other affiliates" includes entities that are associated with various board members and executives and require approval by the Board prior to completing transactions. Transactions with these entities include freight services, facility and equipment leases, equipment sales, and other services.

•	Freight Services Provided by Knight-Swift — The Company charges each of these companies for transportation services.

•	Freight Services Received by Knight-Swift — Transportation services received from Central Freight represent less-than-truckload freight services rendered to haul parts and equipment to Company shop locations.

•	Other Services Provided by Knight-Swift — Other services provided by the Company to the identified related parties include equipment sales and miscellaneous services.

•	Other Services Received by Knight-Swift — Consulting fees, diesel particulate filter cleaning, sales of various parts and tractor accessories, and certain third-party payroll and employee benefits administration services from the identified related parties are included in other services received by the Company.

Receivables and payables pertaining to related party transactions were:

	March 31, 2020								December 31, 2019
	Receivable				Payable				Receivable				Payable
	(In thousands)
Central Freight Lines	$	5,703			$	—			$	2,872			$	—
SME Industries	—				—				17				—
DPF Mobile	—				5				—				2
Other Affiliates	—				2				—				—
Total	$	5,703			$	7			$	2,889			$	2

---

Segment Information

The Company has three reportable segments: Trucking, Logistics, and Intermodal, as well as the non-reportable segments, discussed below. Based on how economic factors affect the nature, amount, timing, and uncertainty of revenue or cash flows, the Company disaggregates revenues by reportable segment for the purposes of applying the ASC Topic 606 guidance.

Trucking

The Trucking segment is comprised of irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border operations.

Logistics

The Logistics segment is primarily comprised of brokerage and other freight management services.

Intermodal

The Intermodal segment includes revenue generated by moving freight over the rail in the Company's containers and other trailing equipment, combined with the Company's revenue for drayage to transport loads between the railheads and customer locations.

Non-reportable

The non-reportable segments include support services provided to the Company's customers and independent contractors (including repair and maintenance shop services, equipment leasing, warranty services, and insurance), trailer parts manufacturing, warehousing, and certain driving academy activities, as well as certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).

Intersegment Eliminations

Certain operating segments provide transportation and related services for other affiliates outside of their reportable segments. For certain operating segments, such services are billed at cost, and no profit is earned. For the other operating segments, revenues for such services are based on negotiated rates, and are reflected as revenues of the billing segment. These rates are adjusted from time to time, based on market conditions. Such intersegment revenues and expenses are eliminated in Knight-Swift's consolidated results.

The following tables present the Company's financial information by segment:

	Quarter Ended March 31,
	2020				2019
Revenue:	(In thousands)
Trucking	$	919,061			$	973,245
Logistics	79,198				88,952
Intermodal	94,731				116,367
Subtotal	$	1,092,990			$	1,178,564
Non-reportable segments	46,242				37,764
Intersegment eliminations	(14,434		)		(11,793		)
Total revenue	$	1,124,798			$	1,204,535

---

	Quarter Ended March 31,
	2020				2019
Operating income (loss):	(In thousands)
Trucking	$	107,334			$	115,175
Logistics	3,719				7,283
Intermodal	(2,737		)		2,361
Subtotal	$	108,316			$	124,819
Non-reportable segments	(6,197		)		(8,520		)
Operating income	$	102,119			$	116,299

	Quarter Ended March 31,
	2020				2019
Depreciation and amortization of property and equipment:	(In thousands)
Trucking	$	93,548			$	84,510
Logistics	207				155
Intermodal	3,488				3,360
Subtotal	$	97,243			$	88,025
Non-reportable segments	12,978				12,912
Depreciation and amortization of property and equipment	$	110,221			$	100,937

Geographical Information

In the aggregate, total revenue from the Company's foreign operations was less than 5.0% of consolidated total revenue for the quarters ended March 31, 2020 and 2019. Additionally, long-lived assets on the Company's foreign subsidiary balance sheets were less than 5.0% of consolidated total assets as of March 31, 2020 and December 31, 2019.

ASC Topic 820, Fair Value Measurements and Disclosures, requires that the Company disclose estimated fair values for its financial instruments. The estimated fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for the asset or liability. Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Changes in assumptions could significantly affect these estimates. Because the fair value is estimated as of March 31, 2020 and December 31, 2019, the amounts that will actually be realized or paid at settlement or maturity of the instruments in the future could be significantly different.

