DOCUMENTS INCORPORATED BY REFERENCE

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•	any projections of earnings, 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 future impact of the 2017 Merger and the Abilene Acquisition, 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,

•	the balance between industry demand and capacity,

•	economic conditions and growth, including future inflation, consumer spending, supply chain conditions, and GDP growth,

•	our ability to obtain favorable 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,

•	future mix of owned versus leased revenue equipment,

•	future asset utilization,

•	future return on capital,

•	future share repurchases and dividends,

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•	future tax rates,

•	future trucking industry capacity,

•	future rates,

•	future depreciation and amortization,

•	expected tractor and trailer fleet age,

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

•	future classification of our independent contractors, including the impact of new laws and regulations regarding classification,

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

•	future purchased transportation expense, and

•	others.

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•	tightening industry capacity;

•	cumulative impacts of regulatory initiatives, such as ELDs, hours-of service limitations for drivers, and others;

•	uncertainty in the economic environment, including changing supply chain and consumer spending patterns;

•	driver shortages;

•	increased insurance costs as significant verdicts and settlement amounts for accident claims impact the industry;

•	significant and rapid fluctuations in fuel prices; and

•	increased prices for new revenue equipment, design changes of new engines, and volatility in the used equipment sales market.

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•	In 2019, our top 25, top 10, and top 5 customers accounted for 49.7%, 33.5%, and 25.5% of our total revenue, respectively.

•	In 2018, our top 25, top 10, and top 5 customers accounted for 50.1%, 34.6%, and 27.2% of our total revenue, respectively.

•	In 2017, our top 25, top 10, and top 5 customers accounted for 56.6%, 39.7%, and 31.7% of our total revenue, respectively.

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•

Phase 1 — In September 2011, the EPA finalized federal regulations for controlling GHG emissions, beginning with model-year 2014 medium- and heavy-duty engines and vehicles and increasing in stringency through model-year 2018. The federal regulations relate to efficient engines, use of auxiliary power units, mass reduction, low-rolling resistance tires, improved aerodynamics, improved transmissions, and reduced accessory loads.

•

Phase 2 — In June 2015, the EPA and NHTSA, working in concert with California's ARB, formally announced a proposed national program establishing Phase 2 of the GHG emissions and fuel efficiency standards for medium- and heavy-duty vehicles for model-year 2018 and beyond. In August 2016, the EPA and NHTSA announced the final rule regarding Phase 2, which builds upon Phase 1, and would apply to certain trailer types beginning with model-year 2018 for EPA standards (voluntary for NHTSA standards through model-year 2020). Tractors and certain trailer types would be subject to the Phase 2 standards beginning with model-year 2021, increasing in stringency through model-year 2024, and phasing in completely by model-year 2027. This rule marks the first time federal mandates will be applied to trailers, with respect to aerodynamics and low-rolling resistance tires. The final rule was effective December 27, 2016.

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•	Phase 1 (February 16, 2016 through December 18, 2017): Carriers and drivers subject to the rule may voluntarily use ELDs or use other forms of logging devices.

•	Phase 2 (December 18, 2017 through December 16, 2019): Carriers and drivers subject to the rule can use Automatic On-board Recording Devices that were installed prior to December 18, 2017 or ELDs certified and registered after December 16, 2015.

•	Phase 3 (after December 16, 2019): All drivers and carriers subject to the rule must use certified and registered ELDs that comply with the requirements of the ELD regulations.

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•	There would be only one safety rating of "unfit," as compared to the current rules, which have three safety ratings (satisfactory, conditional, and unsatisfactory).

•	Carriers could be determined "unfit" by failing two or more BASICs, investigation results, or a combination of the two.

•	Stricter standards would be used for BASICs with a higher correlation to crash risk (Unsafe Driving and Hours-of-Service Compliance).

•	All investigation results would be used, not just results from comprehensive on-site reviews.

•	Violations of a revised list of "critical" and "acute" safety regulations would result in failing a BASIC.

•	Carriers would be assessed monthly.

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•	the design and maintenance of equipment used to transport food,

•	the measures taken during food transportation to ensure food safety,

•	the training of carrier personnel in sanitary food transportation practices, and

•	maintenance and retention of records of written procedures, agreements, and training related to the foregoing items.

•	abolish the current safe harbor allowing taxpayers meeting certain criteria to treat individuals as independent contractors if they are following a long-standing, recognized practice,

•	extend the FLSA to independent contractors, and

•	impose notice requirements based upon employment or independent contractor status and fines for failure to comply.

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•	the worker is free from control and direction in the performance of services;

•	the worker is performing work outside the usual course of the business of the hiring company;

•	the worker is customarily engaged in an independently established trade, occupation, or business.

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•	we may experience a reduction in overall freight levels, which may impair our asset utilization;

•	freight patterns may change as supply chains are redesigned, resulting in an imbalance between our capacity and our customers' freight demand;

•	customers may experience credit issues and cash flow problems, resulting in an inability to compensate us for rendered services;

•	customers may solicit bids for freight from multiple trucking companies or select competitors that offer lower rates in an attempt to lower their costs, and we might be forced to lower our rates or lose freight;

•	we may be forced to accept more freight from freight brokers, where freight rates are typically lower;

•	we may need to incur significantly more non-paid empty miles and other non-revenue miles to obtain loads; and

•	lack of access to current sources of credit or lack of lender access to capital, leading to an inability to secure credit financing on satisfactory terms, or at all.

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•	many of our competitors periodically reduce their freight rates to gain business, especially during times of reduced growth rates in the economy, which may limit our ability to maintain or increase freight rates or maintain or grow profitability of our business;

•	many customers periodically accept bids from multiple carriers for their shipping needs, and this process may depress freight rates or result in the loss of some of our business to competitors;

•	many customers reduce the number of carriers they use by selecting "core carriers" as approved service providers or by engaging dedicated providers, and in some instances we may not be selected;

•	some of our customers operate their own private trucking fleets and they may decide to transport more of their own freight;

•	we may increase the size of our fleet during periods of high freight demand during which our competitors also increase their capacity, and we may experience losses in greater amounts than such competitors during subsequent cycles of softened freight demand if we are required to dispose of assets at a loss to match reduced customer demand;

•	the market for qualified drivers is increasingly competitive, and our inability to attract and retain driving associates could reduce our equipment utilization or cause us to increase driving associate compensation, both of which would adversely affect our profitability;

•	competition from non-asset-based and other logistics and freight brokerage companies may adversely affect our customer relationships and freight rates;

•	the continuing trend toward consolidation in the trucking industry may result in more large carriers with greater financial resources and other competitive advantages, with which we may have difficulty competing;

•	economies of scale that procurement aggregation providers may pass on to smaller carriers may improve their ability to compete with us;

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•	advances in technology may require us to increase investments in order to remain competitive, and our customers may not be willing to accept higher freight rates to cover the cost of these investments;

•	the Knight and Swift brand names are valuable assets that are subject to the risk of adverse publicity (whether or not justified), which could result in the loss of value attributable to our brand and reduced demand for our services; and

•	higher fuel prices and, in turn, higher fuel surcharges to our customers may cause some of our customers to consider freight transportation alternatives, including rail transportation.

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•	foreign currency fluctuation;

•	changes in Mexico's economic strength;

•	difficulties in enforcing contractual obligations and intellectual property rights;

•	burdens of complying with a wide variety of international and US export, import, business procurement, transparency, and corruption laws, including the US Foreign Corrupt Practices Act;

•	changes in trade agreements and US-Mexico relations;

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•	theft or vandalism of our revenue equipment; and

•	social, political, and economic instability.

•	the acquired company may not achieve anticipated revenue, earnings, or cash flow;

•	we may assume liabilities beyond our estimates or what was disclosed to us;

•	we may be unable to assimilate or integrate the acquired company's operations or assets into our business successfully and realize the anticipated economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays or other operational, technical, or financial problems;

•	transaction costs and acquisition-related integration costs could adversely affect our results of operations in the period in which such costs are recorded;

•	diverting our management's attention from other business concerns;

•	risks of entering into markets in which we have had no or only limited direct experience; and

•	the potential loss of customers, key employees, or driving associates of the acquired company.

•	difficulties in integrating functions, personnel, and systems;

•	challenges in conforming standards, controls, procedures, and accounting and other policies, business cultures, and compensation structures between the two companies;

•	difficulties in assimilating driving associates and employees and in attracting and retaining key personnel;

•	challenges in retaining existing customers and obtaining new customers;

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•	difficulties in achieving anticipated cost savings, synergies, business opportunities, and growth prospects from the combination;

•	difficulties in managing multiple brands under a significantly larger and more complex company;

•	contingent liabilities that are larger than expected; and

•	potential unknown liabilities, adverse consequences, and unforeseen increased expenses associated with the 2017 Merger.

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•	approval of premium rates for insurance;

•	standards of solvency;

•	minimum amounts of statutory capital surplus that must be maintained;

•	limitations on types and amounts of investments;

•	regulation of dividend payments and other transactions between affiliates;

•	regulation of reinsurance;

•	regulation of underwriting and marketing practices;

•	approval of policy forms;

•	methods of accounting; and

•	filing of annual and other reports with respect to financial condition and other matters.

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•	finance unanticipated working capital requirements, capital investments, or refinance existing indebtedness;

•	develop or enhance our technological infrastructure and our existing products and services;

•	fund strategic relationships;

•	respond to competitive pressures; and

•	acquire complementary businesses, technologies, products, or services.

•	increased vulnerability to adverse economic, industry, or competitive developments;

•	cash flows from operations that are committed to payment of principal and interest, thereby reducing our ability to use cash for our operations, capital expenditures, and future business opportunities;

•	increased interest rates that would affect our variable rate debt;

•	potential noncompliance with financial covenants, borrowing conditions, and other debt obligations (where applicable);

•	lack of financing for working capital, capital expenditures, product development, debt service requirements, and general corporate or other purposes; and

•	limits on our flexibility to plan for, or react to, changes in our business, market conditions, or in the economy.

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1	On May 31, 2019, we announced that the Board approved the $250.0 million 2019 Knight-Swift Share Repurchase Plan, replacing the 2018 Knight-Swift Share Repurchase Plan. There is no expiration date associated with this share repurchase authorization. See Note 20 in Part II, Item 8 of this Annual Report.

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1	Data after September 8, 2017 includes the results of Swift, pursuant to the 2017 Merger. Data after March 16, 2018 includes the results of Abilene pursuant to the Abilene Acquisition.

2	Total operating expenses expressed as a percentage of total revenue.

3	Working capital is in a deficit position as of December 31, 2019, as our Term Loan is scheduled to mature on October 2, 2020. The Company intends to refinance prior to maturity.

4	Includes carrying value of current and noncurrent portions of term loan debt, revolving credit facilities, receivables sales agreement, and finance/capital leases. For more discussion refer to "Liquidity and Capital Resources" in Part II, Item 7 of this Annual Report.

5

Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, and Adjusted Operating Ratio, are non-GAAP financial measures. These non-GAAP financial measures should not be considered alternatives to, or superior to, 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 in "Non-GAAP Financial Measures" in Part II, Item 7 of this Annual Report. The Adjusted Operating Ratio for 2018 and 2017 is recast to adjust "Total revenue" and "Total operating expenses" by fuel surcharges generated within the Trucking segment only.

6	See "Results of Operations — Segment Review — Operating Statistics" in Part II, Item 7 of this Annual Report regarding definitions of these operating data.

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•	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.

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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.

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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, as well as certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and certain acquisitions).

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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.

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1

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. The Adjusted Operating Ratio for 2018 and 2017 is recast to adjust "Total revenue" and "Total operating expenses" by fuel surcharges generated within the Trucking segment only.

2	See "Results of Operations — Segment Review — Operating Statistics" in Part II, Item 7 of this Annual Report regarding definitions of these operating data.

3	Our tractor fleet had a weighted average age of 1.9 years, 2.2 years, and 2.5 years for 2019, 2018, and 2017, respectively. Average tractors within our Trucking segment includes 16,432, 15,743 and 15,916 company-owned tractors for 2019. 2018, and 2017, respectively.

4	Our trailer fleet had a weighted average age of 7.5 years, 7.2 years, and 7.6 years for 2019, 2018, and 2017, respectively.

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•

Contributor — $82.1 million decrease in operating income within our Trucking segment due to an oversupply of truckload capacity in the 2019 freight market. This resulted in fewer miles per tractor and a pressured rate per loaded mile which was unable to keep pace with inflationary costs. We also incurred incremental expenses associated with exiting several underperforming refrigerated and dry dedicated accounts in 2019.

•	Contributor — $26.8 million decrease in operating income within our Intermodal segment due to a reduction in volume from continued market pressures and relatively worse inclement weather at the onset of 2019, compared to 2018.

•

Contributor — $22.6 million increase in operating loss within the non-reportable segments in 2019. This was primarily due to the recognition of $35.8 million in 2019, in revised estimates for litigation related to various pre-2017 Merger legal matters which were previously disclosed by Swift. These costs were recorded in "Miscellaneous operating expenses" in the consolidated statements of comprehensive income.

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Offset — $27.6 million decrease in consolidated income tax expense primarily due to a decrease in pretax earnings and a partial release of our reserve for uncertain tax positions recognized as a discrete item. This was partially offset by a decrease in foreign income tax deductions recognized as a discrete item. In 2018, we recognized discrete items related to stock compensation deductions and a favorable audit settlement of nondeductible penalties. All of these factors resulted in a 2019 effective tax rate of 25.1% and a 2018 effective tax rate of 23.8%.

1	2017 operating income for the Trucking segment includes $23.1 million in 2017 Merger-related costs.

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

2	Defined within "Operating Statistics" above. In order to improve comparability, average tractors of 9,433 is used as the denominator in the average revenue per tractor and total miles per tractor calculations for 2017, reflecting the pro-rata portion of the year for which Swift's results of operations were reported following the close of the 2017 Merger.

3	Includes 16,432, 15,743, and 15,916 company-owned tractors for 2019, 2018, and 2017, respectively.

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

2	Defined under "Operating Statistics" above.

•	Brokerage-only — The gross margin in our brokerage business increased slightly to 15.9% in 2019 from 15.8% in 2018. Brokerage revenue, excluding intersegment transactions decreased 18.3% as a result of a 9.7% decrease in brokerage revenue per load and a 9.4% decrease in load counts.

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

2	Defined within "Operating Statistics" above.

3	Includes 568, 551, and 442 company-owned tractors for 2019, 2018, and 2017, respectively.

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1	"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, Abilene Acquisition, and other acquisitions. Refer to Note 5 in Part II Item 8 of this Annual Report for additional details.

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2

We incurred $1.3 million of impairment charges in the fourth quarter of 2019, which was 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. The impairments were recorded across various segments, depending on the nature of the impairment. In addition to these fourth quarter 2019 impairment charges, full-year 2019 includes $2.2 million of impaired leasehold improvements from an early termination of a lease of one of our operating properties. During the fourth quarter of 2018, the Company incurred impairment charges related to the Company airplane of $2.2 million and incurred impairment charges related to replaced software systems of $0.6 million. During 2017, impairments related to the termination of Swift's implementation of a new ERP system during the quarter ended September 30, 2017. Additionally, during the quarter ended December 31, 2017, management reassessed the fair value of certain tractors within the Company's leasing subsidiary, Interstate Equipment Leasing, LLC, determining that there was an impairment loss.

3

"Legal accruals" in the fourth quarter of 2019 include additional legal costs within the non-reportable segments, reflecting revised estimates for various pre-2017 Merger legal matters which were previously disclosed by Swift. During the fourth quarter of 2018 we incurred expenses related to certain class action lawsuits involving employment-related claims. The amounts are included in "Miscellaneous operating expenses" in the consolidated statements of comprehensive income.

4	"Other merger-related operating expenses" represent one-time expenses associated with the 2017 Merger, including acceleration of stock compensation expense, bonuses, and other operating expenses.

5	Knight-Swift incurred certain merger-related expenses associated with the 2017 Merger, consisting of legal and professional fees.

6	Severance expenses were incurred during the third and fourth quarters of 2018 in relation to certain organizational changes at Swift.

7

For 2019, an effective tax rate of 24.6% was applied in our 2019 Adjusted EPS calculation to normalize permanent differences pertaining to a Value Added Tax ("VAT") adjustment within Swift's Mexico operations. The adjustment pertains to pre-2017 Merger VAT receivables from 2016 and prior years that have been deemed unrecoverable as of December 31, 2019. For 2017, a normalized effective tax rate of 37.5% was utilized to calculate "Provision for income tax expense at effective rate," as the actual effective tax rate for the year includes a significant income tax benefit representing management's estimate of the net impact of the Tax Cuts and Jobs Act passed during the fourth quarter of 2017.

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

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

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

4	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 4.

5	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5.

6	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 6.

