Acquisitions

6 Months Ended

Jun. 30, 2011

Acquisitions

On September 15, 2009, through GTS, the Company acquired all of the outstanding membership interests of Mesca Freight Services, LLC (“Mesca”) for purposes of expanding its current market presence and service offerings in the TMS segment. Mesca operates as a non-asset based, third-party logistics provider. Total consideration was $9.1 million, including $1.8 million of cash acquired. A working capital adjustment in the amount of $0.1 million was paid by GTS in 2010. The acquisition price and related financing fees of approximately $0.1 million were financed with proceeds from the issuance of common stock by GTS of $4.2 million and borrowings under a credit facility of $4.4 million. GTS incurred $0.6 million of transaction expenses related to this acquisition.

In addition to cash paid at closing, the Mesca purchase agreement calls for contingent consideration in the form of an earnout. The former owners of Mesca are entitled to receive a payment equal to the amount by which Mesca’s earnings before income taxes, depreciation and amortization, as defined in the purchase agreement, exceeds $1.6 million for the years ending December 31, 2010 and 2011. Approximately $2.4 million has been included in goodwill and is included in the TMS segment. The Company has paid $1.6 million for the earnout as of June 30, 2011.

On December 7, 2009, through GTS, the Company acquired all of the outstanding stock of Great Northern Transportation Services, Inc. (“GNTS”) for purposes of expanding its current market presence and service offerings in the TMS segment. GNTS is an agent of Mesca and operates from New Hampshire. Total consideration was $1.7 million, including $0.2 million of cash acquired. The acquisition price was financed with proceeds from the issuance of common stock by GTS of $0.9 million and borrowings under a credit facility of $0.9 million. GTS incurred $0.2 million of transaction expenses related to this acquisition.

In addition to cash paid at closing, the GNTS purchase agreement calls for contingent consideration in the form of an earnout. The former owner of GNTS is entitled to receive a payment equal to the amount by which GNTS’ earnings before income taxes, depreciation and amortization, as defined in the purchase agreement, exceeds $0.6 million for the years ending December 31, 2010 and 2011. Approximately $0.2 million has been included in goodwill and is included in the TMS segment. The Company has paid $0.1 million for the earnout as of June 30, 2011.

On February 12, 2010, through GTS, the Company acquired all the outstanding stock of Alpha Freight Systems, Inc. (“Alpha”) for purposes of expanding its current market presence and service offerings in the TMS segment. Total consideration was $2.0 million, including $0.1 million of cash acquired. The acquisition price was financed with proceeds from the issuance of common stock by GTS of $1.0 million and borrowings under a credit facility of $1.2 million. GTS incurred $0.3 million of transaction expenses related to this acquisition.

On February 4, 2011, the Company acquired all the outstanding stock of Morgan Southern Inc. (“Morgan Southern”) for purposes of expanding its current market presence and service offerings in the TL segment. Total consideration paid was $19.4 million after a working capital adjustment. The acquisition price was financed with borrowings under the Company’s existing revolving credit facility. The Company incurred $0.3 million of transaction expenses related to this acquisition.

On June 1, 2011, the Company acquired all the outstanding stock of Bruenger Trucking Company (“Bruenger”) for the purposes of expanding its current market presence in the TL segment. Total consideration paid was $10.8 million. The acquisition price was financed with borrowings under the Company’s amended and restated credit facility discussed in Note 5. The Company incurred $0.1 million of transaction expenses related to this acquisition.

In addition to cash paid at closing, the Bruenger purchase agreement calls for contingent consideration in the form of an earnout capped at $3.0 million. The former owners of Bruenger are entitled to receive a payment equal to the amount by which Bruenger’s annual operating income, as defined in the purchase agreement, exceeds $1.1 million for the six months ending December 31, 2011 and $2.1 million for the years ending 2012, 2013 and 2014. Approximately $2.6 million has been included in goodwill and is included in the TL segment.

The following is a summary of the allocation of the purchase price paid to the fair value of the net assets (in thousands):


										Morgan
										Southern			Bruenger
	Mesca			GNTS			Alpha			(Preliminary)			(Preliminary)
Accounts receivable	$	1,895		$	706		$	519		$	4,870		$	2,004
Other current assets		69			—			8			1,199			773
Property and equipment		170			—			25			1,041			11,326
Goodwill		8,986			1,643			1,869			16,385			3,345
Customer relationships intangible assets		246			—			—			500
Other noncurrent assets		1			1			—
Accounts payable and other liabilities		(4,010	)		(819	)		(511	)		(4,639	)		(7,471	)

Total	$	7,357		$	1,531		$	1,910		$	19,356		$	9,977

The Mesca, GNTS, Alpha, Morgan Southern and Bruenger goodwill is a result of acquiring and retaining their existing workforces and expected synergies from integrating their operations into the Company. The Company anticpates that the goodwill from the Mesca and Alpha acquistions will be dedecutible for tax purposes while the goodwill from the GNTS, Morgan Southern and Bruenger is will not be deductible for tax purposes.

Morgan Southern contributed revenues to the Company of $17.2 for the three months ended June 30, 2011 and 26.8 million since the acquisition on February 4, 2011 and the impact to the Company’s net income was not material. On a pro forma basis, assuming the acquisition had closed on January 1, 2010, Morgan Southern would have contributed revenues to the Company of $14.1 million and $27.3 million for the three months and six months ended June 30, 2010 and $4.7 million for the period ended February 3, 2011. The impact of Morgan Southern to the Company’s net income during these periods would not have been material. The Company’s results of operations were not materially impacted by the acquisitions of Bruenger and Alpha. The results of operations and financial condition of these acquisitions have been included in our consolidated financial statements since their acquisition dates.