Roadrunner Transportation Systems, Inc.
Annual Report 2016

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31, 2016Commission File Number 001-34734 ROADRUNNER TRANSPORTATION SYSTEMS, INC.(Exact Name of Registrant as Specified in Its Charter) Delaware 20-2454942(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification No.) 1431 Opus Place, Suite 530Downers Grove, Illinois 60515(Address of Principal Executive Offices) (Zip Code)(414) 615-1500(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $.01 per share The New York Stock ExchangeIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes o No xIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, andwill not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer o Accelerated filer xNon-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o Emerging growth company oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ýAs of June 30, 2016, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of theregistrant’s voting common stock held by non-affiliates of the registrant was approximately $225.2 million based on the closing price of such stock asreported on The New York Stock Exchange on such date. For purposes of this computation, all officers, directors, and 10% beneficial owners of the registrantare deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors, or 10% beneficial owners are, in fact,affiliates of the registrant.As of January 26, 2018, there were outstanding 38,423,391 shares of the registrant’s Common Stock, par value $.01 per share. ROADRUNNER TRANSPORTATION SYSTEMS, INC.ANNUAL REPORT ON FORM 10-KTABLE OF CONTENTS PART I ITEM 1.BUSINESS1ITEM 1A.RISK FACTORS11ITEM 1B.UNRESOLVED STAFF COMMENTS24ITEM 2.PROPERTIES25ITEM 3.LEGAL PROCEEDINGS25ITEM 4.MINE SAFETY DISCLOSURES26 PART II ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES27ITEM 6.SELECTED FINANCIAL DATA29ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS32ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK45ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA45ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE46ITEM 9A.CONTROLS AND PROCEDURES46ITEM 9B.OTHER INFORMATION53 PART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE54ITEM 11.EXECUTIVE COMPENSATION58ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS79ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE86ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES88 PART IV ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES88ITEM 16.FORM 10-K SUMMARY91SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, otherthan statements of historical fact, contained in this Form 10-K are forward-looking statements, including, but not limited to, statements regarding ourstrategy, prospects, plans, objectives, future operations, future revenue and earnings, projected margins and expenses, markets for our services, potentialacquisitions or strategic alliances, financial position, and liquidity and anticipated cash needs and availability. The words “anticipates,” “believes,”“estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” and similar expressions or the negatives thereof are intended to identifyforward-looking statements. However, not all forward-looking statements contain these identifying words. These forward-looking statements represent ourcurrent reasonable expectations and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance andachievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differmaterially and adversely from those contained in the forward-looking statements due to a number of factors including, but not limited to, those described inthe section entitled “Risk Factors” included in this Form 10-K. Furthermore, such forward-looking statements speak only as of the date of this Form 10-K.Except as required by law, we do not undertake publicly to update or revise these statements, even if experience or future changes make it clear that anyprojected results expressed in this Form 10-K or future quarterly reports, press releases or company statements will not be realized. In addition, theinclusion of any statement in this Form 10-K does not constitute an admission by us that the events or circumstances described in such statement arematerial. We qualify all of our forward-looking statements by these cautionary statements. In addition, the industry in which we operate is subject to a highdegree of uncertainty and risk due to a variety of factors including those described in the section entitled “Risk Factors.” These and other factors couldcause our results to differ materially from those expressed in this Form 10-K.Unless otherwise indicated, information contained in this Form 10-K concerning our industry and the markets in which we operate, including ourgeneral expectations and market position, market opportunity, and market size, is based on information from various sources, on assumptions that we havemade that are based on those data and other similar sources, and on our knowledge of the markets for our services. This information includes a number ofassumptions and limitations, and you are cautioned not to give undue weight to such information. In addition, projections, assumptions, and estimates ofour future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk dueto a variety of factors, including those described in the section entitled “Risk Factors” and elsewhere in this Form 10-K. These and other factors couldcause results to differ materially from those expressed in the estimates made by third parties and by us.Unless otherwise indicated or unless the context requires otherwise, all references in this document to “RRTS,” “our company,” “we,” “us,” “our,”and similar names refer to Roadrunner Transportation Systems, Inc. and, where appropriate, its subsidiaries.“Roadrunner Transportation Systems,” our logo, and other trade names, trademarks, and service marks of Roadrunner Transportation Systemsappearing in this Form 10-K are the property of Roadrunner Transportation Systems. Other trade names, trademarks, and service marks appearing in thisForm 10-K are the property of their respective holders.PART I ITEM 1.BUSINESSOverviewWe are a leading asset-right transportation and asset-light logistics service provider offering a full suite of solutions. Our Truckload Logistics (“TL”)and Less-than-Truckload (“LTL”) segments offer solutions including less-than-truckload, air and ground domestic and cross-border expedite, dry van andtemperature controlled truckload logistics, and intermodal services. Our Global Solutions segment offers domestic freight management, retail consolidation,international freight forwarding, and customs brokerage. Subsequent to December 31, 2016, we re-branded Global Solutions as Ascent Global Logistics.We have three segments:Truckload Logistics. Within our TL business, we arrange the pickup and delivery of truckload, intermodal, and ground and air expedited freightthrough our 42 TL service centers, 40 company brokers, and over 90 independent brokerage agents located throughout the United States, Mexico, andCanada. We offer temperature-controlled, dry van, intermodal drayage, and flatbed services and specialize in the transport of automotive parts, refrigeratedfoods, poultry, and beverages. Our on-demand ground and air expedited services feature proprietary bid technology supported by our fleets of ground and airassets. We believe this array of services and specialization provides our customers with full-service options and provides us with more consistent shippingvolume in any given year.Less-than-Truckload. Our LTL business involves the pickup, consolidation, linehaul, deconsolidation, and delivery of LTL shipments throughout theUnited States and parts of Canada. With 44 LTL service centers and over 150 third-party delivery agents, we are designed to provide customers with highreliability at an economical cost. We employ a point-to-point LTL model that we believe serves as a competitive advantage over the traditional hub andspoke LTL.Global Solutions. Within our Global Solutions business, we offer a full portfolio of domestic and international transportation and logistics solution,including access to cost-effective and time-sensitive modes of transportation within our broad network. Specifically, our Global Solutions offering includespricing, contract management, transportation mode and carrier selection, freight tracking, freight bill payment and audit, cost reporting and analysis,dispatch, and freight consolidation and warehousing. Our customized Global Solutions offering is designed to allow our customers to reduce operating costs,redirect resources to core competencies, improve supply chain efficiency, and enhance customer service. Our Global Solutions business also includesdomestic and international air and ocean transportation services and customs brokerage.Our IndustryOver-the-Road FreightThe over-the-road freight sector includes both private fleets (company drivers) and “for-hire” carriers (independent contractors (“ICs”) and purchasedpower providers). According to the American Trucking Associations (“ATA”), the U.S. freight sector represented revenue of approximately $906.0 billion in2016 and accounted for approximately 80% of domestic freight transportation spend. The ATA estimates that U.S. freight transportation will increase to over$1.6 trillion by 2027. Private fleets consist of tractors and trailers owned and operated by shippers that move their own goods and, according to the ATA,accounted for revenue of approximately $308.2 billion in 2015. For-hire carriers transport TL and LTL freight belonging to others and, according to the ATA,accounted for revenue of approximately $368.0 billion in 2016.TL carriers dedicate an entire trailer to one shipper from origin to destination and are categorized by the type of equipment they use to haul a shipper’sfreight, such as temperature-controlled, dry van, tank, or flatbed trailers. According to the ATA, excluding private fleets, revenue in the U.S. TL segment wasapproximately $313.3 billion in 2016.LTL carriers specialize in consolidating shipments from multiple shippers into truckload quantities for delivery to multiple destinations. LTL carriersare traditionally divided into two categories — national and regional. National carriers typically focus on two-day or longer service across distances greaterthan 1,000 miles and often operate without time-definite delivery, while regional carriers typically offer time-definite delivery in less than two days.According to the ATA, the U.S. LTL market generated revenue of approximately $54.7 billion in 2016.1Third-Party LogisticsThird-party logistics (“3PL”) providers offer transportation management solutions and distribution services, including the movement and storage offreight and the assembly of inventory. The U.S. 3PL sector revenue increased from approximately $89.4 billion in 2004 to approximately $166.8 billion in2016 (and experienced growth each year during such period other than from 2008 to 2009), according to Armstrong & Associates, Inc., a leading supplychain market research firm. In addition, only 11.0% of logistics expenditures by U.S. businesses were outsourced in 2016, according to Armstrong &Associates. We believe that the market penetration of 3PL providers will expand in the future as companies increasingly redirect their resources to corecompetencies and outsource their transportation and logistics requirements as they realize the cost-effectiveness of 3PL providers.Factors Important to Our BusinessOur success principally depends on our ability to generate revenues through our network of sales personnel, proprietary bid technology, andindependent brokerage agents and to deliver freight in all modes safely, on time, and cost-effectively through a suite of solutions tailored to the needs of eachcustomer. Customer shipping demand, over-the-road freight tonnage levels, events leading to expedited shipping requirements, and equipment capacityultimately drive increases or decreases in our revenues. Our ability to operate profitably and generate cash is also impacted by purchased transportation costs,personnel and related benefits costs, fuel costs, pricing dynamics, customer mix, and our ability to manage costs effectively.Agent Network and Sales Personnel. In our TL business, we arrange the pickup and delivery of freight either through our growing sales force ofcompany brokers and salespeople or through our network of over 90 independent brokerage agents. Brokerage agents complement our company sales forceby bringing pre-existing customer relationships, new customer prospects, and/or access to new geographic markets. Furthermore, brokerage agents typicallyprovide immediate revenue and do not require us to invest in incremental overhead. Brokerage agents own or lease their own office space and pay for othercosts associated with running their operations.In our LTL business, while many national asset-based LTL providers are encumbered by the fixed overhead costs associated with owning or leasingmost or all of their de-consolidation and delivery facilities, we maintain our variable cost structure through the extensive use of delivery agents. We have anetwork of over 150 third-party LTL delivery agents that provide cost-effective delivery coverage throughout North America. In addition to our agentnetwork, we market and sell our LTL services through a sales force of over 80 people, consisting of account executives, sales managers, inside salesrepresentatives, and commissioned sales representatives.In our Global Solutions business, we have over 60 salespeople and commissioned sales representatives.Tonnage Levels and Capacity. Competition intensifies in the transportation industry as tonnage levels decrease and equipment capacity increases. Ourability to maintain or grow existing tonnage levels is impacted by overall economic conditions, shipping demand, over-the-road freight capacity in NorthAmerica, and capacity in domestic air freight, as well as by our ability to compete effectively in terms of pricing, safety, and on-time delivery. We do businesswith a broad base of third-party carriers, including ICs and purchased power providers, together with a blend of our own ground and air capacity, whichreduces the impact of tightening capacity on our business.Purchased Transportation Costs. Purchased transportation costs within our TL business are generally based either on negotiated rates for each loadhauled or spot market rates for ground and air services. Purchased transportation costs within our LTL business represent amounts we pay to ICs or purchasedpower providers and are generally contractually agreed-upon rates. Within our Global Solutions business, purchased transportation costs represent paymentsmade to our purchased power providers, which are generally contractually agreed-upon rates. Purchased transportation costs are the largest component of ourcost structure. Our purchased transportation costs typically increase or decrease in proportion to revenues.Personnel and Related Benefits. Personnel and related benefits costs are a large component of our overall cost structure. We employ over 1,500company drivers who are paid either per mile or at an hourly rate. In addition, we employ over 600 dock workers and over 2,200 operations and otheradministrative personnel to support our day-to-day operations. Personnel and related benefits costs could vary significantly as we may be required to adjuststaffing levels to match our business needs.Fuel. The transportation industry is dependent upon the availability of adequate fuel supplies and the price of fuel. Fuel prices have fluctuateddramatically over recent years. Within our TL and Global Solutions businesses, we generally pass fuel costs through to our customers. As a result, ouroperating income in these businesses is less impacted by rises in fuel prices. Within our LTL business, our ICs and purchased power providers pass along thecost of diesel fuel to us, and we in turn attempt to pass along some or all of these costs to our customers through fuel surcharge revenue programs. Althoughrevenues from fuel surcharges generally offset increases in fuel costs, other operating costs have been, and may continue to be, impacted by fluctuating fuelprices. The total impact of higher energy prices on other nonfuel-related expenses is difficult to ascertain. We cannot predict future fuel price fluctuations, theimpact of higher energy prices on other cost elements, recoverability of higher fuel costs through fuel surcharges,2and the effect of fuel surcharges on our overall rate structure or the total price that we will receive from our customers. Depending on the changes in the fuelrates and the impact on costs in other fuel- and energy-related areas, our operating margins could be impacted.Pricing. The pricing environment in the transportation industry also impacts our operating performance. Within our TL business, we typically charge aflat rate negotiated on each load hauled. Pricing within our TL business is typically driven by shipment frequency and consistency, length of haul, andcustomer and geographic mix, but generally has fewer influential factors than pricing within our LTL business. Within our LTL business, we typicallygenerate revenues by charging our customers a rate based on shipment weight, distance hauled, and commodity type. This amount is comprised of a base rate,a fuel surcharge, and any applicable service fees. Our LTL pricing is dictated primarily by factors such as shipment size, shipment frequency and consistency,length of haul, freight density, and customer and geographic mix. Within our Global Solutions business, we typically charge a variable rate on each shipmentin addition to transaction or service fees appropriate for the solution we have provided to meet a specific customer’s needs. Since we offer both TL and LTLshipping as part of our Global Solutions offering, pricing within our Global Solutions business is impacted by similar factors. The pricing environment for allof our operations generally becomes more competitive during periods of lower industry tonnage levels and/or increased capacity within the over-the-roadfreight sector. In addition, when we provide international freight forwarding services in our Global Solutions business, we also contract with airlines, oceancarriers, and agents as needed. The international shipping markets are very dynamic and we must therefore adjust rates regularly based on market conditions.Our StrategyOur goal is to be the leading asset-right transportation and asset-light logistics service provider in North America. Our strategy includes continuing to:Generate Free Cash Flows. Our scalable business model and low capital expenditures (as a percentage of our revenues) enhance our ability to generatestrong free cash flows and returns on our invested capital and assets.Gain New Customers. We continue to expand our customer base, and we will continue to pursue increased market share in the TL, LTL, and GlobalSolutions markets. Our expansive geographic reach and broad service offering provides us with the ability to add new customers seeking transportation andlogistics solutions. We also believe the pool of potential new customers will grow as the benefits of third-party transportation management solutionscontinue to be embraced.Increase Penetration with Existing Customers. With our comprehensive service offering and large global network, we have substantial cross-sellingopportunities and the potential to capture a greater share of existing customer’s annual transportation and logistics expenditures.Increased Levels of Integration. We adopted a long-term brand and go-to-market service offering plan in the fourth quarter of 2016. Over the next threeyears, in order to implement this plan we expect to increase the level of integration within each of our three segments in order to improve our ability to servecustomers. For example, in November of 2016, we re-branded our Roadrunner LTL business as Roadrunner Freight and in January of 2017, we re-brandedour Global Solutions business as Ascent Global Logistics. These are first steps in the implementation of our long-term brand and go-to-market serviceoffering plan.Our ServicesWe are a leading asset-right transportation and asset-light logistics service provider offering a full suite of solutions. In each of our service offerings, weutilize a blend of company-owned and third-party owned equipment to provide the most cost effective service for our customers. Because of this blend, weare able to focus primarily on providing quality service rather than on asset utilization. Our customers generally communicate their freight needs to one ofour transportation specialists on a shipment-by-shipment basis via telephone, fax, Internet, e-mail, or electronic data interchange (“EDI”). We leverage adiverse group of third-party carriers and ICs to provide scalable capacity and reliable service to our extensive customer base in North America.3Truckload LogisticsWe are a leading TL business operation in North America in terms of revenue. We provide a comprehensive range of TL solutions for our customers byleveraging our broad base of third-party carriers who operate temperature-controlled, dry van, and/or flatbed capacity. Although we specialize in the transportof refrigerated foods, poultry, and beverages, we also provide a variety of TL transportation solutions for dry goods ranging from paper products to steel, aswell as flatbed service for larger industrial load requirements. Our intermodal capabilities include drayage, which is the transport of freight between oceanports or rail ramps and shipping docks. We also have a strong presence in TL expedited services for our customers with just-in-time and time criticaltransportation needs. Expedited offerings include ground and air cargo services. We arrange the pickup and delivery of TL freight through our 42 TL servicecenters, 40 company brokers, and over 90 independent brokerage agents located throughout the United States, Mexico, and Canada. Company Brokers and Salespeople. We have 40 company brokers that not only engage in the routing and selection of our transportation providers, butalso supplement our internal TL sales force. Internal sales personnel and company brokers are responsible for managing existing customer relationships andgenerating new customer relationships. Because the performance of these individuals is essential to our success, we offer attractive incentive-basedcompensation packages that we believe keep our brokers and sales force motivated, focused, and service-oriented.Independent Brokerage Agents. We also maintain a network of independent brokerage agents that complement our network of company brokers bybringing pre-existing customer relationships, new customer prospects, and/or access to new geographic markets. Furthermore, they typically provideimmediate revenue and do not require us to invest in incremental overhead. Brokerage agents own or lease their own office space and pay for their owncommunications equipment, insurance, and any other costs associated with running their operation. We only invest in the working capital required toexecute our quick pay strategy and generally pay a commission to our brokerage agents ranging from 40-70% of the margin we earn on a TL shipment.Similar to company brokers, our brokerage agents engage in the routing and selection of transportation providers for our customer base and perform sales andcustomer service functions on our behalf.Brokerage Agent Expansion. We believe we offer brokerage agents a very attractive partnership opportunity. We offer access to our reliable network ofpurchased power providers and we invest in the working capital required to pay these carriers promptly and assume collection responsibility. We believe thishas contributed to our reputation for quality and reliable service, as well as to the consistent growth of our brokerage agent network. As of December 31,2016, our TL brokerage agent network consisted of over 90 agents. Additionally, 31 of our brokerage agents generated more than $1 million in revenue in2016. We believe our increased development efforts and attractive value proposition will allow us to further expand our brokerage agent network andenhance the growth of our TL business.Less-than-TruckloadBased on our industry knowledge, we believe we are the largest asset-light provider of LTL transportation services in North America in terms ofrevenue. We provide LTL service originating from points within approximately 150 miles of our service centers to most destinations throughout the UnitedStates and parts of Canada. Within the United States, we offer national, long-haul service (1,000 miles or greater), inter-regional service (between 500 and1,000 miles), and regional service (500 miles or less). We serve a diverse group of customers within a variety of industries, including retail, industrial, papergoods, manufacturing, food and beverage, health care, chemicals, computer hardware, and general commodities.We use over 150 third-party LTL delivery agents to complement our service center footprint and to provide cost-effective full state, national, and NorthAmerican delivery coverage. Delivery agents also enhance our ability to handle special needs of the final consignee, such as scheduled deliveries andspecialized delivery equipment.We utilize a point-to-point LTL model that is differentiated from the traditional, asset-based hub and spoke LTL model. Our model does not requireintermediate handling at a break-bulk hub (a large terminal where freight is offloaded, sorted, and reloaded), which we believe represents a competitiveadvantage.Key aspects of our LTL service offering include the following: •Pickup. In order to stay as close as possible to our customers, we prefer to directly pick up freight whenever cost-effective. We generally directly pickup freight within 150 miles of one of our service centers, primarily utilizing local ICs. Although we generally do not own the tractors or otherpowered transportation equipment used to transport our customers’ freight, we own or lease trailers for use in local city pickup and delivery. In 2016,we picked up approximately 79% of our customers’ LTL shipments. The remainder was handled by agents with whom we generally have long-standing relationships.4•Consolidation at Service Centers. Key to our model are our 44 LTL service centers that we lease in strategic markets throughout the United States.At these service centers, numerous smaller LTL shipments are unloaded, consolidated into truckload shipments, and loaded onto a linehaul unitscheduled for a destination city. In order to continuously emphasize optimal load building and enhance operating margins, dock managers reviewevery load before it is dispatched from one of our service centers.•Linehaul. Linehaul is the longest leg of the LTL shipment process. In dispatching a load, a linehaul coordinator uses our technology system tooptimize cost-efficiency and service by assigning the load to the appropriate IC, company driver, or purchased power. In 2016, approximately 58%of our linehaul shipments were handled by over 500 LTL ICs with the remainder shipped via company driver, purchased power, or rail.•De-consolidation and Delivery. Within our unique model, linehaul shipments are transported to our service centers, delivery agents, or direct to endusers without stopping at a break-bulk hub, as is often necessary under the traditional, asset-based hub and spoke LTL model. This generally reducesphysical handling and damage claims. In 2016, we delivered approximately 31% of LTL shipments through our service centers and 69% through ourdelivery agents.•Benefits of a Delivery Agent Network. While many national asset-based LTL providers are encumbered by the fixed overhead associated withowning or leasing most or all of their de-consolidation and delivery facilities, we maintain our variable cost structure through the extensive use ofdelivery agents.Global SolutionsOur Global Solutions offering is designed to provide comprehensive or à la carte 3PL services, domestic and international transportation, and freightconsolidation and warehousing. We provide the necessary operational expertise, information technology capabilities, and relationships with third-partytransportation providers to meet the unique needs of our customers. For customers that require the most comprehensive service plans, we complement theirinternal logistics and transportation management personnel and operations, enabling them to redirect resources to core competencies, reduce internaltransportation management personnel costs, and, in many cases, achieve substantial annual freight savings. Key aspects of our Global Solutions capabilitiesinclude the following: •Procurement. After an in-depth consultation and analysis with our customer to identify cost savings opportunities, we develop an estimate of ourcustomer’s potential savings and design a plan for implementation. If necessary, we manage a targeted bid process based on the customer’s trafficlanes, shipment volumes, and product characteristics, and negotiate rates with reputable carriers. In addition to a cost-efficient rate, the customerreceives a summary of projected savings as well as our carrier recommendation.•Shipment Planning. Utilizing our technology systems and an expansive multi-modal network of third-party transportation providers, we determinethe appropriate mode of transportation and select the ideal provider. In addition, we provide load optimization services based on freight patterns andconsolidation opportunities. We also provide rating and routing services, either on-site with one of our transportation specialists, off-site through ourcentralized call center, or online through our website. Finally, we offer merge-in-transit coordination to synchronize the arrival and pre-consolidation of high-value components integral to a customer’s production process, enabling them to achieve reduced cycle times, lower inventoryholding costs, and improved supply chain visibility.•Customs Brokerage Services. We provide customs brokerage services to customers importing goods. We remove the burden on completingpotentially complex customs documentation and paperwork and charge our customers a small fee for completing such work. In addition toprocessing documents for clearance, our knowledgeable staff can assist with customs compliance issues and remote location filing, and provideinformation on C-TPAT certification.•International Freight Forwarding. We provide comprehensive air and ocean freight forwarding solutions. For customers requiring ocean freightsolutions, we provide full-container-load, less-than-container-load, charters, bulk, refrigerated service or other unique solutions based on ourcustomers' requirements. For customers requiring air freight solutions, we provide express service, temperature control, monitored door-to-doorservice, consolidated services or aircraft charters, and onboard couriers. We are well-versed in the many technical aspects of government regulations,state and commerce department licensing requirements, foreign government forms, transportation documents, and international collection andbanking procedures. We are an authorized International Air Transport Association (“IATA”) agent and also an Indirect Air Carrier authorized by theTransportation Security Administration (“TSA”). Some of our locations are also authorized cargo screening locations.•Shipment Execution. Our transportation specialists are adept at managing time-critical shipments. We maintain constant communication with third-party transportation providers from dispatch through final delivery. As a result, our expedited services are capable of meeting virtually any customertransit or delivery requirement. Finally, we provide the ability to track and trace shipments either online or by phone through one of ourtransportation specialists.5•Audit and Payment Services. We capture and consolidate our customers’ entire shipping activity and offer weekly electronic billing. We alsoprovide freight bill audit and payment services designed to eliminate excessive or incorrect charges from our customers’ bills.•Performance Reporting and Improvement Analysis. Customers utilizing our web reporting system have the ability to review freight bills, developcustomized reports online, and access data to assist in financial and operational reporting and planning. Our specialists are also actively drivingprocess improvement by continuously using our technology to identify incremental savings opportunities and efficiencies for our customers.•Freight Consolidation and Warehousing. We have 2.5 million square feet of warehousing space strategically located throughout the United States,which includes temperature controlled areas and food-grade sections. We provide access to our state-of-the-art warehouse management system,which provides customers with complete inventory visibility and a robust tool for inventory management.With a broad Global Solutions offering, we believe we can accommodate a shipper’s unique needs with any combination of services along our entirespectrum, and cater to their preferred means of shipment processing and communication.We believe our comprehensive service approach and focus on building long-term customer relationships lead to greater retention of existing businesscompared to a more short-term gain sharing model employed by many 3PL providers. Before becoming fully operational with a customer, we conductthorough feasibility and cost savings analyses and collaborate with the customer to create a project scope and timeline with measurable milestones. Webelieve this approach enables us to identify any potential issues, ensure a smooth integration process, and set the stage for long-term customer satisfaction.Within our Global Solutions operation, we have consistently met customer implementation deadlines and achieved anticipated levels of freight savings.CapacityWe offer scalable capacity and reliable service to our extensive customer base in North America through a diverse third-party network of transportationproviders and company drivers. Our various transportation modes include TL, LTL intermodal, and domestic and international air. No single carrieraccounted for more than 2% of our 2016 purchased transportation costs. We ensure that each carrier is properly licensed and we regularly monitor eachcarrier's capacity, reliability, and pricing trends. Enhanced visibility provided by our technology systems allows us to leverage the competitive dynamicswithin our network to renegotiate freight rates and provide our customers with more cost-effective transportation solutions while enhancing our operatingmargins.We continuously focus on building and enhancing our relationships with reliable transportation providers to ensure that we not only securecompetitive rates, but that we also gain access to consistent capacity. These relationships are critical to our success based on our asset-right transportationand asset-light logistics service provider business model. We typically pay our third-party carriers either a contracted per mile rate or the cost of a shipmentless our contractually agreed-upon commission, and generally pay within seven to ten days from the date the shipment is delivered. We pay our third-partycarriers promptly in order to drive loyalty and reliable capacity.Our network of transportation providers can be divided into the following groups:Independent Contractors. ICs are a key part of our long-term strategy to maintain service and provide cost stability. As of December 31, 2016, we hadover 2,700 ICs, which consisted of over 2,300 linehaul, truckload, and intermodal services ICs and over 400 local delivery ICs. In selecting our ICs, weadhere to specific screening guidelines in terms of safety records, length of driving experience, and evaluations. In the event of tightening of over-the-roadfreight capacity, we believe we are well positioned to increase our utilization of ICs as a cost-effective and reliable solution.To enhance our relationship with our ICs, we offer per mile rates that we believe are highly competitive and often above prevailing market rates. Inaddition, we focus on keeping our ICs fully utilized in order to limit the number of “empty” miles they drive. We regularly communicate with our ICs andseek new ways to enhance their quality of life. We believe our efforts increase IC retention, which we believe ultimately leads to better service for ourcustomers.Purchased Power Providers. In addition to our large base of ICs, we have access to a broad base of purchased power providers. We have establishedrelationships with carriers of all sizes, including large national trucking companies and small to mid-size regional fleets. With the exception of safetyincentives, purchased power providers are generally paid under a similar structure as ICs within our LTL and TL businesses. In contrast to contractsestablished with our ICs, however, we do not cover the cost of liability insurance for our purchased power providers.Company Drivers. We employ over 1,500 drivers across our businesses.6Delivery Agents. For the de-consolidation and delivery stages of our LTL shipment process, our 44 LTL service centers are complemented by over 150third-party delivery agents. The use of delivery agents is also a key part of our long-term strategy to maintain a variable cost and scalable operating modelwith minimal overhead.Intermodal Capabilities. We maintain intermodal capability within our TL segment and through relationships with third-party carriers who rentcapacity on Class 1 railroads throughout North America. Intermodal transportation rates are typically negotiated between us and the capacity provider on acustomer-specific basis.Flight Operations. We support air freight services, including expedited delivery, with 11 cargo jets, 66 flight operations personnel, including pilots,ground crew, and flight coordinators, and a network of third party air cargo providers.Ground Expedite. We utilize proprietary bid technology supported by our logistics personnel and our network of over-the-road ICs and purchasedpower providers.CustomersOur goal is to establish long-term customer relationships and achieve year-over-year growth in recurring business by providing reliable, timely, andcost-effective transportation and logistics solutions. We possess the scale, operational expertise, and capabilities to serve shippers of all sizes. We serve anextensive customer base within a variety of end markets, with one direct customer accounting for approximately 12% of 2016 revenue. Our diverse customerbase reduces our exposure to a decline in shipping demand from any one customer and a cyclical downturn within any particular end market.Sales and MarketingIn addition to over 90 independent brokerage agents and 40 company brokers, we currently market and sell our transportation and logistics solutionsthrough sales personnel located throughout the United States. We are focused on actively expanding our sales force to new geographic markets where we lacka strong presence.As of December 31, 2016, our sales force extends into each service offering as follows: •Truckload Logistics. We had 40 company brokers and over 90 independent brokerage agents located throughout the United States, Mexico, andCanada. Additionally, we had a sales team consisting of both sales managers and inside sales representatives. We believe that this sales structureenables our salespeople to better serve our customers by developing an understanding of local and regional market conditions, as well as the specifictransportation and logistics issues facing individual customers. Our brokers, brokerage agents, and sales team seek additional business from existingcustomers and pursue new customers based on this knowledge and an understanding of the value proposition we can provide.