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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 and Adjusted EPS footnote 2.

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

4	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 4.

5	See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5.

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

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

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1	As of December 31, 2019, we had $279.0 million in borrowings under our $800.0 million Revolver. We additionally had $28.3 million in outstanding letters of credit (discussed below), leaving $492.7 million available under the Revolver.

2	Based on eligible receivables at December 31, 2019, our borrowing base for the 2018 RSA was $299.1 million, while outstanding borrowings were $205.0 million. We additionally had $70.8 million in outstanding letters of credit (discussed below), leaving $23.3 million available under 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 $41.3 million, which is included in "Cash and cash equivalents — restricted" in the consolidated balance sheet and is 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.

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•	$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

•	$0.0 million: Other

•	$364.6 million: Term Loan, due October 2020, net of $0.4 million in deferred loan costs

•	$239.6 million: 2018 RSA outstanding borrowings, due July 2021, net of $0.4 million in deferred loan costs

•	$129.5 million: Capital lease obligations

•	$195.0 million: Revolver, due October 2022

•	$0.4 million: Other

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1	Represents borrowings owed at December 31, 2019. Interest rates vary.

1a	Our Term Loan is scheduled to mature on October 2, 2020. The Company intends to refinance prior to maturity.

2

Represents principal payments owed at December 31, 2019. The borrowing consists of finance leases with finance companies, fixed borrowing amounts, and fixed interest rates, as set forth on each applicable lease schedule. Accordingly, interest on each lease varies between schedules. The Company's finance leases are typically structured with balloon payments at the end of the lease term equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers.

3	Represents interest obligations on long-term debt, the 2018 RSA, and finance lease obligations. For variable rate debt, the interest rate in effect as of December 31, 2019 was utilized. The table assumes long-term debt and the 2018 RSA are held to maturity.

4

Represents future monthly rental payment obligations, which include an interest element, under operating leases for tractors, trailers, chassis, and facilities. Substantially all lease agreements for revenue equipment have fixed payment terms based on the passage of time. The tractor lease agreements generally stipulate maximum miles and may provide for mileage penalties for excess miles. These leases generally run for a period of three to five years for tractors and five to seven years for trailers.

5	Represents purchase obligations for revenue equipment, facilities, and non-revenue equipment, of which a significant portion is expected to be purchased with cash, to the extent available, as well as borrowings under the Revolver. Refer to Note 18 in Part II, Item 8 of this Annual Report for additional information regarding our purchase commitments.

6	Investment commitments consist of contractual obligations to investments in various Transportation Resource Partnerships, which are subject to capital calls. The expected timing of the capital calls is presented above.

7	ERP obligation consists of outstanding commitments related to terminating the implementation of the Swift ERP system.

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•	Note 3 for accounting pronouncements adopted during 2019.

•	Note 4 for recently issued accounting pronouncements.

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•	We tested the effectiveness of controls relating to the goodwill impairment assessment, including the determination of the fair value of the reporting units.

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We tested management’s process for determining the fair value of the reporting units. This included evaluating the appropriateness of the valuation methods, testing the completeness, accuracy and relevance of data used by management, and evaluating the reasonableness of management’s significant assumptions, which included forecasted revenues, operating expenses, and net capital expenditures. We tested whether these forecasts were reasonable and consistent with historical performance, third-party market data, and other evidence obtained in other areas of the audit.

•	We tested the Company’s discounted cash flow models for the reporting units with the assistance of valuation specialists, including the reasonableness of the utilized discount rates.

•	We tested the Company’s use of the market approach with the assistance of valuation specialists, including the reasonableness of selected multiples.

•	We tested the effectiveness of controls relating to the trade names impairment assessment, including the determination of the fair value of the trade names.

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We tested management’s process for determining the fair value of the trade names. This included evaluating the appropriateness of the valuation method, testing the completeness, accuracy and relevance of data used by management, and evaluating the reasonableness of management’s significant assumptions, which included forecasted revenues. We tested whether these forecasts were reasonable and consistent with historical performance, third-party market data, and other evidence obtained in other areas of the audit.

•	We tested the reasonableness of the Company’s discount rates and royalty rates with the assistance of valuation specialists.

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•	We tested the effectiveness of controls over auto liability and workers’ compensation claims, including the completeness and accuracy of claim expenses and payments.

•	We tested management’s process for determining the auto liability and workers’ compensation claims accrual, including evaluating the reasonableness of the methods and assumptions used in estimating the ultimate claim losses with the assistance of an actuarial specialist.

•	We tested the claims data used in the auto liability and workers' compensation claims accrual calculation by selecting samples of historical claims data and inspecting source documents to test key attributes of the claims data.

•	We tested the effectiveness of controls relating to the initial adoption of ASC Topic 842.

•	We evaluated the independent auditor’s report on effectiveness of controls at the Company’s third party lease software vendor, which included testing the effectiveness of the relevant user controls due to the Company’s reliance on the third party software to appropriately calculate the related ROU asset and lease liability.

•	We verified the completeness of the population of leases that management evaluated as part of the initial adoption.

•	We inspected a sample of lease contracts, compared the relevant inputs in the lease software to underlying lease documentation, and recalculated the related ROU asset and lease liability.

•	We assessed the reasonableness of the Company’s discount rates with the assistance of valuation specialists.

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

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Certain acronyms and terms used throughout this Annual Report are specific to Knight-Swift, 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 2019, the Trucking segment operated an average of 18,877 tractors (comprised of 16,432 company tractors and 2,445 independent contractor tractors) and 58,315 trailers. Additionally, the Intermodal segment operated an average of 643 tractors and 9,862 intermodal containers.

Segment Realignment

During the first quarter of 2019, the Company reorganized its reportable segments to reflect management’s revised reporting structure. Under this revised reporting structure, the Company's three reportable segments are as follows:

•	The Trucking segment now includes the results of the previously-reported Knight Trucking, Swift Truckload, Swift Dedicated, and Swift Refrigerated segments.

•	The Logistics segment now includes the results of the Knight brokerage and Swift logistics businesses which were previously included within the Knight Logistics and Swift non-reportable segments, respectively.

•	The Intermodal segment now includes the results of the previously-reported Swift Intermodal segment and the results of the Knight intermodal business, which was previously included in the Knight Logistics segment.

The non-reportable segments include support services that Swift's subsidiaries provide to customers and independent contractors (including repair and maintenance shop services, equipment leasing, and insurance), certain driving academy activities, as well as certain legal settlements and accruals, amortization of intangibles related to the 2017 Merger and select acquisitions, and other corporate expenses. Additionally, the non-reportable segments now include Knight's equipment leasing and warranty services to independent contractors and trailer parts manufacturing, which were previously reported within the Knight Logistics segment.

2017 Merger

On September 8, 2017, the Company became Knight-Swift Transportation Holdings Inc. upon the effectiveness of the 2017 Merger. Immediately upon the consummation of the 2017 Merger, former Knight stockholders and former Swift stockholders owned approximately 46.0% and 54.0%, respectively, of the Company. Upon closing of the 2017 Merger, the shares of Knight common stock that previously traded under the ticker symbol "KNX" ceased trading and were delisted from the NYSE. The shares of Class A common stock commenced trading on the NYSE on a post-reverse split basis under the ticker symbol "KNX" on September 11, 2017.

The Company accounted for the 2017 Merger using the acquisition method of accounting in accordance with GAAP. GAAP requires that either Knight or Swift is designated as the acquirer for accounting and financial reporting purposes ("Accounting Acquirer"). Based on the evidence available, Knight was designated as the Accounting Acquirer while Swift was the acquirer for legal purposes. Therefore, Knight’s historical results of operations replaced Swift’s historical results of operations for all periods prior to the 2017 Merger. More specifically, the accompanying consolidated financial statements for periods prior to the 2017 Merger are those of Knight and its subsidiaries, and for periods subsequent to the 2017 Merger, also include Swift.

In identifying Knight as the Accounting Acquirer, management took into account the structure of the 2017 Merger, the composition of the combined company's board of directors and the designation of certain senior management positions of the combined company, among other factors.

See Note 5 for further details of the 2017 Merger, including discussion of the purchase price allocation applied, as well as Note 21 for further discussion related to the treatment of the Swift equity awards assumed pursuant to the 2017 Merger.

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Abilene Acquisition

On March 16, 2018, the Company acquired all of the issued and outstanding equity interests of Abilene. Abilene's trucking and logistics businesses are included under the respective segments. Please refer to Note 5 for more information about the Abilene Acquisition.

Other Acquisition

On January 1, 2020 the Company acquired a small company to complement its suite of services. Please refer to Note 5 in Part II, Item 8 of this Annual Report for more information about this acquisition.

Basis of Presentation

The consolidated financial statements include the accounts of Knight-Swift Transportation Holdings Inc. and its subsidiaries. In management's opinion, these consolidated financial statements were prepared in accordance with GAAP and include all adjustments necessary (consisting of normal recurring adjustments) for the fair presentation of the periods presented.

With respect to transactional/durational data, references to "years", including "2019", "2018", "2017", "2016", and "2015" pertain to calendar years. Similarly, references to "quarters", including "first", "second", "third", and "fourth" pertain to calendar quarters.

Note regarding comparability — Based on the structure of the 2017 Merger, the reported results do not include the results of operations of Swift and its subsidiaries on and prior to the 2017 Merger, in accordance with the accounting treatment applicable to the transaction. Additionally, the reported results do not include the results of operations of Abilene and its subsidiaries on and prior to its acquisition by the Company on March 16, 2018 in accordance with the accounting treatment applicable to the transaction. Accordingly, comparisons between the Company's 2019 results and prior periods may not be meaningful.

Joint ventures — The financial activities of the following entities with which the Company has joint ventures are consolidated. The noncontrolling interest for these entities is presented as a separate component of the consolidated financial statements.

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In 2014, Knight formed an Arizona limited liability company, now known as Kold Trans, LLC, for the purpose of expanding its refrigerated trucking business. Knight was entitled to 80.0% of the profits of the entity and has effective control over the management of the entity. During 2018, the Company purchased the remaining 20.0% of the joint venture, eliminating the related noncontrolling interest.

•	In 2010, Knight partnered with a non-related investor to form an Arizona limited liability company for the purpose of sourcing commercial vehicle parts. Knight acquired a 52.0% ownership interest in this entity.

Equity method and other equity investments — Refer to Note 7 for basis of presentation disclosures regarding Knight's equity method and other equity investments in Transportation Resource Partners.

Changes in Presentation

Changes in presentation associated with adopting accounting pronouncements are included in Note 3.

Balance Sheet — Beginning in the second quarter of 2019, the Company presents "Contract balance – revenue in transit" as a separate line item on the consolidated balance sheets to improve visibility. The balance was previously disclosed within the footnotes to the consolidated financial statements. Prior period amounts have been reclassified out of "Trade receivables, net" to align with the current period presentation.

Statement of Cash Flows — The amounts presented in the Company's 2017 Annual Report were reclassified to align with the presentation in this Annual Report as follows:

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"Transportation Resource Partners impairment," "Income from investment in Transportation Resource Partners," "Non-cash compensation expense for issuance of common stock to certain members of the Board of Directors," "Provision for doubtful accounts and notes receivable," "Stock-based compensation expense," and "Amortization of debt issuance costs, and other" were reclassified to "Other adjustments to reconcile net income to net cash provided by operating activities."

•	Changes in "Other current assets," "Prepaid expenses," and "Other long-term assets" were reclassified to "Other assets and liabilities."

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•	"Proceeds from notes receivable," "Payments received on equipment sale receivables," "Cash payments to Transportation Resource Partners," and "Cash proceeds from Transportation Resource Partners" were reclassified to "Other cash flows from investing activities."

•	"Payment of deferred loan costs," "Share withholding for taxes due on equity awards," and "Cash distribution to noncontrolling interest holder," were reclassified to "Other cash flows from financing activities."

•	"Repayments on Knight Revolver, net" and "Borrowings on Revolver, net" were reclassified to "Borrowings on revolving lines of credit, net."

Statement of Comprehensive Income — 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 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.

During 2017, to simplify the presentation of the consolidated statements of comprehensive income, the Company changed its presentation of rental expenses related to revenue equipment, which is now separately presented within "Total operating expenses" in the consolidated statements of comprehensive income. The prior period presentation has been retrospectively adjusted to reclassify the amount out of "Miscellaneous operating expenses" and into the new line item "Rental expense." The change in presentation has no net impact on "Total operating expenses."

Seasonality

Use of Estimates — The preparation of the consolidated financial statements, in accordance with GAAP, requires management to make estimates and assumptions about future events that affect the amounts reported in the Company's consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates and periodically adjusts its estimates and assumptions, based on historical experience, the impact of the current economic environment, and other key factors. Volatile energy markets, as well as changes in consumer spending have increased the inherent uncertainty in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Significant items subject to such estimates and assumptions include:

•	carrying amount of property and equipment, intangibles, and goodwill;

•	valuation allowances for receivables, inventories, and deferred income tax assets;

•	valuation of financial instruments;

•	calculation of stock-based compensation;

•	estimates of claims accruals;

•	leases; and

•	contingent obligations.

Segments — The Company uses the "management approach" to determine its reportable segments, as well as to determine the basis of reporting the operating segment information. Certain of the Company's operating segments

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have been aggregated into reportable segments. The management approach focuses on financial information that management uses to make operating decisions. The Company's chief operating decision makers use total revenue, operating expense categories, operating ratios, operating income, and key operating statistics to evaluate performance and allocate resources to the Company's operations.

Operating income is the measure that management uses to evaluate segment performance and allocate resources. Operating income should not be viewed as a substitute for GAAP net income (loss). Management believes the presentation of operating income enhances the understanding of the Company's performance by highlighting the results of operations and the underlying profitability drivers of the business segments. Operating income is defined as "Total revenue" less "Total operating expenses."

Based on the unique nature of the Company's operating structure, certain revenue-generating assets are interchangeable between segments. Additionally, the Company's chief operating decision makers do not review assets or liabilities by segment to make operating decisions. The Company allocates depreciation and amortization expense of its property and equipment to the segments based on the actual utilization of the asset by the segment during the period.

See Note 25 for additional disclosures regarding the Company's segments.

Cash and Cash Equivalents — Cash and cash equivalents are comprised of cash, money market funds, and highly liquid instruments with insignificant interest rate risk and original maturities of three months or less. Cash balances with institutions may be in excess of Federal Deposit Insurance Corporation ("FDIC") limits or may be invested in sweep accounts that are not insured by the institution, the FDIC, or any other government agency.

Restricted Cash and Equivalents — The Company's wholly-owned captive insurance companies, Red Rock and Mohave, maintain certain operating bank accounts, working trust accounts, and investment accounts. The cash and cash equivalents within these accounts are restricted by insurance regulations to fund the insurance claim losses to be paid by the captive insurance companies, and therefore, are classified as "Cash and cash equivalents – restricted" in the consolidated balance sheets.

Restricted Investments — The Company's investments are restricted by insurance regulations to fund the insurance claim losses to be paid by the captive insurance companies. The Company accounts for its investments in accordance with ASC Topic 320, Investments – Debt Securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase and re-evaluates the determination on a quarterly basis. As of December 31, 2019, all of the Company's investments in fixed-maturity securities were classified as held-to-maturity, as the Company has the positive intent and ability to hold these securities to maturity. Held-to-maturity securities are carried at amortized cost. The amortized cost of debt securities is adjusted using the effective interest rate method for amortization of premiums and accretion of discounts. Amortization and accretion are reported in "Other income, net" in the consolidated statements of comprehensive income.

Management periodically evaluates restricted investments for impairment. The assessment of whether impairments have occurred is based on management's case-by-case evaluation of the underlying reasons for the decline in estimated fair value. Management accounts for other-than-temporary impairments of debt securities in accordance with ASC Topic 320, Investments – Debt Securities. This guidance requires the Company to evaluate whether it intends to sell an impaired debt security or whether it is more likely than not that it will be required to sell an impaired debt security before recovery of the amortized cost basis. If either of these criteria are met, an impairment loss equal to the difference between the debt security's amortized cost and its estimated fair value is recognized in earnings. For impaired debt securities that do not meet these criteria, the Company determines if a credit loss exists with respect to the impaired security. If a credit loss exists, the credit loss component of the impairment (i.e., the difference between the security's amortized cost and the present value of projected future cash flows expected to be collected) is recognized in earnings and the remaining portion of the impairment is recognized as a component of accumulated other comprehensive income.

See Note 6 for additional disclosures regarding the Company's restricted investments.

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Inventories and Supplies — Inventories and supplies, which are included in "Other current assets" in the consolidated balance sheets, primarily consist of spare parts, tires, fuel, and supplies and are stated at lower of cost or net realizable value. Depending on the class of inventory, cost is determined using the first-in, first-out method or average cost.