The estimated fair values of the Company's financial instruments represent management's best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. The estimated fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the estimated fair value measurement reflects management's own judgments about the assumptions that market participants would use in pricing the asset or liability. These judgments are developed by the Company based on the best information available under the circumstances.

The following summary presents a description of the methods and assumptions used to estimate the fair value of each class of financial instrument.

---

Restricted Investments, Held-to-Maturity — The estimated fair value of the Company's restricted investments, held-to-maturity, is based on quoted prices in active markets that are readily and regularly obtainable. See Note 5 for additional disclosures regarding restricted investments, held-to-maturity.

Transportation Resource Partners — The estimated fair value of the Company's investments with Transportation Resource Partners are privately negotiated equity investments. The carrying amount of these investments approximates the fair value.

Equity Securities — The estimated fair value of the Company's investments in equity securities is based on quoted prices in active markets that are readily and regularly obtainable.

Debt Instruments and Leases — For notes payable under the Revolver and the Term Loan, fair value approximates the carrying value due to the variable interest rate. The carrying value of the 2018 RSA approximates fair value, as the underlying receivables are short-term in nature and only eligible receivables (such as those with high credit ratings) are qualified to secure the borrowed amounts. For finance and operating leases, the carrying value approximates the fair value, as the Company's finance and operating leases are structured to amortize in a manner similar to the depreciation of the underlying assets.

Other — Cash and cash equivalents, restricted cash, net accounts receivable, income tax refund receivable, and accounts payable represent financial instruments for which the carrying amount approximates fair value, as they are short-term in nature. These instruments are accordingly excluded from the disclosures below. All remaining balance sheet amounts excluded from the below are not considered financial instruments, subject to this disclosure.

The following table presents the carrying amounts and estimated fair values of the Company's major categories of financial assets and liabilities: 

	March 31, 2020								December 31, 2019
	Carrying Value				Estimated Fair Value				Carrying Value				Estimated Fair Value
	(In thousands)
Financial Assets:
Restricted investments, held-to-maturity ¹	$	8,836			$	8,806			$	8,912			$	8,915
TRP Investments	30,338				30,338				30,878				30,878
Investments in equity securities ²	9,843				9,843				8,722				8,722
Financial Liabilities:
Term Loan, due October 2020 ³	$	364,883			$	365,000			$	364,825			$	365,000
2018 RSA, due July 2021 4	179,801				180,000				204,762				205,000
Revolver, due October 2022	294,000				294,000				279,000				279,000

1	Refer to Note 5 for the differences between the carrying amounts and estimated fair values of the Company's restricted investments, held-to-maturity.

2	The investments are carried at fair value and are included in "Other long-term assets" on the condensed consolidated balance sheets.

3	The carrying amount of the Term Loan is included in "Finance lease liabilities and long-term debt – current portion," on the condensed consolidated balance sheets and is net of $0.1 million and $0.2 million in deferred loan costs as of March 31, 2020 and December 31, 2019, respectively.

4	The carrying amount of the 2018 RSA is included in "Accounts receivable securitization," on the condensed consolidated balance sheets and is net of $0.2 million in deferred loan costs as of March 31, 2020 and December 31, 2019.

---

Recurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate fair value of assets measured on a recurring basis as of March 31, 2020:

					Fair Value Measurements at Reporting Date Using:
	Estimated Fair Value				Level 1 Inputs				Level 2 Inputs				Level 3 Inputs				Total Losses
	(In thousands)
As of March 31, 2020
Investments in equity securities ¹	$	9,843			$	9,843			$	—			$	—			$	(5,279	)
As of December 31, 2019
Investments in equity securities ¹	$	8,722			$	8,722			$	—			$	—			$	(184	)

1	Total unrealized losses for these investments are included within "Other (expense) income, net" within the condensed consolidated statements of comprehensive income for the quarter ended March 31, 2020. The Company did not sell any equity investments during the quarters ended March 31, 2020 or 2019 and therefore did not realize any losses on these investments.

Recurring Fair Value Measurements (Liabilities) — As of March 31, 2020 and December 31, 2019, there were no major categories of liabilities on the condensed consolidated balance sheets estimated at fair value that were measured on a recurring basis.

Nonrecurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate fair value of assets measured on a nonrecurring basis as of March 31, 2020 and December 31, 2019:

					Fair Value Measurements at Reporting Date Using:
	Estimated Fair Value				Level 1 Inputs				Level 2 Inputs				Level 3 Inputs				Total Losses
	(In thousands)
As of March 31, 2020
Equipment ¹	$	350			$	—			$	350			$	—			$	(902	)
As of December 31, 2019
Leasehold improvements ²	$	—			$	—			$	—			$	—			$	(2,182	)
Equipment ³	1,380				—				1,380				—				(870		)
Software 4	—				—				—				—				(434		)

1	During the first quarter of 2020, the Company incurred impairment charges which were associated with revenue equipment held for sale and trailer tracking systems.