•Less-than-Truckload. Our LTL sales team of over 80 people consisted of account executives, sales managers, inside sales representatives, andcommissioned sales representatives.•Global Solutions. We had over 60 Global Solutions salespeople, commissioned sales representatives, and agents.CompetitionWe compete in the North American transportation and logistics services sector. Our marketplace is extremely competitive and highly fragmented. Wecompete with a large number of other asset-light logistics companies, asset-based carriers, integrated logistics companies, and third-party freight brokers,many of whom have larger customer bases and more resources than we do.In our markets, we compete with global asset-based integrated logistics companies such as FedEx Corporation, United Parcel Service, Inc., and XPOLogistics, Inc., against whom we compete in all of our service lines; asset-based freight haulers, such as Arkansas Best Corporation, Old Dominion FreightLine Inc., and YRC Worldwide, Inc., against whom we compete in our core TL and LTL service offerings; non-asset based and asset-light freight brokeragecompanies, such as C.H. Robinson Worldwide, Inc., Echo Global Logistics, Inc., and Landstar System, Inc., against whom we compete in all of our serviceofferings; 3PL providers that offer comprehensive transportation management solutions, such as Schneider Logistics, Inc. and Transplace, Inc., against whomwe compete in our Global Solutions offering; and smaller, niche transportation and logistics companies that provide services within a specific geographicregion or end market. In our international freight forwarding business, we compete with a large number of service providers. Depending on the trade lane andsolution, these competitors include large multi-national, such as Expeditors International of Washington, Inc., Kuehne & Nagel International AG / ADR, andDHL Global Supply Chain, regional, such as Mallory Alexander International Logistics and Laufer Group International and, local, or niche providers. As aresult, our focus remains on continuing to provide our customers with exceptional service.We believe we compete favorably by offering shippers attractive transportation and logistics solutions designed to deliver the optimal combination ofcost and service. To that end, we believe our most significant competitive advantages include: 7•our comprehensive suite of transportation and logistics services, which allows us to offer à la carte or a full portfolio value proposition to shippers ofvarying sizes and to accommodate their diverse needs and preferred means of processing and communication;•our asset-right transportation and asset-light logistics service provider, variable cost business model, which allows us to generate strong free cashflows and focus greater attention on providing optimal customer service than on asset utilization;•our technology systems, which allow us to provide scalable capacity and a high level of customer service across a variety of transportationmodes; and•our knowledgeable management team with experience leading high-growth logistics companies and/or business units, which allows us to benefitfrom a collective entrepreneurial culture focused on growth.SeasonalityOur operations are subject to seasonal trends that have been common in the North American over-the-road freight sector for many years. Our results ofoperations for the quarter ending in March are on average lower than the quarters ending in June, September, and December. Typically, this pattern has beenthe result of factors such as inclement weather, national holidays, customer demand, and economic conditions.TechnologyWe believe the continued development and innovation of our technology systems is important to providing our customers with the most cost-effective,timely, and reliable transportation and logistics solutions. Our objective is to allow our customers and vendors to easily do business with us via technology.Our customers have the ability, through a paperless process, to receive immediate pricing, place orders, track shipments, process remittance, receive updates,and review historical shipping data through a variety of reports over the Internet. We provide flexibility for customers and vendors by utilizing multipletechnologies, including web, mobile, workflow and EDI.Our TL operation uses technology to broker our customers’ freight. Our software enhances our ability to track our third-party drivers, tractors, andtrailers, which provides customers with visibility into their supply chains. Additionally, our systems allow us to operate as a paperless operation throughelectronic order entry, resource planning, and dispatch. Our TL operations also utilize spot bid technology to manage expedited customers' logistics needs.Our LTL operation utilizes a web-based system with our transportation management applications. Additionally, we make use of EDI to allow ourservice centers to communicate electronically with our carriers’ and customers’ internal systems. We offer our customers a paperless process, includingdocument imaging and shipment tracking and tracing.Our Global Solutions operation uses a variety of software applications and systems customized to meet the unique needs of our customers. Wecontinuously enhance our applications and systems to help improve our productivity, increase customer visibility, and improve collaboration with ourservice providers, all while offering customizable content for our customers. Our web-based technology approach allows our Global Solutions operation toprocess and service customer orders, track shipments in real time, select optimal modes of transportation, execute customer billing, provide carrier rates,establish customer-specific profiles, and retain critical information for analysis while providing a company branded solution. We utilize this approach tomaximize supply chain efficiency through mode, carrier, and route optimization.EmployeesAs of December 31, 2016, we employed 4,645 personnel, which included 41 management personnel, 100 sales and marketing personnel, 2,269operations and other personnel, 1,553 company drivers, and 616 dock personnel. None of our employees are covered by a collective bargaining agreementand we consider relations with our employees to be good.8RegulationThe federal government substantially deregulated the provision of ground transportation and logistics services via the enactment of the Motor CarrierAct of 1980, the Trucking Industry Regulatory Reform Act of 1994, the Federal Aviation Administration Authorization Act of 1994, and the ICCTermination Act of 1995. Prices and services are now largely free of regulatory controls, although states have the right to require compliance with safety andinsurance requirements, and interstate motor carriers remain subject to regulatory controls imposed by the U.S. Department of Transportation (“DOT”) and itsagencies, such as the Federal Motor Carrier Safety Administration (“FMCSA”). Motor carrier, freight forwarding, and freight brokerage operations are subjectto safety, insurance, and bonding requirements prescribed by the DOT and various state agencies. Any air freight business is subject to commercial standardsset forth by the IATA and federal regulations issued by the TSA.We are also subject to the Compliance, Safety, and Accountability Program (“CSA”), which is the FMCSA safety program designed to improve largetruck and bus safety and ultimately reduce crashes. CSA is an enforcement and compliance model that involves assessments of a motor carrier's on-roadperformance and investigation results for a 24-month period using roadside stops and inspections, resulting in safety performance in the following categories:unsafe driving; hours-of-service compliance; driver fitness; controlled substances/alcohol; vehicle maintenance; hazardous material compliance; and crashindicator. The evaluations are then used by the FMCSA to select carriers for audit and other interventions.As part of our acquisition of Active Aero, we acquired USA Jet Airlines (“USA Jet”), which holds certificates of public convenience and necessityissued by the DOT pursuant to 49 U.S.C. § 41102 and an air carrier certificate granted by the Federal Aviation Administration (“FAA”) pursuant to Part 119 ofthe federal aviation regulations. The DOT, the FAA, and the U.S. Department of Homeland Security (“DHS”), through the TSA, have regulatory authority overUSA Jet’s air transportation services. The Federal Aviation Act of 1958, as amended, is the statutory basis for DOT and the FAA authority and the Aviationand Transportation Security Act of 2001, as amended, is the basis for TSA aviation security authority.The FAA’s authority relates primarily to operational aspects of air transportation, including aircraft standards and maintenance, as well as personnel andground facilities, which may from time to time affect the ability of USA Jet to operate its aircraft in the most efficient manner. The air carrier certificategranted to USA Jet by the FAA remains in effect so long as we meet the safety and operational requirements of the applicable FAA regulations.The DOT’s authority relates primarily to economic licensing aspects of air transportation. The DOT’s jurisdiction extends to authorized types ofoperations and aviation route authority and to other regulatory matters, including the transfer of route authority between carriers. USA Jet holds variouscertificates issued by the DOT, including a domestic certificate authorizing USA Jet to engage in U.S. air transportation and a foreign certificate authorizinginternational air transportation of property. In addition, USA Jet is subject to non-U.S. government regulation of aviation rights involving non-U.S.jurisdictions, and non-U.S. customs regulation.The TSA has responsibility for aviation security. The TSA continues to require USA Jet to comply with a Full All-Cargo Aircraft Operator StandardSecurity Program and the Twelve-Five Standard Security Program, which contain evolving and strict security requirements. These requirements are not static,but change periodically as the result of regulatory and legislative requirements, imposing additional security costs and creating a level of uncertainty for ouroperations.We are also subject to various environmental and safety requirements, including those governing the handling, disposal, and release of hazardousmaterials, which we may be asked to transport in the course of our operations. If hazardous materials are released into the environment while beingtransported, we may be required to participate in, or may have liability for response costs and the remediation of such a release. In such a case, we also may besubject to claims for personal injury, property damage, and damage to natural resources. Our business is also subject to changes in legislation and regulations,which can affect our operations and those of our competitors. For example, new laws and initiatives to reduce and mitigate the effects of greenhouse gasemissions could significantly impact the transportation industry. Future environmental laws in this area could adversely affect our ICs’ costs and practicesand consequently, our operations.We are also subject to regulations to combat terrorism that the DHS and other agencies impose.The international freight forwarding and customs brokerage services provided by our Global Solutions business are regulated by a variety of regulatoryagencies and bodies including, but not limited to: the U.S. Federal Maritime Commission (“FMC”), the Bureau of Customs and Border Protection (“CBP”)and the TSA within the DHS (customs brokerage and security issues); the IATA; the DOT; the U.S. Food and Drug Administration (“FDA”); the U.S.Department of Agriculture (“USDA”); the U.S. Fish and Wildlife Service (“FWS”); the Bureau of Alcohol, Tobacco Products and Firearms (“BATF”); the U.S.Census Bureau; and other agencies or world governing bodies regulating international trade and compliance. Regulations and requirements must be strictlyadhered to and can change periodically. Additionally, our Global Solutions business manages customer activities in numerous countries. As such, there maybe risk associated with sudden fluctuations in currency, changes in economic policy, political unrest, changes to9tariffs and trade policies/restrictions that are all outside of our control. Compliance with these changes may have a material impact on our operations and mayincrease our costs to service our customers.InsuranceWe insure our ICs and company drivers against third-party claims for accidents or damaged shipments and we bear the risk of such claims. We maintaininsurance for auto liability, general liability, and cargo damage claims. We maintain an aggregate of $100 million of auto liability and general liabilityinsurance. We maintain auto liability insurance coverage for claims in excess of $1.0 million per occurrence and cargo coverage for claims in excess of$100,000 per occurrence. Because we maintain insurance for our ICs, if our insurance does not cover all or any portion of the claim amount, we may be forcedto bear the financial loss. We attempt to mitigate this risk by carefully selecting carriers with quality control procedures and safety ratings.In addition to auto liability, general liability, and cargo claim coverage, our insurance policies also cover other standard industry risks related toworkers’ compensation and other property and casualty risks. We are self-insured up to $1.0 million for workers compensation. We believe our insurancecoverage is comparable in terms and amount of coverage to other companies in our industry. We establish insurance reserves for anticipated losses andexpenses and periodically evaluate and adjust the reserves to reflect our experience.Financial Information About SegmentsSee Note 14 “Segment Reporting” to the consolidated financial statements in this Form 10-K for financial information about our segments.2017 DevelopmentsPreferred Stock InvestmentOn May 1, 2017, we entered into an Investment Agreement (“Investment Agreement”) with affiliates of Elliott Management Corporation (“Elliott”),pursuant to which we issued and sold to Elliott, for an aggregate purchase price of $540.5 million (a) 155,000 shares of a newly created class of preferredstock designated as Series B Cumulative Redeemable Preferred Stock (“Series B Preferred Stock”), at a purchase price of $1,000 per share; (b) 55,000 sharesof a newly created class of preferred stock designated as Series C Cumulative Redeemable Participating Preferred Stock (“Series C Preferred Stock”), at apurchase price of $1,000 per share; (c) 100 shares of a newly created class of preferred stock designated as Series D Cumulative Redeemable ParticipatingPreferred Stock (“Series D Preferred Stock”), at a purchase price of $1.00 per share; (d) 90,000 shares of a newly created class of preferred stock designated asSeries E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”), at a purchase price of $1,000 per share; and (e) 240,500 shares of a newlycreated class of preferred stock designated as Series F Cumulative Redeemable Preferred Stock (“Series F Preferred Stock,” and collectively with the Series BPreferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock, the “Preferred Stock”), at a purchase price of $1,000 per share.We used the proceeds of the sale of the Preferred Stock to pay off and terminate our senior credit facility and to provide working capital to support ouroperations and future growth. See Note 16 “Subsequent Events” to the consolidated financial statements in this Form 10-K for further information.In connection with the issuance of the Preferred Stock pursuant to the Investment Agreement, (a) we and Elliott entered into a Warrant Agreement (the“Warrant Agreement”), pursuant to which we issued to Elliott eight year warrants to purchase an aggregate of 379,572 shares of our common stock at anexercise price of $0.01 per share, (b) we and Elliott entered into a Stockholders’ Agreement (the “Stockholders’ Agreement”), pursuant to which we grantedElliott certain preemptive rights and other rights, and (c) we, Elliott, and investment funds affiliated with HCI Equity Partners (“HCI”) entered into aRegistration Rights Agreement (the “Registration Rights Agreement”), pursuant to which we granted Elliott and HCI certain demand and piggybackregistration rights.Termination of HCI Advisory AgreementIn connection with the issuance of the Preferred Stock pursuant to the Investment Agreement, we agreed with HCI to terminate the Amended andRestated Advisory Agreement, dated as of September 12, 2011. See Note 16 “Subsequent Events” to the consolidated financial statements in this Form 10-Kfor further information.ABL FacilityOn July 21, 2017, we entered into a credit agreement with BMO Harris Bank, N.A. and certain other lenders (the “ABL Facility”). The ABL Facilityconsists of a $200.0 million asset-based revolving line of credit, of which $20.0 million may be used for swing line loans and $30.0 million may be used forletters of credit, a $56.8 million term loan facility, and a $35.0 million asset-based facility available to finance future capital expenditures. We used the initialproceeds from the ABL Facility for working capital purposes and to redeem all 240,500 shares of our Series F Preferred Stock.10On December 15, 2107, we entered into an amendment to the ABL Facility. Pursuant to the amendment, the ABL Facility was amended to (i) reduce themaximum borrowing amount under the revolving line of credit by $15.0 million and (ii) terminate the asset-based facility available to finance future capitalexpenditures.See Note 16 “Subsequent Events” to the consolidated financial statements in this Form 10-K for further information.Sale of UnitransOn September 15, 2017, we completed the sale of Unitrans, Inc. (“Unitrans”) for cash consideration of $95.0 million. We used a portion of the proceedsfrom the sale of Unitrans to redeem 52,500 shares of our Series E Preferred Stock. See Note 16 “Subsequent Events” to the consolidated financial statementsin this Form 10-K for further information.Enactment of US Tax ReformOn December 22, 2017, the Tax Cuts and Jobs Act was signed into United States law, and most changes are effective as of January 1, 2018. The lawincludes various provisions that will affect corporations, including a reduction of the corporate income tax rate from a 35% maximum rate to a 21% flat rate,enhanced “bonus depreciation” for capital equipment purchases, limitations on interest expense deductions, changes to net operating loss carryback andcarryforward rules, and changes to US taxation of foreign profits. The corporate tax rate reduction is expected to result in a discrete tax benefit during thethree months ended December 31, 2017 as a result of recalculating the carrying value of our deferred tax assets and liabilities. See Note 16 “SubsequentEvents” to the consolidated financial statements in this Form 10-K for further information.Available InformationOur principal executive offices are located at 1431 Opus Place, Suite 530, Downers Grove, Illinois 60515, and our telephone number is (414) 615-1500. Our website address is www.rrts.com. The information on our website is not incorporated by reference into this Form 10-K or in any other report ordocument we file with the Securities and Exchange Commission (“SEC”).We file reports with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any otherfilings required by the SEC. Through our website, we make available free of charge our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,Current Reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnishit to, the SEC.The public may read and copy any materials we file with, or furnish to, the SEC at the SEC's Public Reference Room at 100 F Street, NE,Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SECmaintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that fileelectronically with the SEC.ITEM 1A.RISK FACTORSYou should carefully consider the risk factors set forth below as well as the other information contained in this Form 10-K, including our consolidatedfinancial statements and related notes. Any of the following risks could materially and adversely affect our business, financial condition, or results ofoperations. In such a case, you may lose all or part of your investment. The risks described below are not the only risks facing us. Additional risks anduncertainties not currently known to us or those we currently view to be immaterial may also materially adversely affect our business, financial condition, orresults of operations.The restatement of our previously issued financial statements has been time-consuming and expensive and could expose us to additional risks that couldadversely affect our financial position, results of operations, and cash flows.As described in Amendment No. 1 to our Annual Report on Form 10-K/A for the year ended December 31, 2015, Amendment No. 1 to our QuarterlyReports on Form 10-Q/A for the quarters ended March 31, 2016, June 30, 2016, and September 30, 2016, and Note 15 “Restatement of Previously IssuedFinancial Statements” to the consolidated financial statements in this Form 10-K, we have restated our previously issued consolidated financial statementsfor the years ended December 31, 2015, 2014, and 2013, and each of the quarters ended March 31, 2016, June 30, 2016, and September 30, 2016, as well asthe quarters in the years ended December 31, 2015 and 2014. We have also revised our unaudited selected financial data for the fiscal year ended December31, 2012, as summarized in Item 6. “Selected Financial Data.” The restatement has been time-consuming and expensive and could expose us to a number ofadditional risks that could adversely affect our financial position, results of operations, and cash flows.In particular, subsequent to 2016 we have incurred significant expense, including audit, legal, consulting, and other professional fees, as well as feesrelated to amendments to our prior senior credit facility, the Investment Agreement, and the ABL Facility, in connection with the restatement of ourpreviously issued consolidated financial statements and the ongoing remediation of material weaknesses in our internal control over financial reporting. Wehave taken a number of steps, including both adding internal personnel and hiring outside consultants, and intend to continue to take appropriate andreasonable steps to strengthen our accounting function11and reduce the risk of additional misstatements in our financial statements. For more details about our remediation plan, see Item 9A. “Controls andProcedures.” To the extent these steps are not successful, we may have to incur additional time and expense. Our management’s attention has also been, andmay further be, diverted from the operation of our business in connection with the restatement and ongoing remediation of material weaknesses in ourinternal controls.We are also subject to claims, investigations, and proceedings arising out of the errors in our previously issued financial statements, including securitiesclass action litigation, derivative lawsuits, and government agency investigations.We have identified material weaknesses in our internal control over financial reporting which could, if not remediated, adversely affect our ability toreport our financial condition and results of operations in a timely and accurate manner, investor confidence in our company, and the value of ourcommon stock.Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act and based upon the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission (the “COSO framework”). Our internal control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of our financial reporting and preparation of our financial statements for external purposes inaccordance with generally accepted accounting principles (“GAAP”). Management is also responsible for reporting on the effectiveness of internal controlover financial reporting.We did not maintain an effective control environment based on the criteria established in the COSO framework. We have identified deficiencies in theprinciples associated with the control environment of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, eitherindividually or in the aggregate, relating to: (i) our commitment to integrity and ethical values, (ii) the ability of our board of directors to effectively exerciseoversight of the development and performance of internal control, as a result of failure to communicate relevant information within our organization and, insome cases, withholding information, (iii) appropriate organizational structure, reporting lines, and authority and responsibilities in pursuit of objectives, (iv)our commitment to attract, develop, and retain competent individuals, and (v) holding individuals accountable for their internal control relatedresponsibilities. As disclosed in the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data,” these materialweaknesses resulted in material accounting errors.We did not maintain an effective control environment to enable the identification and mitigation of risks of material accounting errors, based on thecontributing factors to material weakness in the control environment, including:•The tone from former executive management was insufficient to create the proper environment for effective internal control over financial reportingand to ensure that (i) there were adequate processes for oversight, (ii) there was accountability for the performance of internal control over financialreporting responsibilities, (iii) identified issues and concerns were raised to appropriate levels within our organization, (iv) corrective activities wereappropriately applied, prioritized, and implemented in a timely manner, and (v) relevant information was communicated within our organization andnot withheld from our independent directors, our Audit Committee, and our independent auditors.•In certain operating companies and at our corporate headquarters there were inconsistent accounting systems, policies, and procedures. Additionally,in certain locations we did not attract, develop, and retain competent management, accounting, financial reporting, internal audit, and informationsystems personnel or resources to ensure that internal control responsibilities were performed and that information systems were aligned withinternal control objectives.•Our oversight processes and procedures that guide individuals in applying internal control over financial reporting were not adequate in preventingor detecting material accounting errors, or omissions due to inadequate information and, in certain instances, management override of internalcontrols, including recording improper accounting entries, recording accounting entries that were inconsistent with information known bymanagement at the time, not communicating relevant information within our organization and, in some cases, withholding information from ourindependent directors, our Audit Committee, and our independent auditors.Additionally, we have identified control deficiencies that constituted material weaknesses in the principles associated with the risk assessment, controlactivities, information and communication and monitoring activities components of the COSO framework. Refer to Item 9A. “Controls and Procedures” ofthis Form 10-K for more information.As a result of such material weaknesses, our management concluded that our disclosure controls and procedures and internal control over financialreporting were not effective as of December 31, 2016.A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonablepossibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. We areactively engaged in developing and implementing a remediation plan designed to address these material weaknesses, but our remediation efforts are notcomplete and are ongoing. Although we are working to12remedy the ineffectiveness of our internal control over financial reporting, there can be no assurance as to when the remediation plan will be fully developed,when it will be fully implemented, or the aggregate cost of implementation. Until our remediation plan is fully implemented, our management will continueto devote significant time and attention to these efforts. If we do not complete our remediation in a timely fashion, or at all, or if our remediation plan isinadequate, there will continue to be an increased risk that we will be unable to timely file future periodic reports with the SEC and that our futureconsolidated financial statements could contain errors that will be undetected. If we are unable to report our results in a timely and accurate manner, we maynot be able to comply with the applicable covenants in our financing arrangements, and may be required to seek additional amendments or waivers underthese financing arrangements, which could adversely impact our liquidity and financial condition. Further and continued determinations that there arematerial weaknesses in the effectiveness of our internal control over financial reporting could reduce our ability to obtain financing or could increase the costof any financing we obtain and require additional expenditures of both money and our management’s time to comply with applicable requirements.Any failure to implement or maintain required new or improved controls, or any difficulties we encounter in their implementation, could result inadditional material weaknesses or material misstatements in our consolidated financial statements. Any new misstatement could result in a further restatementof our consolidated financial statements, cause us to fail to meet our reporting obligations, reduce our ability to obtain financing, or cause investors to loseconfidence in our reported financial information, leading to a decline in our stock price. We cannot assure you that we will not discover additionalweaknesses in our internal control over financial reporting.Further, we may be the subject of negative publicity focusing on the restatement of our previously issued financial results and related matters, and maybe adversely impacted by negative reactions from our stockholders, creditors, or others with which we do business. This negative publicity may impact ourability to attract and retain customers, employees, drivers, and vendors. The occurrence of any of the foregoing could harm our business and reputation andcause the price of our securities to decline.The restatement of our previously issued financial results has resulted in private litigation, derivative lawsuits, and government agency investigations andcould result in additional litigation, government agency investigations, and enforcement actions.Following our press release on January 30, 2017, three putative class actions were filed in the United States District Court for the Eastern District ofWisconsin on behalf of a class of persons who acquired our common stock between May 8, 2014 and January 30, 2017, inclusive. The Complaints allege thatwe, Mark A. DiBlasi, and Peter R. Armbruster violated Section 10(b) of the Exchange Act, and Messrs. DiBlasi and Armbruster violated Section 20(a) of theExchange Act, by making materially false or misleading statements, or failing to disclose material facts, regarding our internal control over financialreporting and our financial statements. The Complaints seek certification as a class action, compensatory damages, and attorney’s fees and costs. On May 19,2017, the Court consolidated the actions under the caption In re Roadrunner Transportation Systems, Inc. Securities Litigation, and appointed PublicEmployees’ Retirement System as lead plaintiff. Counsel for lead plaintiff has advised us of their intent to file a consolidated Amended Complaint after weissue our restated financial statements.On May 25, 2017, Richard Flanagan filed a complaint alleging derivative claims on our behalf in the Circuit Court of Milwaukee County, State ofWisconsin (Case No. 17-cv-004401) against Scott Rued, Mark DiBlasi, Christopher Doerr, John Kennedy, III, Brian Murray, James Staley, Curtis Stoelting,William Urkiel, Judith Vijums, Michael Ward, Chad Utrup, Ivor Evans, Peter Armbruster, and Brian van Helden. Count I of the Complaint alleges the DirectorDefendants breached their fiduciary duties by “knowingly failing to ensure that the Company implemented and maintained adequate internal controls overits accounting and financial reporting functions,” and seeks unspecified damages. Count II of the Complaint alleges the Officer Defendants DiBlasi,Armbruster, and van Helden received substantial performance-based compensation and bonuses for fiscal year 2014 that should be disgorged. The action hasbeen stayed by agreement pending a decision on an anticipated motion to dismiss the Amended Complaint to be filed in the securities class action describedabove.On June 28, 2017, Jesse Kent filed a complaint alleging derivative claims on our behalf and class action claims in the United States District Court forthe Eastern District of Wisconsin (Case No. 17-cv-00893-PP) against Scott Rued, Mark DiBlasi, Christopher Doerr, John Kennedy, III, Brian Murray, JamesStaley, Curtis Stoelting, William Urkiel, Judith Vijums, Michael Ward, Chad Utrup, Ivor Evans, Peter Armbruster, Brian van Helden, Scott Dobak, and RalphKittle. Count I of the Complaint alleges the Individual Defendants other than Armbruster, Dobak, Evans, Kittle, and van Helden, violated Section 14(a) of theExchange Act by making false and misleading statements in proxies concerning our financial statements and internal controls. Count II of the Complaintalleges: (i) all the Individual Defendants breached their fiduciary duties of good faith, candor, and loyalty by creating a culture of lawlessness; (ii) the OfficerDefendants knew, were reckless, or were grossly negligent in not knowing that we lacked effective internal controls and our financial statements wereinaccurate; (iii) the Director Defendants other than Dobak and Kittle breached their duty of loyalty by recklessly permitting the improper statementsconcerning our internal controls and financial statements; (iv) the Director Defendants other than Dobak and Kittle breached their fiduciary duty andcommitted the ultra vires act of appointing the interlocking director defendant Dobak to the Board in violation of Section 8 of the Clayton Act; and (v) theAudit Committee Defendants breached their fiduciary duty of loyalty by approving the statements concerning our internal controls and financial statements.Count III of the Complaint alleges all the Individual Defendants wasted corporate assets by: (i) spending hundreds of13millions of dollars to purchase various companies in connection with our alleged reckless growth-through-acquisition strategy; (ii) forcing us to have todefend ourselves in the securities fraud lawsuits; and (iii) paying improper compensation and bonuses to certain of our executive officers and directors whobreached their fiduciary duty. Count IV of the Complaint alleges all the Individual Defendants were unjustly enriched as a result of the compensation anddirector remuneration they received while breaching their fiduciary duties. Count V of the Complaint alleges a direct claim against our current directorsbased on our failure to hold an annual meeting of stockholders by June 18, 2017 (13 months after our previous annual meeting of stockholders). TheComplaint seeks judgment awarding unspecified damages, directing us to make certain corporate governance changes, awarding restitution, orderingdisgorgement, directing us to hold our annual meeting of stockholders, and directing the Board to remove Dobak from the Board. On September 29, 2017, allthe Defendants filed a motion to dismiss the complaint. The motion is being held in abeyance pending our filing of our restated consolidated financialstatements.On December 22, 2017, Chester County Employees Retirement Fund filed a Complaint alleging derivative claims on our behalf in the United StatesDistrict Court for the Eastern District of Wisconsin (Case No. 2:17-cv-01788-NJ) against the same defendants as those named in the Kent action. Theallegations are substantially the same as those in the Kent Complaint.In addition, subsequent to our announcement that certain previously filed financial statements should not be relied upon, we were contacted by theSEC, FINRA, and the Department of Justice. The Department of Justice and Division of Enforcement of the SEC have commenced investigations into theevents giving rise to the restatement. We have received formal requests for documents and other information. We are cooperating fully with all of theseagencies.We cannot predict the outcome of these matters, or whether any other actions or proceedings will be filed against us in the future, and the cost ofdefending such actions or proceedings could be material. Furthermore, defending such actions or proceedings could divert our management and keypersonnel from our business operations. If we are found liable in any actions or proceedings, we may have to pay substantial damages or change the way weconduct our business, either of which may have a material adverse effect on our business, operating results, financial condition, and prospects. There may alsobe negative publicity associated with litigation or regulatory proceedings that could harm our business and reputation and cause the price of our securities todecline.One or more significant claims or the cost of maintaining our insurance could have an adverse effect on our results of operations.We employ over 1,500 drivers and use the services of thousands of ICs and transportation companies and their drivers in connection with ourtransportation operations. From time to time, these drivers are involved in accidents which may cause injuries and in which goods carried by these drivers arelost or damaged. Such accidents usually result in equipment damage and, unfortunately, can also result in injuries or death. Our involvement in thetransportation of certain goods, including, but not limited to, hazardous materials, could also increase our exposure in the event of an accident resulting ininjuries or contamination. The resulting types and/or amounts of damages may under any of these circumstances be excluded by or exceed the amount of ourinsurance coverage or the insurance coverage maintained by the contracted carrier. Although most of these drivers are ICs or work for third-party carriers,from time to time claims may be asserted against us for their actions or for our actions in retaining them. Claims against us may exceed the amount of ourinsurance coverage, or may not be covered by insurance at all. A material increase in the frequency or severity of accidents, claims for lost or damaged goods,liability claims, workers' compensation claims, or unfavorable resolutions of any such claims could adversely affect our results of operations to the extentclaims are not covered by our insurance or such losses exceed our reserves. Significant increases in insurance costs or the inability to purchase insurance as aresult of these claims could also reduce our profitability and have an adverse effect on our results of operations. The timing of the incurrence of these costscould also significantly and adversely impact our operating results compared to prior periods.Increased insurance premium costs could have an adverse effect on our results of operations.Insurance carriers may increase premiums for transportation companies generally. We could also experience additional increases in our insurancepremiums in the future if our claims experience worsens. If our insurance or claims expense increases and we are unable to offset the increase with higherfreight rates, our results of operations could be adversely affected. Furthermore, we may not be able to maintain or obtain sufficient or desired levels ofinsurance at reasonable rates. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. If we were toincur a significant liability for which we were not fully insured, it could have an adverse effect on our results of operations and financial position.The cost of compliance with, liability for violations of, or modifications to existing or future governmental laws and regulations could adversely affect ourbusiness and results of operations.Our operations are regulated and licensed by various federal and state agencies in the United States and similar governmental agencies in foreigncountries in which we operate. These regulatory agencies have authority and oversight of domestic and international transportation services and relatedactivities, licensure, motor carrier operations, safety and security, and other matters. We must comply with various insurance and surety bond requirements toact in the capacities for which we are licensed. Our subsidiaries and ICs must also comply with applicable regulations and requirements of such agencies.14Through our subsidiaries, we hold various licenses required to carry out our domestic and international services. These licenses permit us to provideservices as a motor carrier, property broker, air carrier, indirect air carrier, ocean transportation intermediary, non-vessel operating common carrier, freightforwarder, and ocean freight forwarder. We also are subject to regulations and requirements promulgated by, among others, the DOT, FMCSA, DHS, CBP,TSA, FMC, IATA, FDA, USDA, FWS, BATF, and various other international, domestic, state, and local agencies and port authorities. Our failure to maintainour required licenses, or to comply with applicable regulations, could materially and adversely affect our business, results of operations, or financialcondition. See the section entitled “Regulation” in Item 1 of this Form 10-K for more information.In addition, DHS regulations applicable to our customers who import goods into the United States and our contracted ocean carriers may impact ourability to provide and/or receive services with and from these parties. Enforcement measures related to violations of these regulations can slow and/or preventthe delivery of shipments, which may negatively impact our operations.We incur significant costs to operate our business and monitor our compliance with applicable laws and regulations. The regulatory requirementsgoverning our operations are subject to change based on new legislation and regulatory initiatives, which could affect the economics of the transportationindustry by requiring changes in operating practices or influencing the demand for, and the cost of providing, transportation services. We cannot predict whatimpact future regulations may have on our business. Compliance with existing, new, or more stringent measures could disrupt or impede the timing of ourdeliveries and our ability to satisfy the needs of our customers. In addition, we may experience an increase in operating costs, such as security costs, as aresult of governmental regulations that have been and will be adopted in response to terrorist activities and potential terrorist activities. The cost ofcompliance with existing or future measures could adversely affect our results of operations. Further, we could become subject to liabilities as a result of afailure to comply with applicable regulations.In addition to the legal proceedings described above, we are a defendant in various purported class-action lawsuits alleging violations of variousCalifornia labor laws and one purported class-action lawsuit alleging violations of the Illinois Wage Payment and Collection Act. Additionally, theCalifornia Division of Labor Standards and Enforcement has brought administrative actions against us alleging that we violated various California laborlaws. In May 2017, the California Division of Labor Standards and Enforcement ruled against us in a number of cases, which we intend to appeal. In 2017 and2018, we reached settlement agreements on a number of these labor related lawsuits and administrative actions and recorded a reserve of $3.7 million as ofDecember 31, 2016 in aggregate legal settlements. As of December 31, 2016, we have recorded additional litigation and defense reserves of $6.7 millionrelated to pending lawsuits.Jeffrey Cox and David Chidester filed a Complaint against certain of our subsidiaries in state court in California in a post-acquisition dispute. TheComplaint alleges contract, statutory and tort based claims arising out of the Stock Purchase Agreement, dated November 2, 2012, between the defendants, asbuyers, and the plaintiffs, as sellers, for the purchase of the shares of Central Cal Transportation, Inc. and Double C Transportation, Inc. (the “Central CalAgreement”). The plaintiffs claim that a contingent purchase obligation payment of more than $2.4 million is due and owing pursuant to the Central CalAgreement, and that defendants have furnished fraudulent calculations to the plaintiffs to avoid payment. The plaintiffs also claim violations of California’sLabor Code related to the plaintiffs’ respective employment with Central Cal Transportation, LLC. On October 27, 2017, the state court granted our motionto compel arbitration of all non-employment claims alleged in the Complaint. The plaintiffs are now required to comply with the dispute resolution processoutlined in the Central Cal Agreement, and submit the dispute to a Settlement Accountant. The plaintiffs have indicated that they would like to transfer theremaining employment claims to the related and also pending employment dispute.Our operations are subject to various environmental laws and regulations, the violation of which could result in substantial fines or penalties.From time to time, we arrange for the movement of hazardous materials at the request of our customers. As a result, we are subject to variousenvironmental laws and regulations relating to the handling, transport, and disposal of hazardous materials. If our customers or carriers are involved in anaccident involving hazardous materials, or if we are found to be in violation of applicable laws or regulations, we could be subject to substantial fines orpenalties, remediation costs, or civil and criminal liability, any of which could have an adverse effect on our business and results of operations. In addition,current and future laws and regulations relating to carbon emissions and the effects of global warming can be expected to have a significant impact on thetransportation sector generally and the operations and profitability of some of our carriers in particular, which could adversely affect our business and resultsof operations.A decrease in levels of capacity in the over-the-road freight sector could have an adverse impact on our business.The current operating environment in the over-the-road freight sector resulting from fluctuating fuel costs, industry-specific regulations (such as theCSA and hours-of-service rules and the proposed but not yet finalized changes implemented under Moving Ahead for Progress in the 21st Century (“MAP-21”)), a shortage of qualified drivers, and other economic factors are causing a15tightening of capacity in the sector generally, and in our carrier network specifically, which could have an adverse impact on our ability to execute ourbusiness strategy and on our business.Any acquisitions that we undertake could be difficult to integrate, disrupt our business, dilute stockholder value, and adversely affect our results ofoperations.We may increase our revenue and expand our offerings in the market regions that we serve through the acquisition of complementary businesses. Wecannot guarantee that we will be able to identify suitable acquisitions or investment candidates. Even if we identify suitable candidates, we cannot guaranteethat we will make acquisitions or investments on commercially acceptable terms, if at all. In addition, we may incur debt or be required to issue equitysecurities to pay for future acquisitions or investments. The issuance of any equity securities could be dilutive to our stockholders.Strategic acquisitions involve numerous risks, including the following:•failure of the acquired company to achieve anticipated revenues, earnings, or cash flows;•assumption of liabilities that were not disclosed to us or that exceed our estimates;•problems integrating the purchased operations with our own, which could result in substantial costs and delays or other operational, technical, orfinancial problems;•potential compliance issues with regard to acquired companies that did not have adequate internal controls;•diversion of management's attention or other resources from our existing business;•risks associated with entering markets in which we have limited prior experience; and•potential loss of key employees and customers of the acquired company.We have had, and may have in the future, difficulties integrating acquired companies.For acquisitions, success is also dependent upon efficiently integrating the acquired business into our existing operations. We are required to integratethese businesses into our internal control environment, which may present challenges that are different than those presented by organic growth and that maybe difficult to manage. For example, as described in Part II, Item 9A. “Controls and Procedures” of this Form 10-K, based on the Audit CommitteeInvestigation, current management determined that there were deficiencies in the design and/or execution of internal controls that constituted materialweaknesses, with one of the contributing factors being the increased size and complexity of our company arising from the acquisition of 25 non-publiccompanies between February 2011 and September 2015. The possible difficulties of integration include, among others: retention of customers and keyemployees; unanticipated issues in the assimilation and consolidation of information, communications, and other systems; inefficiencies and difficulties thatarise because of unfamiliarity with potentially new geographic areas and new assets and the businesses associated with them; consolidation of corporate andadministrative infrastructures; the diversion of management's attention from ongoing business concerns; the effect on internal controls and compliance withthe regulatory requirements under the Sarbanes-Oxley Act of 2002; and unanticipated issues, expenses, and liabilities. The diversion of management'sattention from our current operations to the acquired operations and any difficulties encountered in combining operations has prevented us, and could in thefuture prevent us, from realizing the full benefits anticipated to result from the acquisitions and has adversely impacted, and could in the future adverselyimpact, our results of operations and financial condition. Also, following an acquisition, we may discover previously unknown liabilities associated with theacquired business for which we have no recourse under applicable indemnification provisions. If we are unable to successfully integrate and grow theseacquisitions and to realize contemplated revenue synergies and cost savings, our business, prospects, results of operations, financial position, and cash flowscould be materially and adversely affected.We have not successfully managed, and may not in the future manage, our growth or operations.We have grown substantially, including by expanding our internal resources, making acquisitions, and entering into new markets. We haveexperienced, and may in the future experience, difficulties and higher-than-expected expenses in executing this strategy as a result of unfamiliarity with newmarkets, change in revenue and business models, and entering into new geographic areas. For example, as described in Part II, Item 9A. “Controls andProcedures” of this Form 10-K, based on the Audit Committee Investigation, current management determined that there were deficiencies in the design and/orexecution of internal controls that constituted material weaknesses, with one of the contributing factors being the increased size and complexity of ourcompany arising from the acquisition of 25 non-public companies between February 2011 and September 2015.Our growth has placed, and will in the future place, a significant strain on our management and our operational and financial resources. We need tocontinually improve existing procedures and controls as well as implement new transaction processing, operational and financial systems, and proceduresand controls to expand, train, and manage our employee base. Our working16capital needs have increased substantially as our operations have grown. Failure to manage growth effectively, or obtain necessary working capital, has in thepast had, and could in the future have, a material adverse effect on our business, results of operations, financial position, and cash flows.Our indebtedness could adversely affect our business and limit our ability to expand our business or respond to changes, and we may be unable to generatesufficient cash flow to satisfy our debt service obligations.As of December 31, 2016, we had indebtedness of $450.5 million, which is offset on the balance sheet by $4.9 million of debt issuance costs. On May 1,2017, we entered into the Investment Agreement with Elliott, pursuant to which we issued and sold shares of our Preferred Stock for an aggregate purchaseprice of $540.5 million. We used the proceeds of the issuance and sale of the Preferred Stock to, among other things, pay off and terminate our prior seniorcredit facility. In addition, on July 21, 2017, we entered into the ABL Facility. See Note 16 “Subsequent Events” to the consolidated financial statements inthis Form 10-K for further information. We may incur additional indebtedness in the future, including any additional borrowings available under the ABLfacility. Any substantial indebtedness and the fact that a substantial portion of our cash flow from operating activities could be needed to make payments onthis indebtedness could have adverse consequences, including the following:•reducing the availability of our cash flow for our operations, capital expenditures, future business opportunities, and other purposes;•limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate, which would place us at acompetitive disadvantage compared to our competitors that may have less debt;•limiting our ability to borrow additional funds; and•increasing our vulnerability to general adverse economic and industry conditions.Our ability to borrow any funds needed to operate and expand our business will depend in part on our ability to generate cash. Our ability to generatecash is subject to the performance of our business as well as general economic, financial, competitive, legislative, regulatory, and other factors that arebeyond our control. If our business does not generate sufficient cash flow from operating activities or if future borrowings are not available to us under ourABL facility or otherwise in amounts sufficient to enable us to fund our liquidity needs, our operating results, financial condition, and ability to maintain orexpand our business may be adversely affected. Moreover, our inability to make scheduled payments on our debt obligations in the future would require usto refinance all or a portion of our indebtedness on or before maturity, sell assets, delay capital expenditures, or seek additional equity.Our ABL facility contains financial and other restrictive covenants with which we may be unable to comply. A default under these financing arrangementscould cause a material adverse effect on our liquidity, financial condition, and results of operations.The loans outstanding under our ABL facility are secured by a first priority lien on certain real property owned by our domestic subsidiaries andsubstantially all of our and our domestic subsidiaries' tangible and intangible personal property, including a pledge of the capital stock of certain of ourdirect and indirect subsidiaries. Our ABL facility contains conditions, representations and warranties, events of default, and indemnification provisions thatare customary for financings of this type, including, but not limited to, a minimum fixed charge coverage ratio, and limitations on incurrence of debt,investments, liens on assets, transactions with affiliates, mergers, consolidations, and purchases and sales of assets.If we incur defaults under the terms of this facility and fail to obtain appropriate amendments to or waivers under the applicable financing arrangement,our borrowings against the facility could be immediately declared due and payable. If we fail to pay the amount due, the lenders could proceed against thecollateral by which our loans are secured, our borrowing capacity may be limited, or the facility could be terminated. If acceleration of outstandingborrowings occurs or if the facilities are terminated, we may have difficulty borrowing additional funds sufficient to refinance the accelerated debt or enteringinto new credit or debt arrangements, and, if available, the terms of the financing may not be acceptable. A default under our ABL facility could have amaterial adverse effect on our liquidity and financial condition.Fluctuations in the price or availability of fuel and limitations on our ability to collect fuel surcharges may adversely affect our results of operations.We are subject to risks associated with fuel charges from our ICs, purchased power providers, and aircraft in our TL and LTL businesses. The availabilityand price of fuel are subject to political, economic, and market factors that are outside of our control. Fuel prices have fluctuated dramatically over recentyears. Over time we have been able to mitigate the impact of the fluctuations through our fuel surcharges which are closely linked to the market price forfuel. There can be no assurance that our fuel surcharge revenue programs will be effective in the future. Market pressures may limit our ability to assess ourfuel surcharges. At the request of our customers, we have at times temporarily capped the fuel surcharges at a fixed percentage pursuant to contractualarrangements that vary by customer. Currently, a minimal number of our customers have contractual arrangements with varying levels of capped17fuel surcharges. If fuel surcharge revenue programs, base freight rate increases, or other cost-recovery mechanisms do not offset our exposure to rising fuelcosts, our results of operations could be adversely affected.A significant or prolonged economic downturn in the over-the-road freight sector, or a substantial downturn in our customers' business, could adverselyaffect our revenue and results of operations.The over-the-road freight sector has historically experienced cyclical fluctuations in financial results due to, among other things, economic recession,downturns in business cycles, increasing costs and taxes, fluctuations in energy prices, price increases by carriers, changes in regulatory standards, licenseand registration fees, interest rate fluctuations, and other economic factors beyond our control. All of these factors could increase the operating costs of avehicle and impact capacity levels in the over-the-road freight sector. Our ICs or purchased power providers may charge higher prices to cover higheroperating expenses, and our operating income may decrease if we are unable to pass through to our customers the full amount of higher purchasedtransportation costs. Additionally, economic conditions may adversely affect our customers, their need for our services, or their ability to pay for our services.We operate in a highly competitive industry and, if we are unable to adequately address factors that may adversely affect our revenue and costs, ourbusiness could suffer.Competition in the transportation services industry is intense. We face significant competition in local, regional, national, and international markets.Increased competition may lead to revenue reductions, reduced profit margins, or a loss of market share, any one of which could harm our business. There aremany factors that could impair our ability to maintain our current profitability, including the following:•competition with other transportation services companies, some of which have a broader coverage network, a wider range of services, and greatercapital resources than we do;•reduction by our competitors of their freight rates to gain business, especially during times of declining growth rates in the economy, whichreductions may limit our ability to maintain or increase freight rates, maintain our operating margins, or maintain significant growth in our business;•solicitation by shippers of bids from multiple carriers for their shipping needs and the resulting depression of freight rates or loss of business tocompetitors;•development of a technology system similar to ours by a competitor with sufficient financial resources and comparable experience in thetransportation services industry; and•establishment by our competitors of cooperative relationships to increase their ability to address shipper needs.We have experienced significant recent turnover in our executive leadership team. If we fail to effectively integrate and retain these new executives, wemay not be able to accomplish our growth strategy and our financial performance may suffer.In the past year, we have experienced significant turnover in our senior management ranks, including the appointment of our new Chief ExecutiveOfficer and President and Chief Operating Officer and the hiring of our new Chief Financial Officer. In April 2017, Curtis W. Stoelting was appointed ourChief Executive Officer and Michael L. Gettle was appointed our President and Chief Operating Officer. In May 2017, Terence R. Rogers was appointed ourChief Financial Officer. In addition, during 2017 we have hired a new Chief Information Officer, a new President of our Roadrunner Freight business, and anew Senior Vice President of Human Resources. We also hired a new Controller, Treasurer, and Director of Internal Audit. This lack of managementcontinuity could adversely affect our ability to successfully execute our growth strategy, as well as result in operational and administrative inefficiencies andadded costs, and may make recruiting for future management positions more difficult.In addition, we must successfully integrate any new management personnel into our organization in order to achieve our operating objectives, andchanges in other key management positions may affect our financial performance and results of operations while new management becomes familiar with ourbusiness. Accordingly, our future financial performance will depend to a significant extent on our ability to motivate and retain key management personnel.Competition for senior management is intense, and we may not be able to retain our management team or attract additional qualified personnel. The loss of amember of senior management would require our remaining executive officers to divert immediate and substantial attention to fulfilling the duties of thedeparting executive and to seeking a replacement. The inability to adequately fill vacancies in our senior executive positions on a timely basis couldnegatively affect our ability to implement our business strategy, which could adversely impact our results of operations.18Our reliance on ICs to provide transportation services to our customers could impact our operations and ability to expand.Our transportation services are conducted in part by ICs, who are generally responsible for paying for their own equipment, fuel, and other operatingcosts. Our ICs are responsible for providing the tractors and generally the trailers they use related to our business. Certain factors such as increases in fuelcosts, insurance costs and the cost of new and used tractors, reduced financing sources available to ICs for the purchase of equipment, or the impact of CSAand hours-of-service rules could create a difficult operating environment for ICs. Turnover and bankruptcy among ICs in the over-the-road freight sector oftenlimit the pool of qualified ICs and increase the competition among carriers for their services. If we are required to increase the amounts paid to ICs in order toobtain their services, our results of operations could be adversely affected to the extent increased expenses are not offset by higher freight rates. Additionally,our agreements with our ICs are terminable by either party upon short notice and without penalty. Consequently, we regularly need to recruit qualified ICs toreplace those who have left our pool. If we are unable to retain our existing ICs or recruit new ICs, our results of operations and ability to expand our businesscould be adversely affected.Our third-party carriers must meet our needs and expectations, and those of our customers, and their inability to do so could adversely affect our results ofoperations.Our business depends to a large extent on our ability to provide consistent, high quality, technology-enabled transportation and logistics solutions. Wegenerally do not own or control the transportation assets that deliver our customers' freight, and we generally do not employ the people directly involved indelivering the freight. We rely on third parties to provide less-than-truckload, truckload and intermodal brokerage, and domestic and international airservices and to report certain information to us, including information relating to delivery status and freight claims. This reliance could cause delays inproviding our customers with timely delivery of freight and important service data, as well as in the financial reporting of certain events, includingrecognizing revenue and recording claims. Carrier bankruptcy may also disrupt our business by delaying movement of the cargo, creating an inability to getaccess to equipment, and increasing our rates. If we are unable to secure sufficient transportation services to meet our customer commitments, or if any of thethird parties we rely on do not meet our needs or expectations, or those of our customers, our results of operations could be adversely affected, and ourcustomers could switch to our competitors temporarily or permanently.If our ICs are deemed to be employees, our business and results of operations could be adversely affected.We are a defendant in various purported class-action lawsuits alleging violations of various labor laws. We are a defendant in a number of purportedclass-action lawsuits alleging violations of various California labor laws and one purported class-action lawsuit alleging violations of the Illinois WagePayment and Collection Act. Additionally, the California Division of Labor Standards and Enforcement has brought administrative actions against usalleging that we violated various California labor laws. In May 2017, the California Division of Labor Standards and Enforcement ruled against us in anumber of cases, which we intend to appeal. In 2017 and 2018, we reached settlement agreements on a number of these labor related lawsuits andadministrative actions and recorded a reserve of $3.7 million as of December 31, 2016 in aggregate legal settlements. As of December 31, 2016, we haverecorded additional litigation and defense reserves of $6.7 million related to pending lawsuits.In addition, tax and other regulatory authorities have in the past sought to assert that independent contractors in the trucking industry are employeesrather than independent contractors. There can be no assurance that these authorities will not successfully assert this position against us or that tax and otherlaws that currently consider these persons ICs will not change. If our ICs are determined to be our employees, we would incur additional exposure underfederal and state tax, workers' compensation, unemployment benefits, labor, employment, and tort laws, including for prior periods, as well as potentialliability for employee benefits, tax withholdings, and penalties and interest. Our business model relies on the fact that our ICs are independent contractorsand not deemed to be our employees, and exposure to any of the above factors could have an adverse effect on our business and results of operations.Our financial results may be adversely impacted by potential future changes in accounting practices.Future changes in accounting standards or practices, and related legal and regulatory interpretations of those changes, may adversely impact publiccompanies in general, the transportation industry, or our operations specifically. New accounting standards or requirements could change the way we recordrevenues, expenses, assets, and/or liabilities or could be costly to implement. These types of regulations could have a negative impact on our financialposition, liquidity, results of operations, and/or access to capital.We rely heavily on information and technology to operate our transportation and business networks, and any disruption to our technology infrastructureor the Internet could harm our operations and our reputation among customers.Our ability to attract and retain customers and to compete effectively depends in part upon the sophistication and reliability of our technology network,including our ability to provide features of service that are important to our customers. To keep pace with changing technologies and customer demands inthe future, we must correctly interpret and address market trends and enhance19the features and functionality of our technology system. We may be unable to implement the appropriate features and functionality in a timely manner,which could result in decreased demand for our services and a corresponding decrease in revenue. In addition, we have become increasingly reliant on our technology systems for our operations as well as providing services to our customers. Externaland internal risks, such as malware, code anomalies, “Acts of God,” attempts to penetrate our networks, transitional challenges in migrating operatingcompany functionality to a centralized automation platform, data leakage, and human error pose a direct threat to our services and data. Any disruption to theInternet or our complex technology infrastructure, including those impacting our computer systems, could adversely impact our customer service, volumes,and revenues and result in increased costs. These types of adverse impacts could also occur in the event the confidentiality, integrity, or availability ofcompany and customer information is compromised due to a data loss by us or a trusted third party. While we have invested and continue to invest intechnology security initiatives, information technology risk management, and disaster recovery plans, these measures cannot fully insulate us fromtechnology disruptions or data loss and the resulting adverse effect on our operations and financial results. Additionally, the cost and operationalconsequences of implementing further data or system protection measures could be significant.Seasonal sales fluctuations and weather conditions could have an adverse impact on our results of operations.The transportation industry is subject to seasonal sales fluctuations as shipments are generally lower during and after the winter holiday season. Theproductivity of our carriers historically decreases during the winter season because companies have the tendency to reduce their shipments during that timeand inclement weather can impede operations. At the same time, our operating expenses could increase because harsh weather can lead to increased accidentfrequency rates and increased claims, as well as reduced commodity production (i.e. poultry, beef, fruit, produce). These commodities and other products wetransport are also subject to disease, crop failure, reduction in production quantities or adjustments to automotive model changeovers. Any of the fluctuationscould have an adverse effect on our revenues. If we were to experience lower-than-expected revenue during any such period, our expenses may not be offset,which could have an adverse impact on our results of operations.Terrorist attacks, anti-terrorism measures, and war could have broad detrimental effects on our business operations.As a result of the potential for terrorist attacks, federal, state, and municipal authorities have implemented and continue to follow various securitymeasures, including checkpoints and travel restrictions on large trucks. Such measures may reduce the productivity of our ICs or increase the costs associatedwith their operations, which we could be forced to bear. For example, security measures imposed at bridges, tunnels, border crossings, and other points on keytrucking routes may cause delays and increase the non-driving time of our ICs, which could have an adverse effect on our results of operations. War, risk ofwar, or a terrorist attack also may have an adverse effect on the economy. A decline in economic activity could adversely affect our revenues or restrict ourfuture growth. Instability in the financial markets as a result of terrorism or war also could impact our ability to raise capital. In addition, the insurancepremiums charged for some or all of the coverage currently maintained by us could increase dramatically or such coverage could be unavailable in the future.Our Global Solutions business derives a portion of its revenues from inventory management, the loss of which could have a negative impact on ourfinancial condition, results of operations, and cash flows.A portion of our Global Solutions business is involved with inventory and freight management for customers whose products are shipped to a limitednumber of big box retailers. Should these big box retailers change their supply chain practices and direct our customers to deliver product via another source,such change could have a negative impact on our Global Solutions business.Our international operations subject us to operational and financial risks.We provide transportation and logistics services to and from international locations and are, therefore, subject to risks of international business,including, but not limited to, the following:•changes in tariffs, trade restrictions, trade agreements, and taxations;•difficulties in managing or overseeing foreign operations and agents;•limitations on the repatriation of funds because of foreign exchange controls;•different liability standards; and•intellectual property laws of countries which do not protect our rights in our intellectual property, including, but not limited to, our proprietaryinformation systems, to the same extent as the laws of the United States.We are also subject to compliance with the Foreign Corrupt Practices Act (“FCPA”). Failure to comply with the FCPA and local regulations in theconduct of our international business operations may result in legal claims against us.20The occurrence or consequences of any of these factors may restrict our ability to operate in the affected region and/or decrease the profitability of ouroperations in that region.As we expand our business in foreign countries, we will be exposed to increased risk of loss from foreign currency fluctuations and exchange controls aswell as longer accounts receivable payment cycles. We have limited control over these risks, and if we do not correctly anticipate changes in internationaleconomic and political conditions, we may not alter our business practices in time to avoid adverse effects.Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from achieving our growthobjectives.We may in the future be required to raise capital through public or private financing or other arrangements. Such financing may not be available onacceptable terms, or at all, and our failure to raise capital when needed could harm our business. Additional equity financing may dilute the interests of ourstockholders, and debt financing, if available, may involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptableterms, we may not be able to grow our business or respond to competitive pressures.Our total assets include goodwill and intangibles. If we determine that these items have become impaired in the future, our earnings could be adverselyaffected.As of December 31, 2016, we had recorded goodwill of $312.5 million and other intangible assets, net of accumulated amortization, of $65.5 million.Goodwill represents the excess of purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets of a businessacquired. Goodwill and other intangible assets are evaluated for impairment annually or more frequently, if indicators of impairment exist. If the impairmentevaluations for goodwill and intangible assets indicate the carrying amount exceeds the estimated fair value, an impairment loss is recognized in an amountequal to that excess. Our annual impairment evaluations of goodwill are performed at least annually as of July 1 and periodically if indicators or impairmentare present.We have four reporting units for our three segments: TL, LTL, Global Solutions, and Warehousing & Consolidation, which is consolidated into ourGlobal Solutions segment. As a result of the first step of our goodwill impairment analysis, we determined that the fair value of the Global Solutions reportingunit exceeded its carrying value by 8.4%; thus no impairment was indicated for this reporting unit. However, resulting from a combination of the weakenedenvironment, the inability to meet forecast results, and the lower share price, we determined that the fair value of the TL, LTL, and Warehousing &Consolidation reporting units were less than their respective carrying values, requiring us to perform the second step of the goodwill impairment analysis forthe TL, LTL, and Warehousing & Consolidation reporting units. We completed the second step of the goodwill impairment analysis and recorded non-cashgoodwill impairment charges of $157.5 million, $197.3 million, and $17.2 million for the TL, LTL, and Warehousing & Consolidation reporting units,respectively. No goodwill impairments were identified in 2015 or 2014.In addition, throughout the year we may update our assumptions used in the calculation of the fair value of each reporting unit. Changes to ourforecasts or the discount rate and/or growth rate assumptions based on current market conditions could affect the fair value of the reporting units and result inan indication of impairment for one or more of our reporting units. If we determine that our goodwill and intangible assets in any reporting units have becomeimpaired in the future, our results of operations could be adversely affected.If we are unable to expand the number of our sales representatives, or if a significant number of our existing sales representatives leave us, our ability toincrease our revenue could be negatively impacted.Our ability to expand our business will depend, in part, on our ability to attract additional sales representatives and brokerage agents. Competition forqualified sales representatives can be intense, and we may be unable to attract such persons. Any difficulties we experience in expanding the number of oursales representatives could have a negative impact on our ability to expand our customer base, increase our revenue, and continue our growth.In addition, we must retain our current sales representatives and properly incentivize them to obtain new customers and maintain existing customerrelationships. If a significant number of our sales representatives leave us, our revenue could be negatively impacted. A significant increase in the turnoverrate among our current sales representatives could also increase our recruiting costs and decrease our operating efficiency.21Changes in our relationships with our significant customers, including the loss or reduction in business from one or more of them, could have an adverseimpact on us.We had one direct customer that accounted for approximately 12% of our 2016 revenue. Our contractual relationships with customers generally areterminable at will by the customers on short notice and do not require the customer to provide any minimum commitment. Our customers could choose todivert all or a portion of their business with us to one of our competitors, demand rate reductions for our services, require us to assume greater liability thatincreases our costs, or develop their own logistics capabilities. Failure to retain our existing customers or enter into relationships with new customers couldmaterially impact the growth in our business and the ability to meet our current and long-term financial forecasts.The market value of our common stock may fluctuate and could be substantially affected by various factors.The price of our common stock on the New York Stock Exchange (“NYSE”) constantly changes. We expect that the market price of our common stockwill continue to fluctuate. Our share price may fluctuate as a result of a variety of factors, many of which are beyond our control. These factors include, amongothers:•actual or anticipated variations in earnings, financial or operating performance, or liquidity;•changes in analysts' recommendations or projections;•failure to meet analysts' projections;•general economic and capital market conditions;•announcements of developments related to our business;•operating and stock performance of other companies deemed to be peers;•actions by government regulators;•news reports of trends, concerns, and other issues related to us or our industry, including changes in regulations; and•other factors described in this “Risk Factors” section.Our common stock price may fluctuate significantly in the future, and these fluctuations may be unrelated to our performance. General market pricedeclines or market volatility in the future could adversely affect the price of our common stock, and the current market price of our common stock may not beindicative of future market prices.The New York Stock Exchange could commence procedures to delist our common stock in the event we do not timely file all required periodic reports withthe SEC, in which case the market price of our shares might decline and become more volatile and our stockholders’ ability to trade in our stock could beadversely affected.As a result of our failure to timely file our Form 10-K for the year ended December 31, 2016 with the SEC, as previously disclosed, on April 4, 2017 wereceived a notice from the New York Stock Exchange (the “NYSE”) informing us that we were not in compliance with the NYSE’s continued listingrequirements under the timely filing criteria set forth in Section 802.01E of the NYSE Listed Company Manual and that we were subject to the procedures setforth in the NYSE’s listing standards related to late filings. Under the NYSE rules, we were provided with six months from April 4, 2017 to file the delinquentAnnual Report on Form 10-K. In the event that we did not file the delinquent 2016 Annual Report on Form 10-K and the required 2017 Quarterly Reports onForm 10-Q by the end of that six-month period, we could receive up to an additional six-month extension at the discretion of the NYSE. On October 5, 2017,the NYSE granted us an extension to December 15, 2017 to file our delinquent 2016 Annual Report on Form 10-K and the required 2017 Quarterly Reportson Form 10-Q. On December 18, 2017, the NYSE granted us an extension to April 4, 2018 to file our delinquent 2016 Annual Report on Form 10-K and therequired 2017 Quarterly Reports on Forms 10-Q. While we are filing this Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q for the quartersended March 31, 2017, June 30, 2017 and September 30, 2017 have not been filed and we remain subject to the procedures set forth in the NYSE’s listingstandards related to late filings and subject to the risk of delisting.If our common stock were delisted, there could be no assurance whether or when it would again be listed for trading on NYSE or any other exchange.Further, the market price of our shares might decline and become more volatile, and our stockholders may find that their ability to trade in our stock would beadversely affected. Furthermore, institutions whose charters do not allow them to hold securities in unlisted companies might sell our shares, perhaps verypromptly, which could have a further adverse effect on the price of our stock.In addition, if our common stock were delisted and we were unable to get our common stock listed for trading within one year, a Triggering Event (asdefined in the Certificates of Designations for our Preferred Stock) would occur and, among other22things, the dividend rate on certain series of our Preferred Stock would increase by 3.0%. See Note 16 “Subsequent Events” to the consolidated financialstatements in this Form 10-K for further information.Elliott may exercise influence over us, including through their ability to nominate and elect up to two (2) members of our board of directors.Although the holders of our Preferred Stock will generally not be entitled to vote on any matters submitted to a vote of our stockholders, so long as anyshares of our Preferred Stock are outstanding, we may not take certain actions without the prior approval of the holders of shares of our Preferred Stockrepresenting a majority of the aggregate liquidation value of all of the shares of Preferred Stock (the “Preferred Requisite Vote”), voting as a separate class,including, among other matters:•amending, altering, repealing, or otherwise modifying any provision of our certificate of incorporation, certificate of designations or bylaws in amanner that would alter or change the terms or the powers, preferences, rights, or privileges of our Preferred Stock;•declaring, paying, or setting aside for payment any dividends or distributions upon any junior securities;•repurchasing, redeeming, or otherwise acquiring any junior securities or parity securities (other than for certain ordinary course purposes) for anyconsideration or paying any moneys or making available for a sinking fund for the redemption of any shares of such junior securities or paritysecurities;•authorizing, creating, increasing the authorized amount of, or issuing any class or series of senior securities or parity securities, including anysecurities convertible into, or exchangeable or exercisable for, any senior securities or parity securities;•amending, restating, supplementing, modifying, or replacing any debt agreement or other financing agreement which would restrict the minimumcash dividend payments contemplated by the certificates of designations for the Preferred Stock; or•subject to various exceptions, incurring any indebtedness.Elliott may have interests that diverge from, or even conflict with, those of our other stockholders. For example, Elliott and its affiliates may have aninterest in directly or indirectly pursuing acquisitions, divestitures, financings, or other transactions that, in their judgment, could enhance their other equityinvestments, even though such transactions might involve risks to us. Elliott and its affiliates are in the business of making or advising on investments incompanies, including businesses that may directly or indirectly compete with certain portions of our business. They may also pursue acquisitionopportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.In addition, the terms of the Investment Agreement grant Elliott certain rights to designate directors to serve on our board of directors. For so long as (x)any shares of our Series B Preferred Stock or Series C Preferred Stock are issued and outstanding and (y) Elliott hold shares of Preferred Stock collectivelyrepresenting a majority of the liquidation value of the Preferred Stock, the holders of our Preferred Stock have the exclusive right, acting with the PreferredRequisite Vote, to nominate and elect two (2) individuals selected by the holders of Preferred Stock, or to require that our board of directors to fill two (2)vacancies in the board of directors with individuals selected by the holders of our Preferred Stock, to serve as, respectively, a Class II director and a Class IIIdirector of our company (the “Preferred Stock Directors”). Following the redemption of all shares of our Series B Preferred Stock and Series C Preferred Stock,and until such time as all shares of Series D Preferred Stock are redeemed, for so long as Elliott holds at least 5.0% of the equity value of our company, theholders of Preferred Stock have the exclusive right acting with the Preferred Requisite Vote, to (i) nominate and elect one (1) Preferred Stock Director, and (ii)designate one (1) individual to act as an observer to our board of directors. Until such time as all shares of Series B Preferred Stock has been redeemed, wewill, upon the request of the holders of Preferred Stock, acting with the Preferred Requisite Vote, cause each of our Compensation Committee and Nominatingand Corporate Governance Committee to include one Preferred Stock Director, in each case, to the extent permitted under applicable requirements of theNYSE or applicable law.In addition, in the event of any Triggering Event (as defined in the Certificates of Designations for our Preferred Stock), subject to applicable rules ofthe NYSE, including, without limitation, independent director requirements, the number of directors constituting our board of directors will be increased suchthat the number of vacancies on our board of directors resulting from such increase (the “Triggering Event Vacancies”), together with the Preferred StockDirectors (to the extent then serving on our board of directors), constitutes a majority of the board of directors. The holders of Preferred Stock will have theright, acting with the Preferred Requisite Vote, to nominate and elect individuals selected by the holders of Preferred Stock to fill such Triggering EventVacancies and thereby serve as directors of our company, or to require our board of directors to act to fill such Triggering Event Vacancies with individualsselected by such holders of Preferred Stock, to serve as directors of our company, and the size of our board of directors will be increased as needed. Each suchdirector so elected is referred to as a “Triggering Event Director.”23When a Triggering Event is no longer continuing, then the right of the holders of Preferred Stock to elect the Triggering Event Directors will cease, the termsof office of the Triggering Event Directors will immediately terminate, and the number of directors constituting our board of directors will be reducedaccordingly.Our Preferred Stock has rights, preferences, and privileges that are not held by, and are preferential to, the rights of our common stockholders, which couldadversely affect our liquidity and financial condition, and may result in the interests of Elliott differing from those of our common stockholders.As the holder of certain series of our Preferred Stock, Elliott has the right to receive a liquidation preference entitling them to be paid out of our assetsavailable for distribution to stockholders before any payment may be made to holders of our common stock. In addition, dividends on certain series of ourPreferred Stock accrue and are cumulative as a percentage of the liquidation value of such series of Preferred Stock. The holders of our Preferred Stock alsohave certain redemption rights, including upon certain change in control events involving us, which, if exercised, could require us to repurchase all of theoutstanding shares of Preferred Stock at 100% or more of the stated value of the shares, plus all accrued but unpaid dividends. See Note 16 “SubsequentEvents” to the consolidated financial statements in this on Form 10-K for further information.These dividend and redemption obligations could impact our liquidity and reduce the amount of cash flows available for working capital, capitalexpenditures, growth opportunities, acquisitions, and other general corporate purposes. Our obligations to the holders of our Preferred Stock could also limitour ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition. The preferentialrights could also result in divergent interests between Elliott and the holders of our common stock.Our current principal stockholders continue to have significant influence over us, and they could delay or deter a change of control or other businesscombination or otherwise cause us to take action with which you might not agree.Investment funds affiliated with HCI together owned approximately 20.3% of our outstanding common stock as of January 15, 2018. In addition, two ofour directors are affiliated with HCI. In addition, Elliott currently owns approximately 8.6% of our outstanding common stock and, as described above, theterms of the Investment Agreement grant Elliott certain rights to designate directors to serve on our board of directors.As a result, these stockholders will have significant influence over the election of our board of directors and our decision to enter into any corporatetransaction and may have the ability to delay or deter any transaction that requires the approval of stockholders, regardless of whether or not otherstockholders believe that such a transaction is in their own best interests. Such concentration of voting power could have the effect of delaying or deterring achange of control or other business combination that might otherwise be beneficial to our stockholders or could limit the price that some investors might bewilling to pay in the future for shares of our common stock. The interests of these stockholders may not always coincide with our interests as a company orthe interests of our other stockholders.Provisions in our certificate of incorporation, our bylaws, and Delaware law could make it more difficult for a third party to acquire us, discourage atakeover, and adversely affect existing stockholders.Our certificate of incorporation, our bylaws, and the Delaware General Corporation Law contain provisions that may make it more difficult or delayattempts by others to obtain control of our company, even when these attempts may be in the best interests of our stockholders. These include provisionslimiting the stockholders' powers to remove directors or take action by written consent instead of at a stockholders' meeting. Our certificate of incorporationalso authorizes our board of directors, without stockholder approval, to issue one or more series of preferred stock, which could have voting and conversionrights that adversely affect or dilute the voting power of the holders of common stock. On May 2, 2017, we issued shares of our preferred stock to affiliates ofElliott pursuant to the Investment Agreement. See Note 16 “Subsequent Events” to the consolidated financial statements in this Form 10-K for furtherinformation. In addition, our certificate of incorporation provides for our board to be divided into three classes, serving staggered terms. The classified boardprovision could have the effect of discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. Delaware lawalso imposes conditions on the voting of “control shares” and on certain business combination transactions with “interested stockholders.”These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in our control ormanagement, including transactions in which stockholders might otherwise receive a premium for their shares over then-current market prices. Theseprovisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests.ITEM 1B.UNRESOLVED STAFF COMMENTSNone.24ITEM 2.PROPERTIESWe recently announced that we moved our corporate headquarters to Downers Grove, Illinois from Cudahy, Wisconsin to locate our new executivemanagement team for easier travel to both customers and geographically dispersed operating units. We continue to lease 28,824 square feet of space inCudahy, Wisconsin to house key business and support functions, which include accounting, treasury, marketing, human resources, linehaul support, claims,safety, and information technology support.For our TL business, we own three and lease 10 company dispatch offices and lease nine cross-dock and drop yard locations throughout the UnitedStates and Canada. We own six and lease 35 TL service centers, and lease five warehouses throughout the United States. For our LTL business, we lease 28service centers throughout the United States. Each service center manages and is responsible for the freight that originates in its service area. The typicalservice center is configured to perform cross-dock and limited short-term warehouse operations. For our Global Solutions business, we own one and lease 17office locations to support our international freight forwarding and domestic 3PL business. We also lease five distribution facilities used to support ourwarehousing and consolidation business.We believe that our current facilities are in good working order and are capable of supporting our operations for the foreseeable future; however, wewill continue to evaluate leasing additional space as needed to accommodate our growth.ITEM 3.LEGAL PROCEEDINGSIn the ordinary course of business, we are a defendant in several legal proceedings arising out of the conduct of our business. These proceedings includeclaims for property damage or personal injury incurred in connection with our services. Although there can be no assurance as to the ultimate disposition ofthese proceedings, we do not believe, based upon the information available at this time, that these property damage or personal injury claims, in theaggregate, will have a material impact on our consolidated financial statements. We maintain insurance for auto liability, general liability, and cargo damageclaims. We maintain an aggregate of $100 million of auto liability and general liability insurance. We maintain auto liability insurance coverage for claimsin excess of $1.0 million per occurrence and cargo coverage for claims in excess of $100,000 per occurrence. We are self-insured up to $1.0 million forworkers compensation. We believe we have adequate insurance to cover losses in excess of our self-insured and deductible amount. As of December 31, 2016and 2015, we had reserves for estimated uninsured losses for auto liability, cargo, and workers compensation of $21.5 million and $25.9 million, respectively,included in accrued expenses and other current liabilities.In addition to the legal proceedings described above, we are a defendant in various purported class-action lawsuits alleging violations of variousCalifornia labor laws and one purported class-action lawsuit alleging violations of the Illinois Wage Payment and Collection Act. Additionally, theCalifornia Division of Labor Standards and Enforcement has brought administrative actions against us alleging that we violated various California laborlaws. In May 2017, the California Division of Labor Standards and Enforcement ruled against us in a number of cases, which we intend to appeal. In 2017 and2018, we reached settlement agreements on a number of these labor related lawsuits and administrative actions and recorded a reserve of $3.7 million as ofDecember 31, 2016 in aggregate legal settlements. As of December 31, 2016, we have recorded additional litigation and defense reserves of $6.7 millionrelated to pending lawsuits.Jeffrey Cox and David Chidester filed a Complaint against certain of our subsidiaries in state court in California in a post-acquisition dispute. TheComplaint alleges contract, statutory and tort based claims arising out of the Stock Purchase Agreement, dated November 2, 2012, between the defendants, asbuyers, and the plaintiffs, as sellers, for the purchase of the shares of Central Cal Transportation, Inc. and Double C Transportation, Inc. (the “Central CalAgreement”). The plaintiffs claim that a contingent purchase obligation payment of more than $2.4 million is due and owing pursuant to the Central CalAgreement, and that defendants have furnished fraudulent calculations to the plaintiffs to avoid payment. The plaintiffs also claim violations of California’sLabor Code related to the plaintiffs’ respective employment with Central Cal Transportation, LLC. On October 27, 2017, the state court granted our motionto compel arbitration of all non-employment claims alleged in the Complaint. The plaintiffs are now required to comply with the dispute resolution processoutlined in the Central Cal Agreement, and submit the dispute to a Settlement Accountant. The plaintiffs have indicated that they would like to transfer theremaining employment claims to the related and also pending employment dispute.Following our press release on January 30, 2017, three putative class actions were filed in the United States District Court for the Eastern District ofWisconsin on behalf of a class of persons who acquired our common stock between May 8, 2014 and January 30, 2017, inclusive. The Complaints allege thatwe, Mark A. DiBlasi, and Peter R. Armbruster violated Section 10(b) of the Exchange Act, and Messrs. DiBlasi and Armbruster violated Section 20(a) of theExchange Act, by making materially false or misleading statements, or failing to disclose material facts, regarding our internal control over financialreporting and our financial statements. The Complaints seek certification as a class action, compensatory damages, and attorney’s fees and costs. On May 19,2017, the Court consolidated the actions under the caption In re Roadrunner Transportation Systems, Inc. Securities Litigation, and appointed25Public Employees’ Retirement System as lead plaintiff. Counsel for lead plaintiff has advised us of their intent to file a consolidated Amended Complaintafter we issue our restated financial statements.On May 25, 2017, Richard Flanagan filed a complaint alleging derivative claims on our behalf in the Circuit Court of Milwaukee County, State ofWisconsin (Case No. 17-cv-004401) against Scott Rued, Mark DiBlasi, Christopher Doerr, John Kennedy, III, Brian Murray, James Staley, Curtis Stoelting,William Urkiel, Judith Vijums, Michael Ward, Chad Utrup, Ivor Evans, Peter Armbruster, and Brian van Helden. Count I of the Complaint alleges the DirectorDefendants breached their fiduciary duties by “knowingly failing to ensure that the Company implemented and maintained adequate internal controls overits accounting and financial reporting functions,” and seeks unspecified damages. Count II of the Complaint alleges the Officer Defendants DiBlasi,Armbruster, and van Helden received substantial performance-based compensation and bonuses for fiscal year 2014 that should be disgorged. The action hasbeen stayed by agreement pending a decision on an anticipated motion to dismiss the Amended Complaint to be filed in the securities class action describedabove.On June 28, 2017, Jesse Kent filed a complaint alleging derivative claims on our behalf and class action claims in the United States District Court forthe Eastern District of Wisconsin (Case No. 17-cv-00893-PP) against Scott Rued, Mark DiBlasi, Christopher Doerr, John Kennedy, III, Brian Murray, JamesStaley, Curtis Stoelting, William Urkiel, Judith Vijums, Michael Ward, Chad Utrup, Ivor Evans, Peter Armbruster, Brian van Helden, Scott Dobak, and RalphKittle. Count I of the Complaint alleges the Individual Defendants other than Armbruster, Dobak, Evans, Kittle, and van Helden, violated Section 14(a) of theExchange Act by making false and misleading statements in proxies concerning our financial statements and internal controls. Count II of the Complaintalleges: (i) all the Individual Defendants breached their fiduciary duties of good faith, candor, and loyalty by creating a culture of lawlessness; (ii) the OfficerDefendants knew, were reckless, or were grossly negligent in not knowing that we lacked effective internal controls and our financial statements wereinaccurate; (iii) the Director Defendants other than Dobak and Kittle breached their duty of loyalty by recklessly permitting the improper statementsconcerning our internal controls and financial statements; (iv) the Director Defendants other than Dobak and Kittle breached their fiduciary duty andcommitted the ultra vires act of appointing the interlocking director defendant Dobak to the Board in violation of Section 8 of the Clayton Act; and (v) theAudit Committee Defendants breached their fiduciary duty of loyalty by approving the statements concerning our internal controls and financial statements.Count III of the Complaint alleges all the Individual Defendants wasted corporate assets by: (i) spending hundreds of millions of dollars to purchase variouscompanies in connection with our alleged reckless growth-through-acquisition strategy; (ii) forcing us to have to defend ourselves in the securities fraudlawsuits; and (iii) paying improper compensation and bonuses to certain of our executive officers and directors who breached their fiduciary duty. Count IVof the Complaint alleges all the Individual Defendants were unjustly enriched as a result of the compensation and director remuneration they received whilebreaching their fiduciary duties. Count V of the Complaint alleges a direct claim against our current directors based on our failure to hold an annual meetingof stockholders by June 18, 2017 (13 months after our previous annual meeting of stockholders). The Complaint seeks judgment awarding unspecifieddamages, directing us to make certain corporate governance changes, awarding restitution, ordering disgorgement, directing us to hold our annual meeting ofstockholders, and directing the Board to remove Dobak from the Board. On September 29, 2017, all the Defendants filed a motion to dismiss the complaint.The motion is being held in abeyance pending our filing of our restated consolidated financial statements.On December 22, 2017, Chester County Employees Retirement Fund filed a Complaint alleging derivative claims on our behalf in the United StatesDistrict Court for the Eastern District of Wisconsin (Case No. 2:17-cv-01788-NJ) against the same defendants as those named in the Kent action. Theallegations are substantially the same as those in the Kent Complaint.In addition, subsequent to our announcement that certain previously filed financial statements should not be relied upon, we were contacted by theSEC, FINRA, and the Department of Justice. The Department of Justice and Division of Enforcement of the SEC have commenced investigations into theevents giving rise to the restatement. We have received formal requests for documents and other information. We are cooperating fully with all of theseagencies.ITEM 4.MINE SAFETY DISCLOSURESNot applicable.26PART II ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMarket Information on Common StockOur common stock has been trading on the NYSE under the symbol “RRTS” since May 13, 2010. Prior to that time, there was no public market for ourcommon stock. The following table sets forth, for the periods indicated, the high and low sales prices of our common stock as quoted on the NYSE. High LowFiscal 2016: First quarter$13.67 $6.39Second quarter$12.82 $6.67Third quarter$9.15 $6.86Fourth quarter$11.83 $6.99Fiscal 2015: First quarter$26.73 $20.20Second quarter$28.51 $23.43Third quarter$26.95 $18.24Fourth quarter$19.22 $8.91Fiscal 2014: First quarter$29.82 $21.17Second quarter$28.82 $23.79Third quarter$29.02 $22.72Fourth quarter$23.96 $19.57StockholdersAs of January 26, 2018, there were 127 holders of record of our common stock. On January 26, 2018, the closing price of our common stock as reportedon the NYSE was $7.38 per share.DividendsWe have never declared or paid cash dividends on our common stock. We currently plan to retain any earnings to finance the growth of our businessrather than to pay cash dividends on our common stock. Payments of any cash dividends on our common stock in the future will depend on our financialcondition, results of operations, and capital requirements, as well as other factors deemed relevant by our board of directors. Our ABL Facility restricts us frompaying dividends on our common stock unless certain payment conditions are satisfied. The Investment Agreement prohibits us from paying dividends onour common stock without the consent of Elliott.Equity Compensation Plan InformationFor equity compensation plan information, refer to Item 12 in Part III of this Form 10-K.Performance GraphThe following line graph compares cumulative total shareholder returns for the period from December 31, 2011 through December 31, 2016 for (1) ourcommon stock; (2) the Nasdaq Composite Index; and (3) the Nasdaq Transportation Index. The graph assumes an investment of $100 on December 31, 2011.The calculations of cumulative stockholder return on the Nasdaq Composite Index and the Nasdaq Transportation Index include reinvestment of dividends.The calculation of cumulative stockholder return on our common stock does not include reinvestment of dividends because we did not pay any dividendsduring the measurement period. The historical performance shown is not necessarily indicative of future performance.27The performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act orotherwise subject to the liability of that section. The performance graph shall not be deemed to be incorporated by reference into any filing of our companyunder the Exchange Act or the Securities Act.*$100 invested on December 31, 2011 in stock or in index, including reinvestment of dividends.28ITEM 6.SELECTED FINANCIAL DATAThe following tables present selected financial data for each fiscal year in the five-year period ended December 31, 2016. Our past operating results arenot necessarily indicative of our future operating results as the consolidated statement of operations includes the results of operations of our acquiredcompanies since the date of their acquisition. The selected financial data below should be read in conjunction with Item 7. “Management’s Discussion andAnalysis of Financial Condition and Results of Operations,” and our consolidated financial statements and related notes contained elsewhere in this Form 10-K, including Note 3 “Acquisitions” thereto.We have derived the consolidated statements of operations and other data for the years ended December 31, 2016, 2015, and 2014 and the consolidatedbalance sheet data as of December 31, 2016 and 2015 from our audited consolidated financial statements included elsewhere in this Form 10-K. Theconsolidated statements of operations data and other data for the years ended December 31, 2013 and 2012 and the consolidated balance sheet data as ofDecember 31, 2014, 2013, and 2012 have been revised from our reports previously filed with the SEC related to those periods for the effects of therestatement described in Note 15 “Restatement of Previously Issued Financial Statements”; however, such periods are no longer subject to audit. Ourhistorical results are not necessarily indicative of the results that should be expected in the future and the selected financial data is not intended to replace theconsolidated financial statements and related notes included elsewhere in this Form 10-K.CONSOLIDATED STATEMENTS OF OPERATIONS DATA(In thousands, except per share amounts) Year Ended December 31, 2016 2015 2014 2013 2012 As Revised(1) As Revised(1) As Revised(2) As Revised(2)Consolidated Statement of Operations Data: Revenues$2,033,200 $1,992,166 $1,872,470 $1,361,410 $1,073,354Purchased transportation costs1,364,055 1,310,396 1,294,724 944,275 753,459Personnel and related benefits286,134 263,254 213,661 151,935 120,366Other operating expenses374,979 323,955 271,210 170,053 128,763Depreciation and amortization38,145 31,626 24,254 15,444 9,064Impairment charges373,661 — — — —Acquisition transaction expenses— 564 2,305 851 773Operating (loss) income(403,774) 62,371 66,316 78,852 60,929Interest on debt22,827 19,439 13,363 7,883 7,981Dividends on preferred stock subject to mandatory redemption— — — — 49(Loss) income before provision for income taxes(426,601) 42,932 52,953 70,969 52,899(Benefit from) provision for income taxes(66,281) 17,312 20,243 25,049 21,204Net (loss) income$(360,320) $25,620 $32,710 $45,920 $31,695(Loss) earnings per share: Basic$(9.40) $0.67 $0.86 $1.27 $1.02Diluted$(9.40) $0.65 $0.83 $1.21 $0.98Weighted average common stock outstanding: Basic38,318 38,179 37,852 36,133 31,040Diluted38,318 39,180 39,259 37,913 32,425(1) See Note 15 “Restatement of Previously Issued Financial Statements” to the consolidated financial statements in this Form 10-K.29(2) Selected financial data has been revised for the effects of the restatement; however, such periods are no longer subject to audit. The effects of the restatement were as follows: Year Ended December 31, 2013 2012 As PreviouslyReportedAdjustmentsAs Revised As PreviouslyReportedAdjustmentsAs RevisedRevenues$1,361,410$—$1,361,410 $1,073,354$—$1,073,354Purchased transportation costs944,275—944,275 753,459—753,459Personnel and related benefits151,158777151,935 119,955411120,366Other operating expenses163,4526,601170,053 120,7188,045128,763Depreciation and amortization16,311(867)15,444 9,499(435)9,064Acquisition transaction expenses851—851 773—773Operating income85,363(6,511)78,852 68,950(8,021)60,929Interest on debt7,883—7,883 7,981—7,981Dividends on preferred stock subject to mandatoryredemption——— 49—49Income before provision for income taxes77,480(6,511)70,969 60,920(8,021)52,899Provision for income taxes28,484(3,435)25,049 23,390(2,186)21,204Net income$48,996$(3,076)$45,920 $37,530$(5,835)$31,695Earnings per share: Basic$1.36 $1.27 $1.21 $1.02Diluted$1.29 $1.21 $1.16 $0.98Weighted average common stock outstanding: Basic36,133 36,133 31,040 31,040Diluted37,913 37,913 32,425 32,425CONSOLIDATED BALANCE SHEET DATA(In thousands) December 31, 2016 2015 2014 2013 2012 As Revised(1) As Revised(2) As Revised(2) As Revised(2)Total assets$933,554 $1,307,753 $1,250,638 $859,492 $688,041Adjusted working capital (4)138,692 153,626 155,950 98,255 71,058Total debt (including current maturities)445,589 432,830 423,945 187,165 155,992Capital lease obligation6,245 12,464 1,730 1,934 2,145Total stockholders’ investment197,468 556,439 524,287 485,141 379,931(1) See Note 15 “Restatement of Previously Issued Financial Statements” to the consolidated financial statements in this Form 10-K.(2) Selected financial data has been revised for the effects of the restatement; however, such periods are no longer subject to audit. The effects of the restatement were as follows: December 31, 2014 2013 2012 AsPreviouslyReportedAdjustmentsAs Revised AsPreviouslyReportedAdjustmentsAs Revised AsPreviouslyReportedAdjustmentsAs RevisedTotal assets (3)$1,251,765$(1,127)$1,250,638 $871,880$(12,388)$859,492 $700,808$(12,767)$688,041Adjusted working capital (4)179,894(23,944)155,950 102,110(3,854)98,256 64,0976,96171,058Total debt (including currentmaturities) (3)430,000(6,055)423,945 192,640(5,475)187,165 161,500(5,508)155,992Capital lease obligation9907401,730 1,0588761,934 1,1381,0072,145Total stockholders’ investment558,775(34,488)524,287 500,365(15,224)485,141 392,079(12,148)379,931(3) Adjustments to total assets and debt balances include effects of reclassification of debt issuance costs from other noncurrent assets to total debt resulting from the adoption ofnew accounting methodology as disclosed in Note 1 “Organization, Nature of Business and Significant Accounting Policies” to the consolidated financial statements in this Form10-K.30(4) Adjusted working capital, calculated as current assets less current liabilities, excluding current maturities of debt and short-term capital lease obligations, is not a financial measurepresented in accordance with GAAP. The following is a reconciliation of Adjusted working capital from current assets (in thousands): Year Ended December 31, 2016 2015 2014 2013 2012 As Revised As Revised As Revised As RevisedCurrent assets$374,487 $346,564 $349,139 $211,115 $160,330Less: Current liabilities684,037 630,918 617,367 124,001 106,483Plus: Short-term capital lease obligation2,653 5,150 233 204 211Plus: Current maturities of debt445,589 432,830 423,945 10,938 17,000Adjusted working capital$138,692 $153,626 $155,950 $98,256 $71,058OTHER DATA(In thousands) December 31, 2016 2015 2014 2013 2012 As Revised(2) As Revised(2) As Revised(2) As Revised(2)EBITDA (3)$(365,629) $93,997 $90,570 $94,296 $69,993Adjusted EBITDA (3)$7,806 $93,566 $91,103 $85,356 $70,652Net cash provided by operating activities29,401 68,214(1) 37,228(1) 33,644 34,879Net cash used in investing activities(9,593) (76,671)(1) (265,842)(1) (124,894) (101,742)Net cash provided by financing activities1,775 5,578(1) 233,985(1) 84,780 75,456(1) See Note 15 “Restatement of Previously Issued Financial Statements” to the consolidated financial statements in this Form 10-K.