Property and Equipment — Property and equipment is stated at cost less accumulated depreciation. Costs to construct significant assets include capitalized interest incurred during the construction and development period. Expenditures for replacements and improvements are capitalized. Maintenance and repairs are expensed as incurred.

Depreciation of property and equipment is calculated on a straight-line basis down to the salvage value, as applicable, over the following estimated useful lives:

Category:		Range (in years)
Revenue equipment		4	—	20
Shop and service equipment		2	—	10
Land improvements		5	—	15
Buildings and building improvements		10	—	40
Furniture and fixtures		3	—	10
Leasehold improvements		Life of the lease

Net gains on the disposal of property and equipment are presented in the consolidated statements of comprehensive income within "Miscellaneous operating expenses."

Tires on purchased revenue equipment are capitalized along with the related equipment cost when the vehicle is placed in service, and are depreciated over the life of the vehicle. Replacement tires are classified as inventory and expensed when placed in service.

Management evaluates its property and equipment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC Topic 360, Property, Plant and Equipment. When such events or changes in circumstances occur, management performs a recoverability test that compares the carrying amount with the projected undiscounted cash flows from the use and eventual disposition of the asset or asset group. An impairment is recorded for any excess of the carrying amount over the estimated fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary.

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 two-step quantitative goodwill impairment test. The first step of the quantitative impairment test involves comparing the fair values of the applicable reporting units with their carrying values. 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 reporting unit's fair value, then management performs the second step of the quantitative impairment test. The second step of the quantitative impairment test involves comparing the implied fair value of the affected reporting unit's goodwill with the carrying value of that goodwill. Any amount by which the carrying value of the goodwill exceeds its implied fair value is recognized as an impairment loss. Refer to Note 11 for discussion of the results of the Company's annual evaluation as of June 30, 2019.

See Notes 5 and 11 for additional disclosures regarding the Company's goodwill.

Intangible Assets other than Goodwill — The Company's intangible assets other than goodwill primarily consist of acquired customer relationships and a trade name from the 2017 Merger, as well as intangibles from Knight's 2018 acquisition of Abilene and Knight's 2014 acquisition of Barr-Nunn Transportation, Inc. and certain of its affiliates. Amortization of acquired customer relationships is calculated on a straight-line basis over the estimated useful life, which ranges from 5 years to 20 years. The trade names have indefinite useful lives and are not amortized, but are tested for impairment at least annually, unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value.

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Management reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable, in accordance with ASC Topic 350, Intangibles – Goodwill and Other. When such events or changes in circumstances occur, management performs a recoverability test that compares the carrying amount with the projected discounted cash flows from the use and eventual disposition of the asset or asset group. An impairment is recorded for any excess of the carrying amount over the estimated fair value, which is generally determined using discounted future cash flows.

See Notes 5 and 11 for additional disclosures regarding the Company's intangible assets.

Claims Accruals — The Company is self-insured for a portion of its risk related to auto liability, workers' compensation, property damage, and cargo damage. This self-insurance results from buying insurance coverage that applies in excess of a retained portion of risk for each respective line of coverage. The Company accrues for the cost of the uninsured portion of pending claims by evaluating the nature and severity of individual claims and by estimating future claims development based upon historical claims development trends. The actual cost to settle self-insured claim liabilities may differ from the Company's reserve estimates due to legal costs, claims that have been incurred but not reported, and various other uncertainties, including the inherent difficulty in estimating the severity of the claims and the potential judgment or settlement amount to dispose of the claim.

See Notes 13 and 19 for additional disclosures regarding the Company's claims accruals.

Operating Leases (2019) — Management evaluates the Company’s leases based on the underlying asset groups. The assets currently underlying the Company’s leases include revenue equipment (primarily tractors and trailers), real estate (primarily buildings, office space, land, and drop yards), as well as technology and other equipment that supports business operations. Management’s significant assumptions and judgments include the determination of the discount rate (discussed below), as well as the determination of whether a contract contains a lease.

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Lease Term — The Company’s leases generally have lease terms corresponding to the useful lives of the underlying assets. Revenue equipment leases have fixed payment terms based on the passage of time, which is typically three to five years for tractors and five to seven years for trailers. Certain finance leases for revenue equipment contain renewal or fixed price purchase options. Real estate leases, excluding drop yards, generally have varying lease terms between five and fifteen years and may include renewal options. Drop yards include month-to-month leases, as well as leases with varying lease terms generally ranging from two to five years.

Options to renew or purchase the underlying assets are considered in the determination of the right-of-use asset and lease liability once reasonably certain of exercise.

•

Portfolio Approach — The Company typically leases its revenue equipment under master lease agreements, which contain general terms, conditions, definitions, representations, warranties and other general language, while the specific contract provisions are contained within the various individual lease schedules that fall under a master lease agreement. Each individual leased asset within a lease schedule is similar in nature (i.e. all tractors or all trailers) and has identical contract provisions to all of the other individual leased assets within the same lease schedule (such as the contract provisions discussed above). Management has elected to apply the portfolio approach to its revenue equipment leases, as accounting for its revenue equipment under the portfolio approach would not be materially different from separately accounting for each individual underlying asset as a lease. Each individual real estate and other lease is accounted for at the individual asset level.

•

Nonlease Components — Management has elected to combine its nonlease components (such as fixed charges for common area maintenance, real estate taxes, utilities, and insurance) with lease components for each class of underlying asset, as applicable, as the nonlease components in the Company’s lease contracts typically are not material. These nonlease components are usually present within the Company’s real estate leases. The Company’s assets are generally insured by umbrella policies, in which the premiums change from one policy period to the next, making them variable in nature. Accordingly, these insurance costs are excluded from the Company’s calculation of right-of-use assets and corresponding lease liabilities.

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Short-Term Lease Exemption — Management has elected to apply the short-term lease exemption to all asset groups. Accordingly, leases with terms of twelve months or less are not capitalized and continue to be expensed on a straight-line basis over the term of the lease. This primarily affects the Company’s drop yards and corresponding temporary structures on those drop yards. To a lesser extent, certain short-term leases for revenue equipment, technology, and other assets are affected.

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Discount Rate — The Company uses the rate implicit in the lease, when readily determinable. Otherwise the Company’s incremental borrowing rate is applied. Due to the unique structure of the Company’s revenue equipment leases, management believes that the rate implicit in the lease is readily determinable for such leases and the implicit rate is used. The Company’s use of the implicit rate (rather than the incremental borrowing rate) for its revenue equipment leases does not materially change the Company’s financial position or financial results either by financial statement caption or in total. The implicit interest rate is not readily determinable for the Company’s real estate and other leases. As such, management applies the Company’s incremental borrowing rate, which is defined by GAAP as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company's incremental borrowing rate is based on the results of an independent third-party valuation.

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Residual Values — The Company's finance leases are typically structured with balloon payments at the end of the lease term equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers. If the Company does not receive proceeds of the contracted residual value from the manufacturer, the Company is still obligated to make the balloon payment at the end of the lease term.

In connection with certain revenue equipment operating leases, the Company issues residual value guarantees, which provide that if the Company does not purchase the leased equipment from the lessor at the end of the lease term, then the Company is liable to the lessor for an amount equal to the shortage (if any) between the proceeds from the sale of the equipment and an agreed value. To the extent management believes any manufacturer will refuse or be unable to meet its obligation, the Company recognizes additional rental expense to the extent the fair market value at the lease termination is expected to be less than the obligation to the lessor. Proceeds from the sale of equipment under the Company’s operating leases generally exceed the payment obligation on substantially all operating leases. Although the Company typically owes certain amounts to its lessors at the end of its revenue equipment leases, the Company’s equipment manufacturers have corresponding guarantees back to the Company as to the buyback value of the units.

Operating Leases (2018 and 2017) — In accordance with ASC Topic 840, Leases, property and equipment held under operating leases, and liabilities related thereto, are off-balance sheet. All expenses related to operating leases were reflected in the consolidated statement of comprehensive income in "Rental expense." At lease inception, management determined whether the lease should be classified as operating or capital lease, based on the guidance set forth in ASC Topic 840. Additionally at lease inception, management determined the useful life and estimated residual values of the related equipment. Future minimum lease payments used in determining lease classification represented the minimum rental payments called for over the lease term, inclusive of residual value guarantees (if applicable) and amounts that would be required to be paid, if any, by the Company upon default for leases containing subjective acceleration or cross default clauses.

In connection with various operating leases, the Company issued residual value guarantees, which provided that if the Company did not purchase the leased equipment from the lessor at the end of the lease term, it was liable to the lessor for an amount equal to the shortage (if any) between the proceeds from the sale of the equipment and an agreed value. To the extent the Company believed any manufacturer would refuse or be unable to meet its obligation, the Company recognized additional rental expense to the extent the Company believed the fair market value at the lease termination would be less than the Company's obligation to the lessor. The Company believed that proceeds from the sale of equipment under operating leases would exceed the payment obligation on substantially all operating leases.

See Note 17 for additional disclosures regarding the Company's operating leases.

Fair Value Measurements — See Note 23 for accounting policies and financial information relating to fair value measurements.

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Contingencies — See Note 19 for accounting policies and financial information related to contingencies.

Revenue Recognition (2019 and 2018) — The Company adopted ASC Topic 606, Revenue from Contracts with Customers, on January 1, 2018.

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Contract Identification — Management has identified that a legally enforceable contract with its customers is executed by both parties at the point of pickup at the shipper's location, as evidenced by the bill of lading. Although the Company may have master agreements with its customers, these master agreements only establish general terms. There is no financial obligation to the shipper until the load is tendered/accepted and the Company takes possession of the load.

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Performance Obligations — The Company's only performance obligation is transportation services. The Company's delivery, accessorial, and dedicated operations truck capacity in its dedicated operations represent a bundle of services that are highly interdependent and have the same pattern of transfer to the customer. These services are not capable of being distinct from one another. For example, the Company generally would not provide accessorial services or truck capacity without providing delivery services.

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Transaction Price — Depending on the contract, the total transaction price may consist of mileage revenue, fuel surcharge revenue, accessorial fees, truck capacity, and/or non-cash consideration. Non-cash consideration is measured by the estimated fair value of the non-cash consideration at contract inception. There is no significant financing component in the transaction price, as the Company's customers generally pay within the contractual payment terms of 30 to 60 days.

•	Allocating Transaction Price to Performance Obligations — The transaction price is entirely allocated to the only performance obligation: transportation services.

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Revenue Recognition — The performance obligation of providing transportation services is satisfied over time. Accordingly, revenue is recognized over time. Management estimates the amount of revenue in transit at period end based on the number of days completed of the dispatch (which is generally one to three days for the Trucking segment, but can be longer for the Intermodal segment). Management believes this to be a faithful depiction of the transfer of services because if a load is dispatched, but terminates mid-route and the load is picked up by another carrier, then that carrier would not need to re-perform the services for the days already traveled. Recognizing revenue over time is a change from the Company's past practice, under which revenue was recognized at the point in time that the freight was delivered (see "Revenue Recognition (2017)" below).

Based on the guidance in ASC Topic 606, management has determined that the Company acts as the principal (rather than the agent) with respect to revenue recognition within its Logistics segment. Accordingly, the Company recognizes revenue on a gross basis, consistent with past practices.

Significant judgments involved in the Company's revenue recognition and corresponding accounts receivable balances include:

•Measuring in-transit revenue at period end (discussed above).

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Estimating the allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on historical experience and any known trends or uncertainties related to customer billing and account collectability. Management reviews the adequacy of its allowance for doubtful accounts on a quarterly basis. Uncollectible accounts are written off when deemed uncollectible, and accounts receivable are presented net of an allowance for doubtful accounts.

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Revenue Disaggregation — In considering the level at which the Company should disaggregate revenues pertaining to contracts with customers, management determined that there are no significant differences between segments in how the nature, amount, timing, and uncertainty of revenue or cash flows are affected by economic factors. Additionally, management considered how and where the Company has communicated information about revenue for various purposes, including disclosures outside of the financial statements and how information is regularly reviewed by the Company's chief operating decision makers for evaluating financial performance of the Company's segments, among others. Based on these considerations, management determined that revenues should be disaggregated by reportable segment.

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The Company recognizes operating lease revenue from leasing tractors and related equipment to independent contractors. Operating lease revenue from rental operations is recognized as earned, which is straight-lined per the rent schedules in the lease agreements. Losses from lease defaults are recognized as offsets to revenue.

Revenue Recognition (2017) — In accordance with ASC 605-20-25-13, Services for Freight-in-Transit at the End of a Reporting Period, the Company recognized operating revenue and the related direct costs of such revenue when persuasive evidence of an arrangement existed, the fee was fixed and determinable, and collectability was probable, all of which occurred as of the date the freight was delivered.

Credit terms for customer accounts were generally on a net 30 day basis. The Company established an allowance for doubtful accounts based on historical experience and any known trends or uncertainties related to customer billing and account collectability. The Company reviewed the adequacy of its allowance for doubtful accounts on a quarterly basis. Uncollectible accounts were written off when deemed uncollectible, and accounts receivable were presented net of an allowance for doubtful accounts.

Stock-based Compensation — The Company accounts for stock-based compensation expense in accordance with ASC Topic 718, Compensation – Stock Compensation. ASC Topic 718 requires that all share-based payments to employees and non-employee directors, including grants of employee stock options, are recognized in the financial statements based upon a grant-date fair value of an award. The fair value of performance units is estimated using the Monte Carlo Simulation valuation model. Equity awards settled in cash are remeasured at each reporting period and are recognized as a liability in the consolidated balance sheets during the vesting period until settlement. The fair value of stock options is estimated using the Black-Scholes option-valuation model. The requisite service period is the specified vesting date in the grant agreement or the date that the employee becomes retirement-eligible, whichever occurs first. The Company calculates the number of awards expected to vest as awards granted, less expected forfeitures over the life of the award (estimated at grant date). The fair value of restricted stock units is based on the closing price of Company's stock as of the grant date. Compensation expense is recorded on a straight-line basis, by amortizing the grant-date fair value over the requisite service period of the entire award. Unless a material deviation from the assumed forfeiture rate is observed during the term in which the awards are expensed, any adjustment necessary to reflect differences in actual experience is recognized in the period the award becomes payable or exercisable.

See Note 21 for additional information relating to the Company's stock compensation plan.

Income Taxes — Management accounts for income taxes under the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences of events that have been included in the consolidated financial statements. Additionally, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and respective tax bases of assets and liabilities (using enacted tax rates in effect for the year in which the differences are expected to reverse). The effect on deferred tax assets and liabilities of changes in tax rates is recognized in income in the period that includes the enactment date. Net deferred incomes taxes are primarily classified as noncurrent in the consolidated balance sheets.

A valuation allowance is provided against deferred tax assets if the Company determines it is more likely than not that such assets will not ultimately be realized. In making such determinations, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial operations.

Unrecognized tax benefits are defined as the difference between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to ASC Topic 740, Income Taxes. The Company does not recognize a tax benefit for uncertain tax positions unless it concludes that it is more likely than not that the benefit will be sustained on audit (including resolutions of any related appeals or litigation processes) by the taxing authority, based solely on the technical merits of the associated tax position. If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that, in the management's judgment, is greater than 50% likely to be realized. The Company records expected incurred interest and penalties related to unrecognized tax positions in "Income tax expense (benefit)" in the consolidated statements of comprehensive income. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued are reduced and reflected as a reduction of the overall income tax provision.

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See Note 14 for additional disclosures regarding the Company's income taxes.

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Leases (ASC Topic 842): ASU 2016-02 — Leases

Note: Required annual disclosures regarding ASC Topic 842 are included in Note 17.

Summary of the Standard — In February 2016, the FASB issued ASU 2016-02, which established the new ASC Topic 842, Leases, standard. The new standard requires lessees to recognize assets and liabilities arising from both operating and financing leases on the balance sheet. Lessor accounting for leases is largely unaffected. For public business entities, the new standard was effective for fiscal years beginning after December 15, 2018. Companies may apply the amendments in ASU 2016-02 using a modified retrospective approach with an adjustment to retained earnings as of either the beginning of the current year ("ASC Topic 840 Comparative Approach") or the beginning of the earliest period presented ("ASC Topic 842 Comparative Approach").

Adoption Method and Approach — The Company adopted ASC Topic 842 on January 1, 2019 by applying the ASC Topic 840 Comparative Approach, resulting in the recognition of right-of-use assets and lease liabilities related to its operating leases. Comparative information related to periods prior to January 1, 2019 continues to be reported under the legacy guidance in ASC Topic 840.

Practical Expedients — As permitted under ASU 2016-02 (and related ASUs), management elected to apply the package of practical expedients:

•	Lease Identification — An entity need not reassess whether any expired or existing contracts are or contain leases.