2	During the second quarter of 2019, the Company incurred an impairment of leasehold improvements related to the early termination of a lease on one of its operating properties. This impairment was recorded in the Trucking segment.

3	During the fourth quarter of 2019, the Company incurred impairment charges which were associated with certain revenue equipment technology, warehousing equipment no longer in use, and certain Swift legacy trailer models as a result of a softer used equipment market. These impairments were allocated between the Logistics and non-reportable segments based on each segment’s use of the assets.

4	During the fourth quarter of 2019, the Company incurred impairment charges related to discontinued use of software systems. These impairments were allocated between the Logistics and non-reportable segments based on each segment's use of the assets.

Nonrecurring Fair Value Measurements (Liabilities) — As of March 31, 2020 and December 31, 2019, the Company had no major categories of liabilities estimated at fair value that were measured on a nonrecurring basis.

---

•	any projections of or guidance regarding earnings, earnings per share, revenues, cash flows, dividends, capital expenditures, or other financial items,

•	any statement of plans, strategies, and objectives of management for future operations,

•	any statements concerning proposed acquisition plans, new services, or developments,

•	any statements regarding future economic conditions or performance, and

•	any statements of belief and any statements of assumptions underlying any of the foregoing.

•	the ability of our infrastructure to support future growth, whether we grow organically or through potential acquisitions,

•	the impacts of the COVID-19 global pandemic,

•	the future impact of acquisitions, including achievement of anticipated synergies,

•	the flexibility of our model to adapt to market conditions,

•	our ability to recruit and retain qualified driving associates,

•	future safety performance,

•	future performance of our segments or businesses,

•	our ability to gain market share,

•	the ability, desire, and effects of expanding our logistics, brokerage, and intermodal operations,

•	future equipment prices, our equipment purchasing or leasing plans, and our equipment turnover (including expected tractor trade-ins),

•	our ability to sublease equipment to independent contractors,

•	the impact of pending legal proceedings,

•	the expected freight environment, including freight demand and volumes,

•	economic conditions and growth, including future inflation, consumer spending, supply chain conditions, and US Gross Domestic Product ("GDP") changes,

•	future pricing terms from vendors and suppliers,

•	expected liquidity and methods for achieving sufficient liquidity,

•	future fuel prices and the expected impact of fuel efficiency initiatives,

•	future expenses and our ability to control costs,

•	future operating profitability,

•	future third-party service provider relationships and availability,

•	future contracted pay rates with independent contractors and compensation arrangements with driving associates,

•	our expected need or desire to incur indebtedness,

•	future capital expenditures and expected sources of liquidity, capital allocation, capital structure, capital requirements, and growth strategies and opportunities,

---

•	expected capital expenditures,

•	future mix of owned versus leased revenue equipment,

•	future asset utilization,

•	future return on capital,

•	future share repurchases and dividends,

•	future tax rates,

•	future trucking industry capacity and balance between industry demand and capacity,

•	future rates,

•	future depreciation and amortization,

•	expected tractor and trailer fleet age,

•	future investment in and deployment of new or updated technology,

•	political conditions and regulations, including trade regulation, quotas, duties, or tariffs, and any future changes to the foregoing,

•	future purchased transportation expense, and

•	others.

---

•	Our trucking services include irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border transportation of various products, goods, and materials for our diverse customer base. We primarily generate revenue by transporting freight for our customers through our Trucking segment.

•

Our brokerage and intermodal operations provide a multitude of shipping solutions, including additional sources of truckload capacity and alternative transportation modes, by utilizing our vast network of third-party capacity providers and rail providers, as well as certain logistics and freight management services. Revenue in our brokerage and intermodal operations is generated through our Logistics and Intermodal segments.

•	Our non-reportable segments include support services provided to our customers and independent contractors (including repair and maintenance shop services, equipment leasing, warranty services, and insurance), trailer parts manufacturing, warehousing, and certain driving academy activities, as well as certain corporate expenses

---

•

In addition to the revenues earned from our customers for the trucking and non-trucking services discussed above, we also earn fuel surcharge revenue from our customers through our fuel surcharge program, which serves to recover a majority of our fuel costs. This applies only to loaded miles and typically does not offset non-paid empty miles, idle time, and out-of-route miles driven. Fuel surcharge programs involve a computation based on the change in national or regional fuel prices. These programs may update as often as weekly, but typically require a specified minimum change in fuel cost to prompt a change in fuel surcharge revenue. Therefore, many of these programs have a time lag between when fuel costs change and when the change is reflected in fuel surcharge revenue for our Trucking segment.

