Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

3. Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price of all acquisitions over the estimated fair value of the net assets acquired. The Company evaluates goodwill and intangible assets for impairment at least annually or more frequently whenever events or changes in circumstances indicate that the asset may be impaired, or in the case of goodwill, the fair value of the reporting unit is below its carrying amount. The analysis of potential impairment of goodwill requires a two-step approach that begins with the estimation of the fair value at the reporting unit level. The Company has four reporting units for its three operating segments: one reporting unit for its TL segment; one reporting unit for its LTL segment; and two reporting units for its Global Solutions segment.

For purposes of the impairment analysis, the fair value of the Company's reporting units is estimated based upon an average of an income fair value approach and a market fair value approach, both of which incorporate numerous assumptions and estimates such as company forecasts, discount rates, and growth rates, among others. The determination of fair value requires considerable judgment and is highly sensitive to changes in the underlying assumptions. The Company completed the annual impairment analysis as of July 1, 2015, and determined no impairment had occurred.

A decline in TL and LTL revenues due to lower freight volumes and pricing, as well as operating cost increases in both reporting units due to higher insurance claims, independent contractor termination costs, and excess capacity during the quarter ended June 30, 2016, resulted in operating performance that fell below the projections used by the Company in its interim goodwill impairment assessments performed as of September 30, 2015 for the Company's LTL reporting unit and as of March 31, 2016 for the Company's TL reporting unit, which indicated that the fair value exceeded the carrying value by approximately 65% and 87% for the LTL and TL reporting units, respectively. Accordingly, the Company is required to perform an interim goodwill impairment analysis of its TL and LTL reporting units as of June 30, 2016. Due to the significant effort that is required to determine the implied fair value of reporting units' goodwill, through assessing growth, operating margin, and discount rate assumptions, as well as the lack of updated market data, the Company has not completed this interim goodwill impairment analysis and will complete the analysis during the third quarter of 2016.

As indicated in Note 1, in connection with the change in reportable segments, the Company reallocated goodwill of $77.5 million between the TL and Global Solutions segments as of December 31, 2015. The following is a rollforward of goodwill from December 31, 2015 to June 30, 2016 by reportable segment (in thousands):



	TL		LTL		Global Solutions		Total
Goodwill balance as of December 31, 2015	$	262,870	$	197,312	$	230,936	$	691,118
Adjustments to goodwill for purchase accounting	569		—		—		569
Goodwill balance as of June 30, 2016	$	263,439	$	197,312	$	230,936	$	691,687

Intangible assets consist primarily of customer relationships acquired from business acquisitions. As indicated in Note 1, in connection with the change in reportable segments, the Company reallocated net intangible assets of $2.7 million between the TL and Global Solutions segments as of December 31, 2015. Intangible assets as of June 30, 2016 and December 31, 2015 were as follows (in thousands):



	June 30, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
TL	$	58,468	$	(12,121	)	$	46,347	$	58,468	$	(9,714	)	$	48,754
LTL	1,358		(1,050		)	308		1,358		(1,017		)	341
Global Solutions	38,427		(12,675		)	25,752		38,427		(10,828		)	27,599
Total	$	98,253	$	(25,846	)	$	72,407	$	98,253	$	(21,559	)	$	76,694

The customer relationships intangible assets are amortized over their estimated five to 12 year useful lives. Amortization expense was $2.1 million and $2.0 million for the three months ended June 30, 2016 and 2015, respectively. Amortization expense was $4.3 million and $4.1 million for the six months ended June 30, 2016 and 2015, respectively. Estimated amortization expense for each of the next five years based on intangible assets as of June 30, 2016 is as follows (in thousands):



Remainder 2016	$	4,335
2017	8,557
2018	8,293
2019	7,990
2020	7,617
2021	7,435
Thereafter	28,180
Total	$	72,407

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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