•	Lease Classification — An entity need not reassess the lease classification for any expired or existing leases (for example, all existing leases that were classified as operating leases in accordance with ASC Topic 840 are now classified as operating leases, and all existing leases that were classified as capital leases in accordance with ASC Topic 840 are now classified as finance leases).

•	Initial Direct Costs — An entity need not reassess initial direct costs for any existing leases.

Adoption Date Impact — The required disclosures regarding the adoption date impact of ASC Topic 842 on the consolidated balance sheet are presented below.

	December 31, 2018				Opening Balance Adjustments				January 1, 2019
	(in thousands)
Assets
Prepaid expenses 2	$	67,011			$	(948	)		$	66,063
Operating lease right-of-use assets 1	—				280,527				280,527
Other long-term assets 2	51,721				(1		)		51,720
Liabilities
Accounts payable 2	$	117,883			$	(437	)		$	117,446
Accrued liabilities 2	151,500				(4,168		)		147,332
Operating lease liabilities – current portion 1	—				119,963				119,963
Operating lease liabilities – less current portion 1	—				168,232				168,232
Deferred tax liabilities 3	739,538				—				739,538
Other long-term liabilities 2	23,294				(4,012		)		19,282

1	These new line items on the consolidated balance sheets represent the capitalization of the Company's operating leases as lessee.

2	The effect of adopting ASC Topic 842 reflects certain reclassifications to adjust the right-of-use assets.

3	Amounts are reflective of deferred tax impacts from capitalizing the Company's operating leases.

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Current Period Impact of Adoption — The required quantitative disclosures regarding the current period impact of adopting ASC Topic 842 on the consolidated balance sheet are presented below.

	December 31, 2019
	As Reported under ASC Topic 842				If Reported Under ASC Topic 840				Effect of Change to ASC Topic 842
	(in thousands)
Assets
Prepaid expenses 2	$	62,160			$	62,879			$	(719	)
Gross property and equipment 4	3,742,739				3,741,911				828
Accumulated depreciation and amortization 4	(892,019		)		(891,191		)		(828		)
Operating lease right-of-use assets 1	169,425				—				169,425
Other long-term assets 2	73,108				73,108				—
Liabilities
Accounts payable 2	$	99,194			$	101,264			$	(2,070	)
Accrued liabilities 2	175,222				178,404				(3,182		)
Finance lease liabilities and long-term debt – current portion 4	377,651				377,651				—
Operating lease liabilities – current portion 1	80,101				—				80,101
Operating lease liabilities – less current portion 1	96,160				—				96,160
Deferred tax liabilities 3	771,719				771,772				(53		)
Other long-term liabilities 2	14,455				16,705				(2,250		)

1	Refer to tabular footnote 1 under "Adoption Date Impact" above.

2	Refer to tabular footnote 2 under "Adoption Date Impact" above.

3	Refer to tabular footnote 3 under "Adoption Date Impact" above.

4	Amounts represent reclassification of operating lease liabilities to finance lease liabilities, as the Company became reasonably certain to purchase certain revenue equipment off of operating leases during 2019.

ASU 2018-13: Fair Value Measurement (Topic 820): Disclosure Framework – Change to the Disclosure Requirements for Fair Value Measurement

Summary of the Standard — The amendments in this ASU modify several disclosure requirements under ASC Topic 820. These changes include removing the disclosure requirements related to the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and adding disclosure requirements about the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. Additionally, the amendments remove the phrase "at a minimum" from the codification clarifying that materiality should be considered when evaluating disclosure requirements.

Current Period Impact of Adoption — The Company began excluding immaterial disclosures regarding fair value measurements from its Quarterly Reports and Annual Reports during the first quarter of 2019.

Other ASUs

There were various other ASUs that became effective during 2019, which did not have a material impact on the Company's results of operations, financial position, cash flows, or disclosures.

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Date Issued		Reference		Description		Expected Adoption Date and Method		Financial Statement 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		Refer to ASU 2016-13, below.
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
December 2019		2019-12: Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes		The amendments in this update intend to reduce the complexity in accounting standards related to ASC Topic 740. These changes include removing several exceptions such as requirements related to intraperiod tax allocations, requirements related to foreign subsidiary equity method investments, and changes to interim period income tax calculations. Additionally, the amendments intend to simplify income tax accounting by updating areas, including but not limited to, franchise taxes, evaluation of goodwill, allocation of current and deferred tax expenses, and various other areas.		January 2021, Adoption method varies by amendment		Currently under evaluation, but not expected to be material
November 2019		2019-11: Codification Improvements to Topic 326 Financial Instruments — Credit Losses 1		The amendments address certain issues related to the implementation of ASU 2016-13 - Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments. These include, among other things, including expected recoveries in the allowance for credit losses, extending disclosure relief for accrued interest balances to additional relevant disclosures, and clarifying that an entity should assess whether it expects the borrower will be able to continually replenish collateral securing the financial assets.		January 2020, Adoption method varies by amendment		Refer to ASU 2016-13, below.
November 2019		2019-10: Financial Instruments — Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)		The amendments in this ASU update the private entity effective dates for the major updates 2016-13, 2017-12, and 2016-02. The effective dates for these updates would remain the same for public business entities, but would be extended for smaller reporting companies, private companies, not-for-profit organizations and employee benefit plans.		January 2020, Prospective		Currently under evaluation, but not expected to be material

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Date Issued		Reference		Description		Expected Adoption Date and Method		Financial Statement Impact
July 2019		2019-07: Codification Updates to SEC Sections – Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates 1		The amendments in this ASU update several topics of the ASC to incorporate changes required by guidance made effective by SEC Final Rule Nos. 33-10532, 33-10231, and 33-10442. These final rules included, among other things, extending the disclosure requirement of presenting changes in stockholders' equity for both current and comparative interim periods, changing the title of the income statement to statement of comprehensive income, and disclosing the dividend per share amount for each class of stock.		July 2019, Prospective		Presentation and disclosure impact only
May 2019		2019-05: Financial Instruments – Credit Losses, Topic 326; Targeted Transition Relief 1		The amendments provide entities that hold instruments within the scope of Subtopic 326-20 with the option to irrevocably elect the fair value option in Subtopic 825-10. This fair value option election does not apply to instruments classified as held-to-maturity debt securities.		January 2020, Adoption method varies by amendment		Refer to ASU 2016-13, below.
April 2019		2019-04: Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments 1		The amendments address certain issues related to the implementation of ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and ASU 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments update the treatment of credit losses for accrued interest receivables and related recoveries by removing the prohibition of using projections of future interest rate environments when using a discounted cash flow method to measure expected credit losses, outlining other targeted improvements that clarify language and intent, better defining scope, and improving cross references, among others. The amendments in the ASU are effective for fiscal years beginning after December 15, 2019 and early adoption is permitted.		January 2020, Adoption method varies by amendment		Refer to ASU 2016-13, below.
November 2018		2018-19: Codification Improvements to Topic 326 – Financial Instruments – Credit Losses 1		The amendments in this ASU make targeted improvements to the implementation guidance in ASU 2016-13. The amendments clarify that receivables arising from operating leases are not within the scope of ASC 326-20, but instead should be accounted for in accordance with ASC Topic 842. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019. Early adoption is permitted.		January 2020, Modified retrospective		Refer to ASU 2016-13, below.

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Date Issued		Reference		Description		Expected Adoption Date and Method		Financial Statement Impact
August 2018		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 2		The amendments align the requirements for capitalizing implementation costs in a hosting arrangement with the guidance for internal-use software, resulting in expensing preliminary or post-implementation project costs and capitalizing certain application development costs. Previously, there was no specific guidance for these transactions which resulted in various accounting treatments. The capitalized costs should be included in the balance sheet line that includes prepayment for the fees of the associated hosting arrangement, and amortized over the noncancellable period of the arrangement. Amortization expense should be included in the income statement line that includes the fees associated with the hosting element of the arrangement. Payments for capitalized implementation costs should be classified in the statement of cash flows in the same manner as payments made for hosting element fees. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019. Early adoption is permitted.		January 2020, Prospective		Refer to ASU 2018-05, below
January 2017		2017-04: Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment 3		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.		January 2020, Prospective		Refer to ASU 2017-04, below.
June 2016		2016-13: Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments 1		The purpose of this ASU is to amend the current incurred loss impairment methodology with a new methodology that reflects expected credit losses and requires a broader range of reasonable and supportable information to inform credit loss estimates. This is the final credit accounting standard, out of a series, with detailed guidance on the new loss reserve model, Current Expected Credit Losses ("CECL"). Among other provisions, the amendments in the ASU require a financial asset (or group of assets) measured at amortized cost basis to be presented at the net amount expected to be collected. Entities are no longer required to wait until a loss is probable to record it.		January 2020, Modified retrospective		Refer to ASU 2016-13, below.

1

ASU 2016-13: Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments — Management has established an implementation team to evaluate and implement the ASUs related to ASC Topic 326, commonly referred to as the CECL amendments. The diagnostic phase of assessing the financial and business impacts of implementing the standard is nearly complete and includes identifying potential short-term and long-term financing receivables, determining credit quality indicators, analyzing the impact on systems (if any), and developing a preliminary assessment. Based upon the procedures performed in the diagnostic phase, management anticipates that the following key considerations will impact the Company's accounting and reporting under the new standard:

•	identification and assessment of receivable pools,

•	identification of characteristics that drive credit risk to identify financing receivable pools, and

•	determining new/changed estimates and management judgments (if any).

The Company is not anticipating significant changes in accounting, reporting, business processes, or policies and controls as a result of implementing the standard. Based on the information currently available from the diagnostic phase, management anticipates some minor changes in disclosures, but overall the impact on the financial statements is not expected to be material.

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2

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 — Management has established an implementation team and is currently assessing the potential financial and business impacts of implementing the standard. Based on a preliminary assessment, the Company expects to capitalize costs within the development stage of a cloud computing arrangement and continue to expense any costs in the preliminary or post implementation stages. The Company is not expecting a material impact from adopting the amendments in this ASU and has established an implementation team to assess the impact, if any.

3

ASU 2017-04: Intangibles – Goodwill and Other – (Topic 350): Simplifying the Test for Goodwill Impairment — In accordance with the amendments in this ASU, the Company expects to update its goodwill impairment test procedures by comparing the fair value of each reporting unit with its carrying amount. This differs from the current process of calculating the implied fair value of the reporting unit as if all of the assets and liabilities had been acquired in a business combination. The Company is not expecting a material impact from adopting the amendments in this ASU.

Since management is continuing to evaluate the impacts of the above standards, disclosures around these preliminary assessments are subject to change.

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2017 Merger

On September 8, 2017, pursuant to the Agreement and Plan of Merger, dated as of April 9, 2017, by Swift Transportation Company, Bishop Merger Sub, Inc., a direct wholly owned subsidiary of Swift ("Merger Sub"), and Knight Transportation, Inc., Merger Sub merged with and into Knight, with Knight surviving as a direct wholly owned subsidiary of Swift (the "2017 Merger"). Immediately prior to the effective time of the 2017 Merger (the "Effective Time"), the certificate of incorporation of the Company was amended and restated (the "Amended Company Charter") to reflect, among other things, that:

(1)	the Company's corporate name changed from "Swift Transportation Company" to "Knight-Swift Transportation Holdings Inc."; and

(2)

each issued and outstanding share of Class B common stock, par value $0.01 per share, of Swift was converted (the "Class B Conversion") into one share of Class A common stock, par value $0.01 per share, of Swift and immediately thereafter, each issued and outstanding share of Swift Class A common stock (including each share of Swift Class A common stock into which the shares Swift Class B common stock was converted pursuant to the Class B Conversion) was, by means of a reverse stock split (the "Reverse Split"), consolidated into 0.72 of a share of Class A common stock of the Company. No fractional shares of Class A common stock were issued in the Reverse Split, and, in connection with the Reverse Split, holders of Class A common stock became entitled to receive cash in lieu of any fractional shares in accordance with the Amended Company Charter.

At the Effective Time, each share of Knight common stock, par value $0.01 per share, of Knight ("Knight Common Stock") issued and outstanding immediately prior to the Effective Time (other than shares held in the treasury of Knight or owned or held, directly or indirectly, by Swift or any wholly owned subsidiary of Swift or Knight, in each case not held in a fiduciary capacity on behalf of a third-party) was converted into the right to receive one share of the Company's Class A common stock.

Upon the closing of the 2017 Merger, the shares of Knight common stock that previously traded under the ticker symbol "KNX" on the NYSE ceased trading on, and were delisted from, the NYSE. Shares of the Company's Class A common stock commenced trading on the NYSE, on a post-Reverse Split basis, under the ticker symbol "KNX" on September 11, 2017.

In 2017, the Company recorded $16.5 million of direct and incremental costs associated with 2017 Merger-related activities, primarily incurred for legal and professional fees, which were recorded in the "Merger-related costs" line in the consolidated statements of comprehensive income. In association with the 2017 Merger, the Company incurred merger-related bonuses and accelerated stock compensation expense totaling $5.6 million, which is recorded in the "Salaries, wages, and benefits" line in the consolidated statements of comprehensive income. Additionally, the Company incurred $0.9 million in merger-related statutory filing fees and miscellaneous expense, and $0.1 million in independent contractor retention expenses recorded within the "Miscellaneous operating expenses, net" and "Purchased transportation" lines in the consolidated statements of comprehensive income.

Purchase Price Allocation

Following the consummation of the 2017 Merger, Knight and Swift stockholders owned approximately 46% and 54%, respectively, of the Company. Based on Knight's $40.85 per share closing price on September 8, 2017 and the fair value of Swift equity awards, consisting of outstanding stock options and certain unvested restricted stock units, and noncontrolling interest assumed by the Company totaling $13.2 million, the 0.72 of a combined company share that the Swift stockholders received in respect of each Class A share of Swift had an aggregate fair value of approximately $4.0 billion.

The purchase price allocation for the 2017 Merger has been allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The purchase price allocation was open for adjustments through the end of the measurement period, which closed one year from the merger date.

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The following table summarizes the total fair value consideration transferred:

	(In thousands, except ratio and stock price)
Number of Swift shares outstanding at September 8, 2017	134,765
Swift share consolidation ratio	0.72
Swift shares outstanding post-Reverse Split and immediately prior to the 2017 Merger	97,031
Closing price of Knight on September 8, 2017	$	40.85
Fair value of equity portion of the 2017 Merger consideration	$	3,963,712
Fair value of Swift equity awards and noncontrolling interest assumed	13,193
Total fair value of consideration transferred	$	3,976,905

The following is a summary of the allocation of purchase consideration to the estimated fair value of Swift's assets acquired and liabilities assumed in the 2017 Merger:

	September 9, 2017 Opening Balance Sheet				Adjustments ¹				Adjusted September 9, 2017 Opening Balance Sheet
	(In thousands)
Fair value of the consideration transferred	$	3,976,905			$	—			$	3,976,905
Cash and cash equivalents	$	28,484			$	—			$	28,484
Restricted cash and fixed maturity securities	85,615				—				85,615
Trade and other receivables	411,767				—				411,767
Prepaid expenses	44,564				—				44,564
Other current assets	19,736				—				19,736
Property and equipment	1,522,123				—				1,522,123
Identifiable intangible assets ¹	1,285,900				165,800				1,451,700
Other noncurrent assets	18,537				—				18,537
Total assets	3,416,726				165,800				3,582,526
Accounts payable	(188,411		)		—				(188,411		)
Accrued liabilities ²	(232,280		)		(6,466		)		(238,746		)
Claims accruals	(306,846		)		—				(306,846		)
Long-term debt and capital lease obligations	(894,681		)		—				(894,681		)
Deferred tax liabilities ¹ ²	(741,405		)		(61,900		)		(803,305		)
Other long-term liabilities	(18,452		)		—				(18,452		)
Total liabilities	(2,382,075		)		(68,366		)		(2,450,441		)
Goodwill ¹ ²	$	2,942,254			$	(97,434	)		$	2,844,820

1	Adjustments made to identifiable intangible assets, goodwill, and deferred tax liabilities pertain to management's re-evaluation of the royalty rate used associated with certain trade names.

2	Adjustments made to accrued liabilities, goodwill, and deferred tax liabilities were due to new information obtained related to certain legal matters that were outstanding as of the 2017 Merger closing date.

The goodwill is primarily attributable to Swift's existing workforce and the synergies expected to arise after the 2017 Merger. These acquired capabilities, when combined with Knight's business, will result in opportunities that allow us to provide services under contracts that could not have been pursued individually by either Knight or Swift. The Company allocated goodwill to its reportable segments (as presented in Note 11). The goodwill will not be deductible for tax purposes.

