Acquisitions

9 Months Ended

Sep. 30, 2011

Acquisitions [Abstract]

Acquisitions

2. 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 the Company’s then-existing credit facility of $4.4 million. GTS incurred $0.6 million of transaction expenses related to this acquisition.

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 paid $3.1 million as of September 30, 2011 related to the earnout and has no further commitments due under this agreement.

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 the Company’s then-existing credit facility of $0.9 million. GTS incurred $0.2 million of transaction expenses related to this acquisition.

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 September 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 the Company’s then-existing 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 then-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 $10.6 million after a working capital adjustment. 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.

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.

On August 1, 2011, the Company acquired all the outstanding stock of James Brooks Company, Inc. and C.A.L, Transport, Inc., (collectively “James Brooks”), for the purpose of expanding its market presence in the TL segment. Total consideration paid was $7.6 million subject to a final working capital adjustment. 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.

On August 31, 2011, the Company acquired all the outstanding stock of Prime Logistics Corporation (“Prime”) for the purpose of expanding its current market presence in the TL segment. Total consideration paid was $96.6 million after a working capital adjustment. The acquisition price was financed with $3.0 million of stock and the remainder was financed with borrowings under the Company’s second amended and restated credit facility discussed in Note 5. The Company incurred $0.5 million of transaction expenses related to this acquisition.

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

										Morgan						James
										Southern			Bruenger			Brooks			Prime
	Mesca			GNTS			Alpha			(Preliminary)			(Preliminary)			(Preliminary)			(Preliminary)
Accounts receivable	$	1,895		$	706		$	519		$	4,860		$	1,948		$	777		$	8,149
Other current assets		69			—			8			842			729			36			506
Property and equipment		170			—			25			1,041			11,234			319			3,996
Goodwill		8,986			1,643			1,869			16,081			3,624			6,798			95,307
Customer relationships intangible assets		246			—			—			500			—			—			3,400
Other noncurrent assets		1			1			—			356			300			161			523
Accounts payable and other liabilities		(4,010	)		(819	)		(511	)		(4,324	)		(7,225	)		(529	)		(15,291	)
Total	$	7,357		$	1,531		$	1,910		$	19,356		$	10,610		$	7,562		$	96,590

The goodwill for each acquisition is a result of acquiring and retaining their existing workforces and expected synergies from integrating their operations into the Company. The Company anticipates that the goodwill from the Mesca and Alpha acquisitions will be deductible for tax purposes while the remaining goodwill will not be deductible for tax purposes.

Prime contributed revenues to the Company of $7.3 million since the acquisition on August 31, 2011 and the impact to the Company’s net income was not material. On a pro forma basis, assuming the acquisition had closed January 1, 2010, Prime would have contributed revenues to the Company of $16.9 million and $50.6 million for the three months and nine months ended September 30, 2010, respectively, and this would have positively impacted net income by $0.6 million and $1.1 million during those same periods. On a pro forma basis, assuming the acquisition had closed on January 1, 2011, Prime would have contributed revenues of $12.6 million and $50.5 million for the period from July 1, 2011 to August 31, 2011 and January 1, 2011 to August 31, 2011, respectively, and this would have positively impacted net income by $0.8 million and $3.0 million during those same periods Morgan Southern contributed revenues to the Company of $18.5 million for the three months ended September 30, 2011 and $45.2 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 $15.3 million and $39.5 million for the three months and nine months ended September 30, 2010, respectively, and $4.7 million for the period from January 1, 2011 to 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 James Brooks. The results of operations and financial condition of these acquisitions have been included in our consolidated financial statements since their respective acquisition dates.