(2) Selected financial data has been revised for the effects of the restatement; however, such periods are no longer subject to audit. The effects of the restatement were as follows: Year Ended December 31, 2015 2014 As PreviouslyReportedAdjustmentsAs Revised As PreviouslyReportedAdjustmentsAs RevisedEBITDA (3)$128,996$(34,999)$93,997 $120,764$(30,194)$90,570Net cash provided by operating activities73,362(5,148)68,214 40,630(3,402)37,228Net cash used in investing activities(81,544)4,873(76,671) (268,844)3,002(265,842)Net cash provided by financing activities5,501775,578 234,121(136)233,985 Year Ended December 31, 2013 2012 As PreviouslyReportedAdjustmentsAs Revised As PreviouslyReportedAdjustmentsAs RevisedEBITDA (3)$101,674$(7,378)$94,296 $78,449$(8,456)$69,993Net cash provided by operating activities36,123(2,479)33,644 36,723(1,844)34,879Net cash used in investing activities(127,073)2,179(124,894) (103,607)1,865(101,742)Net cash provided by financing activities84,48030084,780 75,477(21)75,456(3) EBITDA represents earnings before interest, taxes, depreciation, and amortization. We use Adjusted EBITDA, which also excludes impairment and other non-cash gains andlosses, adjustments to contingent purchase obligation, and share-based compensations expenses, as a supplemental measure in evaluating our operating performance and whendetermining executive incentive compensation. We believe adjusted EBITDA is useful to investors in evaluating our performance compared to other companies in our industrybecause it assists in analyzing and benchmarking the performance and value of a business. The calculation of EBITDA and Adjusted EBITDA eliminates the effects of financing,income taxes, impairments, and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall operating performanceof a company’s business. EBITDA and Adjusted EBITDA are not financial measures presented in accordance with GAAP. Although our management uses Adjusted EBITDA asa financial measure to assess the performance of our business compared to that of others in our industry, EBITDA and Adjusted EBITDA have limitations as analytical tools, andyou should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:31•EBITDA and Adjusted EBITDA do not reflect our cash expenditures, future requirements for capital expenditures, or contractual commitments;•EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;•EBITDA and Adjusted EBITDA do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on ourdebt;•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, EBITDA andAdjusted EBITDA do not reflect any cash requirements for such replacements; and•other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.Because of these limitations, EBITDA and Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business. Wecompensate for these limitations by relying primarily on our results of operations under GAAP. See the consolidated statements of operations included in our consolidated financialstatements included elsewhere in this Form 10-K.The following is a reconciliation of EBITDA and Adjusted EBITDA from net (loss) income: Year Ended December 31, 2016 2015 2014 2013 2012 As Revised As Revised As Revised As Revised (In thousands)Net (loss) income$(360,320) $25,620 $32,710 $45,920 $31,695Plus: Total interest expense22,827 19,439 13,363 7,883 8,030Plus: (Benefit from) provision for income taxes(66,281) 17,312 20,243 25,049 21,204Plus: Depreciation and amortization38,145 31,626 24,254 15,444 9,064EBITDA(365,629) 93,997 90,570 94,296 69,993Plus: Impairment charges373,661 — — — —Plus: Share-based compensation expense2,232 2,500 2,255 1,503 659Plus: Adjustments for contingent purchase obligation(2,458) (2,931) (1,722) (10,443) —Adjusted EBITDA$7,806 $93,566 $91,103 $85,356 $70,652ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThis financial review presents our operating results for each of our three most recent fiscal years and our financial condition as of December 31, 2016.You should read the following discussion and analysis in conjunction with “Selected Financial Data” and our consolidated financial statements and relatednotes contained elsewhere in this Form 10-K. As described in Note 15 “Restatement of Previously Issued Financial Statements” to the consolidated financialstatements in this Form 10-K, we have restated our previously issued consolidated financial statements for the years ended December 31, 2015 and 2014. Thisdiscussion and analysis of our financial condition and results of operations incorporates the revised amounts for these periods. This discussion and analysisof our financial condition and results of operations also contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actualresults may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth underItem 1A. “Risk Factors.”OverviewWe are a leading asset-right transportation and asset-light logistics service provider offering a full suite of solutions. Our TL and LTL segments offersolutions including less-than-truckload, air and ground domestic and cross-border expedite, dry van and temperature controlled truckload logistics, andintermodal services. Our Global Solutions segment offers domestic freight management, retail consolidation, international freight forwarding, and customsbrokerage. We utilize both company drivers and a broad third-party network of transportation providers, comprised of ICs and purchased power providers, toserve a diverse customer base in terms of end-market focus and annual freight expenditures.32We have three segments:Truckload Logistics. Within our TL business, we arrange the pickup and delivery of truckload, intermodal, and ground and air expedited freightthrough 42 TL service centers, 40 company brokers, and over 90 independent brokerage agents located throughout the United States, Mexico, and Canada.We offer temperature-controlled, dry van, intermodal drayage, and flatbed services and specialize in the transport of automotive parts, refrigerated foods,poultry, and beverages. Our on-demand ground and air expedited services feature proprietary bid technology supported by our fleets of ground and air assets.We believe this array of services and specialization provides our customers with full-service options and provides us with more consistent shipping volumesin any given year.Less-than-Truckload. Our LTL business involves the pickup, consolidation, linehaul, deconsolidation, and delivery of LTL shipments throughout theUnited States and parts of Canada. With 44 LTL service centers and over 150 third-party delivery agents, we are designed to provide customers with highreliability at an economical cost. We employ a point-to-point LTL model that we believe serves as a competitive advantage over the traditional hub andspoke LTL model in terms of lower incidence of damage and reduced fuel consumption.Global Solutions. Within our Global Solutions business, we offer a full portfolio of domestic and international transportation and logistics solution,including access to cost-effective and time-sensitive modes of transportation within our broad network. Specifically, our Global Solutions offering includespricing, contract management, transportation mode and carrier selection, freight tracking, freight bill payment and audit, cost reporting and analysis,dispatch, and freight consolidation and warehousing. Our customized Global Solutions offering is designed to allow our customers to reduce operating costs,redirect resources to core competencies, improve supply chain efficiency, and enhance customer service. Our Global Solutions business also includesdomestic and international air and ocean transportation services and customs brokerage.Critical Accounting Policies and EstimatesThe preparation of financial statements in conformity with GAAP requires that we make estimates and assumptions. In certain circumstances, thoseestimates and assumptions can affect amounts reported in the accompanying consolidated financial statements and notes. In preparing our financialstatements, we have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality.We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. Application of the accounting policiesdescribed below involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from theseestimates. The following is a brief discussion of our critical accounting policies and estimates.Goodwill and Other IntangiblesWe evaluate goodwill and intangible assets for impairment at least annually or more frequently whenever events or changes in circumstances indicatethat 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 potentialimpairment of goodwill requires a two-step approach, the first of which is to compare the estimated fair value at each of the reporting units to its carryingamount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, a second step is required to measure the goodwill impairmentloss. The second step includes valuing all the tangible and intangible assets of the reporting unit as if the reporting unit had been acquired in a businesscombination. Then, the implied fair value of the reporting unit's goodwill is compared to the carrying amount of that goodwill. If the carrying amount of thereporting unit's goodwill exceeds the implied fair value of the goodwill, a non-cash goodwill impairment loss is recognized in an amount equal to the excess,not to exceed the carrying amount.For purposes of the impairment analysis, the fair value of our reporting units is estimated based upon an average of the market approach and the incomeapproach, both of which incorporate numerous assumptions and estimates such as company forecasts, discount rates, and growth rates, among others. Thedetermination of the fair value of the reporting units and the allocation of that value to individual assets and liabilities within those reporting units requiresus to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peergroup companies; control premiums appropriate for acquisitions in the industries in which we compete; the discount rate; terminal growth rates; and forecastsof revenue, operating income, and capital expenditures. The allocation requires several analyses to determine fair value of assets and liabilities including,among others, customer relationships, and property and equipment. Although we believe our estimates of fair value are reasonable, actual financial resultscould differ from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions concerning future financialresults or other underlying assumptions could have a significant impact on either the fair value of the reporting units, the amount of the goodwill impairmentcharge, or both. Future declines in the overall market value of our stock may also result in a conclusion that the fair value of one or more reporting units hasdeclined below its carrying value.33We have four reporting units for our three segments: TL, LTL, Global Solutions, and Warehousing & Consolidation, which is consolidated into ourGlobal Solutions segment. We conduct our annual goodwill impairment analysis for each of our four reporting units as of July 1 of each year. As a result ofthe first step of our goodwill impairment analysis, we determined that the fair value of the Global Solutions reporting unit exceeded its carrying value by8.4%; thus no impairment was indicated for this reporting unit. However, resulting from a combination of the weakened environment, the inability to meetforecast results, and the lower share price, we determined that the fair value of the TL, LTL, and Warehousing & Consolidation reporting units were less thantheir respective carrying values, requiring us to perform the second of the goodwill impairment analysis for the TL, LTL, and Warehousing & Consolidationreporting units. We completed the second step of the goodwill impairment analysis and recorded a non-cash goodwill impairment charge of $157.5 million,$197.3 million, and $17.2 million for the TL, LTL, and Warehousing & Consolidation reporting units, respectively. No impairment charges were recorded in2015 or 2014.The fair value of the Global Solutions reporting unit exceeded book value by 8.4%, or approximately $14.0 million. Relatively small changes incertain key assumptions could have resulted in this reporting unit failing step one. Using the income approach, holding other assumptions constant, arelatively small decrease in the operating margin assumption could decrease the reporting unit's fair value such that an impairment may have been present.Applying the market approach, a decrease in the assumed earnings multiple could have also caused the Global Solutions reporting unit to fail the first step.Other intangible assets recorded consist primarily of definite lived customer relationships. We evaluate our other intangible assets for impairment whencurrent facts or circumstances indicate that the carrying value of the assets to be held and used may not be recoverable. Indicators of impairment wereidentified in connection with the shut-down of one of our business operations and as a result, $1.6 million of non-cash impairment charges were recorded inthe fourth quarter of 2016. There were also indicators of impairment with certain other business operations in the fourth quarter. Accordingly, we performedthe required impairment analysis, but no impairment was identified.Revenue RecognitionTL revenue is recorded when all of the following have occurred: an agreement of sale exists; pricing is fixed or determinable; delivery has occurred;and our obligation to fulfill a transaction is complete and collection of revenue is reasonably assured. This occurs when we complete the delivery of ashipment or the service has been fulfilled.LTL revenue is recorded when all of the following have occurred: an agreement of sale exists; pricing is fixed or determinable; and collection ofrevenue is reasonably assured. We use a percentage of services completed method to recognize revenue, which results in an allocation of revenue betweenreporting periods based on the distinctive phases of each LTL transaction completed in each reporting period, with expenses recognized as incurred. Webelieve that this is the most appropriate method for LTL revenue recognition based on the multiple distinct phases of a typical LTL transaction, which is incontrast to the single phase of a typical TL transaction.Global Solutions revenue is recorded when the shipment has been delivered by a third-party carrier. Fees for services revenue is recognized when theservices have been rendered. At the time of delivery or rendering of services, as applicable, our obligation to fulfill a transaction is complete and collection ofrevenue is reasonably assured. We offer volume discounts to certain customers. Revenue is reduced as discounts are earned. In some instances, we performmultiple services. Typically separate fees are quoted and recognized as revenue when services are rendered. Occasionally, customers request an all-inclusive“door-to-door” fee for a set of services and revenue is allocated to each element of the service package and recognized as each service is completed.We typically recognize revenue on a gross basis, as opposed to a net basis, because we bear the risks and benefits associated with revenue-generatedactivities by, among other things, (1) acting as a principal in the transaction, (2) establishing prices, (3) managing all aspects of the shipping process, and(4) taking the risk of loss for collection, delivery, and returns. Certain Global Solutions transactions to provide specific services are recorded at the netamount charged to the client due to the following factors: (A) we do not have latitude in establishing pricing, and (B) we do not bear the risk of loss fordelivery and returns; these items are the risk of the carrier.Self-Insurance AccrualsWe use a combination of purchased insurance and self-insurance programs to provide for the cost of auto liability, cargo damage, workers’compensation claims, and benefits paid under employee health care programs. Insurance reserves are established for estimates of the loss that we willultimately incur on reported claims, as well as estimates of claims that have been incurred but not yet reported. Recorded balances are based on reserve levels,which incorporate historical loss experience and judgments about the present and expected levels of cost per claim. We believe our estimated reserves forsuch claims are adequate, but actual experience in claim frequency and/or severity could materially differ from our estimates and affect our results ofoperations.A number of factors can affect the actual cost of a claim, including the length of time the claim remains open, trends in health care costs, accidentfrequency and severity, and the results of related litigation. Furthermore, claims may emerge in future years for34events that occurred in a prior year at a rate that differs from previous projections. All of these factors can result in revisions to prior projections and produce amaterial difference between estimated and actual costs.Accounts Receivable and Related ReservesAccounts receivable are uncollateralized customer obligations due under normal trade terms. We extend credit to certain customers in the ordinarycourse of business based on the customer's credit history. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts thatreflects management's best estimate of amounts that will not be collected. The allowance is based on historical loss experience and any specific risksidentified in customer collection matters. Accounts receivable are charged off against the allowance for doubtful accounts when it is determined that thereceivable is uncollectible.35Results of OperationsThe following table sets forth, for the periods indicated, summary TL, LTL, Global Solutions, corporate, and consolidated statement of operations data.Such revenue data for our TL, LTL, and Global Solutions segments is expressed as a percentage of consolidated revenues. Other statement of operations datafor our TL, LTL, and Global Solutions segments is expressed as a percentage of segment revenues. Total statement of operations and corporate andeliminations data is expressed as a percentage of consolidated revenues. In 2016, we realigned two of our operating companies into different segments.Segment data for the years ended December 31, 2015 and 2014 have been retrospectively revised to reflect the change in segments. Year Ended December 31, 2016 2015 2014 (Dollars in thousands)Revenues: TL$1,246,798 61.3 % $1,128,390 56.6 % $943,055 50.4 %LTL461,540 22.7 % 515,328 25.9 % 577,175 30.8 %Global Solutions335,510 16.5 % 377,137 18.9 % 367,423 19.6 %Eliminations(10,648) (0.5)% (28,689) (1.4)% (15,183) (0.8)%Total2,033,200 100.0 % 1,992,166 100.0 % 1,872,470 100.0 %Purchased transportation costs: TL826,224 66.3 % 716,518 63.5 % 631,932 67.0 %LTL320,439 69.4 % 357,124 69.3 % 421,556 73.0 %Global Solutions228,040 68.0 % 265,443 70.4 % 256,419 69.8 %Eliminations(10,648) (0.5)% (28,689) (1.4)% (15,183) (0.8)%Total1,364,055 67.1 % 1,310,396 65.8 % 1,294,724 69.1 %Other operating expenses (1): TL397,934 31.9 % 340,568 30.2 % 253,651 26.9 %LTL143,337 31.1 % 139,965 27.2 % 134,726 23.3 %Global Solutions77,158 23.0 % 78,523 20.8 % 79,894 21.7 %Corporate42,684 2.1 % 28,717 1.4 % 18,905 1.0 %Total661,113 32.5 % 587,773 29.5 % 487,176 26.0 %Depreciation and amortization: TL27,622 2.2 % 22,587 2.0 % 15,285 1.6 %LTL4,052 0.9 % 2,801 0.5 % 2,964 0.5 %Global Solutions4,938 1.5 % 4,903 1.3 % 4,868 1.3 %Corporate1,533 0.1 % 1,335 0.1 % 1,137 0.1 %Total38,145 1.9 % 31,626 1.6 % 24,254 1.3 %Impairment charges: TL159,118 12.8 % — — % — — %LTL197,312 42.8 % — — % — — %Global Solutions17,231 5.1 % — — % — — %Corporate— — % — — % — — %Total373,661 18.4 % — — % — — %Operating (loss) income: TL(164,100) (13.2)% 48,717 4.3 % 42,187 4.5 %LTL(203,600) (44.1)% 15,438 3.0 % 17,929 3.1 %Global Solutions8,143 2.4 % 28,268 7.5 % 26,242 7.1 %Corporate(44,217) (2.2)% (30,052) (1.5)% (20,042) (1.1)%Total(403,774) (19.9)% 62,371 3.1 % 66,316 3.5 %Total interest expense22,827 1.1 % 19,439 1.0 % 13,363 0.7 %(Loss) Income before provision for income taxes(426,601) (21.0)% 42,932 2.2 % 52,953 2.8 %(Benefit from) provision for income taxes(66,281) (3.3)% 17,312 0.9 % 20,243 1.1 %Net (loss) income$(360,320) (17.7)% $25,620 1.3 % $32,710 1.7 %(1) Reflects the sum of personnel and related benefits, other operating expenses, and acquisition transaction expenses.36Year Ended December 31, 2016 Compared to Year Ended December 31, 2015RevenuesConsolidated revenues increased by $41.0 million, or 2.1%, to $2,033.2 million in 2016 from $1,992.2 million in 2015, primarily due to an increase inground and air expedited freight revenues in our TL segments, which were partially offset by a decrease in revenues in our LTL and Global Solutionssegments.TL revenues increased by $118.4 million, or 10.5%, to $1,246.8 million in 2016 from $1,128.4 million in 2015, primarily due to an increase of $197.5million in ground and air expedited freight and incremental revenue of $20.8 million due the 2015 acquisition of Stagecoach. These increases were partiallyoffset by decreased volumes, continued softness in the spot market, and lower fuel surcharge revenue.LTL revenues decreased by $53.8 million, or 10.4%, to $461.5 million in 2016 from $515.3 million in 2015. LTL revenues were impacted year-over-year by a drop in fuel prices that resulted in a $16.3 million, or 25.3%, decrease in fuel surcharge revenue and a 12.4% decrease in LTL tonnage, primarilydue to weak freight demand and changes in freight mix. These decreases were partially offset by a 4.2% increase in revenue per hundredweight, excludingfuel surcharges, primarily driven by improved pricing and positive freight mix changes resulting from our pricing initiatives.Global Solutions revenues decreased by $41.6 million, or 11.0%, to $335.5 million in 2016 from $377.1 million in 2015, primarily due to a decrease indomestic freight management business and lower volumes and rates in international freight forwarding, partially offset by an increase of $3.9 million in ourwarehousing and consolidation business.Purchased Transportation CostsPurchased transportation costs increased by $53.7 million, or 4.1%, to $1,364.1 million in 2016 from $1,310.4 million in 2015. Purchasedtransportation costs as a percent of revenue increased to 67.1% in 2016 from 65.8% in 2015.TL purchased transportation costs increased by $109.7 million, or 15.3%, to $826.2 million in 2016 from $716.5 million in 2015, primarily due to anincrease of $180.4 million in ground and air expedited freight. This increase was partially offset by decreases in volumes and weakened demand. TLpurchased transportation costs as a percentage of TL revenues increased to 66.3% in 2016 from 63.5% in 2015.LTL purchased transportation costs decreased by $36.7 million, or 10.3%, to $320.4 million in 2016 from $357.1 million in 2015. This decrease isprimarily the result of lower volume. LTL purchased transportation costs as a percentage of LTL revenues increased to 69.4% in 2016 from 69.3% in 2015.Excluding fuel surcharges, our average linehaul cost per mile remained flat at $1.25 in 2016 and 2015.Global Solutions purchased transportation costs decreased by $37.4 million, or 14.1%, to $228.0 million in 2016 from $265.4 million in 2015, anddecreased as a percentage of Global Solutions revenues to 68.0% in 2016 from 70.4% in 2015. The decreases were primarily due to the lower volumes andmarket rates in our international freight forwarding and domestic freight management business.Other Operating ExpensesOther operating expenses, which reflect the sum of personnel and related benefits, other operating expenses, and acquisition transaction expensesshown in our consolidated statements of operations, increased by $73.3 million, or 12.5%, to $661.1 million in 2016 from $587.8 million in 2015.Within our TL business, other operating expenses increased by $57.4 million, or 16.8%, to $397.9 million in 2016 from $340.6 million in 2015,primarily due to $14.8 million of incremental costs associated with Stagecoach, which was acquired in the third quarter of 2015, increased equipment leaseexpense of $10.3 million, increased insurance expense of $10.0 million, increased maintenance costs of $7.5 million, and increased salaries and benefits of$5.1 million. As a percentage of TL revenues, other operating expenses increased to 31.9% in 2016 from 30.2% in 2015.Within our LTL business, other operating expenses increased by $3.3 million, or 2.4%, to $143.3 million in 2016 from $140.0 million in 2015,primarily as a result of increased insurance and claims expense of $2.8 million, increased building maintenance and rent expense of $2.8 million, andincreased professional and outside services expense of $2.1 million, partially offset by lower equipment maintenance expense of $2.7 million and loweremployee compensation costs of $2.0 million. As a percentage of LTL revenues, other operating expenses increased to 31.1% in 2016 from 27.2% in 2015.37Within our Global Solutions business, other operating expenses decreased $1.3 million, or 1.7%, to $77.2 million in 2016 from $78.5 million in 2015.As a percentage of Global Solutions revenues, other operating expenses increased to 23.0% in 2016 from 20.8% in 2015.Other operating expenses that were not allocated to our TL, LTL, or Global Solutions businesses increased $14.0 million, or 48.6%, to $42.7 million in2016 from $28.7 million in 2015, primarily due to increased lease purchase guarantee expenses of $7.0 million and $10.4 million of legal expenses for thesettlement, litigation and defense of pending lawsuits, which were partially offset by decreased insurance reserves of $3.8 million.Depreciation and AmortizationDepreciation and amortization increased to $38.1 million in 2016 from $31.6 million in 2015, reflecting increases in property, plant, and equipmentattributable to our acquisitions and continued revenue growth, as well as increased amortization of customer relationship intangibles of $0.2 million inconnection with our 2015 acquisition of Stagecoach.Goodwill and Other Intangible ImpairmentDuring 2016, we recorded total impairment charges of $373.7 million resulting from a combination of the weakened environment, the inability to meetforecast results, and our lower share price. No impairment charges were recorded during 2015.As a result of goodwill impairment analysis performed during 2016, non-cash goodwill impairment charges of $157.5 million, $197.3 million, and $17.2million were recognized for our TL, LTL, and Warehousing & Consolidation reporting units, respectively.Other intangible assets consist primarily of definite lived customer relationships. Indicators of impairment were identified in connection with the shut-downof one of our business operations, and as a result, a non-cash impairment charge for the customer relationship intangible of $1.6 million was recorded in 2016.Operating (Loss) IncomeOperating results decreased to an operating loss of $403.8 million in 2016 from operating income of $62.4 million in 2015. Operating loss in 2016included impairment charges of $373.7 million. Excluding the impairment charges, operating loss was $30.1 million in 2016, which was a decrease inoperating results of $92.5 million, or 148.3%, from operating income of $62.4 million in 2015.Within our TL business, operating results decreased to an operating loss of $164.1 million in 2016 from operating income of $48.7 million in 2015.Operating loss in our TL business in 2016 included impairment charges of $159.1 million. Excluding the impairment charges, the operating loss was $5.0million, which was a decrease in operating results of $53.7 million, or 110.2%, from $48.7 million in 2015.Within our LTL business, operating results decreased to an operating loss of $203.6 million in 2016 from operating income of $15.4 million in 2015.Operating loss in our LTL business in 2016 included impairment charges of $197.3 million. Excluding the impairment charges, the operating loss in our LTLbusiness was $6.3 million in 2016, which was a decrease in operating results of $21.7 million, or 140.7%, from operating income of $15.4 million in 2015.Within our Global Solutions business, operating income decreased to $8.1 million in 2016 from operating income of $28.3 million in 2015. Operatingincome in our Global Solutions business in 2016 included impairment charges of $17.2 million. Excluding the impairment charges, operating income in ourGlobal Solutions business was $25.4 million, which was a decrease of $2.9 million, or 10.2%, from $28.3 million in 2015. Operating income, excludingimpairment charges, as a percentage of Global Solutions revenues increased slightly to 7.6% in 2016 from 7.5% in 2015.Other operating loss that was not allocated to TL, LTL, or Global Solutions increased $14.2 million, or 47.1%, to $44.2 million in 2016 from $30.1million in 2015.Interest ExpenseInterest expense increased to $22.8 million in 2016 from $19.4 million in 2015, primarily as a result of the increased debt related to our 2015acquisition of Stagecoach, as well as the increased interest rate year-over-year.Income TaxIncome tax benefit was $66.3 million in 2016 compared with income tax provision of $17.3 million in 2015. The effective tax rate was 15.5% in 2016compared to 40.3% in 2015. The non-deductible goodwill impairment charges incurred during 2016 decreased38the overall benefit we received during 2016, which lowered our effective tax rate. The effective income tax rate varies from the federal statutory rate of 35.0%primarily due to state income taxes as well as the impact of items causing permanent differences.Net (Loss) IncomeNet loss was $360.3 million in 2016 and net income was $25.6 million in 2015 resulting from the factors described above.Year Ended December 31, 2015 Compared to Year Ended December 31, 2014RevenuesConsolidated revenues increased by $119.7 million, or 6.4%, to $1,992.2 million in 2015 from $1,872.5 million in 2014, primarily as a result of thecompanies we acquired in 2014 and 2015, which were offset by a decrease in fuel surcharge revenues and volume.TL revenues increased by $185.3 million, or 19.7%, to $1,128.4 million in 2015 from $943.1 million in 2014, primarily as a result of our acquisitionsof Rich Logistics, ISI, Active Aero, and Stagecoach, which had incremental revenues of $216.6 million. The increase associated with the acquisitions wasprimarily offset by the decrease in fuel surcharge revenues year-over-year.LTL revenues decreased by $61.9 million, or 10.7%, to $515.3 million in 2015 from $577.2 million in 2014. LTL revenues were impacted year-over-year by a drop in fuel prices that resulted in a $35.7 million, or 35.7%, decrease in fuel surcharge revenue and a 13.5% decrease in LTL tonnage, primarilydue to weak freight demand and changes in freight mix. These decreases were partially offset by a 10.1% increase in revenue per hundredweight, excludingfuel surcharges, primarily driven by improved pricing and positive freight mix changes resulting from our pricing initiatives.Global Solutions revenues increased by $9.7 million, or 2.6%, to $377.1 million in 2015 from $367.4 million in 2014. This growth was primarilydriven by our 2014 acquisition of Unitrans, which increased $14.2 million. The increase at Unitrans was offset by a decrease in volume at other GlobalSolutions companies year-over-year.Purchased Transportation CostsPurchased transportation costs increased by $15.7 million, or 1.2%, to $1,310.4 million in 2015 from $1,294.7 million in 2014. Purchasedtransportation costs as a percent of revenue decreased to 65.8% in 2015 from 69.1% in 2014.TL purchased transportation costs increased by $84.6 million, or 13.4%, to $716.5 million in 2015 from $631.9 million in 2014, primarily as a result ofour acquisitions of Rich Logistics, ISI, and Active Aero, which had incremental purchased transportation costs of $137.5 million. This increase was offset bydecreases in our other business primarily related to the lower revenues at our other operating companies. TL purchased transportation costs as a percentage ofTL revenues decreased to 63.5% in 2015 from 67.0% in 2014, primarily due to higher user of employee drivers at recently acquired companies, which arereported in other operating expenses.LTL purchased transportation costs decreased by $64.5 million, or 15.3%, to $357.1 million in 2015 from $421.6 million in 2014, and decreased as apercentage of LTL revenues to 69.3% in 2015 from 73.0% in 2014. Excluding fuel surcharges, our average linehaul cost per mile decreased to $1.25 in 2015from $1.28 in 2014.Global Solutions purchased transportation costs increased by $9.0 million, or 3.5%, to $265.4 million in 2015 from $256.4 million in 2014, andincreased as a percentage of Global Solutions revenue to 70.4% in 2015 from 69.8% in 2014. The increase was primarily due to our 2014 acquisition ofUnitrans, which had increased purchased transportation costs of $9.2 million.Other Operating ExpensesOther operating expenses, which reflect the sum of personnel and related benefits, other operating expenses, and acquisition transaction expensesshown in our consolidated statements of operations, increased by $100.6 million, or 20.6%, to $587.8 million in 2015 from $487.2 million in 2014.Within our TL business, other operating expenses increased by $86.9 million, or 34.3%, to $340.6 million in 2015 from $253.7 million in 2014,primarily as a result of our acquisitions of Rich Logistics, ISI, Active Aero, and Stagecoach, which accounted for incremental costs of $60.3 million.Additionally, we incurred increased leased equipment and maintenance costs of $7.0 million, primarily due to the declining quality and performance of leasepurchase units, and increased insurance claims expense of $5.4 million, primarily due to an increase in severe accidents in the latter half of 2015. These costincreases were offset by contingent purchase obligation adjustments related to downward changes to the operating results forecasts for certain acquisitionswith contingent consideration thresholds. The value of the expected contingent purchase obligation decreased resulting in a reduction in expenses of $2.9million in 2015 and $1.7 million in 2014. As a percentage of TL revenues, other operating expenses increased to 30.2% in 2015 from 26.9% in 2014.39Within our LTL business, other operating expenses increased by $5.3 million, or 3.9%, to $140.0 million in 2015 from $134.7 million in 2014,primarily due to increased cargo claims expense of $4.2 million and increased contractor receivable reserves of $0.3 million. As a percentage of LTLrevenues, other operating expenses increased to 27.2% in 2015 from 23.3% in 2014.Within our Global Solutions business, other operating expenses decreased by $1.4 million, or 1.7% to $78.5 million in 2015 from $79.9 million in2014, primarily due to a decrease in temporary labor costs of $2.0 million, which was partially offset by an increase in salaries and benefits of $0.5 million. Asa percentage of Global Solutions revenues, other operating expenses decreased to 20.8% in 2015 from 21.7% in 2014.Other operating expenses that were not allocated to our TL, LTL, or Global Solutions businesses increased $9.8 million, or 51.9%, to $28.7 million in2015 from $18.9 million in 2014, primarily as a result of the $5.0 million charge that we recorded in connection with the termination of certain IC leasepurchase guarantee programs, as well as $1.2 million of severance expenses related to the separation agreement with a former company executive officer,increased amortization of the lease purchase guarantee unit of $0.9 million related to increased number of units compared to the prior year, and increasedcompensation cost of $0.7 million.Depreciation and AmortizationDepreciation and amortization increased to $31.6 million in 2015 from $24.3 million in 2014, reflecting increases in property, plant, and equipmentattributable to our acquisitions and continued revenue growth along with increased amortization of customer relationship intangibles of $2.6 million inconnection with our 2014 and 2015 acquisitions.Operating IncomeOperating income decreased by $3.9 million, or 5.9%, to $62.4 million in 2015 from $66.3 million in 2014. As a percentage of revenues, operatingincome decreased to 3.1% in 2015 from 3.5% in 2014.Within our TL business, operating income increased by $6.5 million, or 15.5%, to $48.7 million in 2015 from $42.2 million in 2014. Operating incomeas a percentage of TL revenues decreased to 4.3% in 2015 from 4.5% in 2014.Within our LTL business, operating income decreased by $2.5 million, or 13.9%, to $15.4 million in 2015 from $17.9 million in 2014, and as apercentage of LTL revenues decreased from 3.0% in 2015 from 3.1% 2014.Within our Global Solutions business, operating income increased by $2.1 million, or 7.7%, to $28.3 million in 2015 from $26.2 million in 2014, andincreased as a percentage of Global Solutions revenues to 7.5% in 2015 from 7.1% in 2014.Other operating loss that was not allocated to TL, LTL, or Global Solutions businesses increased $10.1 million, or 49.9%, to $30.1 million in 2015 from$20.0 million in 2014, primarily as a result of higher other operating expenses described above.Interest ExpenseInterest expense increased to $19.4 million in 2015 from $13.4 million in 2014, primarily as a result of the increased debt related to our 2014acquisitions and our 2015 acquisition of Stagecoach, as well as the increased interest rate year-over-year.Income TaxIncome tax provision was $17.3 million in 2015 compared with $20.2 million in 2014. The effective tax rate was 40.3% in 2015 compared to 38.2% in2014. The effective tax rates were impacted by the contingent consideration adjustments in 2015 and 2014. The effective income tax rate varies from thefederal statutory rate of 35.0% primarily due to state income taxes as well as the impact of items causing permanent differences.Net IncomeNet income was $25.6 million in 2015 compared to $32.7 million in 2014, resulting from the factors described above.Liquidity and Capital ResourcesOur primary sources of cash have been borrowings under our revolving credit facility, cash flows from operations, and proceeds from the sale of ourcommon stock. Our primary cash needs are and have been to execute our acquisition strategy, fund normal working capital requirements, finance capitalexpenditures, and repay our indebtedness. As of December 31, 2016, we had $29.5 million in cash and cash equivalents. On May 1, 2017, we entered into theInvestment Agreement with Elliott, pursuant to which we issued and sold shares of our Preferred Stock for an aggregate purchase price of $540.5 million. Theproceeds of the sale of the Preferred Stock were used to pay off and terminate our prior senior credit facility and to provide working capital to support ourcurrent operations and future growth. In addition, on July 21, 2017, we entered into the ABL Facility. See Note 16 “Subsequent Events” to the consolidatedfinancial statements in this Form 10-K for further information.40Our prior senior credit facility consisted of a $300.0 million term loan and a revolving credit facility up to a maximum aggregate amount of $250.0million, of which $10.0 million