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The estimated fair value of the acquired identifiable intangible assets is based on a valuation completed for Swift, along with related tangible assets, using a combination of the income method and comparable market transactions. Following are the details of the preliminary purchase price allocated to the identifiable intangible assets acquired:

	Estimated Life		Estimated Fair Value as of September 9, 2017				Adjustments ¹				Adjusted Estimated Fair Value as of September 9, 2017
	(years)		(thousands)
Customer relationships	10 - 20 years		$	817,200			$	(700	)		$	816,500
Trade name	indefinite		468,700				166,500				635,200
Total identifiable intangible assets			$	1,285,900			$	165,800			$	1,451,700

1	See 1, above for nature of the adjustments made to intangible assets.

The Company's 2017 consolidated financial statements include Swift's results of operations after September 8, 2017 (closing of the 2017 Merger) through December 31, 2018. During 2017, Swift's total revenue and net income included within the Company's consolidated operating results was $1.3 billion and $95.7 million, respectively. Swift's net income for this period includes a $16.8 million impairment charge primarily related to termination of implementation of Swift's ERP system, as well as $12.9 million related to the amortization of intangibles acquired in the 2017 Merger.

Abilene Acquisition

On March 16, 2018, the Company purchased 100.0% of the equity interests of Abilene. Abilene is a diversified truckload carrier located in Richmond, Virginia operating throughout the US and Canada.

The total consideration of $103.3 million consisted of approximately $80.5 million in cash consideration to the sellers, plus approximately $22.8 million for debt payoffs. The Company funded the Abilene Acquisition through cash-on-hand and borrowing on the Revolver on the date of the transaction. At closing, $7.0 million of the purchase price was placed in escrow to secure the sellers' indemnification obligations and an additional $4.5 million of the purchase price was placed in escrow in respect of certain tax obligations of the sellers and remains subject to further adjustments.

The equity purchase agreement 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 equity purchase agreement contains customary representations, warranties, covenants, and indemnification provisions.

The results of the acquired business have been included in the consolidated financial statements since the date of acquisition and represent 2.0% in 2019 and 1.6% in 2018 of consolidated total revenue, and 2.3% in 2019 and 2.1% in 2018 of consolidated net income attributable to Knight-Swift . The acquired business also represented 1.6% and 1.7% of consolidated total assets as of December 31, 2019 and 2018, respectively.

The goodwill recognized represents expected synergies from combining the operations of Abilene with the Company, including enhanced service offerings and sharing best practices in terms of driver recruiting and retention, 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 was allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The purchase price allocation was open for adjustments through the end of the measurement period, which closed one year from the March 16, 2018 acquisition date.

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The following table summarizes the fair value of the consideration transferred as of the acquisition date, including any adjustments during the measurement period:

	March 16, 2018 Opening Balance Sheet				Adjustments				Adjusted March 16, 2018 Opening Balance Sheet
	(in thousands)
Fair value of the consideration transferred	$	103,223			$	124			$	103,347
Cash	1,654				—				1,654
Trade receivables	11,745				1,265				13,010
Other assets	7,785				842				8,627
Property and equipment	41,403				(41		)		41,362
Identifiable intangible assets ¹	23,000				(400		)		22,600
Total assets	85,587				1,666				87,253
Accounts payable	1,959				1,577				3,536
Accrued liabilities	2,419				4,942				7,361
Claims accruals	230				179				409
Total liabilities	4,608				6,698				11,306
Goodwill	$	22,244			$	5,156			$	27,400

1	Includes $17.9 million in customer relationships and a $4.7 million trade name.

The above adjustments were related to the completion of an independent valuation of certain acquired intangible assets, the identification of liabilities associated with capital expenditures incurred prior to the acquisition, adjustments for Abilene’s adoption of ASC Topic 606, and the associated deferred tax asset impact of these adjustments. No material statement of comprehensive income effects were identified with these adjustments.

Consolidated Pro Forma Information

The following unaudited pro forma information combines the historical operations of Knight-Swift and Abilene giving effect to the Abilene Acquisition and related transactions as if they had been consummated on January 1, 2018, the beginning of the comparative periods presented.

	2018
	(in thousands, except per share data)
Total revenue	$	5,366,551
Net income attributable to Knight-Swift	$	419,812
Earnings per diluted share	$	2.36

The unaudited pro forma condensed combined financial information has been presented for comparative purposes only and includes certain adjustments such as recognition of assets acquired at estimated fair values and related depreciation and amortization, elimination of transaction costs incurred by Knight-Swift and Abilene during the periods presented that were directly related to the Abilene Acquisition and related income tax effects. As a result of the Abilene Acquisition, the Company incurred certain acquisition-related expenses totaling $0.2 million during 2018. The acquisition-related expenses that the Company incurred from the Abilene Acquisition are eliminated from presentation of the unaudited pro forma net income presented above.

The unaudited pro forma condensed combined financial information does not purport to represent the actual results of operations that Knight-Swift and Abilene would have achieved had the companies been combined during the periods presented in the unaudited pro forma condensed combined financial statements and is not intended to project the future results of operations that the combined company may achieve after the identified transactions. The unaudited pro forma condensed combined financial information does not reflect any cost savings that may be realized as a result of the Abilene Acquisition and also does not reflect any restructuring or integration-related costs to achieve those potential cost savings.

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Other Acquisition

On January 1, 2020, the Company purchased 100.0% of the equity interests of a small company, complementary to its suite of services, for total consideration of approximately $72.5 million. This consisted of $48.2 million in cash consideration and approximately $24.3 million in potential payments to the former shareholders, contingent upon the achievement of certain performance thresholds. The acquisition is not considered significant and does not require separate reporting.

The following table presents the cost or amortized cost, gross unrealized gains and temporary losses, and estimated fair value of the Company's restricted investments: 

	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

	December 31, 2018
					Gross Unrealized
	Cost or Amortized Cost				Gains				Temporary Losses				Estimated Fair Value
	(In thousands)
US corporate securities	$	15,296			$	1			$	(16	)		$	15,281
Municipal bonds	1,082				—				—				1,082
Negotiable certificates of deposit	1,035				—				—				1,035
Restricted investments, held-to-maturity	$	17,413			$	1			$	(16	)		$	17,398

As of December 31, 2019, the contractual maturities of the restricted investments were one year or less. There were 7 and 20 securities that were in an unrealized loss position, all for less than twelve months as of December 31, 2019 and 2018, respectively. The Company did not recognize any impairment losses related to restricted investments during 2019, 2018, or 2017.

Refer to Note 2 for accounting policy and Note 23 for additional information regarding fair value measurements of restricted investments.

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Since 2003, Knight has entered into partnership agreements with entities that make privately-negotiated equity investments, including Transportation Resource Partners ("TRP"), Transportation Resource Partners III, LP ("TRP III"), TRP Capital Partners, LP ("TRP IV"), TRP CoInvest Partners, (NTI) I, LP ("TRP Coinvestment NTI"), TRP CoInvest Partners, (QLS) I, LP ("TRP Coinvestment QLS"), and TRP Coinvest Partners, FFR I, LP ("TRP Coinvestment FFR"). In these agreements, Knight committed to invest in return for an ownership percentage.

The following table presents ownership and commitment information for Knight's investments in TRP partnerships:

	December 31, 2019
	Knight's Ownership  Interest 1			Total Commitment (All Partners)				Knight's Contracted Commitment				Knight's Remaining Commitment
	(Dollars in thousands)
TRP – equity investment 2	2.4	%		$	260,000			$	5,500			$	—
TRP III – equity method investment 3	4.9	%		$	245,000			$	15,000			$	1,715
TRP IV – equity investment 2 4	4.4	%		$	116,000			$	4,900			$	750
TRP Coinvestment NTI – equity method investment 5	8.3	%		$	120,000			$	10,000			$	—
TRP Coinvestment QLS – equity method investment 5	25.0	%		$	39,000			$	9,735			$	—
TRP Coinvestment FFR – equity method investment 5 6	7.4	%		$	66,555			$	4,950			$	—

1	The Company's share of the results is included within "Other income, net" in the consolidated statements of comprehensive income.

2	In accordance with ASC Topic 321, Investments – Equity Securities, these investments are recorded at cost minus impairment.

3	Management anticipates that the following amounts will be due: $1.7 million in 2020.

4	Management anticipates that the following amounts will be due: $0.1 million in 2020, $0.2 million from 2021 through 2022, $0.2 million from 2023 through 2024, and $0.3 million thereafter.

5

The TRP Coinvestments are unconsolidated majority interests. Management considered the criteria set forth in ASC 323, Investments – Equity Method and Joint Ventures, to establish the appropriate accounting treatment for these investments. This guidance requires the use of the equity method for recording investments in limited partnerships where the "so minor" interest is not met. As such, the investments are being accounted for under the equity method. Knight's ownership interest reflects its ultimate ownership of the portfolio companies underlying the TRP Coinvestment NTI, TRP Coinvestment QLS, and TRP Coinvestment FFR legal entities.

6	The Company entered into the agreement in the first quarter of 2019.

Net investment balances included in "Other long-term assets" in the consolidated balance sheets were as follows:

	December 31,
	2019				2018
	(in thousands)
TRP – equity investment ¹	$	—			$	211
TRP III – equity method investment	252				1,781
TRP IV – equity investment ¹	3,068				2,022
TRP Coinvestment NTI – equity method investment	6,225				5,547
TRP Coinvestment QLS – equity method investment	16,383				11,085
TRP Coinvestment FFR – equity method investment	4,950				—
Total carrying value	$	30,878			$	20,646

1	In accordance with ASC Topic 321, Investments – Equity Securities, these investments are recorded at cost minus impairment.

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Trade receivables balances were as follows:

	December 31,
	2019				2018 ¹
	(In thousands)
Trade customers	$	511,487			$	581,475
Equipment manufacturers	5,146				7,166
Other	20,092				28,942
Trade receivables	536,725				617,583
Less: Allowance for doubtful accounts	(18,178		)		(16,355		)
Trade receivables, net	$	518,547			$	601,228

1	Refer to Note 1 for change in presentation regarding "Contract balance – revenue in transit"

The following is a rollforward of the allowance for doubtful accounts for trade receivables:

	2019				2018				2017
	(In thousands)
Beginning balance	$	16,355			$	14,829			$	2,727
Provision (reduction)	16,925				(3,092		)		4,671
Write-offs directly against the reserve	(2,652		)		(1,362		)		(1,583		)
Write-offs for revenue adjustments	(12,450		)		5,861				(3,758		)
Other ¹	—				119				12,772
Ending balance	$	18,178			$	16,355			$	14,829

1	Increase in allowance for doubtful accounts relates to trade receivables assumed in 2017 from Swift as part of the 2017 Merger and in 2018 from the Abilene Acquisition. See Note 5 for further details regarding these transactions.

See Note 15 for a discussion of the Company's accounts receivable securitization program and the related accounting treatment.

The Company provides financing to independent contractors and other third-parties on equipment sold or leased. Most of the notes are collateralized and are due in weekly installments, including principal and interest payments, ranging from 5% to 18%. Notes receivable are included in "Other current assets" and "Other long-term assets" in the consolidated balance sheets and were comprised of:

	December 31,
	2019				2018
	(In thousands)
Notes receivable from independent contractors	$	9,167			$	9,318
Notes receivable from third parties	6,164				7,075
Gross notes receivable	15,331				16,393
Allowance for doubtful notes receivable	(503		)		(1,051		)
Total notes receivable, net of allowance	$	14,828			$	15,342
Current portion, net of allowance	4,163				4,563
Long-term portion	$	10,665			$	10,779

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The following is a rollforward of the allowance for doubtful notes receivable:

	2019				2018				2017
	(In thousands)
Beginning balance	$	1,051			$	1,040			$	240
(Reduction) provision	(137		)		(100		)		574
Write-offs	(411		)		(103		)		(53		)
Other ¹	—				214				279
Ending balance	$	503			$	1,051			$	1,040

1	Represents an increase in allowance for doubtful notes associated with notes receivable assumed in 2017 from Swift as part of the 2017 Merger and in 2018 from the Abilene Acquisition. See Note 5 for further details regarding these transactions.

The Company expects to sell its assets held for sale within the next twelve months. Revenue equipment held for sale totaled $41.8 million and $40.0 million as of December 31, 2019 and 2018, respectively. Net gains on disposals, including disposals of property and equipment classified as assets held for sale, reported in "Miscellaneous operating expenses" in the consolidated statements of comprehensive income were $32.9 million during 2019 and $37.0 million during 2018.

The Company's net carrying value of land and facilities classified as held for sale in the consolidated balance sheets as of December 31, 2019 and December 31, 2018 was zero.

In 2019, the Company incurred $0.4 million of impairment losses related to certain Swift legacy trailer models as a result of a softer used equipment market. The Company did not recognize any impairment losses related to assets held for sale during 2018 and 2017.

Goodwill

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

	2019				2018
	(In thousands)
Goodwill at beginning of period	$	2,919,176			$	2,887,867
Amortization relating to deferred tax assets	(232		)		(17		)
Abilene Acquisition ¹	48				27,352
Goodwill related to 2017 Merger ²	—				3,974
Goodwill at end of period	$	2,918,992			$	2,919,176

1	The goodwill associated with the Abilene Acquisition was allocated to the Trucking segment. See Note 5 regarding the amount attributed to adjustments to the March 17, 2018 opening balance sheet.

2	The goodwill adjustment associated with the 2017 Merger was allocated to the Trucking segment. See Note 5 regarding the nature of the adjustment.

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The following presents the components of goodwill by segment as of December 31, 2019 and 2018:

	December 31,
	2019				2018
	Net Carrying Amount ¹				Net Carrying Amount ¹
	(In thousands)
Trucking	$	2,658,106			$	2,658,290
Intermodal	175,594				175,594
Logistics	42,512				42,512
Non-reportable	42,780				42,780
Goodwill	$	2,918,992			$	2,919,176

1	Except for the net accumulated amortization related to deferred tax assets in the Trucking segment, the net carrying amount and gross carrying amount are equal since there are no accumulated impairment losses.

There were no impairments identified during annual goodwill impairment testing in 2019, 2018, or 2017.

Other Intangible Assets

Other intangible asset balances were as follows:

	December 31,
	2019				2018
	(In thousands)
Customer relationships and non-compete:
Gross carrying amount ¹	$	839,516			$	838,100
Accumulated amortization	(99,957		)		(57,081		)
Customer relationships and non-compete, net	739,559				781,019
Trade names:
Gross carrying amount	639,900				639,900
Intangible assets, net	$	1,379,459			$	1,420,919

1	The $1.4 million increase in the gross carrying amount of intangible assets from December 31, 2018 to December 31, 2019 is primarily due to a small acquisition that occurred during 2019.

The following table presents amortization of intangible assets related to the 2017 Merger and intangible assets related to various acquisitions:

	2019				2018				2017
	(In thousands)
Amortization of intangible assets related to the 2017 Merger	$	41,375			$	41,375			$	12,872
Amortization related to other intangible assets	1,501				1,209				500
Amortization of intangibles	$	42,876			$	42,584			$	13,372

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 17.3 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 December 31, 2019, management anticipates that the composition and amount of amortization associated with intangible assets will be $42.8 million for each of the years 2020 and 2021, $42.7 million in 2022, and $42.4 million in 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.

See Note 2 for accounting policies regarding goodwill and other intangible assets.

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The following table presents the composition of accrued payroll and purchased transportation:

	December 31,
	2019				2018
	(In thousands)
Accrued payroll ¹	$	70,534			$	68,121
Accrued purchased transportation	39,531				58,343
Accrued payroll and purchased transportation	$	110,065			$	126,464

1

Accrued payroll includes accruals related to the various 401(k) plans the Company offers to its employees. In order to qualify for these plans, employees must meet the minimum age requirement (18 years) and have completed ninety days of service with the Company. Employees' rights to employer contributions are fully vested after five years from their date of employment. The plans offer discretionary matching contributions of the greater of 100% up to 3.0% of an employee's eligible compensation or $2,000.

The Company's employee benefits expense for matching contributions related to the 401(k) plans was approximately $8.8 million, $8.7 million, and $3.9 million in 2019, 2018, and 2017, respectively. This expense was included in "Salaries, wages, and benefits" in the consolidated statements of comprehensive income. As of December 31, 2019 and 2018, the balance above included $9.1 million and $6.4 million, respectively, in matching contributions for the 401(k) plans.

The following table presents the composition of accrued liabilities:

	December 31,
	2019				2018
	(In thousands)
Accrued legal ¹	$	121,312			$	90,789
Other	53,910				60,711
Accrued liabilities	$	175,222			$	151,500

1	See Note 19 for details regarding the Company's legal accruals.

Claims accruals represent the uninsured portion of outstanding claims at year-end. The current portion reflects the amount of claims expected to be paid in the following year. The Company's insurance program for workers' compensation, auto and collision liability, physical damage, independent contractor claims, and cargo damage involves self-insurance with varying risk retention levels.