---

1

Beginning in the second quarter of 2019, the Company presents fuel surcharge revenue generated within only its Trucking segment within "Trucking fuel surcharge" in the condensed consolidated statements of comprehensive income. Fuel surcharge revenue generated within the remaining segments is included in "Revenue, excluding trucking fuel surcharge." Prior period amounts have been reclassified to align with the current period presentation.

2

Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, and Adjusted Operating Ratio are non-GAAP financial measures and should not be considered alternatives, or superior to, the most directly comparable GAAP financial measures. However, management believes that presentation of these non-GAAP financial measures provides useful information to investors regarding the Company's results of operations. Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, and Adjusted Operating Ratio are reconciled to the most directly comparable GAAP financial measures under "Non-GAAP Financial Measures," below.

3	The average age of our company-owned tractor fleet was 2.0 years in the first quarter of 2020, as compared to 2.1 years in the first quarter of 2019.

4	The average age of our trailer fleet was 7.6 years in the first quarter of 2020, as compared to 7.2 years in the first quarter of 2019.

---

1	Source: bea.gov

2	Source: kiplinger.com

---

•	Contributor — $7.8 million decrease in operating income within our Trucking Segment was primarily due to an $8.8 million reduction in gain on sales of revenue equipment, which was partially offset by a 3.2% decrease in operating expenses per total mile driven.

•	Contributor — $5.1 million change from operating income to operating loss in our Intermodal Segment due to continued market pressures, including the impact of the COVID-19 pandemic.

•	Contributor — $11.6 million unfavorable change in "Total other (expense) income, net," primarily attributed to unrealized losses in the first quarter of 2020 from our various equity investments, including our investments in TRP, as well as a $2.5 million unfavorable change associated with foreign currency fluctuations within our Mexico operations.

•

Offset — $3.4 million decrease in consolidated income tax expense was primarily due to a decrease in earnings. During the first quarter of 2020, we recognized discrete items related to an increase in unfavorable foreign currency fluctuations, which was partially offset by an increase in stock compensation deductions. During the first quarter of 2019, we recognized discrete items related to a reduction in our reserve for uncertain tax positions and stock compensation deductions. All of these factors resulted in an effective tax rate of 27.2% for the first quarter of 2020 and 24.0% for the first quarter of 2019.

---

---

---

1	Refer to "Non-GAAP Financial Measures" below.

2	Defined under "Operating Statistics," above.

3	Includes 16,339 and 16,208 average company-owned tractors for the quarter ended March 31, 2020 and 2019, respectively.

---

1	Defined under "Operating Statistics," above.

2	Refer to "Non-GAAP Financial Measures" below.

---

1	Defined under "Operating Statistics," above.

2	Refer to "Non-GAAP Financial Measures" below.

3	Includes 536 and 613 company-owned tractors for the quarters ended March 31, 2020 and 2019, respectively.

---

•

Comparison Between Quarters Ended March 31, 2020 and 2019 — The $9.0 million decrease within consolidated salaries, wages and benefits was primarily attributed to decreases in company driving associate wages based on the mix of company miles driven, favorable developments within workers' compensation expense, as well as lower medical insurance costs. These decreases were partially offset by incremental payroll premiums paid to our company driving associates and shop technicians in response to the COVID-19 pandemic. The COVID-19 expenses were clearly separable from our normal business operations and are not expected to recur once the pandemic subsides.

---

•	Comparison Between Quarters Ended March 31, 2020 and 2019 — The $16.6 million decrease in consolidated fuel expense is primarily due to a decrease in average DOE fuel prices to $2.92 per gallon for the quarter ended March 31, 2020 from $3.02 per gallon for the quarter ended March 31, 2019, which was partially offset by a 2.8% increase in the total miles driven by company driving associates.

---

---

•	Comparison Between Quarters Ended March 31, 2020 and 2019 — The $9.3 million increase in consolidated depreciation and amortization of property and equipment is primarily due to an increase in owned versus leased equipment.

---

•	Comparison Between Quarters Ended March 31, 2020 and 2019 — The $10.4 million increase in net consolidated miscellaneous operating expenses is primarily due to an $8.8 million decrease in gain on sales of equipment.