could be used for swing line loans (as defined in the credit agreement) and up to $40.0 million could be used for letters ofcredit. The prior senior credit facility had a maturity date of July 9, 2019.Advances under our prior senior credit facility bore interest at either (a) the Eurocurrency Rate (as defined in the credit agreement), plus an applicablemargin in the range of 2.0% to 3.5%, or (b) the Base Rate (as defined in the credit agreement), plus an applicable margin in the range of 1.0% to 2.5%. In2016, the weighted average interest rate on our credit facility was 4.3%.Our prior senior credit facility was collateralized by all of our assets and contained certain financial covenants, including a maximum cash flowleverage ratio and a minimum fixed charge coverage ratio. On June 17, 2016, we entered into a Consent, Waiver, and First Amendment (the “Amendment”) toour prior senior credit agreement. Pursuant to the Amendment, the maximum cash flow leverage ratio and minimum fixed charge coverage ratio weremodified for certain future periods. As modified by the Amendment, the maximum cash flow leverage ratio was 3.75 to 1.0 for the four quarters endingDecember 31, 2016 and the minimum fixed charge coverage ratio was 1.15 to 1.0 for the four quarters ended December 31, 2016.Additionally, the prior senior credit facility contained negative covenants limiting, among other things, additional indebtedness, capital expenditures,transactions with affiliates, additional liens, sales of assets, dividends, investments, advances, prepayments of debt, mergers and acquisitions, and othermatters customarily restricted in such agreements.We were not in compliance with our debt covenants for the four quarters ending December 31, 2016. Additionally, our announcement of therestatement of previously issued financial statements resulted in a default. On February 27, 2017, we entered into a Forbearance Agreement and SecondAmendment to our prior senior credit agreement (the “Forbearance Agreement”). Pursuant to the Forbearance Agreement, our lenders agreed to forbear fromexercising the remedies available under our prior senior credit agreement in respect of certain disclosed prior senior credit agreement events of default untilthe earliest to occur of (i) a breach by us of any of our covenants in the Forbearance Agreement, (ii) any other default or event of default under our prior seniorcredit agreement, (iii) March 31, 2017, and (iv) certain other specified events, including a material adverse effect. The Forbearance Agreement also amendedcertain credit agreement covenants and other provisions, required certain reporting and information, and imposed other obligations on us. On March 31,2017, we entered into a Forbearance Agreement Extension and Third Amendment to our prior senior credit agreement (the “Forbearance Extension”).Pursuant to the Forbearance Extension, our lenders agreed to forbear from exercising the remedies available under our prior senior credit agreement in respectof certain disclosed prior senior credit agreement events of default until the earliest to occur of (i) a breach by us of any of our covenants in the ForbearanceExtension, (ii) any other default or event of default under our senior credit agreement, (iii) May 19, 2017, and (iv) certain other specified events, including amaterial adverse effect. The Forbearance Extension also amended certain prior senior credit agreement covenants and other provisions, required certainreporting and information, and imposed other obligations on us.Cash FlowsA summary of operating, investing, and financing activities are shown in the following table (in thousands): Year Ended December 31, 2016 2015 2014Net cash provided by (used in): Operating activities$29,401 $68,214 $37,228Investing activities(9,593) (76,671) (265,842)Financing activities1,775 5,578 233,985Net change in cash and cash equivalents$21,583 $(2,879) $5,371Cash Flows from Operating ActivitiesCash provided by operating activities was $29.4 million. The difference between our $360.3 million net loss and the $29.4 million of cash provided byoperating activities during 2016 was primarily attributable to $373.7 million of non-cash impairment charges and $40.7 million of depreciation andamortization expense, offset by a deferred tax benefit of $43.4 million. The remainder is primarily attributable to a net decrease in working capital.Cash Flows from Investing ActivitiesCash used in investing activities was $9.6 million during 2016, which reflects $17.6 million of capital expenditures used to support our operations.These payments were offset by the proceeds from the sale of equipment of $7.0 million and proceeds from sale of non-core business of $1.0 million. Weexpect capital expenditures in fiscal 2017 to be between $15.0 million and $25.0 million.41Cash Flows from Financing ActivitiesCash provided by financing activities was $1.8 million during 2016, which primarily reflects net borrowings of $11.1 million under our credit facility,which were offset by the reduction of a capital lease obligation of $5.1 million, the payment of contingent purchase obligations of $2.5 million, debtissuance costs of $0.9 million associated with the amendments to our credit agreement, and $0.9 million of other miscellaneous reductions.42Quarterly Results of OperationsThe following table presents unaudited consolidated statement of operations data for each of the four quarters ended December 31, 2016 and 2015. Thefirst three quarters of 2016 and each of the four quarters of 2015 were revised for the effects of the restatement disclosed in Note 15 “Restatement ofPreviously Issued Financial Statements” in Part II. Item 8. “Financial Statements and Supplementary Data” of this Form 10-K.In addition to the items discussed in Note 15 “Restatement of Previously Issued Financial Statements” to the consolidated financial statementsincluded in this Form 10-K, the following two items impacted the second and third quarters of 2016 and are reflected in the adjustments in the tables below.Sale LeasebackIn June 2016, we entered into a sale leaseback transaction to sell a warehouse and office for $3.5 million recognizing an initial gain of $0.9 million anddeferring a gain of $0.5 million during the second quarter of 2016. The building and land were initially recorded at $2.1 million at the date of acquisition.We subsequently determined, due to the timing of the sale leaseback transaction relative to the date of acquisition, the building and land were under-valuedat the acquisition date resulting in an overstatement of goodwill and accrued expenses and an understatement of property and equipment and other operatingexpenses. We reversed the gain and deferred gain and corrected goodwill, property and equipment, and other operating expenses in the restated consolidatedfinancial statements.Goodwill ImpairmentAs discussed in Note 4 “Goodwill and Intangible Assets” to the consolidated financial statements included in this Form 10-K, we performed our 2016goodwill impairment analysis as of July 1. We initially recorded the impairment charge in the fourth quarter of 2016 when we completed the second step ofour goodwill impairment analysis. The accounting guidance around goodwill impairment analysis requires a company to estimate an impairment charge inthe period the impairment is identified. Additionally, some of the restatement adjustments impacted the carrying value of our goodwill and, as such, weupdated our impairment analysis to incorporate the restatement adjustments and recorded impairment charges in the third quarter of 2016.We believe that all necessary adjustments have been included to fairly present the quarterly information when read in conjunction with our annualconsolidated financial statements and related notes. The operating results for any quarter are not necessarily indicative of the results for any subsequentquarter. Three Months Ended March 31, 2016 2015 As PreviouslyReportedAdjustmentsAs Restated As PreviouslyReportedAdjustmentsAs Restated (In thousands, except per share data)Total revenues 465,632914466,546 488,970(136)488,834Net revenues (total revenues less purchasedtransportation costs) 157,1581,349158,507 160,479978161,457Income before income taxes 4,998(3,530)1,468 22,193(6,328)15,865Net income 3,065(2,165)900 13,604(3,784)9,820Earnings per share: Basic $0.08 $0.02 $0.36 $0.26Diluted $0.08 $0.02 $0.35 $0.2543 Three Months Ended June 30, 2016 2015 As PreviouslyReportedAdjustmentsAs Restated As PreviouslyReportedAdjustmentsAs Restated (In thousands, except per share data)Total revenues 483,432(15)483,417 517,930(307)517,623Net revenues (total revenues less purchasedtransportation costs) 165,9771,779167,756 171,857341172,198Income (loss) before income taxes 2,934(7,403)(4,469) 26,869(9,591)17,278Net income (loss) 1,798(4,537)(2,739) 16,471(5,900)10,571Earnings (loss) per share: Basic $0.05 $(0.07) $0.43 $0.28Diluted $0.05 $(0.07) $0.42 $0.27 Three Months Ended September 30, 2016 2015 As PreviouslyReportedAdjustmentsAs Restated As PreviouslyReportedAdjustmentsAs Restated (In thousands, except per share data)Total revenues 532,209(200)532,009 497,173(409)496,764Net revenues (total revenues less purchasedtransportation costs) 171,6612,077173,738 170,9221,030171,952Income (loss) before income taxes 12,954(379,502)(366,548) 9,446(6,665)2,781Net income (loss) 7,939(327,557)(319,618) 5,791(4,086)1,705Earnings (loss) per share: Basic $0.21 $(8.34) $0.15 $0.04Diluted $0.21 $(8.34) $0.15 $0.04 Three Months Ended Three Months Ended December 31, December 31, 2015 2016 As PreviouslyReportedAdjustmentsAs Restated (In thousands, except per share data)Total revenues 551,228 490,946(2,001)488,945Net revenues (total revenues less purchased transportationcosts) 169,144 176,267(104)176,163Income (loss) before income taxes (57,052) 18,726(11,718)7,008Net income (loss) (38,863) 12,134(8,610)3,524Earnings (loss) per share: Basic $(1.01) $0.32 $0.09Diluted $(1.01) $0.32 $0.0944Contractual Obligations and Commercial CommitmentsThe following table sets forth a summary of our material contractual obligations and commercial commitments as of December 31, 2016 (in thousands): Payments Due by Period Total Less Than1 Year 1-3 Years 3-5 Years More Than5 YearsDebt$450,450 $450,450 $— $— $—Interest expense19,368 19,368 — — —Capital leases6,954 2,928 3,801 225 —Operating leases180,682 52,720 74,609 30,068 23,285Total$657,454 $525,466 $78,410 $30,293 $23,285Off-Balance Sheet ArrangementsWe do not have any transactions, arrangements, or other relationships with unconsolidated entities that are reasonably likely to materially affect ourfinancial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, or capital resources. We have no special purpose orlimited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support; engage in leasing, hedging, or research anddevelopment services; or have other relationships that expose us to liability that is not reflected in the financial statements. However, as of December 31,2016, we had outstanding letters of credit totaling $21.8 million. Additionally, we provide a guarantee for a portion of the value of certain IC leased tractors.The potential maximum exposure under these lease guarantees was approximately $13.8 million as of December 31, 2016.SeasonalityOur operations are subject to seasonal trends that have been common in the North American over-the-road freight sector for many years. Our results ofoperations for the quarter ending in March are on average lower than the quarters ending in June, September, and December. Typically, this pattern has beenthe result of factors such as inclement weather, national holidays, customer demand, and economic conditions.Effects of InflationBased on our analysis of the periods presented, we believe that inflation has not had a material effect on our operating results as inflationary increasesin fuel and labor costs have generally been offset through fuel surcharges and price increases. ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKCommodity RiskOur primary market risk centers on fluctuations in fuel prices, which can affect our profitability. Fuel prices fluctuate significantly due to economic,political, and other factors beyond our control. Our ICs and purchased power providers pass along the cost of fuel to us, and we in turn attempt to pass alongsome or all of these costs to our customers through fuel surcharge revenue programs. There can be no assurance that our fuel surcharge revenue programs willbe effective in the future. Market pressures may limit our ability to pass along our fuel surcharges.Interest Rate RiskWe have exposure to changes in interest rates on our revolving credit facility and term loan. The interest rates on our revolving credit facility and termloan fluctuate based on the prime rate or LIBOR plus an applicable margin. Assuming our $250.0 million revolving credit facility was fully drawn and takinginto consideration the outstanding term loan of $277.8 million as of December 31, 2016, a 1.0% increase in the borrowing rate would increase our annualinterest expense by $5.3 million. We do not use derivative financial instruments for hedging or speculative trading purposes and are not engaged in anyinterest rate swap agreements.ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAReference is made to the financial statements, the notes thereto, and the report of our independent registered public accounting firm commencing atpage F-1 of this Form 10-K, which financial statements, notes, and report are incorporated herein by reference. For the Quarterly Results of Operations, seeItem 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”45ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENot applicable.ITEM 9A.CONTROLS AND PROCEDURESBackgroundIn November 2016, we commenced an internal investigation into certain accounting discrepancies at our Morgan Southern and Bruenger operatingcompanies. Subsequently, an independent internal investigation was undertaken by the Audit Committee of our Board of Directors (the “Audit Committee”),with assistance from outside counsel and outside consultants to provide forensic and investigative support (the “Audit Committee Investigation”). Theexpanded Audit Committee Investigation included detailed reviews of financial records at other operating companies and at our corporate headquarters. TheAudit Committee Investigation identified material accounting errors that impacted substantially all financial statement line items and disclosures.Based on the Audit Committee Investigation, current management determined that there were deficiencies in the design and/or execution of internalcontrols that constituted material weaknesses. Current management determined that structural and environmental factors, including the increased size andcomplexity arising from the acquisition of 25 non-public companies between February 2011 and September 2015, the inconsistency of our accountingsystems, policies and procedures and management override of internal controls contributed to the material weaknesses and resulting material accountingerrors. Our internal controls failed to prevent or were overridden by management in certain instances to allow recording accounting entries withoutappropriate support, recording accounting entries that were inconsistent with information known by management at the time, not communicating relevantinformation within our organization and, in some cases, withholding information from our independent directors, our Audit Committee, and our independentauditors, which resulted in material accounting errors.Evaluation of Disclosure Controls and ProceduresManagement maintains a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed toensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, andreported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management,including our Chief Executive Officer (“CEO”), to allow for timely decisions regarding required disclosure.In connection with the Audit Committee Investigation and management’s review of financial records, an evaluation of the effectiveness of the designand operation of our disclosure controls and procedures was performed under the supervision and with the participation of our management, including ourcurrent CEO (who is also currently serving as our Principal Financial Officer and Principal Accounting Officer). As a result of this evaluation, our current CEOconcluded that our disclosure controls and procedures were not effective as of December 31, 2016 (the “Evaluation Date”) because of the material weaknessesin internal control over financial reporting described below.Notwithstanding the identified material weaknesses, management believes that the consolidated financial statements and unaudited interim financialinformation included in this Form 10-K fairly present in all material respects our financial condition, results of operations, and cash flows as of and for theperiods presented based on a number of factors including, but not limited to, (a) the completion of the Audit Committee Investigation and substantialresources expended (including the use of internal audit personnel and external consultants) in response to the findings of material weaknesses, (b) internalreviews that identified material accounting errors, which in turn led to the restatement of previously issued financial statements, and (c) the commencement ofcertain remediation actions, as discussed further below.Management's Report on Internal Control Over Financial ReportingManagement, including our CEO, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined inRules 13a-15(f) and 15d-15(f) under the Exchange Act and based upon the criteria established in Internal Control-Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission (“the COSO framework”). Our internal control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for externalpurposes in accordance with GAAP.An effective internal control system, no matter how well designed, has inherent limitations, including the possibility of human error or overriding ofcontrols, and therefore can provide only reasonable assurance with respect to reliable financial reporting. Because of its inherent limitations, our internalcontrol over financial reporting may not prevent or detect all misstatements, including46the possibility of human error, the circumvention or overriding of controls, or fraud. Effective internal controls can provide only reasonable assurance withrespect to the preparation and fair presentation of financial statements.In connection with the Audit Committee Investigation and management’s review of financial records, management, with the assistance of internal auditpersonnel and outside consultants, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the COSOframework. Based on evaluation under these criteria, management determined, based upon the existence of the material weaknesses described below, that wedid not maintain effective internal control over financial reporting as of the Evaluation Date.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibilityexists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.Control EnvironmentWe did not maintain an effective control environment based on the criteria established in the COSO framework. We have identified deficiencies in theprinciples associated with the control environment of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, eitherindividually or in the aggregate, relating to: (i) our commitment to integrity and ethical values, (ii) the ability of our board of directors to effectively exerciseoversight of the development and performance of internal control, as a result of failure to communicate relevant information within our organization and, insome cases, withholding information, (iii) appropriate organizational structure, reporting lines, and authority and responsibilities in pursuit of objectives, (iv)our commitment to attract, develop, and retain competent individuals, and (v) holding individuals accountable for their internal control relatedresponsibilities. As disclosed in the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data”, these materialweaknesses resulted in material accounting errors.We did not maintain an effective control environment to enable the identification and mitigation of risks of material accounting errors based on thecontributing factors to material weakness in the control environment, including:•The tone from former executive management was insufficient to create the proper environment for effective internal control over financial reportingand to ensure that (i) there were adequate processes for oversight, (ii) there was accountability for the performance of internal control over financialreporting responsibilities, (iii) identified issues and concerns were raised to appropriate levels within our organization, (iv) corrective activities wereappropriately applied, prioritized, and implemented in a timely manner, and (v) relevant information was communicated within our organization andnot withheld from our independent directors, our Audit Committee, and our independent auditors.•In certain operating companies and at our corporate headquarters there were inconsistent accounting systems, policies and procedures. Additionally,in certain locations we did not attract, develop, and retain competent management, accounting, financial reporting, internal audit, and informationsystems personnel or resources to ensure that internal control responsibilities were performed and that information systems were aligned withinternal control objectives.•Our oversight processes and procedures that guide individuals in applying internal control over financial reporting were not adequate in preventingor detecting material accounting errors, or omissions due to inadequate information and, in certain instances, management override of internalcontrols, including recording improper accounting entries, recording accounting entries that were inconsistent with information known bymanagement at the time, not communicating relevant information within our organization and, in some cases, withholding information from ourindependent directors, our Audit Committee, and our independent auditors.Risk AssessmentWe did not design and implement an effective risk assessment based on the criteria established in the COSO framework. We have identifieddeficiencies in the principles associated with the risk assessment component of the COSO framework. Specifically, these control deficiencies constitutematerial weaknesses, either individually or in the aggregate, relating to: (i) identifying, assessing, and communicating appropriate objectives, (ii) identifyingand analyzing risks to achieve these objectives, (iii) contemplating fraud risks, and (iv) identifying and assessing changes in the business that could impactour system of internal controls.Control ActivitiesWe did not design and implement effective control activities based on the criteria established in the COSO framework. We have identified deficienciesin the principles associated with the control activities component of the COSO framework. Specifically, these control deficiencies constitute materialweaknesses, either individually or in the aggregate, relating to: (i) selecting and developing control activities and information technology that contribute tothe mitigation of risks and support achievement of47objectives and (ii) deploying control activities through policies that establish what is expected and procedures that put policies into action.Deficiencies in control activities contributed to material accounting errors or the potential for there to have been material accounting errors insubstantially all financial statements account balances and disclosures.Information and CommunicationWe did not generate and provide quality information and communication based on the criteria established in the COSO framework. We have identifieddeficiencies in the principles associated with the information and communication component of the COSO framework. Specifically, these control deficienciesconstitute material weaknesses, either individually or in the aggregate, relating to: (i) obtaining, generating, and using relevant quality information tosupport the function of internal control, and (ii) communicating accurate information internally and externally, including providing information pursuant toobjectives, responsibilities, and functions of internal control.Monitoring ActivitiesWe did not design and implement effective monitoring activities based on the criteria established in the COSO framework. We have identifieddeficiencies in the principles associated with the monitoring component of the COSO framework. Specifically, these control deficiencies constitute materialweaknesses, either individually or in the aggregate, relating to: (i) selecting, developing, and performing ongoing evaluation to ascertain whether thecomponents of internal controls are present and functioning, and (ii) evaluating and communicating internal control deficiencies in a timely manner to thoseparties responsible for taking corrective action.The following were contributing factors to the material weaknesses in monitoring activities:•Internal audit staffing levels were insufficient to keep pace with the size and complexity of our business structure and organization, which limitedour ability to effectively monitor internal controls.•Failure to effectively communicate relevant information and internal control deficiencies to our Audit Committee for appropriate oversight,monitoring and enforcement of corrective action.•Not communicating relevant information within our organization and, in some cases, withholding information from our independent directors, ourAudit Committee, and our independent auditors.Deloitte & Touche LLP, our independent registered public accounting firm, has audited the effectiveness of our internal control over financialreporting as of December 31, 2016. Deloitte & Touche LLP's opinion, as stated in their report which appears on page 51 of this Form 10-K, is consistent withmanagement's report on internal control over financial reporting as set forth above.Changes in Internal Control Over Financial ReportingExcept for the identification of the material weaknesses described above, there were no changes during the year ended December 31, 2016 in ourinternal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financialreporting.Remediation Plan and StatusOur remediation efforts are ongoing and we will continue our initiatives to implement and document policies, procedures, and internal controls.Remediation of the identified material weaknesses and strengthening our internal control environment will require a substantial effort throughout 2018 andbeyond, as necessary. We will test the ongoing operating effectiveness of the new and existing controls in future periods. The material weaknesses cannot beconsidered completely remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing,that these controls are operating effectively.While we believe the steps taken to date and those planned for implementation will improve the effectiveness of our internal control over financialreporting, we have not completed all remediation efforts identified herein. Accordingly, as we continue to monitor the effectiveness of our internal controlover financial reporting in the areas affected by the material weaknesses described above, we have and will continue to perform additional proceduresprescribed by management, including the use of manual mitigating control procedures and employing any additional tools and resources deemed necessary,to ensure that our consolidated financial statements are fairly stated in all material respects. The following remediation activities highlight our commitmentto remediating our identified material weaknesses:48Control EnvironmentWe have undertaken steps to address material weaknesses in the control environment. Executive management team changes, including our CEO,President and Chief Operating Officer, General Counsel and Chief Compliance Officer, Chief Financial Officer, Vice President and Corporate Controller, VicePresident Finance and Treasurer, Chief Information Officer, and the Chief Audit Executive, are committed to implementing and maintaining an effectivecontrol environment that will drive a high level of ethical standards and integrity over internal control over financial reporting. Our Audit Committee, ourrecently formed Executive Committee of the Board of Directors, and management have emphasized and continue to emphasize the importance of internalcontrol over financial reporting, as well as the integrity of our financial statements. Our new executive management team has enhanced compliance withethical standards by, among other things, updating our code of conduct and whistleblower policies, and improving communication practices amongemployees with internal control over financial reporting responsibilities as follows:•Executive management has taken, and will continue to take, steps to ensure a proper, consistent tone is communicated throughout our organization,with distinct emphasis on the expectation that previously identified control deficiencies will be remediated through the implementation of uniformaccounting and internal control policies and procedures with the proper oversight that promotes strict compliance with GAAP and regulatoryrequirements. We have established an Ethics Committee responsible for reviewing compliance matters. Clear and transparent communication withrespect to compliance and ethical values continue to emphasize our commitment to ethics and compliance.•Since August 2016, we have hired new finance team members with the appropriate experience, certifications, education, and training for keyfinancial reporting and accounting positions. The addition of skilled personnel will allow us to select and develop appropriate policies, procedures,and controls to strengthen our control environment. Additionally, executive management has reassigned trusted, experienced financial reportingand accounting personnel to areas within our company that will benefit most from their expertise.•Executive management will continue to evaluate the resources required to right-size our accounting and financial reporting, internal audit, andinformation technology functions. They will also continue to evaluate the effectiveness of these personnel and appropriateness of reporting linesacross the company.•We have enhanced our compliance practices, including recent update and distribution of our code of conduct, whistleblower, and ethics policieswhich required acknowledgment by all employees on a periodic basis. We enhanced our sub-certification process to include executives, finance andoperations personnel from our corporate headquarters and operating companies and will undertake this process for each reporting period.Risk AssessmentWe have performed detailed reviews of financial records at our corporate headquarters and the operating company level for the purpose of identifyingand correcting accounting errors. We will continue to enhance risk assessment procedures and conduct a comprehensive risk assessment to enhance overallcompliance. The results of this effort are expected to enable us to effectively identify, develop, and implement controls and procedures to address risks.Furthermore, our Chief Information Officer has begun to, and will continue to, assess our information technology control environment and adequacy ofpersonnel, including responding to information technology risks appropriately.Control ActivitiesWe have begun the process of redesigning and implementing common internal control activities. We also plan to establish policies and procedures andenhance corporate oversight over process-level controls and structures to ensure that there is appropriate assignment of authority, responsibility, andaccountability to enable remediating our material weaknesses.Information and CommunicationDuring 2017, we have taken various steps to enhance our practices as it relates to information and communication, including the hiring of a number ofnew senior finance and information technology executives, and reorganization and centralization of our information technology department, and purchase ofa consolidation software solution.Monitoring ActivitiesIn addition to the items noted above, as we continue to evaluate, remediate, and improve our internal control over financial reporting, executivemanagement may elect to implement additional measures to address control deficiencies or may determine that the remediation efforts described aboverequire modification. Executive management, in consultation with and at the direction of our Audit Committee, will continue to assess the controlenvironment and the above-mentioned efforts to remediate the underlying causes of the identified material weaknesses, including through the following:49•We have increased and will continue to increase internal audit, finance, accounting, and information technology staffing levels to sufficientlyaddress the size, scope, and complexity of our organization.•We are also developing effective communication plans relating to, among other things, identification of deficiencies and recommendations forcorrective actions. These plans will apply to all parties responsible for remediation.Inherent Limitations on Effectiveness of ControlsManagement, including our CEO, does not expect that our disclosure controls and procedures or our internal control over financial reporting willprevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that theobjectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits ofcontrols must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absoluteassurance that all control issues, misstatements, errors, and instances of fraud, if any, within our organization have been or will be prevented or detected.These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error ormistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of thecontrols. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance thatany design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to futureperiods are subject to risks. Over time, internal controls may become inadequate as a result of changes in conditions, or through the deterioration of thedegree of compliance with policies or procedures.50REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofRoadrunner Transportation Systems, Inc. and subsidiariesDowners Grove, IllinoisWe have audited the internal control over financial reporting of Roadrunner Transportation Systems, Inc. and subsidiaries (the “Company”) as of December31, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessmentof the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over FinancialReporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principalfinancial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition ofthe company’s assets that could have a material effect on the financial statements.Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override ofcontrols, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of theeffectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibilitythat a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The followingmaterial weaknesses have been identified and included in management's assessment:Control Environment - control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to: (i) commitment to integrityand ethical values, (ii) the ability of the board of directors to effectively exercise oversight of the development and performance of internal control, as a resultof failure to communicate relevant information within the organization and, in some cases, withholding information, (iii) appropriate organizationalstructure, reporting lines, and authority and responsibilities in pursuit of objectives, (iv) commitment to attract, develop, and retain competent individuals,and (v) holding individuals accountable for their internal control related responsibilities.Risk Assessment - control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to: (i) identifying, assessing, andcommunicating appropriate objectives, (ii) identifying and analyzing risks to achieve these objectives, (iii) contemplating fraud risks, and (iv) identifyingand assessing changes in the business that could impact the system of internal controls.Control Activities - control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to: (i) selecting and developingcontrol activities and information technology that contribute to the mitigation of risks and support achievement of objectives and (ii) deploying controlactivities through policies that establish what is expected and procedures that put policies into action.51Information and Communication - control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to: (i) obtaining,generating, and using relevant quality information to support the function of internal control, and (ii) communicating accurate information internally andexternally, including providing information pursuant to objectives, responsibilities, and functions of internal control.Monitoring - control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to: (i) selecting, developing, andperforming ongoing evaluation to ascertain whether the components of internal controls are present and functioning, and (ii) evaluating and communicatinginternal control deficiencies in a timely manner to those parties responsible for taking corrective action. These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financialstatements as of and for the year ended December 31, 2016, of the Company and this report does not affect our report on such consolidated financialstatements.In our opinion, because of the effect of the material weaknesses identified above on the achievement of the objectives of the control criteria, the Companyhas not maintained effective internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financialstatements as of and for the year ended December 31, 2016 of the Company and our report dated January 30, 2018 expressed an unqualified opinion on thosefinancial statements./s/ Deloitte & Touche LLPMinneapolis, MinnesotaJanuary 30, 201852ITEM 9B.OTHER INFORMATIONNot applicable.53PART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEDirectorsThe following table, together with the accompanying text, sets forth the names and certain other information as of January 15, 2018 for each of ourdirectors.Name Age Position(s) HeldJames D. Staley(1)(5)(6)(7) 68 Chairman of the BoardCurtis W. Stoelting(7) 57 Chief Executive Officer, Principal Financial Officer, PrincipalAccounting Officer, and DirectorMark A. DiBlasi 61 DirectorScott L. Dobak(2)(5)(6)(7) 55 DirectorChristopher L. Doerr(5)(6)(7) 68 DirectorJohn G. Kennedy, III(4)(6)(7) 56 DirectorRalph (“Cody”) W. Kittle III(3)(7) 28 DirectorBrian C. Murray(4)(7) 52 DirectorScott D. Rued 61 DirectorWilliam S. Urkiel(4)(5)(7) 72 DirectorJudith A. Vijums 52 DirectorMichael P. Ward(5)(7) 57 Director(1) Mr. Staley was appointed Chairman of our board of directors on November 14, 2017.