Claims accruals were comprised of the following:

	December 31,
	2019				2018
	(In thousands)
Auto reserves	$	224,541			$	222,004
Workers’ compensation reserves	108,035				120,522
Independent contractor claims reserves	8,044				12,170
Cargo damage reserves	2,818				2,998
Employee medical reserves	4,279				3,677
Claims accruals	347,717				361,371
Less: current portion of claims accruals	(150,805		)		(160,044		)
Claims accruals, less current portion	$	196,912			$	201,327

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Self Insurance

Automobile Liability, General Liability, and Excess Liability — Effective November 1, 2019, the Company has $130.0 million excess auto liability ("AL") coverage.  From November 1, 2018 to October 31, 2019, the Company had $250.0 million excess AL coverage.  Prior to November 1, 2018, Swift’s excess AL coverage was $250.0 million and Knight’s excess AL coverage was $130.0 million.  During the above policy periods, Swift AL claims are subject to a $10.0 million self-insured retention ("SIR") per occurrence and Knight AL claims are 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.

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.

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

See Note 2 for accounting policy regarding the Company's claims accruals.

The following table presents the Company's income tax expense:

	2019				2018				2017
	(In thousands)
Current expense:
Federal	$	50,703			$	44,357			$	4,868
State	16,616				22,300				8,337
Foreign	5,526				3,124				133
	72,845				69,781				13,338
Deferred expense (benefit):
Federal	28,618				59,508				(323,326		)
State	3,712				1,639				17,731
Foreign	(1,377		)		461				541
	30,953				61,608				(305,054		)
Income tax expense (benefit)	$	103,798			$	131,389			$	(291,716	)

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Rate Reconciliation — Expected tax expense is computed by applying the US federal corporate income tax rate of 21.0% to earnings before income taxes for 2019 and 2018, and 35.0% for 2017. Actual tax expense differs from expected tax expense as follows:

	2019				2018				2017
	(In thousands)
Computed "expected" tax expense	$	86,935			$	117,478			$	67,798
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal income tax benefit	17,803				19,256				4,871
Statutory rate change effect on deferred taxes	—				452				(367,000		)
Other	(940		)		(5,797		)		2,615
Income tax expense (benefit)	$	103,798			$	131,389			$	(291,716	)

Deferred Income Taxes — The components of the net deferred tax asset (liability) included in "Deferred tax liabilities" in the consolidated balance sheets were:

	December 31,
	2019				2018
	(In thousands)
Deferred tax assets:
Claims accrual	$	80,019			$	79,675
Allowance for doubtful accounts	5,478				5,333
Amortization of stock options	5,769				5,325
Accrued liabilities	32,284				27,692
Vacation accrual	3,380				3,499
Other	8,595				8,759
Total deferred tax assets	135,525				130,283
Valuation allowance	—				—
Total deferred tax assets, net	135,525				130,283
Deferred tax liabilities:
Property and equipment, principally due to differences in depreciation	(550,521		)		(503,570		)
Prepaid taxes, licenses, and permits deducted for tax purposes	(11,168		)		(10,933		)
Intangible assets	(345,555		)		(354,944		)
Other	—				(374		)
Total deferred tax liabilities	(907,244		)		(869,821		)
Deferred tax liabilities	$	(771,719	)		$	(739,538	)

Valuation Allowance — As of December 31, 2019, the Company had a federal net operating loss carryforward with estimated tax effects of $0.2 million. The federal net operating loss will expire at various times between 2030 and 2032. As of December 31, 2019, the Company had state income tax credit carryforwards for which a deferred tax asset was recorded in the amount of $0.1 million and expires in the year 2022. 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 asserts 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.

Cumulative Undistributed Foreign Earnings — As of December 31, 2019, foreign withholding taxes have not been provided on approximately $85.7 million of cumulative undistributed earnings of foreign subsidiaries. The earnings are considered to be permanently reinvested outside the US. As such, the Company is not required to provide withholding taxes on these earnings until they are repatriated in the form of dividends or otherwise.

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Unrecognized Tax Benefits — The Company's unrecognized tax benefits as of December 31, 2019 would favorably impact the Company's effective tax rate if subsequently recognized.

See Note 2 for accounting policy related to the Company's income taxes.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2019, 2018, and 2017 is as follows:

	2019				2018				2017
	(In thousands)
Unrecognized tax benefits at beginning of year	$	7,423			$	7,096			$	729
Increases for tax positions taken prior to beginning of year	38				1,056				5,432
Increases for tax positions taken in the current year	—				—				935
Decreases for tax positions taken prior to beginning of year	(3,378		)		(729		)		—
Unrecognized tax benefits at end of year	$	4,083			$	7,423			$	7,096

Increases for tax positions related to the benefit received for federal deductions taken on the Company's subsidiary amended return for the 2015 tax year. Decreases in tax positions related primarily to the release of the FIN 48 reserve for federal deductions, federal credits, and various state apportionment issues for years ranging from 2000 through 2013. The Company anticipates a decrease of $1.0 million of unrecognized tax benefits during the next twelve months.

Interest and Penalties — Accrued interest and penalties as of December 31, 2019 and 2018 were approximately $0.4 million and $1.4 million, respectively.

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 2017. 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 consolidated balance sheets. As of December 31, 2019, 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 December 31, 2019. 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.

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

Effective	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 by 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 index for LIBOR.

Availability under the 2018 RSA is calculated as follows:

	December 31,
	2019				2018
	(In thousands)
Borrowing base, based on eligible receivables	$	299,100			$	325,000
Less: outstanding borrowings ¹	(205,000		)		(240,000		)
Less: outstanding letters of credit	(70,841		)		(70,900		)
Availability under accounts receivable securitization facilities	$	23,259			$	14,100

1	Outstanding borrowings are included in "Accounts receivable securitization" in the consolidated balance sheets. Interest accrued on the aggregate principal balance at a rate of 2.6% and 3.2%, as of December 31, 2019 and 2018, respectively.

Program fees and unused commitment fees are recorded in "Interest expense" in the consolidated statements of comprehensive income. The Company's accounts receivable securitization incurred program fees of $7.2 million in 2019, $8.1 million in 2018, and $2.2 million in 2017.

Refer to Note 23 for information regarding the fair value of the 2018 RSA.

Other than the Company's accounts receivable securitization as discussed in Note 15 and its outstanding finance lease obligations as discussed in Note 17, the Company's long-term debt consisted of the following:

	December 31,
	2019				2018
	(In thousands)
Term Loan, due October 2020, net ¹ ² ³	$	364,825			$	364,590
Other long-term debt, including current portion	—				421
Total long-term debt, including current portion	364,825				365,011
Less: current portion of long-term debt	(364,825		)		(421		)
Long-term debt, less current portion	$	—			$	364,590

	December 31,
	2019				2018
	(In thousands)
Total long-term debt, including current portion	$	364,825			$	365,011
Revolver, due October 2022 1 4	279,000				195,000
Long-term debt, including revolving line of credit	$	643,825			$	560,011

1	Refer to Note 23 for information regarding the fair value of debt.

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2	Net of $0.2 million and $0.4 million deferred loan costs at December 31, 2019 and 2018, respectively.

3	The Term Loan is due October 2, 2020. The Company intends to refinance prior to maturity.

4	The Company also had outstanding letters of credit under the Revolver, primarily related to workers' compensation and self-insurance liabilities of $28.3 million and $36.6 million at December 31, 2019 and 2018, respectively.

Credit Agreements

2017 Debt Agreement — On September 29, 2017, Knight-Swift entered into the $1.2 billion 2017 Debt Agreement (which is an unsecured credit facility), with a group of banks, replacing Swift's previous secured 2015 Debt Agreement, and Knight's unsecured 2013 Debt Agreement.  The 2017 Debt Agreement includes an $800.0 million Revolver maturing October 2022, $85.0 million of which was drawn at closing, and a $400.0 million Term Loan maturing October 2020. There are no scheduled principal payments on the Term Loan until its maturity.

The following table presents the key terms of the 2017 Debt Agreement:

		Term Loan		Revolver ³
2017 Debt Agreement Terms:		(Dollars in thousands)
Maximum borrowing capacity		$400,000		$800,000
Final maturity date		October 2, 2020		October 3, 2022
Interest rate minimum margin ¹		LIBOR		LIBOR
Interest rate minimum margin ²		0.88%		0.88%
Interest rate maximum margin ²		1.50%		1.50%
Minimum principal payment — amount		$—		$—
Minimum principal payment — frequency		Once		Once
Minimum principal payment — commencement date		October 2, 2020		October 3, 2022

1	As is currently customary in financing transactions, discussions of a replacement index for LIBOR will be included as the Company negotiates any refinancing of the Term Loan and associated 2017 Debt Agreement.

2	The interest rate margin for the Term Loan and Revolver is based on the Company's consolidated leverage ratio. As of December 31, 2019, interest accrued at 2.792% on the Term Loan and 2.770% on the Revolver. As of December 31, 2018, interested accrued at 3.522% on the Term Loan and 3.448% on the Revolver.

3	The commitment fee for the unused portion of the Revolver is based on the Company's consolidated leverage ratio, and ranges from 0.07% to 0.20%. As of December 31, 2019 and 2018, commitment fees on the unused portion of the Revolver accrued at 0.100% and outstanding letter of credit fees accrued at 1.000%.

Pursuant to the 2017 Debt Agreement, the Revolver and the Term Loan contain certain financial covenants with respect to a maximum net leverage ratio and a minimum consolidated interest coverage ratio. The 2017 Debt Agreement provides flexibility regarding the use of proceeds from asset sales, payment of dividends, stock repurchases, and equipment financing. In addition to the financial covenants, the 2017 Debt Agreement includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the 2017 Debt Agreement may be accelerated, and the lenders' commitments may be terminated. The 2017 Debt Agreement contains certain usual and customary restrictions and covenants relating to, among other things, dividends (which would be restricted only if a default or event of default had occurred and was continuing or would result therefrom), liens, affiliate transactions, and other indebtedness. As of December 31, 2019 and 2018, the Company was in compliance with the debt covenants that the 2017 Debt Agreement was subject to.

Borrowings under the 2017 Debt Agreement are guaranteed by Knight-Swift Transportation Holdings Inc., and certain of the Company's domestic subsidiaries (other than its captive insurance subsidiaries, driving academy subsidiary, and bankruptcy-remote special purpose subsidiary).

See Note 23 for fair value disclosures regarding the Company's debt instruments.

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Lessee Disclosures for Lease Accounting under ASC Topic 842

Lease Cost — The components of the Company's lease cost were as follows:

	2019
	(in thousands)
Operating lease cost:
Operating lease costs	$	120,201
Short-term lease cost ¹	2,897
Sublease income	(360		)
Rental expense	122,738
Finance lease cost:
Amortization of property and equipment	19,878
Interest expense	3,048
Total finance lease cost	22,926
Total operating and finance lease costs	$	145,664

1	Short-term lease cost includes leases with a term of twelve months or less, as well as month-to-month leases and variable lease costs.

Lease Liability Calculation Assumptions — The assumptions underlying the calculation of the Company's right-of-use assets and lease liabilities are disclosed below.

	December 31, 2019
	Operating			Finance
Revenue equipment leases
Weighted average remaining lease term	2.4 years			2.3 years
Weighted average discount rate	2.6	%		3.3	%
Real estate and other leases
Weighted average remaining lease term	13.3 years			—
Weighted average discount rate	4.3	%		—	%

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Maturity Analysis of Lease Liabilities (as Lessee) — Future minimum lease payments for all noncancelable leases were:

	December 31, 2019
	Operating				Finance
	(In thousands)
2020	$	83,919			$	14,963
2021	44,482				30,711
2022	26,755				18,508
2023	13,764				1,342
2024	4,046				9,553
Thereafter	22,309				—
Future minimum lease payments	195,275				75,077
Less: amounts representing interest	(19,014		)		(4,868		)
Present value of minimum lease payments	176,261				70,209
Less: current portion	(80,101		)		(12,826		)
Lease liabilities – less current portion	$	96,160			$	57,383

Supplemental Cash Flow Lease Disclosures — The following table sets forth cash paid for amounts included in the measurement of lease liabilities:

	2019
	(in thousands)
Operating cash flows for operating leases	$	121,737
Operating cash flows for finance leases	3,048
Financing cash flows for finance leases	115,642

Refer to Note 24 for information regarding the leasing transactions between the Company and its related parties.

Lessor Disclosures for Lease Accounting under ASC Topic 842

The Company's wholly-owned financing subsidiaries lease revenue equipment to the Company's independent contractors under operating leases, which generally have terms between three and four years, and include renewal and purchase options. These leases also include variable charges associated with miles driven in excess of the stipulated allowable miles in the contract, which are accounted for separately and presented in the table below. Lease classification is determined based on minimum rental receipts per the agreement, including residual value guarantees, when applicable, as well as receivables due to the Company upon default or cross-default. When independent contractors default on their leases, the Company typically re-leases the equipment to other independent contractors. As such, future lease receipts reflect original leases and re-leases.

The owned assets underlying the Company's leases as lessor primarily consist of revenue equipment. As of December 31, 2019, the gross carrying value of such revenue equipment underlying these leases was $91.6 million and accumulated depreciation was $18.6 million. Depreciation is calculated on a straight-line basis down to the residual value, as applicable, over the estimated useful life of the equipment. Depreciation expense for these assets was $16.4 million for 2019.

Additionally, the Company periodically leases out real estate for use by third parties, some of which are subleases. These leases have varying terms, and may include renewal options.

Management’s significant assumptions and judgments include the determination of the amount the Company expects to derive from the underlying asset at the end of the lease term, as well as whether a contract contains a lease.

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Lease Revenue and Rental Income — The components of the Company's lease revenue are included in "Revenue, excluding trucking fuel surcharge" and the Company's rental income is included in "Other income, net" in the consolidated statements of comprehensive income. These amounts are disclosed in the table below.

	2019
	(in thousands)
Operating lease revenue	$	46,858
Variable lease revenue	2,169
Total lease revenue ¹	$	49,027
Rental income ²	$	9,982

1	Primarily represents operating revenue earned by the Company's financing subsidiaries for leasing equipment to third-party independent contractors.

2	Represents non-operating income earned from leasing real estate to third parties.

Maturity Analysis of Future Lease Revenues (as Lessor) — Future minimum lease revenues for all noncancelable leases were:

	December 31, 2019
	(In thousands)
2020	$	46,480
2021	33,607
2022	20,989
2023	8,386
2024	988
Thereafter	842
Future minimum lease revenues	$	111,292

Refer to Note 24 for information regarding the leasing transactions between the Company and related parties.

December 31, 2018 (ASC Topic 840 Disclosures)

Note: The ASC Topic 840 Comparative Approach for adopting ASC Topic 842 requires companies to provide disclosures for all periods that continue to be in accordance with ASC Topic 840. Refer to Note 3 for more information regarding the Company's adoption methods and impact of adoption for ASC Topic 842.

The Company finances a portion of its revenue equipment under capital and operating leases and certain terminals under operating leases.

Capital Leases (as Lessee) — The Company's capital leases are typically structured with balloon payments at the end of the lease term equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers. If the Company does not receive proceeds of the contracted residual value from the manufacturer, the Company is still obligated to make the balloon payment at the end of the lease term. Certain leases contain renewal or fixed price purchase options. The present value of obligations under capital leases is included under "Capital lease obligations and long-term debt – current portion" and "Capital lease obligations – less current portion" in the consolidated balance sheets. As of December 31, 2018, the leases were collateralized by revenue equipment with a cost of $154.3 million and accumulated amortization of $34.2 million. Amortization of the equipment under capital leases is included in "Depreciation and amortization of property and equipment" in the Company's consolidated statements of comprehensive income.

Operating Leases (as Lessee) — Operating leases generally include tractors, trailers, chassis, and facilities. Substantially all lease agreements for revenue equipment have fixed payment terms based on the passage of time. The tractor lease agreements generally stipulate maximum miles and provide for mileage penalties for excess miles. These leases generally run for a period of three to five years for tractors and five to seven years for trailers.

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Operating and Capital Leases (as Lessee) — As of December 31, 2018, annual future minimum lease payments for all noncancelable leases were:

	Operating				Capital
	(In thousands)
2019	$	123,380			$	61,285
2020	79,088				15,843
2021	42,441				30,845
2022	24,693				18,528
2023	11,728				1,347
Thereafter	25,403				9,572
Future minimum lease payments	$	306,733			$	137,420
Less: amounts representing interest					(7,921		)
Present value of minimum lease payments					129,499
Less: current portion					(58,251		)
Capital lease obligations – less current portion					$	71,248

Operating Leases (as Lessor) — The Company's wholly-owned financing subsidiaries lease revenue equipment to the Company's independent contractors under operating leases. Additionally, the Company periodically leases out facilities for use by third-parties. Annual future minimum lease payments receivable under operating leases for the periods noted below were:

	(In thousands)
2019	$	54,080
2020	37,694
2021	22,991
2022	8,343
2023	13
Thereafter	—
Future minimum lease payments receivable	$	123,121

Lease classification is determined based on minimum rental payments per the agreement, including residual value guarantees, when applicable, as well as receivables due to the Company upon default or cross-default. When independent-contractors default on their leases, the Company typically re-leases the equipment to other independent-contractors. As such, future minimum lease payments reflect original leases and re-leases.