---

•

Comparison Between Quarters Ended March 31, 2020 and 2019 — The $3.4 million decrease in consolidated income tax expense was primarily due to a decrease in earnings. During the first quarter of 2020, we recognized discrete items related to an increase in unfavorable foreign currency fluctuations, which was partially offset by an increase in stock compensation deductions. During the first quarter of 2019, we recognized discrete items related to a reduction in our reserve for uncertain tax positions and stock compensation deductions. All of these factors resulted in an effective tax rate of 27.2% for the first quarter of 2020 and 24.0% for the first quarter of 2019.

---

---

1	"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger and various acquisitions. Refer to Note 4 in Part I, Item 1 of this Quarterly Report for additional details regarding the acquisition.

2	"Impairments" primarily reflects the non-cash impairment of trailer tracking equipment.

3

"COVID-19 incremental costs" reflects costs incurred during the first quarter of 2020 that were directly attributable to the pandemic and were incremental to those incurred prior to the outbreak. These include payroll premiums paid to our drivers and shop mechanics, additional disinfectants and cleaning supplies, and various other pandemic-specific items. The costs are clearly separable from our normal business operations and are not expected to recur once the pandemic subsides.

1	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift footnote 1.

2	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift footnote 2.

3	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift footnote 3.

---

1	"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the Abilene Acquisition and historical Knight acquisitions.

2	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift footnote 2.

3	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift footnote 3.

---

1	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift footnote 3.

---

1	As of March 31, 2020, we had $294.0 million in borrowings under our $800.0 million Revolver. We additionally had $31.1 million in outstanding letters of credit (discussed below), leaving $474.9 million available under the Revolver.

2	Based on eligible receivables at March 31, 2020, our borrowing base for the 2018 RSA was $276.5 million, while outstanding borrowings were $180.0 million. We additionally had $68.8 million in outstanding letters of credit (discussed below), leaving $27.7 million available under the 2018 RSA. Refer to Note 9 in Part I, Item 1 of this Quarterly Report for more information regarding the 2018 RSA.

3

Restricted cash and restricted investments are primarily held by our captive insurance companies for claims payments. "Cash and cash equivalents – restricted" consists of $39.8 million, included in "Cash and cash equivalents — restricted" in the condensed consolidated balance sheet and held by Mohave and Red Rock for claims payments. The remaining $1.2 million is included in "Other long-term assets" and is held in escrow accounts to meet statutory requirements.

---

•	$364.9 million: Term Loan, due October 2020, net of $0.1 million in deferred loan costs

•	$179.8 million: 2018 RSA outstanding borrowings, due July 2021, net of $0.2 million in deferred loan costs

•	$68.0 million: Finance lease obligations

•	$294.0 million: Revolver, due October 2022

•	$364.8 million: Term Loan, due October 2020, net of $0.2 million in deferred loan costs

•	$204.8 million: 2018 RSA outstanding borrowings, due July 2021, net of $0.2 million in deferred loan costs

•	$70.2 million: Finance lease obligations

•	$279.0 million: Revolver, due October 2022.

---

---

•	Note 2 for accounting pronouncements adopted during quarter ended March 31, 2020.

•	Note 3 for accounting pronouncements issued during quarter ended March 31, 2020.

---

---

•	the duration and geographic scope of the outbreak;

•	current and potential governmental, business and individual actions taken in response to the outbreak, such as travel bans and restrictions, quarantines, shelter in place orders, social distancing measures, increased border and port controls and closures, and shutdowns, the length, scope, and severity of those actions, and the impact of those actions on global economic activity;

•	the actions taken in response to economic disruption or demand uncertainty;

•	expenses we may incur in connection with our response to the pandemic;

•	the impact of business disruptions on the supply chain and our customers and the resulting impact on our customers' demand for our services;

•	our customers' ability to pay for our services;

•	the impact on the availability and cost of credit;

•	our ability to provide our services, including as a result of our employees or our customers’ employees working remotely, closures of offices and facilities, and/or an increase in absences or terminations among our driving associates and non-driver personnel; and

•	our ability to pay our quarterly dividend at prior levels.

---

1	On May 31, 2019, the Company announced that the Board approved the $250.0 million 2019 Knight-Swift Share Repurchase Plan. There is no expiration date associated with the 2019 Knight-Swift Share Repurchase Plan.

---

*	Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to supplementally furnish to the SEC a copy of any omitted schedule upon request by the SEC.

---