(2) Mr. Dobak was elected to our board of directors on June 6, 2017.(3) Mr. Kittle was elected to our board of directors on June 6, 2017.(4) Member of the audit committee.(5) Member of the compensation committee.(6) Member of the nominating/corporate governance committee.(7) Member of the executive committeeJames D. Staley has served as the chairman of our board of directors since November 2017 and has been a director of our company since October 2010.Mr. Staley previously served as the lead independent director of our board of directors from December 2016 to November 2017. Mr. Staley is presentlyretired. From 2004 through December 2007, Mr. Staley served in various capacities for YRC Worldwide, Inc. (NASDAQ: YRCW) and its subsidiaries, one ofthe world's largest transportation services providers, including as President and Chief Executive Officer of Roadway Group and YRC RegionalTransportation. Prior to that, Mr. Staley served for over 30 years in various capacities for Roadway Express, including President and Chief Operating Officer.Mr. Staley currently serves as the Lead Director and on the audit, compensation, and nominating and corporate governance committees of Douglas Dynamics,Inc. (NYSE: PLOW), a designer, manufacturer, and seller of snow and ice control equipment for light trucks. Mr. Staley was nominated to our board ofdirectors because of his executive and operational experience with a public company in the transportation industry, and his experience on other publiccompany boards of directors.Curtis W. Stoelting has served as our Chief Executive Officer, principal financial officer and principal accounting officer since April 2017 and has beena director of our company since January 2016. Mr. Stoelting previously served as our President and Chief Operating Officer from January 2016 until April2017. Prior to joining our company, Mr. Stoelting served as the Chief Executive Officer and a director of TOMY International (formerly RC2 Corporation)from January 2003 to March 2013. RC2 Corporation (NASDAQ: RCRC) was acquired by TOMY Company, Ltd. in April 2011. Mr. Stoelting previouslyserved as RC2's Chief Operating Officer from 2000 to 2003, Executive Vice President from 1998 to 2000 and Chief Financial Officer from 1994 to 1998. Priorto that, Mr. Stoelting was with Arthur Andersen for 12 years. Mr. Stoelting currently serves on the Board of Directors and Compensation Committee of Regal-Beloit Corporation (NYSE: RBC), a publicly traded manufacturer of commercial, industrial, and HVAC electric motors, electric generators and controls, andmechanical motion control products. Mr. Stoelting was nominated to our board of directors because of his role as our chief executive officer, which enableshim to provide the board with insight based on his day-to-day interactions with our company, and because of his operational expertise. As a managementrepresentative on our board of directors, Mr. Stoelting provides an insider's perspective in board discussions about the business and strategic direction of ourcompany.Mark A. DiBlasi has been a director of our company since July 2006. Mr. DiBlasi previously served as the vice chairman of our board of directors fromApril 2017 to November 2017, as our Chief Executive Officer from January 2006 until April 2017, and54as our President from January 2006 until January 2016. Prior to joining our company, Mr. DiBlasi served as Vice President - Southern Division for FedExGround, a division of FedEx Corporation, from July 2002 to January 2006. Mr. DiBlasi was responsible for all operational matters of the $1.2 billion-revenueSouthern Division, which represented one-fourth of FedEx Ground's total operations. From February 1995 to June 2002, Mr. DiBlasi served as the ManagingDirector of two different regions within the FedEx Ground operation network. From August 1979 to January 1995, Mr. DiBlasi held various positions inoperations, sales, and terminal management at Roadway Express before culminating as the Chicago Breakbulk Manager. Mr. DiBlasi was nominated to ourboard of directors because of his service as our former president and chief executive officer, his intimate knowledge and experience with all aspects of theoperations, opportunities, and challenges of our company, and his extensive operational expertise.Scott L. Dobak has served as a director of our company since June 2017. Mr. Dobak currently serves as the Chief Executive Officer of DicomTransportation Group, where he has been employed since January 2014. Prior to that, Mr. Dobak served in various leadership roles with our company fromJanuary 2007 to December 2013, most recently serving as our President - Less-than-Truckload and Transportation Management Solutions. Mr. Dobak wasnominated to our board of directors in connection with the Investment Agreement and because of his proven business acumen, his executive and operationalexperience in the transportation industry, and his familiarity with our business.Christopher L. Doerr has served as a director of our company since October 2010. Mr. Doerr is currently the sole member of Passage Partners, LLC, aprivate investment company. Mr. Doerr served as Co-Chief Executive Officer of Sterling Aviation Holdings, Inc., an aircraft management and chartercompany, from 2004 to 2014. From 2009 to 2011, Mr. Doerr served as Executive Chairman and Chief Executive Officer of Karl's Rental, Inc., a globalmanufacturer and supplier of portable event structures and related equipment. Prior to that, Mr. Doerr served as President and Co-Chief Executive Officer ofLeeson Electric Corporation from 1986 to 2001. Mr. Doerr currently serves on the board of directors and compensation committee of Regal BeloitCorporation (NYSE: RBC), a publicly traded manufacturer of commercial, industrial, and HVAC electric motors, electric generators and controls, andmechanical motion control products. Mr. Doerr was nominated to our board of directors because of his proven business acumen and executive andoperational experience, having served as the chief executive officer of several companies, and because of his experience on other public company boards ofdirectors.John G. Kennedy, III has served as a director of our company since December 2012. Mr. Kennedy served as Senior Advisor and Managing Director andHead of Capital Markets at Tudor, Pickering, Holt & Co. Securities, Inc., an integrated energy investment and merchant bank, from 2010-2017. Mr. Kennedycurrently serves as a Manager for TMX Finance LLC. Mr. Kennedy has more than 30 years of experience in investment banking. Mr. Kennedy served as aManaging Director of Deutsche Bank's investment banking group and served as a Managing Director of Donaldson, Lufkin & Jenrette until its sale to CreditSuisse First Boston. Mr. Kennedy has served or currently serves as trustee or director of various private companies, foundations, and not-for-profitinstitutions. Mr. Kennedy was nominated to our board of directors because of his proven business acumen and his extensive banking and capital marketsexperience.Ralph (“Cody”) W. Kittle III has served as a director of our company since June 2017. Mr. Kittle currently serves as an investment professional withElliott Management Corporation, where he has been employed since August 2014. Prior to that, Mr. Kittle served as an associate at Wind Point Partners, aprivate equity firm based in Chicago, and in Investment Banking at J.P. Morgan, where he focused on mergers and acquisitions in the industrial andconsumer industries. Mr. Kittle was nominated to our board of directors in connection with the Investment Agreement and because of his significant businessand investment experience across a wide range of industries, including in the transportation and logistics sectors, as well as experience with financial andoperational matters for businesses.Brian C. Murray has served as a director of our company since August 2015. Mr. Murray currently serves as the Chief Operating Officer and ChiefFinancial Officer of Ryan Companies US, Inc., a national firm providing real estate services including architecture and engineering, development,construction, capital markets and real estate management. Mr. Murray has served as Chief Financial Officer of Ryan Companies since November 2009 and asChief Operating Officer of Ryan Companies since May 2014. Prior to joining Ryan Companies, Mr. Murray held various positions with UnitedHealth Group,Inc., most recently serving as the Chief Financial Officer of its Specialized Care Services division. Mr. Murray was nominated to our board of directorsbecause of his expertise with accounting and audit matters, his deep understanding of financial reporting rules and regulations, and his experience withexecutive functions as a chief financial officer.Scott D. Rued has served as a director of our company since March 2005. Mr. Rued also served as the chairman of our board of directors from March2010 to November 2017 and March 2005 to July 2008. Mr. Rued has been a Managing Partner of HCI Equity Partners (referred to as HCI), a private equityfirm, since 2003. HCI is affiliated with investment funds that hold approximately 20.3% of our outstanding common stock. From 1989 to 2003, Mr. Ruedheld various executive positions at Hidden Creek Industries. Mr. Rued was nominated to our board of directors because of his experience with operationsmanagement and his expertise in corporate strategy, development, and mergers and acquisitions. Further, his demonstrated business acumen and knowledgeof our55company's industry allows him to contribute a broad perspective to discussions about our future activities and our place in the current competitive landscape.William S. Urkiel has served as a director of our company since May 2010. Mr. Urkiel currently serves on the board of directors and audit committee ofCrown Holdings, Inc. (NYSE: CCK), where he has been a director since December 2004. Mr. Urkiel served as a director of Suntron Corporation from August2006 until June 2013. From May 1999 until January 2005, Mr. Urkiel served as Senior Vice President and Chief Financial Officer of IKON Office Solutions.From February 1995 until April 1999, Mr. Urkiel served as the Corporate Controller and Chief Financial Officer at AMP Incorporated. Prior to 1999, Mr.Urkiel held various financial management positions at IBM Corporation. Mr. Urkiel was nominated to our board of directors because of his financial andaccounting expertise evidenced by his position as chief financial officer of multiple companies, his knowledge of corporate finance, accounting principles,and audit procedures, as well as his corporate governance experience.Judith A. Vijums has served as a director of our company since March 2005. Ms. Vijums has served as a Managing Director of HCI, a private equity firm,since 2003. HCI is affiliated with investment funds that hold approximately 20.3% of our outstanding common stock. From 1993 to 2003, Ms. Vijums heldvarious leadership positions at Hidden Creek Industries and actively participated in the management of several of Hidden Creek Industries' portfoliocompanies, including Commercial Vehicle Group, Inc., Dura Automotive Systems, Inc., Tower Automotive, Inc., and Automotive Industries Holdings, Inc.Ms. Vijums was nominated to our board of directors because of her expertise in the management and corporate development of multiple transportationcompanies, her knowledge of public and financial accounting matters, and her extensive experience in mergers and acquisitions.Michael P. Ward has served as a director of our company since February 2016. Mr. Ward currently serves as the Managing Director of Research atSeaport Global Securities, where he has been employed since 2016. Prior to that time, Mr. Ward served as a Managing Director at Sterne Agee CRT between2011 and 2016 and as the President of Ward Transportation Research, a small independent research boutique which specialized in the automotive and airlinesectors, from 2005 to 2011. Prior to that time, Mr. Ward worked for major Wall Street brokerage firms for 10 years, including Kidder, Peabody & Co.,PaineWebber, and Salomon Smith Barney. Mr. Ward was nominated to our board of directors because of his proven business acumen and his extensiveexperience as a sell-side analyst following the auto and auto parts sectors.Executive OfficersThe following table, together with the accompanying text, sets forth the names and certain other information as of January 15, 2018 for each of ourexecutive officers.Name Age Position(s) HeldCurtis W. Stoelting 57 Chief Executive Officer, Principal Financial Officer, PrincipalAccounting Officer, and DirectorMichael L. Gettle 58 President, Chief Operating Officer, and SecretaryTerence R. Rogers 58 Executive Vice President and Chief Financial OfficerScott B. Cousins 50 Chief Information OfficerRobert M. Milane 64 General Counsel and Chief Compliance OfficerFrank L. Hurst 43 President - Roadrunner FreightWilliam R. Goodgion 52 President - Ascent Global LogisticsPatrick K. McKay 49 Senior Vice President - Enterprise Fleet ServicesCraig Paulson 45 Senior Vice President - Human ResourcesCurtis W. Stoelting’s biography is set forth under the heading “Directors” above.Michael L. Gettle has served as our President, Chief Operating Officer, and Secretary since April 2017. Mr. Gettle previously served as our ExecutiveVice President from May 2016 until April 2017. Prior to joining our company, Mr. Gettle served as Amercias Chief Executive Officer of TNS, a division ofBritish multinational WPP plc from January 2013 to May 2016 and as Global Chief Financial Officer and Chief Operating Officer from October 2008 toDecember 2012. Prior to that time, Mr. Gettle served as the Executive Vice President and Chief Financial Officer of Millward Brown from 1992 to October2008. Prior to joining Millward Brown Mr. Gettle served in various positions with Arthur Andersen LLP for nine years.Terence R. Rogers has served as our Executive Vice President and Chief Financial Officer since May 2017. Prior to joining our company, Mr. Rogersserved as the Chief Financial Officer of The Heico Companies, LLC, the parent company for a diversified portfolio of over 35 businesses, from April 2012 toFebruary 2017. Prior to that time, Mr. Rogers served in various financial positions with Ryerson Inc., a leading distributor and value-added processor ofindustrial metals, from December 1994 to April 2012, most recently as Chief Financial Officer.56Scott B. Cousins has served as our Chief Information Officer since January 2017. Prior to joining our company, Mr. Cousins served as the ChiefInformation Officer of KeHE from 2007 to 2017 and NCH Marketing Services from 2005 to 2007. Prior to that time, Mr. Cousins served as Senior VicePresident of Information Technology at IndyMac Bank from 2004 to 2005. Prior to joining IndyMac Bank, Mr. Cousins was an Associate Partner atAccenture for 14 years.Robert M. Milane has served as our Chief Compliance Officer since April 2017 and as our General Counsel since November 2015. Mr. Milane has alsoserved as our Executive Vice President of Risk Management since November 2015. Mr Milane served as our Vice President of Risk Management from June2014 to October 2015. Prior to joining our company, Mr. Milane served as Managing Director for Risk Management at FedEx Ground from 1999 to 2010 andas Assistant Vice President of Risk Management for Canal Insurance from 2011 to 2013.Frank L. Hurst has served as our President - Roadrunner Freight since June of 2017. Mr. Hurst previously served as our Senior Vice President of Salesand Marketing of Roadrunner Freight from January 2017 to June 2017. Prior to joining our company, Mr. Hurst served as VP/GM for North AmericanCorporation, a distributor of packaging products, equipment, and service based in Glenview, IL, from January 2014 to December 2016. From August 2012 toDecember 2013, Mr. Hurst served as Executive Vice President for Vitran Express, where he was responsible for the turnaround, sale, and transition of the USLTL operation. Prior to joining Vitran Express, Mr. Hurst spent 16 years at FedEx Freight, where he was most recently served as VP - Divisional Operationsfrom July 2007 to August 2012.William R. Goodgion has served as our President - Ascent Global Logistics since April 2015. Prior to joining our company, Mr. Goodgion served asManaging Director - Operations (Central Region) for FedEx Trade Networks Transport & Brokerage, Inc., a subsidiary of FedEx Corporation, from December2014 through April 2015, and as Managing Director - Global Distribution & Surface Transportation for FedEx Trade Networks Transport & Brokerage, Inc.from March 2000 through April 2015.Patrick K. McKay has served as our Senior Vice President - Enterprise Fleet Services since February 2017 and was previously our President - TruckloadLogistics from July 2014 until February 2017 and our President - Truckload Services from March 2012 to July 2014. Prior to joining our company, Mr.McKay served as a General Manager - Operations for the van truckload division of Schneider National, Inc. from 2008 to 2012. Prior to that, Mr. McKay heldvarious leadership positions with FedEx Ground, Inc. from 1992 to 2008, most recently serving as a Division Managing Director.Craig Paulson has served as our Senior Vice President - Human Resources since October 2017. Prior to joining our company, Mr. Paulson served as theDirector of Human Resources of Generac Corporation since June 2016. Prior to that time, Mr. Paulson served as Vice President of Human Resources - PumpSolutions Group of Dover Corporation from January 2015 to September 2015 and as Vice President of Human Resources - Waukesha Bearings Corporation ofDover Corporation from August 2011 to January 2015. Prior to joining Dover Corporation, Mr. Paulson served in various human resources roles for 11 years.There are no family relationships among any of our directors or executive officers.Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of a registered class of our securitiesto file with the SEC initial reports of ownership and reports of changes in ownership. Directors, executive officers, and greater than 10% stockholders arerequired by SEC regulations to furnish us with copies of all Section 16(a) forms they file.Based solely upon our review of the copies of such forms that we received during the year ended December 31, 2016, and written representations that noother reports were required, we believe that each person who at any time during such year was a director, executive officer, or beneficial owner of more than10% of our common stock complied with all Section 16(a) filing requirements during the year ended December 31, 2016, except that (i) the Form 4 filed onMarch 4, 2016 by Mr. Armbruster was late; (ii) the Form 3 filed by Mr. Gettle on February 15, 2017 was late; and (iii) the Form 4 filed on March 4, 2016 byMr. McKay was late.Code of EthicsOur board of directors has adopted a code of business conduct and ethics and a code of ethics for our chief executive officer and senior financialofficers. We post on our website, at www.rrts.com, our code of business conduct and ethics, our code of ethics for our chief executive officer and seniorfinancial officers, and any amendments or waivers thereto. These documents are also available in print to any stockholder requesting a copy in writing fromour corporate secretary at 1431 Opus Place, Suite 530, Downers Grove, Illinois 60515.57Director Recommendation ProcessThere have been no material changes to the procedures by which security holders may recommend nominees to our board as described in our DefinitiveProxy Statement filed with the SEC on April 4, 2016.Audit CommitteeOur board of directors has a separately-designated standing audit committee. The current members of our audit committee are Messrs. Murray(chairman), Kennedy, and Urkiel, each of whom satisfies the independence requirements under the NYSE listing standards and Rule 10A-3(b)(1) of theSecurities Exchange Act of 1934, as amended (referred to as the Exchange Act). Our board of directors has determined that Mr. Murray is an “audit committeefinancial expert” within the meaning of SEC regulations. Each member of our audit committee can read and understand fundamental financial statements inaccordance with audit committee requirements. In arriving at this determination, our board of directors has examined each audit committee member'sprofessional experience and the nature of their employment in the corporate finance sector.ITEM 11.EXECUTIVE COMPENSATIONCompensation Discussion and AnalysisThis Compensation Discussion and Analysis provides an overview of our executive compensation program, together with a description of the materialfactors underlying the decisions that resulted in the compensation paid to our named executive officers.Named Executive Officers and Recent Changes in Executive OfficersOur executive officers whose 2016 actual compensation and 2017 compensation opportunities are discussed in this Compensation Discussion andAnalysis, who we refer to as our named executive officers, are:•Mark A. DiBlasi, our former Chief Executive Officer and President;•Peter R. Armbruster, our former Chief Financial Officer, Treasurer, and Secretary;•Curtis W. Stoelting, our current Chief Executive Officer;•Patrick K. McKay, our Senior Vice President - Enterprise Fleet Services and the former President of our Truckload Logistics business unit; and•Grant M. Crawford, the former President of our Roadrunner Freight business unit.In January 2016, Mr. Stoelting was appointed our President and Chief Operating Officer. In April 2017, Mr. Stoelting was appointed our ChiefExecutive Officer, Principal Financial Officer, and Principal Accounting Officer and Michael L. Gettle was appointed our President, Chief Operating Officer,and Secretary.In January 2017, Scott B. Cousins was appointed our Chief Information Officer. In April 2017, Robert M. Milane was appointed as our General Counseland Chief Compliance Officer. In May 2017, Terence R. Rogers was appointed our Executive Vice President and Chief Financial Officer. In June 2017, FrankL. Hurst was appointed the President of our Roadrunner Freight business unit. In October 2017, Craig Paulson was appointed our Senior Vice President ofHuman Resources.Executive SummaryFor 2016 and 2017, our compensation committee continued to:•use both our compensation peer group and certain composite compensation survey data as the primary tools for evaluating executivecompensation;•increase the base salaries of our executive officers in light of its assessment of competitive market conditions and to reflect theirresponsibilities as executives of a public company of our size;•tie a substantial portion of our annual incentive bonus plan for our executive officers to our consolidated earnings before interest and taxes(referred to as EBIT) to support collaboration within our senior management team and reward our executive officers for company-wideperformance;•use performance-based restricted stock unit awards (referred to as PRSUs) as an integral component of our long-term incentive program inorder to strengthen our pay-for-performance alignment and directly incorporate revenue and earnings before interest, tax, depreciation andamortization expense (referred to as EBITDA) objectives;•use a mix of short-term and long-term incentives to both motivate near-term performance and keep our executive officers focused on longer-term goals that drive stockholder value;58•provide that the mix of full value equity awards is weighted more toward PRSUs than time-based restricted stock unit awards (referred to asRSUs); and•calculate the number of shares of our common stock subject to PRSUs and RSUs by using a 20-day trailing average closing sale price, therebymitigating the effects of our stock price volatility.Compensation Philosophy and ObjectivesOur executive compensation philosophy is to structure our pay at levels that enable us to attract, motivate, and retain highly qualified executives andkey employees and reward the creation of stockholder value. We seek to provide executive compensation packages that are competitive with comparablecompanies and reward the achievement of short-term and long-term performance goals.Like most companies, we use a combination of fixed and variable compensation programs to reward and incentivize strong performance, as well as toalign the interests of our executives with those of our stockholders. Our compensation philosophy is to target total compensation at approximately the 50thpercentile of comparable companies, with higher comparable levels of pay based on higher level of company and individual performance. However, ourcompensation committee’s decisions on target compensation for specific individuals have also been influenced by a variety of additional factors, includingbut not limited to market conditions, our company's recent financial performance and operational challenges, and individual performance, including scope ofduties within our organizational structure, institutional knowledge, position readiness, internal pay equity, and/or level of difficulty in recruiting areplacement executive.Our pay mix consists primarily of base salary, annual performance-based cash incentives, time-based equity incentives, and performance-based equityincentives. We have no guaranteed bonuses, no pension plans or other executive retirement plans except our 401(k) plan available to all of our employees,no significant tax gross-up arrangements, and no material executive perquisites such as company-paid personal travel, financial planning assistance, or carallowances. Total compensation levels reflect corporate positions, responsibilities, and achievement of goals. Accordingly, compensation levels may varysignificantly from year to year and among our various executive officers.We believe that we have closely linked executive officer pay to performance primarily through two components of our compensation system. In 2015,we added a performance-based element to our long-term equity incentive program through the award of PRSUs. We also continue to use an annual cashincentive program that is based on our company-wide EBIT and, for 2017, before all non-recurring charges approved by our compensation committee.An important principle driving our executive compensation programs is our belief that it benefits our stockholders for the target total directcompensation opportunities of our executive officers to be tied to our company’s current and long-term performance. As a result, at-risk pay is expected tocomprise an increasingly significant portion of our executive compensation, particularly for our most senior executive officers.Role of the Compensation CommitteeOur compensation committee is responsible for, among other things:•the review and approval of our compensation philosophy;•the review of all executive compensation plans and structures, including that of our executive officers and other members of management;•the approval (or, for certain determinations relating to our chief executive officer, recommendation to our board of directors) of individualcompensation for our executive officers and other members of management;•the approval of annual and long-term incentive performance metrics, as well as payouts thereunder; and•the review of other executive benefit plans, including perquisites.Our compensation committee also analyzes the reasonableness of our overall executive compensation packages. Our compensation committee has aformal written charter that delineates its responsibilities, a full copy of which is posted on our website at www.rrts.com.While our chief executive officer and other executive officers may attend meetings of our compensation committee from time to time, the ultimatedecisions regarding executive officer compensation are made solely by the members of our compensation committee or, for certain determinations relating toour chief executive officer, our board of directors. These decisions are based not only on our compensation committee’s deliberations, but also from inputrequested from outside advisors, including in some years our compensation committee’s outside compensation consultant, with respect to, among otherthings, market data analyses.59The final decisions relating to our chief executive officer’s compensation have historically been based on recommendations of our compensation committeeand included discussions with and approval by all of our non-employee directors without the presence of management. Our compensation committeetypically discusses proposals for our chief executive officer’s compensation with him but the final decisions regarding his compensation are made when he isnot present. Decisions regarding the compensation of our other executive officers have historically been based on recommendations of our compensationcommittee, after considering recommendations from our chief executive officer (or, in the case of compensation determinations made in February 2017, ourthen president and chief operating officer).Compensation-Setting ProcessOverall compensation levels for our executive officers are generally determined based on our compensation committee's evaluation of the followingfactors:•the individual’s duties and responsibilities within our company;•the individual’s experience and expertise;•compensation levels for similar positions in our industry;•performance of the individual and our company as a whole; and•the levels of compensation necessary to recruit new executive officers.Each year our compensation committee, after consultation with our senior management, establishes performance targets for our annual incentive bonus planand our PRSU Program that requires the achievement of specified target financial results. Each year our compensation committee also determinesperformance-based compensation by assessing prior year actual financial results against these pre-established financial targets. In addition, our compensationcommittee's decisions on target compensation for specific individuals have also been and will continue to be influenced by a variety of additional factorssuch as internal pay equity, the executive officer's ability to impact strategic goals, the length of service with our company, and the level of difficulty inrecruiting a replacement executive. Ultimately, the amount of compensation awarded to our executives is determined based on our performance and what ourcompensation committee believes is in the best interest of our stockholders.Role of Compensation ConsultantOur compensation committee typically engages the services of an outside compensation consultant to provide independent analysis and advice inconnection with making executive compensation decisions.In mid-2015, our compensation committee engaged Compensia, Inc. (referred to as Compensia) to provide the committee with an executivecompensation assessment for 2016. The chairman of our compensation committee, in consultation with other committee members, defined the scope ofCompensia’s 2016 engagement and related responsibilities. These responsibilities included, among other things, advising on issues of executivecompensation and equity compensation structure, assisting with the identification of relevant peer companies, and assisting in the preparation ofcompensation disclosure for inclusion in our SEC filings.Our compensation committee determined not to engage Compensia or any other compensation consultant to assist with its 2017 executivecompensation analyses and determinations. This decision was primarily based on the company’s poor financial performance in late 2016 and the committee’sbelief that it would not be appropriate to adjust the compensation of our senior executive officers in light of those results.Subsequently, in mid-2017, our compensation committee engaged Compensia to provide the committee with executive and director compensationassessments for 2018.Compensia did not perform any consulting or advisory services for our management team in 2016 or 2017 and has not been retained to perform anyconsulting or advisory services for our management team in 2018.Compensia provided analyses and recommendations that informed our compensation committee’s decisions in 2016, but it did not decide or approveany compensation decisions. Compensia reviewed the criteria used to identify peer and other comparable companies for executive officer and performancecomparisons, provided a detailed market assessment of our executive compensation program relative to the competitive market (based on our peer group andcompensation survey data), and provided updates on market trends and the regulatory environment for executive compensation. In addition, Compensiafurnished our compensation committee with information relating to performance-based equity practices, including a summary of the relevant practices of ourcompensation peer group and a summary of the potential performance-based program designs. Compensia’s only contact with management was in thegathering of historic compensation information.60Our compensation committee considered the independence of Compensia in light of the listing standards of the NYSE on compensation committeeindependence and the rules of the SEC. Our compensation committee concluded that the work performed by Compensia for 2016 did not raise any conflict ofinterest.Role of Management in Setting CompensationOur senior human resources executive and members of our finance team have historically worked with our chief executive officer to•formulate recommended changes to our executive compensation plans and arrangements;•formulate recommendations for financial metrics and related target levels to be achieved under those plans and arrangements;•prepare analyses of financial data and other briefing materials to assist our compensation;•committee in making its decisions; and•ultimately, to implement the decisions of our compensation committee.Historically, our chief executive officer has been actively engaged in setting compensation for our other executive officers through a variety of means,including recommending for compensation committee approval the financial goals and the annual variable pay amounts for such other executive officers. For2017, Mr. Stoelting, our then president and chief operating officer, had primary responsibility for these activities. Our chief executive officer and presidentare generally subject to the same financial performance metrics and related target levels as our other executive officers.Compensation StructureAlthough the final structure may vary from year to year and individual to individual, our compensation committee utilizes three main components forexecutive officer compensation:•Base Salary - fixed pay that takes into account an individual’s duties and responsibilities, experience, expertise, and individual potential andperformance.•Annual Incentive Bonus - variable cash compensation that takes into account our financial performance during a particular year.•Long-Term Incentives - stock-based awards consisting of PRSUs, RSUs and, in certain situations, time-based stock options, all of whichreflect the performance of our common stock, encourage retention, and align executive officer and stockholder interests.Pay MixIn determining the allocation among base salary, annual incentive bonus opportunity, and long-term incentive compensation, our compensationcommittee considers the following factors:•our short-term and long-term business objectives;•competitive trends within our industry; and•the importance of creating a performance-based environment that ties a significant portion of each executive officer’s compensation to theachievement of performance targets and corporate objectives.When considering a proposed compensation package for an executive officer, our compensation committee considers the compensation package as awhole, including each element of total compensation. For example, before determining officer compensation for 2017, our compensation committeereviewed, for each executive officer, each element of compensation paid in 2016, including base salary, the 2016 annual incentive bonus earned, and thevalue of equity awards made in prior years. Our compensation committee and management use this information to assess the overall effect and long-termimplications of compensation decisions, rather than viewing individual decisions in isolation. We have no pre-established policy for allocating betweeneither cash and non-cash or short-term or long-term compensation.Our compensation committee believes that the particular elements of compensation identified above produce a well-balanced mix of cash versus stock-based compensation, retention value, and “at-risk” compensation that collectively provide each executive officer with both short-term and long-termperformance incentives. Base salary provides the executive officer with a measure of security as to the minimum level of compensation he or she will receivewhile the annual and long-term incentive compensation61elements motivate the executive officer to focus on the financial and operational metrics that will produce a high level of company performance over boththe annual and long term. Our compensation committee believes that this approach should lead to increases in stockholder value, provide an appropriatereward for our executive officers, and reduce the risk of loss of executive officers to competitors.While each of the elements of our compensation program is intended to motivate and encourage all executive officers to drive performance and achievesuperior results for our stockholders, there is a different emphasis on the three primary elements based on an executive officer’s position and ability to impactour financial results. Historically, the percentage of performance-based pay, or “at-risk” pay, has increased with job responsibility. This is intended to offer anopportunity for increased compensation in the event of successful performance, matched with the prospect of reduced compensation when performance fallsshort of established financial goals.For 2017, compensation for our named executive officers (other than our former executive officers Messrs. DiBlasi and Armbruster, who were terminatedfrom their former positions as executive officers effective April 30, 2017 and March 29, 2017, respectively) has been structured so that more than half thecompensation consists of equity awards and an annual incentive bonus opportunity that is performance-based and dependent on our 2017 financial results,with the other portion comprising base salary.While the annual incentive bonus program for our executive officers is based primarily on our company-wide performance, such compensation programis also designed to provide payments to certain executive officers who lead our business units based on a combination of consolidated company and businessunit results. For example, a portion of the 2017 annual cash incentive opportunity for the president of our global solutions business unit is based on theperformance of that business unit, for which he is primarily responsible. We believe this blended program design motivates business units to work together toachieve greater returns for our stockholders. In any one year, because we are comprised of different business units, executive officers leading high-performingbusiness units may receive significantly more compensation than executive officers leading business units that do not perform well.Compensation Peer GroupFor 2016, our compensation committee reviewed the compensation of our executive officers and compared it with a competitive market assessment thatused a peer group of companies and broader, composite market survey data provided by Compensia. This process started with the selection of an appropriategroup of peer companies for comparison purposes. We use peer group information as a point of reference, but do not specifically benchmark or target ourcompensation levels against our peer group.For its 2016 executive compensation assessment, Compensia reviewed our 2015 compensation peer group and updated it to reflect our revenue size,market capitalization, projected growth, and changes in the peer companies. Under this approach, the peer group companies were selected using thefollowing selection criteria: (1) companies in the transportation and transportation logistics industry; (2) companies with revenue between approximately50% and 200% of our last four quarters revenue at the time of selection, which resulted in peer companies with revenues between approximately $1.0 billionand $4.0 billion, based upon the last four quarters of reported revenue at the time of selection; and (3) companies with a market capitalization betweenapproximately 25% and 400% of our market capitalization at the time of selection, which resulted in peer companies with market capitalization betweenapproximately $225 million and $3.5 billion at the time of selection.The 16 companies included in the compensation peer group approved by our compensation committee for our 2016 executive compensation programwere as follows:ž ArcBest Corporation ž Atlas Air Worldwide Holdings, Inc. ž Celadon Group, Inc.