As of December 31, 2019, the Company had outstanding commitments to acquire revenue equipment of $571.8 million in 2020 ($400.6 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 December 31, 2019, the Company had outstanding purchase commitments to acquire facilities and non-revenue equipment of $6.2 million in 2020, $1.0 million in the two-year period 2021 through 2022, and $0.2 million in 2023 and 2024, and none thereafter. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.

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Accounting Policy

The Company is involved in certain claims and pending litigation primarily arising in the normal course of business. The majority of these claims relate to workers' compensation, auto collision and liability, physical damage, and cargo damage, as well as certain class action litigation in which plaintiffs allege failure to provide meal and rest breaks, unpaid wages, unauthorized deductions, and other items. The Company accrues for the uninsured portion of claims losses and the gross amount of other losses when the likelihood of the loss is probable and the amount of the loss is reasonably estimable. These accruals are based on management's best estimate within a possible range of loss. When there is no amount within the range of loss that appears to be a better estimate than any other amount, then management accrues to the low end of the range. Legal fees are expensed as incurred.

When it is reasonably possible that exposure exists in excess of the related accrual (which could be no accrual), management discloses an estimate of the possible loss or range of loss, unless an estimate cannot be determined (because, among other reasons, (1) the proceedings are in various stages that do not allow for assessment; (2) damages have not been sought; (3) damages are unsupported and/or exaggerated; (4) there is uncertainty as to the outcome of pending appeals; and/or (5) there are significant factual issues to be resolved).

If the likelihood of a loss is remote, the Company does not accrue for the loss. However, if the likelihood of a loss is remote, but it is at least reasonably possible that one or more future confirming events may materially change management's estimate within twelve months from the date of the financial statements, management discloses an estimate of the possible loss or range of loss, unless an estimate cannot be determined.

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 consolidated balance sheets. The Company has recorded an aggregate accrual of approximately $121.3 million and $90.8 million relating to the Company's outstanding legal proceedings as of December 31, 2019 and 2018, respectively.

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.

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EMPLOYEE COMPENSATION AND PAY PRACTICES MATTERS
Washington Overtime Class Actions
The plaintiffs allege one or more of the following, pertaining to Washington state-based driving associates: that Swift 1) failed to pay minimum wage; 2) failed to pay overtime; 3) failed to pay all wages due at established pay periods; 4) failed to provide proper meal and rest periods; 5) failed to provide accurate wage statements; and 6) unlawfully deducted from employee wages. The plaintiffs seek unpaid wages, exemplary damages, interest, other costs, and attorneys’ fees.
Plaintiff(s)		Defendant(s)		Date instituted		Court or agency currently pending in
Troy Slack ¹		Swift Transportation Company of Arizona, LLC and Swift Transportation Corporation		September 9, 2011		United States District Court for the Western District of Washington
Julie Hedglin ¹		Swift Transportation Company of Arizona, LLC and Swift Transportation Corporation		January 14, 2016		United States District Court for the Western District of Washington
Recent Developments and Current Status
In February 2019, the court granted final approval of the Slack settlement. Additionally, in July 2019, the court granted final approval of the settlement in the Hedglin matter. Both settlements have been paid as of December 31, 2019.
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. In December 2019, the Court reduced the jury verdict. The Company is reviewing all options including 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 December 31, 2019.
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 December 31, 2019.
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 December 31, 2019.

1	Individually and on behalf of all others similarly situated.

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INDEPENDENT CONTRACTOR MATTERS
Ninth Circuit Independent Contractors 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. Based on the above, the likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of December 31, 2019.

1	Individually and on behalf of all others similarly situated.

On June 1, 2018, the Board approved the repurchase of up to $250.0 million of the Company's outstanding common stock (the "2018 Knight-Swift Share Repurchase Plan"). With the adoption of the 2018 Knight-Swift Share Repurchase Plan, the Company terminated the previous share repurchase plan (the "Swift Share Repurchase Plan"). This Swift Share Repurchase Plan was authorized in February 2016, by Swift's board of directors for the repurchase of up to $150.0 million of Swift common stock. When terminated, the Swift Share Repurchase Plan had approximately $62.9 million in remaining authorized purchases.

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"). With the adoption of the 2019 Knight-Swift Share Repurchase Plan, the Company terminated the 2018 Knight-Swift Share Repurchase Plan. There was approximately $0.2 million of authorized purchases remaining under the 2018 Knight-Swift Share Repurchase Plan upon termination.

The following table presents the Company's repurchases of its common stock under the respective share repurchase plans, excluding advisory fees:

Share Repurchase Plan				2019							2018
Board Approval Date		Authorized Amount		Shares			Amount				Shares			Amount
		(in thousands)
June 1, 2018 ¹		$250,000		2,315			$	70,500			5,892			$	179,318
May 30, 2019 ²		$250,000		559			16,392				—			—
				2,874			$	86,892			5,892			$	179,318

1	As of December 31, 2018, $70.7 million remained available under the 2018 Knight-Swift Share Repurchase Plan.

2	As of December 31, 2019, $233.6 million remained available under the 2019 Knight-Swift Share Repurchase Plan.

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2017 Merger Impact — Refer to Note 5 for a summary of the 2017 Merger transaction.

Accounting Perspective — Pursuant to the Merger Agreement, the following stock transactions occurred on September 8, 2017 (the "Merger Date"):

(1)	each outstanding Swift stock option fully vested as a result of the 2017 Merger, was converted into a stock option to acquire the Company's shares using a 0.72-for-one share consolidation ratio and adjusting the exercise price using the same consolidation ratio;

(2)	each outstanding unvested Swift restricted stock award (except for the awards granted in May 2017 that excluded acceleration of vesting related to mergers within the award notices) fully vested as a result of the 2017 Merger, and was converted into the Company's Class A common stock, using the 0.72-for-one share consolidation ratio;

(3)	each outstanding unvested Swift restricted stock unit (except for the awards granted in May 2017 that excluded acceleration of vesting related to mergers within the award notices) fully vested as a result of the 2017 Merger, and was converted into the Company's Class A common stock, using the 0.72-for-one share consolidation ratio; and

(4)	each outstanding unvested Swift performance share unit (except for one director) fully vested as a result of the 2017 Merger, and was converted into the Company's Class A common stock, using the 0.72-for-one consolidation ratio.

Except for the conversion of stock options, unvested restricted stock awards, unvested restricted stock units, and unvested performance units discussed herein, the material terms of the awards remained unchanged. Prior to the closing of the 2017 Merger, Swift had various unvested equity awards outstanding, of which the vesting was accelerated as of the Merger Date (with the exceptions noted above).

In accordance with authoritative guidance on accounting for stock-based compensation, the Company revalued the awards upon the 2017 Merger closing and allocated the revised fair value between purchase consideration and continuing compensation expense, based on the ratio of service performed through the Merger Date over the total service period of the awards. The total value of Swift awards earned as of the Merger Date included as purchase consideration was $13.1 million. The revised fair value allocated to post-merger services resulted in incremental expense, which is recognized over the remaining service period of the awards. The total value of Swift awards not earned as of the Merger Date was $6.3 million, which is being expensed over the remaining future vesting period. Refer to Note 5 to the consolidated financial statements for further information regarding the 2017 Merger.

Legal Perspective — Pursuant to the Merger Agreement, the following stock transactions occurred on the Merger Date:

(1)	each outstanding vested and unvested Knight stock option was assumed by the Company and automatically converted into a stock option to acquire an equal number of Company shares;

(2)	each outstanding vested and unvested Knight restricted stock unit was assumed by the Company and automatically converted into a restricted stock unit award of the Company; and

(3)	each outstanding vested and unvested Knight performance unit was assumed by the Company and automatically converted into a performance unit award of the Company.

Except for the conversion of stock options, restricted stock awards, restricted stock unit awards, and performance unit awards discussed herein, the material terms of the awards remained unchanged. Certain of the Knight performance unit awards vested upon the consummation of the 2017 Merger, as described below.

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Compensatory Stock Plans

Before the 2017 Merger, Knight and Swift granted stock-based awards under their respective stock-based compensation plans, discussed below.

2014 Stock Plan — Currently, the 2014 Stock Plan, as amended and restated, is the Company’s only compensatory stock-based incentive plan. The previous 2014 stock plan replaced Swift's 2007 Omnibus Incentive Plan when it was adopted by Swift's board of directors in March 2014 and then approved by the Swift stockholders in May 2014. The previous 2014 stock plan was amended and restated to rename the plan and for other administrative changes relating to the 2017 Merger. The terms of the 2014 Stock Plan, as amended and restated, remain substantially the same as the previous 2014 stock plan. The 2014 Stock Plan, as amended and restated, permits the payment of cash incentive compensation and authorizes the granting of stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares and performance units, cash-based awards, and stock-based awards to the Company's employees and non-employee directors. As of December 31, 2019, the aggregate number of shares remaining available under the 2014 Stock Plan was approximately 1.8 million.

Legacy Plans — In connection with the 2017 Merger, the registered securities under the Knight Amended and Restated 2003 Stock Option Plan, the Knight 2012 Equity Compensation Plan, the Knight Amended and Restated 2015 Omnibus Incentive Plan, and the Swift 2007 Omnibus Incentive Plan (collectively, the "Legacy Plans") were deregistered. As such, no future awards may be granted under these Legacy Plans. Outstanding awards granted under the Legacy Plans were assumed by the combined company and continue to be governed by such Legacy Plans until such awards have been exercised, forfeited, canceled, or have otherwise expired or terminated.

See Note 2 regarding the Company's accounting policy for stock-based compensation.

Stock-based Compensation Expense

Stock-based compensation expense, net of forfeitures, which is included in "Salaries, wages, and benefits" in the consolidated statements of comprehensive income is comprised of the following:

	2019				2018				2017
	(In thousands)
Stock options	$	1,149			$	1,678			$	1,788
Restricted stock units and restricted stock awards	9,734				8,019				4,004
Performance units	2,492				1,791				450
Stock-based compensation expense – equity awards	$	13,375			$	11,488			$	6,242
Stock-based compensation expense – liability awards ¹	2,663				899				148
Total stock-based compensation expense, net of forfeitures	$	16,038			$	12,387			$	6,390
Income tax benefit ²	$	3,344			$	3,097			$	2,415

1	Includes awards granted to executive management in November of 2019, 2018, and 2017 that ultimately settle in cash upon fulfilling a requisite service period (for restricted stock units) and fulfilling a requisite service period and achieving performance targets (for performance units).

2	The income tax benefit is calculated by applying the effective tax rate to stock-based compensation expense for equity awards, as the expense associated with liability awards is not tax deductible.

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Unrecognized Stock-based Compensation Expense

The following table presents the total unrecognized stock-based compensation expense and the expected weighted average period over which these expenses will be recognized:

	December 31, 2019
	Expense				Weighted Average Period
	(In thousands)				(In years)
Equity awards – Stock options	$	853			1.0
Equity awards – Restricted stock units and restricted stock awards	28,463				2.1
Equity awards – Performance units	5,644				2.6
Liability awards – Restricted stock units and performance units	5,757				2.1
Total unrecognized stock-based compensation expense	$	40,717			2.2

Stock Award Grants

	2019			2018			2017
Stock options	—			—			497,421
Restricted stock units and restricted stock awards	588,819			420,014			266,958
Performance units	102,776			106,785			44,244
Equity awards granted	691,595			526,799			808,623
Liability awards granted ¹ ²	80,927			91,268			77,620
Total stock awards granted	772,522			618,067			886,243

1	Includes 48,556, 54,761, and 46,572 performance units in 2019, 2018, and 2017, respectively.

2	Includes 32,371, 36,507, and 31,048 restricted stock units in 2019, 2018, and 2017, respectively.

Stock Options

Stock options are the contingent right of award holders to purchase shares of the Company's common stock at a stated price for a limited time. The exercise price of options granted equals the fair value of the Company's common stock determined by the closing price of the Company's common stock quoted on the NYSE on the grant date. Most stock options granted by the Company cannot be exercised until at least one year after the grant date and have a five to ten-year contractual term. Stock options are forfeited upon termination of employment for reasons other than death, disability, or retirement.

A summary of 2019 stock option activity follows:

Stock options outstanding:	Shares Under Option			Weighted Average Exercise Price				Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value ¹
								(In years)		(In thousands)
Stock options outstanding at December 31, 2018	1,321,605			$	27.13			2.6		$	2,690
Granted	—			—
Exercised ²	(443,288	)		23.80
Expired	(150,399	)		32.69
Forfeited	(27,245	)		30.68
Stock options outstanding at December 31, 2019	700,673			$	27.90			1.7		$	5,563
Aggregate number of stock options expected to vest at a future date as of December 31, 2019 ³	271,965			$	30.34			2.0		$	1,496
Exercisable at December 31, 2019	425,090			$	26.28			1.5		$	4,064

1	The aggregate intrinsic value was computed using the closing share price on December 31, 2019 of $35.84 and on December 31, 2018 of $25.07, as applicable.

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2	Includes 1,721 swapped shares which were excluded from the "Common stock issued to employees" activity on the Consolidated Statements of Stockholders' Equity.

3	Net of the applied, estimated forfeiture rate.

The fair value of each stock option grant is estimated on the grant date using the Black-Scholes option-valuation model. The following table presents the weighted average assumptions used in the fair value computation:

Stock option fair value assumptions:	2017
Dividend yield ¹	0.72%
Risk-free rate of return ²	1.49%
Expected volatility ³	27.95%
Expected term (in years) 4	3.2
Weighted average fair value of stock options granted	$6.78

1	The dividend yield assumption is based on Knight's historical experience and anticipated future dividend payouts.

2	The risk-free interest rate assumption is based on the US Treasury securities at a constant maturity with a maturity period that most closely resembles the expected term of the stock option award.

3	Expected volatility of the Company's common stock is determined based on Knight's historical data.

4	The expected term of employee stock options represents the weighted-average period the stock options are expected to remain outstanding and was determined based on an analysis of historical exercise behavior.

The following table summarizes stock option exercise information for the years presented:

Stock option exercises	2019				2018				2017
	(In thousands, except share data)
Number of stock options exercised	443,288				533,226				589,020
Intrinsic value of stock options exercised	$	5,183			$	11,745			$	8,792
Cash received upon exercise of stock options	$	10,478			$	10,815			$	13,159
Income tax benefit	$	221			$	1,685			$	1,833

The following table is a rollforward of the Company's unvested stock options:

Unvested stock options:	Shares			Weighted Average Fair Value
Unvested stock options at December 31, 2018	582,341			$	5.69
Granted	—			—
Vested	(278,076	)		5.38
Forfeited and canceled	(28,682	)		5.98
Unvested stock options at December 31, 2019	275,583			$	5.97

The total fair value of the shares vested during 2019, 2018, and 2017 was $1.5 million, $2.0 million, and $1.7 million, respectively.

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Restricted Stock Units

A restricted stock unit represents a right to receive a common share of stock when the unit vests. Restricted stock unit recipients do not have voting rights with respect to the shares underlying unvested awards. Employees forfeit their units if their employment terminates before the vesting date.

The following table is a rollforward of unvested restricted stock units, including restricted stock units classified as equity and those classified as liabilities:

Unvested restricted stock units:	Number of Awards			Weighted Average Fair Value ¹
Unvested restricted stock units at December 31, 2018	1,169,974			$	30.14
Granted	621,190			29.32
Vested ²	(266,277	)		31.46
Forfeited	(76,692	)		34.03
Unvested restricted stock units at December 31, 2019	1,448,195			$	29.78

1	The fair value of each restricted stock unit is based on the closing market price on the grant date.

2	Includes 75,559 shares withheld for taxes and 10,556 units settled in cash which were excluded from the "Common stock issued to employees" activity on the Consolidated Statements of Stockholders' Equity.

Performance Units

The Company issues performance units to selected key employees, that may be earned based on achieving performance targets approved by the compensation committee annually. The initial award is subject to an adjustment determined by the Company's performance achieved over a three-year performance period when compared to the objective performance standards adopted by the compensation committee. Furthermore, the performance units have additional service requirements subsequent to the achievement of the performance targets. Performance units do not earn dividend equivalents.

Performance units granted prior to the 2017 Merger were accelerated on September 8, 2017, the 2017 Merger date, pursuant to the terms of the award agreements. On the 2017 Merger date, awards granted in 2014, 2015, and 2016 were accelerated, but only the performance measurement period for the 2014 award was complete allowing for the final award to be expensed and paid out. The performance period for the 2015 and 2016 awards ended December 31, 2017. The performance criteria were not met based on the performance period results ended December 31, 2017, therefore, no expense was recorded, and no payout was made related to the 2015 or 2016 awards.

The following table is a rollforward of unvested performance units, including performance units classified as equity and those classified as liabilities:

Unvested performance units:	Shares			Weighted Average Fair Value
Unvested performance units at December 31, 2018	309,179			$	29.50
Granted	151,332			$	37.24
Vested	—			$	—
Forfeited	(56,817	)		$	26.59
Unvested performance units at December 31, 2019 ¹	403,694			$	35.53

1

The performance measurement period for performance units granted in 2017 is January 1, 2018 to December 31, 2020 (three full calendar years). The performance measurement period for performance units granted in 2018 is January 1, 2019 to December 31, 2021 (three full calendar years). The performance measurement period for performance units granted in 2019 is January 1, 2020 to December 31, 2022 (three full calendar years). All performance units will vest one month following the expiration of the performance measurement period.

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The following table presents the weighted average assumptions used in the fair value computation for performance units, including performance units classified as equity and those classified as liabilities:

Performance unit fair value assumptions:	2019				2018				2017
Dividend yield ¹	0.66		%		0.81		%		0.59		%
Expected volatility ²	34.88		%		32.30		%		31.28		%
Average peer volatility ²	27.96		%		28.61		%		28.45		%
Average peer correlation coefficient ³	0.60				0.58				0.60
Risk-free interest rate 4	1.60		%		2.80		%		1.88		%
Expected term (in years) 5	3.1				3.1				3.1
Weighted-average fair value of performance units granted	$	37.24			$	34.34			$	40.81

1	The dividend yield, used to project stock price to the end of the performance period, is based on the Company's historical experience and future expectation of dividend payouts. Total stockholder return is determined assuming that dividends are reinvested in the issuing entity over the performance period, which is mathematically equivalent to utilizing a 0% dividend yield.

2	Management (or peer company) estimated volatility using the Company's (or peer company's) historical share price performance over the remaining performance period as of the grant date.

3	The correlation coefficients are used to model the way in which each entity tends to move in relation to each other; the correlation assumptions were developed using the same stock price data as the volatility assumptions.

4	The risk-free interest rate assumption is based on US Treasury securities at a constant maturity with a maturity period that most closely resembles the expected term of the performance award.

5	Since the Monte Carlo Simulation valuation is an open form model that uses an expected life commensurate with the performance period, the expected life of the performance units was assumed to be the period from the grant date to the end of the performance period.

Non-compensatory Stock Plan: ESPP

In 2012, Swift's board of directors adopted, and its stockholders approved, the 2012 ESPP. The 2012 ESPP continues to be administered by the Company following the 2017 Merger, is intended to qualify under Section 423 of the Internal Revenue Code, and is considered noncompensatory. Pursuant to the 2012 ESPP, the Company is authorized to issue up to 1.4 million shares of its common stock to eligible employees who participate in the plan. Employees are eligible to participate in the 2012 ESPP following at least 90 days of employment with the Company or any of its participating subsidiaries. Under the terms of the 2012 ESPP, eligible employees may elect to purchase common stock through payroll deductions, not to exceed 15% of their gross cash compensation. The purchase price of the common stock is 95% of the common stock's fair market value quoted on the NYSE on the last trading day of each offering period. There are four three-month offering periods corresponding to the calendar quarters. Each eligible employee is restricted to purchasing a maximum of $6,250 of common stock during an offering period, determined by the fair market value of the common stock as of the first day of the offering period, and $25,000 of common stock during a calendar year. Officers or employees who own 5% or more of the total voting power or value of common stock are restricted from participating in the 2012 ESPP.

The 2012 ESPP was amended and restated in January 2018 to be a Knight-Swift plan, thus permitting Knight employees to participate in the plan in addition to Swift employees. The terms and definitions of the amended and restated 2012 ESPP remain substantially the same as the original 2012 ESPP.

The plan was amended effective January 1, 2019 to align with new federal tax legislation that lifted the restriction on contributing to the ESPP if the participant had a hardship withdrawal on the 401(k) plan.

In 2019, the Company issued approximately 78,000 shares under the 2012 ESPP at a weighted average discounted price per share of $29.62. As of December 31, 2019, the Company is authorized to issue an additional 1.1 million shares under the 2012 ESPP.

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Earnings per share, basic and diluted, as presented in the 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:

	2019			2018			2017
	(In thousands)
Basic weighted average common shares outstanding	171,541			177,018			110,657
Dilutive effect of equity awards	601			981			1,040
Diluted weighted average common shares outstanding	172,142			177,999			111,697
Anti-dilutive shares excluded from earnings per diluted share ¹	603			47			98

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.

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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 December 31, 2019 and 2018, 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 the Company'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 is based on quoted prices in active markets that are readily and regularly obtainable. See Note 6 for additional investments 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.

Fair Value Hierarchy — ASC Topic 820 establishes a framework for measuring fair value in accordance with GAAP and expands financial statement disclosure requirements for fair value measurements. ASC Topic 820 further specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy follows:

•	Level 1 — Valuation techniques in which all significant inputs are quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.

•	Level 2 — Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices from markets that are not active for assets or liabilities that are identical or similar to the assets or liabilities being measured. Also, model-

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derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.

•	Level 3 — Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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

	December 31, 2019								December 31, 2018
	Carrying Value				Estimated Fair Value				Carrying Value				Estimated Fair Value
	(In thousands)
Financial Assets:
Restricted investments, held-to-maturity ¹	$	8,912			$	8,915			$	17,413			$	17,398
TRP Investments	30,878				30,878				20,646				20,646
Investments in equity securities ²	8,722				8,722				—				—
Financial Liabilities:
Term Loan, due October 2020 ³	$	364,825			$	365,000			$	364,590			$	365,000
2018 RSA, due July 2021 4	204,762				205,000				239,606				240,000
Revolver, due October 2022	279,000				279,000				195,000				195,000

1	Refer to Note 6 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 consolidated balance sheets.

3	The carrying amount of the Term Loan is included in "Finance lease liabilities and long-term debt – current portion" and is net of $0.2 million of deferred loan costs as of December 31, 2019. The carrying amount of the Term Loan is included in "Long-term debt – less current portion" and is net of $0.4 million of deferred loan costs as of December 31, 2018.

4	The carrying amount of the 2018 RSA is included in "Accounts receivable securitization," and is net of $0.2 million and $0.4 million in deferred loan costs as of December 31, 2019 and December 31, 2018, respectively.

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 December 31, 2019 and 2018:

					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 December 31, 2019
Investments in equity securities ¹	$	8,722			$	8,722			$	—			$	—			$	(184	)

1	Total unrealized losses for these investments are included within "Other income, net" within the consolidated statements of comprehensive income for 2019. The Company did not sell any equity investments during 2019 and therefore did not realize any losses on these investments.

As of December 31, 2018, there were no major categories of assets on the consolidated balance sheets estimated at fair value that were measured on a recurring basis.

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Recurring Fair Value Measurements (Liabilities) — As of December 31, 2019 and 2018, there were no major categories of liabilities included in the Company's consolidated balance sheets at estimated 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 December 31, 2019 and 2018:

					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 December 31, 2019
Leasehold improvements ¹	$	—			$	—			$	—			$	—			$	(2,182	)
Equipment ²	1,380				—				1,380				—				(870		)
Software ³	—				—				—				—				(434		)
As of December 31, 2018
Software 4	$	—			$	—			$	—			$	—			$	(550	)
Equipment 5	2,800				—				2,800				—				(2,248		)

1	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.

2	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.

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

4	During the fourth quarter of 2018, the Company incurred impairment charges related to replaced software systems.

5	During the fourth quarter of 2018, the Company incurred impairment charges related to the Company airplane. This impairment was allocated between the Trucking and Logistics segments based on each segment’s use of the asset.

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

	2019								2018								2017
	Provided by Knight-Swift				Received by Knight-Swift				Provided by Knight-Swift				Received by Knight-Swift				Provided by Knight-Swift				Received by Knight-Swift
	(In thousands)
Freight Services:
Central Freight Lines ¹	$	19,651			$	—			$	681			$	—			$	161			$	—
SME Industries ¹	345				—				698				—				275				—
Total	$	19,996			$	—			$	1,379			$	—			$	436			$	—
Facility and Equipment Leases:
Central Freight Lines ¹	$	322			$	369			$	916			$	370			$	245			$	92
Other Affiliates ¹	18				—				19				—				—				—
Total	$	340			$	369			$	935			$	370			$	245			$	92
Other Services:
Central Freight Lines ¹	$	1,834			$	—			$	—			$	—			$	—			$	—
Updike Distribution and Logistics ²	4				—				554				—				2,771				—
DPF Mobile ¹	—				220				—				308				—				—
Other Affiliates ¹	35				2,432				35				2,282				48				604
Total	$	1,873			$	2,652			$	589			$	2,590			$	2,819			$	604

1	Entities affiliated with former Board member Jerry Moyes include Central Freight Lines, SME Industries, Compensi Services, and DPF Mobile. Transactions with these entities that are controlled by and/or are otherwise affiliated with Jerry Moyes, include freight services, facility 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, and certain third-party payroll and employee benefits administration services from the identified related parties are included in other services received by the Company.

In conjunction with Swift's September 8, 2016 announcement that Jerry Moyes would retire from his position as Chief Executive Officer effective December 31, 2016, Swift entered into an agreement with Mr. Moyes to memorialize the terms of his retirement, which was assumed by Knight-Swift. Swift contracted with Mr. Moyes to serve as a non-employee consultant from January 1, 2017 through December 31, 2019, during which time Swift paid Mr. Moyes a monthly consulting fee in cash.

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The following is a rollforward of the accrued liability for the consulting fees:

	(In thousands)
Accrued consulting fees – Jerry Moyes, balance at December 31, 2018 1a	$	2,225
Additions to accrual	—
Less: payments	(2,225		)
Accrued consulting fees – Jerry Moyes, balance at December 31, 2019	$	—

1a	The balance is included in "Accrued liabilities" (current) in the consolidated balance sheets, based on the timing of the payments.

2

Knight had an arrangement with Updike Distribution Logistics, LLC, a company that is owned by the father and three brothers of Executive Vice President of Sales and Marketing, James Updike, Jr. The arrangement allowed Updike Distribution Logistics, LLC to purchase fuel from Knight's vendors at cost, plus an administrative fee. The arrangement was terminated during the second quarter of 2018. Activities in 2019 pertain to sales of various spare parts and tractor accessories.

Receivables and payables pertaining to related party transactions were:

	December 31,
	2019								2018
	Receivable				Payable				Receivable				Payable
	(In thousands)
Central Freight Lines	$	2,872			$	—			$	254			$	—
SME Industries	17				—				24				—
Other Affiliates	—				2				—				20
Total	$	2,889			$	2			$	278			$	20

Land Purchase — In November 2018, the Company purchased land in Perris, California for $7.7 million from former Board member Jerry Moyes.

Share Repurchase — On December 27, 2018, the Company purchased 1,173,680 shares of the Company’s common stock from an entity controlled by Jerry Moyes, a former Board member of the Company. The shares were purchased for an aggregate purchase price of $29.3 million, or $24.98 per share. The per share purchase price represents a three cent per share discount from the closing price of the Company’s common stock on December 26, 2018. The Company purchased the shares under the 2018 Knight-Swift Share Repurchase Plan.

Segment Information

As discussed in Note 1, the Company reorganized its reportable segments during the first quarter of 2019. Accordingly, the Company now has three reportable segments: Trucking, Logistics, and Intermodal, as well as the non-reportable segments, discussed below. See Note 2 for discussion of the Company's accounting policy related to segments.

Trucking

The Trucking segment is comprised of irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border operations. Abilene's trucking operations are also included after the March 16, 2018 acquisition date.

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Logistics

The Logistics segment is primarily comprised of brokerage and other freight management services. Abilene's logistics operations are also included after the March 16, 2018 acquisition date.

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, certain driving academy activities, as well as certain corporate expenses (such as legal settlements and accruals and amortization of intangibles related to the 2017 Merger and certain acquisitions).

Intersegment Eliminations

Certain operating segments provide transportation and related services for other affiliates outside their reportable segment. 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:

	2019							2018 (recast)							2017 (recast)
Total revenue:	(Dollars in thousands)
Trucking	$	3,952,866			81.6	%		$	4,290,254			80.3	%		$	1,970,326			81.2	%
Logistics	$	352,988			7.3	%		$	436,044			8.2	%		$	235,925			9.7	%
Intermodal	$	455,466			9.4	%		$	498,821			9.3	%		$	150,326			6.2	%
Subtotal	$	4,761,320			98.3	%		$	5,225,119			97.8	%		$	2,356,577			97.1	%
Non-reportable segments	$	130,782			2.7	%		$	184,140			3.4	%		$	93,875			3.9	%
Intersegment eliminations	$	(48,152	)		(1.0	%)		$	(65,193	)		(1.2	%)		$	(24,999	)		(1.0	%)
Total revenue	$	4,843,950			100.0	%		$	5,344,066			100.0	%		$	2,425,453			100.0	%

	2019							2018 (recast)							2017 (recast)
Operating income (loss):	(Dollars in thousands)
Trucking	$	468,749			109.7	%		$	550,818			96.8	%		$	203,258			101.3	%
Logistics	$	21,869			5.1	%		$	31,991			5.6	%		$	15,168			7.6	%
Intermodal	$	4,501			1.1	%		$	31,272			5.5	%		$	7,041			3.5	%
Subtotal	$	495,119			115.9	%		$	614,081			107.9	%		$	225,467			112.4	%
Non-reportable segments	$	(67,681	)		(15.9	%)		$	(45,038	)		(7.9	%)		$	(24,837	)		(12.4	%)
Operating income	$	427,438			100.0	%		$	569,043			100.0	%		$	200,630			100.0	%

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	2019							2018 (recast)							2017 (recast)
Depreciation and amortization of property and equipment:	(Dollars in thousands)
Trucking	$	355,270			84.6	%		$	319,210			82.4	%		$	169,339			87.4	%
Logistics	$	728			0.2	%		$	607			0.2	%		$	348			0.2	%
Intermodal	$	13,506			3.2	%		$	12,044			3.1	%		$	3,253			1.7	%
Subtotal	$	369,504			88.0	%		$	331,861			85.7	%		$	172,940			89.3	%
Non-reportable segments	$	50,578			12.0	%		$	55,644			14.3	%		$	20,793			10.7	%
Consolidated depreciation and amortization of property and equipment	$	420,082			100.0	%		$	387,505			100.0	%		$	193,733			100.0	%

Geographical Information

In aggregate, operating revenue from the Company's foreign operations was less than 5.0% of consolidated total revenue for each of 2019, 2018, and 2017. Additionally, long-lived assets on the balance sheets of the Company's foreign subsidiaries were less than 5.0% of consolidated "Total assets" as of December 31, 2019 and 2018.

Customer Concentration

Services provided to the Company's largest customer, Walmart, generated 13.3%, 14.6%, and 12.5% of total revenue in 2019, 2018, and 2017, respectively. Revenue generated by Walmart is reported in each of our reportable operating segments. No other customer accounted for 10.0% or more of total revenue in 2019, 2018, or 2017.

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In management's opinion, the following summarized financial information fairly presents the Company's results of operations for the quarters noted. These results are not necessarily indicative of future quarterly results.

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	(In thousands, except per share data)
2019
Total revenue	$	1,204,535			$	1,242,083			$	1,200,522			$	1,196,810
Net income	88,183				79,439				74,981				67,575
Net income attributable to Knight-Swift	87,938				79,205				74,619				67,444
Basic earnings per share	0.51				0.46				0.44				0.40
Earnings per diluted share	0.51				0.46				0.44				0.39
2018
Total revenue	$	1,271,132			$	1,331,683			$	1,346,611			$	1,394,640
Net income	70,732				91,628				106,344				151,945
Net income attributable to Knight-Swift	70,364				91,323				105,881				151,696
Basic earnings per share	0.39				0.51				0.60				0.87
Earnings per diluted share	0.39				0.51				0.60				0.86

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(1)	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company's assets;

(2)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorization of management and directors of the Company; and

(3)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

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(a)	List of documents filed as a part of this Form 10-K:

(1)	See the Consolidated Financial Statements included in Item 8 hereof.

(2)	Financial Statement Schedules are omitted since the required information is not present or is not present in the amounts sufficient to require submission of a schedule, or because the information required is included in the consolidated financial statements, including the notes thereto.

(b)	Exhibits

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*	Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish to the SEC a supplemental copy of any omitted schedule upon request by the SEC.

**	Management contract or compensatory plan, contract, or arrangement.

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