ž Echo Global Logistics, Inc. ž Forward Air Corporation ž Heartland Express, Inc.ž Hub Group, Inc. ž Knight Transportation, Inc. ž Landstar System, Inc.ž Matson, Inc. ž Park-Ohio Holdings, Corp. ž Saia, Inc.ž Universal Truckload Services, Inc. ž Werner Enterprises, Inc. ž Wesco Aircraft Holdings, Inc.ž XPO Logistics, Inc. This compensation peer group was used for purposes of analyzing and comparing compensation levels and programs only, and not for any otherpurposes. This compensation peer group does not represent an established peer group that our management uses for financial or other measurement purposes.Compensia also provided our compensation committee with broader market compensation data for our executive officers. The composite survey dataconsisted of a blend between Mercer’s Benchmark Database Executive Compensation Survey and Towers Watson’s General Industry Top ManagementCompensation Survey.62The proxy statements of the companies in our compensation peer group provide detailed pay data for their named executive officers only (typicallytheir five most highly compensated executive officers). Survey data provides compensation information from a broader group of companies of similar size(based on revenues and market capitalization) to ours across a variety of industries (surveys covering multiple industries were used because there wasinsufficient data in the transportation/logistics industry subset).As discussed above, our compensation committee did not engage a compensation consultant to assist with its 2017 executive compensation decisions,and did not use peer group or other benchmarking information.Compensation-Related Risk ConsiderationsOur compensation committee believes that our annual incentive bonus and long-term incentive compensation programs provide incentives to createlong-term stockholder value. Several elements of these programs are also designed to discourage behavior that leads to inappropriate or excessive risk-taking:•Our compensation committee believes that EBIT, the financial metric used to determine the amount of each executive officer’s annualincentive bonus, is a measure that drives long-term stockholder value. Moreover, our compensation committee attempts to set performanceranges for this metric that encourage success without encouraging excessive risk taking to achieve short-term results. In addition, the overallannual incentive bonus for each of our executive officers never exceeds 150% of their base salaries, no matter how much our financialperformance exceeds the performance ranges established at the beginning of the year.•Our 2017 annual incentive plan continues to provide that our executive officers will receive payments if our company achieves 80% of thetarget EBIT. Our compensation committee believes that this relatively low threshold discourages our executive officers from taking excessiverisk to achieve performance at a higher percentage of the pre-established target level.•Our compensation committee believes that EBITDA, the financial metric used in our 2016 and 2017 PRSU program, is also a measure thatdrives long-term stockholder value. Moreover, our compensation committee attempts to set performance ranges for this metric that encouragesuccess without encouraging excessive risk taking to achieve short-term results.•Our PRSUs and RSUs are earned and vest, respectively, over four-year periods, encouraging our executive officers to look to long-termappreciation in equity values.•Our 2016 time-based stock option granted to Mr. Stoelting vests over a five-year period, encouraging him to look to long-term appreciationin equity values.Individual Executive Officer CompensationBase Salary. Base salaries for our newly hired or appointed executive officers are generally set based on the position within our company, competitivesalary levels for comparable positions at other companies, and the executive’s experience. Base salaries of our executive officers are reviewed each year byour compensation committee, and adjustments to base salaries are based on factors such as the overall performance of our company, new roles andresponsibilities assumed by the executive, the performance of the executive officer’s area of responsibility, the executive officer’s impact on strategic goals,the length of service with our company, and revisions to our compensation philosophy. However, there is no specific weighting applied to any one factor insetting or adjusting base salaries, and the process ultimately relies on the subjective exercise of our compensation committee’s judgment.Although salaries have historically been targeted at the 25th to 50th percentile of our peer group and relevant compensation survey data, ourcompensation committee has also taken into account historical compensation, internal parity with other executives, potential as a key contributor, andspecial recruiting situations.Base Salaries for 2016. Base salary deliberations for 2016 were conducted from November 2015 to February 2016. Mr. DiBlasi, our then chiefexecutive officer, met with Mr. Rued, the chairman of our board of directors, regarding the compensation for each of our executive officers (other thanhimself). Following these discussions, Mr. Rued met with our compensation committee to present recommendations for each of our executive officers,including Mr. DiBlasi. In addition to these recommendations, our compensation committee reviewed peer group data, the composite market survey dataprovided by Compensia, individual performance evaluations for each executive officer, and the other factors described in “Compensation-Setting Process”above.For 2016, our compensation committee approved an increase in the base salaries of our named executive officers other than Mr. Stoelting in order tomaintain their base salaries between the 25th-to-50th percentiles for the competitive market. The base salary increases became effective on January 31, 2016.A summary of the base salary increases made for 2016 is outlined below:63 Base SalaryName 2015 2016 Y/Y ChangeMark A. DiBlasi $527,000 $538,000 2.1%Peter R. Armbruster $325,000 $332,000 2.2%Patrick K. McKay $278,000 $319,000 14.7%Grant M. Crawford $312,000 $319,000 2.2%In January 2016, Mr. Stoelting was hired and appointed as our president and chief operating officer. Messrs. Rued and DiBlasi, as well as Ms. JudyVijums, assisted the compensation committee in the negotiation of Mr. Stoelting’s employment agreement, pursuant to which we agreed to pay Mr. Stoeltinga base salary of $450,000.Base Salaries for 2017. Base salary deliberations for 2017 were conducted from November 2016 through February 2017. Mr. Stoelting, who was thenserving as our president and chief operating officer, met with Mr. DiBlasi (our then chief executive officer), Mr. Staley (our then lead independent director),and Mr. Rued (the then chairman of our board of directors) regarding the compensation of our executive officers. Following these discussions, Mr. Staley metwith the other members of our compensation committee to discuss the base salary recommendations of Messrs. Stoelting, Staley, and Rued.For 2017, our compensation committee considered potential future changes in our senior management team as well as the other factors discussed in“Compensation-Setting Process” above and, in connection therewith, determined to maintain the base salaries for each of Messrs. DiBlasi, Armbruster, andCrawford at their current levels, decreased the base salary for Mr. McKay, and increased the base salary for Mr. Stoelting. The 2017 changes in base salary forour executive officers became effective on May 1, 2017. A summary of the base salary changes made for 2017 is outlined below for each of our namedexecutive officers: Base SalaryName 2016 2017 Y/Y ChangeMark A. DiBlasi $538,000 $538,000 — %Peter R. Armbruster $332,000 $332,000 — %Curtis W. Stoelting $450,000 $510,000(1) 13.3 %Patrick K. McKay $319,000 $260,000 (18.5)%Grant M. Crawford $319,000 $319,000 — %(1) Increased to $571,000 in connection with Mr. Stoelting's April 30, 2017 appointment as our chief executive officer.Annual Incentive Bonus Plan. In addition to base salary, our compensation committee believes that annual performance-based cash bonuses play animportant role in providing incentives to our executive officers to achieve near-term performance goals.Our compensation committee believes that EBIT is a good indicator of our financial performance relative to competitors given the market in which wecompete, and is also a metric that management can easily track and communicate to employees throughout the performance period. Each executive officerhas a target annual incentive bonus opportunity, expressed as a percentage of base salary, with the ability to earn above or below that target based on ourcompany's actual performance. Payments pursuant to our cash incentive plan are intended to qualify as “Performance Awards” under our 2010 IncentiveCompensation Plan (referred to as the 2010 Plan) and thereby constitute performance-based compensation not subject to the deductibility limitations ofSection 162(m) of the Code.When determining the EBIT target for our annual incentive bonus plan, our chief executive officer typically submits to our compensation committeethe initial recommendation for the target based upon our company's annual board-approved budget, as well as the target annual incentive bonus opportunityfor each executive officer, and these recommendations are reviewed and discussed by our compensation committee. The major factors used in setting one ormore target levels for a particular year are the results for the most recently-completed year and the budget for the current year, as well as general economic andmarket conditions. Our compensation committee sets the final EBIT target levels during our first quarter, typically at levels our compensation committeebelieves are challenging, but reasonable, for our company to achieve.After our financial statements are available each year, our compensation committee determines the level of achievement for the specified EBIT target(after making any appropriate adjustments to such goal for the effects of corporate and economic factors that were not anticipated in establishing theperformance measure) and awards credit for the achievement of a percentage of the target. Final determinations as to annual incentive bonus awards are thenbased on that percentage. If earned, actual bonuses are generally paid to our executive officers early in the second quarter of the subsequent fiscal year.642016 Annual Incentive Bonus Plan. In February 2016, our compensation committee determined that the 2016 annual incentive bonus plan for ourexecutive officers would be based on a company-wide EBIT target that was consistent with our board-approved 2016 budget. In addition, 35% of the 2016annual incentive bonus opportunities for Messrs. McKay and Crawford was based on EBIT targets for our truckload logistics and less-than-truckload businessunits, respectively, that were consistent with our board-approved 2016 budget. For 2016, our compensation committee established a target annual incentivebonus opportunity for each executive officer, expressed as a percentage of base salary, with the ability to earn above or below that target based on ourcompany's actual performance.Our compensation committee maintained the maximum annual incentive bonus awards at 150% of base salary for Mr. DiBlasi, at 110% of base salaryfor Mr. Armbruster, and at 90% of base salary for Mr. McKay. The maximum annual incentive bonus award for Mr. Stoelting was set at 150% of base salaryfor 2016. The maximum annual incentive bonus award for Mr. Crawford was 90% of base salary for 2016.The following table sets forth the 2016 base salaries and the 2016 annual incentive bonus plan levels for each of our named executive officers: Annual Incentive Bonus Plan Levels as % of Base SalaryName 2016 Base Salary 80% ofTarget(1) 90% ofTarget 100% ofTarget 150% ofTarget(2)Mark A. DiBlasi $538,000 30% 55% 80% 150%Peter R. Armbruster $332,000 25% 42.5% 60% 110%Curtis W. Stoelting $450,000 30% 55% 80% 150%Patrick K. McKay(3) $319,000 12.5% 25% 40% 90%Grant M. Crawford(4) $319,000 12.5% 25% 40% 90%(1)Represents the annual incentive bonus award (expressed as a percentage of 2016 base salary) that the named executive officer was eligible to receive if we achieved 80% of thecompany-wide EBIT target. No bonus awards were payable if our actual company-wide EBIT was less than 80% of the target level.(2) Represents the maximum potential bonus award.(3) 65% of Mr. McKay's 2016 annual incentive bonus opportunity was based on achieving at least 80% of the company-wide EBIT target using 65% of the percentages set forth in thetable above. 35% of Mr. McKay's 2016 annual incentive bonus opportunity was based on achieving at least 80% of the EBIT target for our truckload logistics business unit using35% of the percentages set forth in the table above.(4)65% of Mr. Crawford's 2016 annual incentive bonus opportunity was based on achieving at least 80% of the company-wide EBIT target using 65% of the percentages set forth inthe table above. 35% of Mr. Crawford's 2016 annual incentive bonus opportunity was based on achieving at least 80% of the EBIT target for our less-than-truckload business unitusing 35% of the percentages set forth in the table above.For 2016, our company-wide EBIT was less than 80% of the pre-established target. Similarly, the 2016 EBIT of each of our truckload logistics and less-than-truckload business units was also below 80% of the pre-established target levels. Accordingly, no annual incentive bonus awards were made to ournamed executive officers for 2016.2017 Annual Incentive Bonus Plan. Our compensation committee determined that the 2017 annual incentive bonus plan for our executive officers willbe based on a company-wide EBIT target that is consistent with our board-approved 2017 budget. In addition, 35% of the 2017 annual incentive bonusopportunities for Mr. Crawford will be based on an EBIT target for our Roadrunner Freight business unit that is consistent with our board-approved 2017budget. For 2017, our compensation committee established a target annual incentive bonus opportunity for each executive officer, expressed as a percentageof base salary, with the ability to earn above or below that target based on our company's actual performance. Mr. DiBlasi did not participate in our 2017annual incentive bonus plan. The actual annual incentive bonus awards for our 2017 performance will be determined by our compensation committee andpaid in early 2018, and may be above or below target bonus levels.65The following table lists the 2017 base salaries and the 2017 annual incentive bonus plan levels for each of our named executive officers (other thanMr. DiBlasi): Annual Incentive Bonus Plan Levels as % of Base SalaryName 2017 Base Salary 80% ofTarget(1) 90% ofTarget 100% ofTarget 150% ofTarget(2)Curtis W. Stoelting $571,000 30% 60% 90% 150%Peter R. Armbruster $332,000 25% 42.5% 60% 110%Patrick K. McKay $260,000 12.5% 25% 40% 90%Grant M. Crawford(3) $319,000 12.5% 25% 40% 90%(1)Represents the annual incentive bonus award (expressed as a percentage of 2017 base salary) that the named executive officer is eligible to receive if we achieve 80% of thecompany-wide EBIT target. No bonus awards will be payable if our actual EBIT is less than 80% of the target level.(2) Represents the maximum potential bonus award.(3) 65% of Mr. Crawford's 2017 annual incentive bonus opportunity will be based on achieving at least 80% of the company-wide EBIT target using 65% of the percentages set forthin the table above. 35% of Mr. Crawford's 2017 annual incentive bonus opportunity was based on achieving at least 80% of the EBIT target for our Roadrunner Freight businessunit using 35% of the percentages set forth in the table above. In June 2017, Mr. Crawford's employment as the president of our Roadrunner Freight business unit was terminated.Long-Term Incentives. We believe that providing long-term incentive compensation opportunities in the form of equity awards as a significant portionof our executive officers' total compensation packages aligns their interests with the interests of our stockholders and with our long-term success. Bycompensating our executive officers with our equity, they receive a stake in our company's financial future, and the gains realized in the long term depend ontheir ability to drive our financial performance. Equity awards are also a useful vehicle for attracting and retaining executive talent in a competitive market.Our compensation committee develops its equity award decisions based on its judgment as to whether the total compensation packages provided to ourexecutive officers, including prior equity awards and the level of outstanding vested and unvested equity awards then held by each executive officer, aresufficient to retain, motivate, and adequately reward them. In addition, our compensation committee considers the accounting costs that will be reflected inour financial statements when establishing the form of equity to be granted and the size of the awards as well as the potential dilution associated with theequity awards.We grant equity awards under our 2010 Plan, which was adopted by our board of directors and approved by our stockholders and permits the grant ofstock options, stock appreciation rights, restricted shares, RSUs, performance shares, and other stock-based awards to our officers, directors, employees, andconsultants.Our compensation committee may adjust the mix of equity award types or approve different awards as part of future long-term incentive awards. Awardsmade in connection with a new, extended, or expanded employment relationship may involve a different mix of PRSUs, time-based RSUs, stock options, orother equity-related awards depending on our compensation committee’s assessment of the total compensation package being offered.Stock Options. Stock options represent the right to purchase shares of our common stock at a specified exercise price for a specified period of time. Thestock options vest and become exercisable in installments as determined by our compensation committee. Although our long-term equity incentives have inrecent years consisted primarily of PRSUs and RSUs, we continue to grant stock options to certain of our executive officers on a selective basis. As describedmore fully below, in January 2016 our compensation committee granted time-based stock options to Messrs. Stoelting and DiBlasi and in 2017 ourcompensation committee granted time-based stock options to Messrs. Stoelting, Gettle, and Cousins.Restricted Stock Unit Awards. RSUs represent the right to receive one share of our common stock for each RSU upon the settlement date, which is thedate on which certain conditions, such as continued employment with us for a pre-established period of time, are satisfied. RSU awards reflect both increasesand decreases in the market prices of our common stock from the grant-date market prices and thus tie compensation more closely to changes in stockholdervalue at all levels compared to stock options, whose intrinsic value changes only when the market price of our common stock increases above the exerciseprice. RSUs also have retention value even during periods in which the market price of our common stock does not appreciate, which supports continuity inthe senior management team. In addition, RSUs allow our compensation committee to deliver equivalent value with use of fewer authorized shares than stockoption awards.Shares of our stock are issued to RSU holders as the awards vest. The vesting schedule for RSUs granted to our executive officers and other employeesprovides that each award vests in four equal annual installments. Recipients of RSU awards generally must remain employed by us on a continuous basisthrough the end of the relevant vesting period in order to receive any shares of our common stock covered by that award, except that recipients may beentitled to accelerated delivery of a portion of their unvested66RSUs in the case of the recipient's death or disability, or upon a change in control of our company. In 2016, our compensation committee granted time-basedRSUs as a portion of the annual equity awards to eligible employees, including our executive officers other than Messrs. DiBlasi and Stoelting. In 2017, ourcompensation committee granted time-based RSUs to all of our then executive officers except Mr. DiBlasi.Performance RSU Awards. In 2015, our compensation committee added a performance-based element to our long-term incentive compensationprogram (referred to as the PRSU Program) in order to strengthen the alignment of pay-for-performance. Under the PRSU Program, PRSUs were granted toeligible employees, including our executive officers, in 2016 (other than to Messrs. DiBlasi and Stoelting and in 2017 (other than to Mr. DiBlasi). PRSUawards are intended to reward recipients to the extent we achieve specific pre-established financial performance goals.Under the PRSU Program, a target number of PRSUs are awarded at the beginning of each one-year performance period. Under the PRSU Program,financial performance goals are set at the beginning of each year, and performance is reviewed at the end of that year. The number of PRSUs ultimately earnedwill range from zero to 1.5 times the target number depending on our performance during the period. Each PRSU is equal in value to one share of ourcommon stock, and the PRSUs earned vest in four equal installments of 25% on the date our compensation committee certifies the performance results and onMarch 1 of each of the next three succeeding years. Recipients of PRSU awards generally must remain employed by us on a continuous basis through the endof the relevant vesting period in order to receive any shares of our common stock covered by the PRSU award, except that recipients may be entitled toaccelerated delivery of a portion of unvested PRSUs in the case of the recipient’s death or disability, or upon a change in control.2016 PRSU Program.Under our PRSU Program for 2016, our compensation committee selected company-wide EBITDA as the financial performancemetric. The calculation of EBITDA excluded non-cash compensation expense attributable to the PRSU Program, acquisition transaction expenses, and theresults of any acquisitions made during the year. The percentage to be applied to each recipient’s target number of PRSUs ranged from zero to 150%, basedupon the level of EBITDA performance achieved:•If we did not achieve a minimum level of approximately 91.8% of the EBITDA performance target of $152.5 million for the year, the numberof PRSUs earned would be zero.•If we achieved this minimum level of the EBITDA performance target for the year, a percentage (ranging on a sliding scale from 50% to150%) would be applied to the recipient’s target number of PRSUs to determine the number of PRSUs earned.•If we achieved a maximum level of $165 million (approximately 108.2%) the EBITDA performance target of $152.5 million) or more for theyear, the number of PRSUs earned would be 150% of the recipient’s target number of PRSUs.Our adjusted EBITDA for the year ended December 31, 2016 did not meet the minimum performance level under the PRSU Program for 2016. Accordingly,none of the PRSUs awarded under the PRSU Program for 2016 were earned.2017 PRSU Program. Under our PRSU Program for 2017, our compensation committee once again selected company-wide EBITDA as the financialperformance metric. The calculation of EBITDA will exclude non-cash compensation expense attributable to the PRSU Program, acquisition transactionexpenses, the results of any acquisitions that we make during the year, and all non-recurring changes approved by our compensation committee. Thepercentage to be applied to each recipient’s target number of PRSUs ranges from zero to 150%, based upon the extent to which the actual EBITDA followingperformance is achieved:Percentage of Target EBITDA Achieved Percentage of PRSUs EarnedLess Than 89.5% —%89.5% 50.0%94.7% 75.0%100.0% 100.0%104.1% 125.0%108.3% or more 150.0%As soon as practicable following the end of 2017, our compensation committee will determine and certify whether the minimum financial performance levelhas been achieved, the level of attainment of the performance goal, and the number of PRSUs earned by each recipient of a PRSU award.2016 Equity Awards. In February 2016, our compensation committee determined that the equity awards to be granted to our executive officers (otherthan Messrs. DiBlasi and Stoelting) would consist of a combination of time-based RSUs and PRSUs. In67determining the time-based RSUs and target amounts of PRSUs, our compensation committee considered peer group and survey data, potential dilution,share “burn” rate relative to our company's outstanding stock, and compensation expense attributable to the awards. The following table sets forth the time-based RSUs and target number of PRSUs awarded to our named executive officers for 2016:Name Dollar Value of RSUs Number of RSUs(1) Target Dollar Value ofPRSUs Target Number ofPRSUs(1)Peter R. Armbruster $75,000 9,644 $150,000 19,288Patrick K. McKay $75,000 9,644 $150,000 19,288Grant M. Crawford $50,000 6,429 $100,000 12,858(1)The number of RSUs and the target number of PRSUs awarded were calculated using a dollar value per share of $7.78, which was the 20-day trailing average closing sales pricefor our common stock as of February 4, 2016, the date our compensation committee was presented with the 2016 awards. Due to scheduling conflicts, the compensationcommittee did not grant the awards until February 12, 2016. On February 12, 2016, the closing sales price for our common stock was $11.14.Our 2016 financial performance did not exceed the minimum financial performance level established under our 2016 PRSU Program and, accordingly,none of the PRSUs awarded under the PRSU Program for 2016 were earned.In January 2016, in connection with our hiring and appointment of Mr. Stoelting as our president and chief operating officer, our compensationcommittee determined to grant stock options to Messrs. Stoelting and DiBlasi to provide appropriate long-term incentives. As a result of these stock optiongrants, the committee determined not to grant Messrs. Stoelting and DiBlasi any PRSUs or time-based RSUs in 2016.Our compensation committee granted Mr. Stoelting (a) a seven-year non-qualified stock option to purchase 150,000 shares of our common stock withan exercise price equal to $7.11 per share (the fair market value of our common stock on the grant date), subject to vesting over five years, with 20% vestingon each annual anniversary of the grant date, and (b) a seven-year non-qualified stock option to purchase 150,000 shares of our common stock with anexercise price equal to $14.22 per share (two times the fair market value of our common stock on the grant date), subject to vesting over five years, with 20%vesting on each annual anniversary of the grant date.Our compensation committee granted Mr. DiBlasi (a) a four-year non-qualified stock option to purchase 125,000 shares of our common stock with anexercise price equal to $7.11 per share (the fair market value of our common stock on the grant date), subject to vesting over three years, with one-thirdvesting on each annual anniversary of the grant date, and (b) a four-year non-qualified stock option to purchase 125,000 shares of our common stock with anexercise price equal to $14.22 per share (two times the fair market value of our common stock on the grant date), subject to vesting over three years, with one-third vesting on each annual anniversary of the grant date.2017 Equity Awards. For 2017, our compensation committee determined that the equity awards to be granted to our executive officers would consist ofa combination of time-based RSUs and PRSUs, as well as a time-based stock option for Messrs. Stoelting, Gettle, and Cousins. The following table sets forththe time-based RSUs and target number of PRSUs granted to our named executive officers (other than Mr. DiBlasi, who did not receive any equity awards in2017) on February 28, 2017:Name Dollar Value of RSUs Number of RSUs(1) Target Dollar Valueof PRSUs Target Number ofPRSUs(1)Curtis W. Stoelting $166,667 23,070 $333,333 46,139Peter R. Armbruster $75,000 10,381 $150,000 20,763Patrick K. McKay $75,000 10,381 $150,000 20,763Grant M. Crawford $50,000 6,921 $100,000 13,842(1) The number of RSUs and the target number of PRSUs awarded were calculated using a dollar value per share of $7.22, which was the 20-day trailing average closing sales price forour common stock as of February 28, 2017, the date our compensation committee approved the 2017 awards. On February 28, 2017, the closing price for our common stock was$7.54.For 2017, our compensation committee also granted a stock option to Mr. Stoelting to provide an additional long-term incentive. On February 28,2017, the committee granted Mr. Stoelting a seven-year non-qualified stock option to purchase 167,000 shares of our common stock with an exercise priceequal to $7.54 per share (the fair market value of our common stock on the grant date), subject to vesting over four years, with 25% vesting on each annualanniversary of the grant date.68Other Compensation ElementsPension and Nonqualified Deferred Compensation. None of our executive officers participate in or have account balances in nonqualified definedcontribution plans or other nonqualified deferred compensation plans maintained by us.Other Compensation. All of our executive officers are eligible to participate in our employee benefit plans, including medical, dental, life insurance,and Section 401(k) plans. These plans are available to all of our employees and do not discriminate in favor of executive officers. It is generally our policy tonot extend significant perquisites to our executive officers that are not broadly available to our other employees. In designing these compensation elements,we seek to provide an overall level of benefits that is competitive with that offered by companies in the markets in which we operate based upon our generalunderstanding of industry practice. These benefits are not considered by our compensation committee in determining the compensation of our executiveofficers.Employment Agreements. We generally do not maintain employment contracts with our executive officers or other employees. However, we have fromtime-to-time provided employment letter agreements to our executive officers. We also entered into employment agreements with Messrs. Stoelting andGettle upon joining our company, which were subsequently amended and restated in connection with their April 30, 2017 appointments as our chiefexecutive officer and chief operating officer, respectively. Those restated agreements, as well as our employment agreements with Messrs. Rogers, Hurst, andPaulson, each of whom was hired and appointed as an executive officer in 2017, are described below under “Executive Compensation - Employment andOther Agreements” below.Severance Payments due Upon Termination of Employment and/or a Change in Control. We currently provide for the accelerated vesting ofoutstanding and unvested equity awards in connection with any “change in control” of our company. Our compensation committee believes that for ourexecutive officers, accelerated vesting of equity awards in the event of a change in control is generally appropriate because in some change in controlsituations, equity of the target company is cancelled, making immediate acceleration necessary in order to preserve the value of the award. In addition, werely primarily on equity awards to provide our executive officers with the opportunity to accumulate substantial resources to fund their retirement income,and our compensation committee believes that a change in control event is an appropriate liquidation point for awards designed for such purpose.In addition, Messrs. Stoelting, Gettle, Rogers, Cousins, Hurst, and Paulson are, and Messrs. DiBlasi and Armbruster were, eligible to receive cashseverance payments in certain circumstances related to involuntary terminations of employment. These payments are intended to provide a level of transitionassistance in the event of an involuntary termination of employment. Our compensation committee believes these provisions are fair and reasonable based onits understanding of market practices among industry competitors and within the broader environment of similarly sized businesses.We believe these post-employment severance payments and benefits are an essential element of our compensation package for our executive officersand assist us in recruiting and retaining talented individuals. In addition, we believe that it is more equitable to offer severance payments based on a standardformula determined as a multiple of base pay because severance often serves as a bridge when employment is involuntarily terminated, and should thereforenot be affected by other, longer-term compensation arrangements. As a result, other compensation decisions are not generally based on the existence of thisseverance protection. For a detailed description of the post-employment compensation of our named executive officers, see “Potential Payments UponTermination of Employment or Change in Control” below.Prohibitions on Hedging and Pledging of Shares. Among other things, our insider trading policy prohibits our executive officers from engaging in put,call, derivative, or short sale transactions, as well as pledging our securities as collateral for a loan.Stock Ownership Guidelines. We do not currently maintain stock ownership guidelines for our executive officers.Compensation Recovery (“Clawback”) Policy. We do not currently maintain a formal compensation recovery “clawback” policy or practice regardingthe adjustment or recovery of awards or payments if the relevant performance measures upon which they are based are restated or otherwise adjusted in amanner that would reduce the size of an award or payment. However, in connection with the adoption of rules under the Dodd-Frank Act, our compensationcommittee expects that in the future it will establish mechanisms to recover incentive compensation in the event of a financial restatement or similar event.Approval Process for Equity AwardsOur executive officers and other employees receive long-term equity awards pursuant to the terms of the 2010 Plan. Our compensation committeeadministers the 2010 Plan and establishes the rules for all awards granted thereunder, including grant guidelines, vesting schedules, and other provisions. Ourcompensation committee reviews these rules from time to time and considers, among other things, the interests of our stockholders, market conditions,information provided by the compensation committee's compensation consultant and our legal advisor, performance objectives, and recommendations madeby our chief executive officer.69Our compensation committee reviews awards for all employees. Our compensation committee has established a process in which it reviews therecommendations of our chief executive officer for our executive officers (other than himself) and other employees, modifies the proposed grants in certaincircumstances, and approves the awards effective as of the date of its approval.We have no practice of timing the grant of equity awards to coordinate with the release of material non-public information, and we have not timed therelease of material non-public information for the purpose of affecting the value of named executive officer compensation. In addition, our practice ofcalculating the number of shares of our common stock subject to equity awards based on the 20-day trailing average closing sale price of our common stockmitigates the effects of both our stock price volatility and the impact of grant timing.In August 2013, our compensation committee created an employee RSU committee and appointed Mr. DiBlasi as the committee’s sole member. InAugust 2017, Mr. Stoelting replaced Mr. DiBlasi as the committee’s sole member. The employee RSU committee has the authority to grant RSUs pursuant tothe 2010 Plan solely to newly hired non-executive officer employees of our company (other than “Covered Employees” as defined in the 2010 Plan) asfollows:•the specified dollar value of any individual award of RSUs by the committee shall not exceed $50,000;•the specific number of RSUs to be granted by the committee shall be calculated using the 20-day trailing average closing sales price for ourcommon stock on the NYSE during the 20 trading days immediately prior to the grant date;•all awards of RSUs by the committee shall have standard terms, including vesting; and•the committee shall promptly following the end of each calendar quarter provide our compensation committee with a report regarding thegrants made by the committee during the prior quarter.In August 2013, our compensation committee provided that the aggregate dollar value of all awards of RSUs to be granted by the employee RSU committeecould not exceed $250,000. In February 2016, our compensation committee authorized an additional $250,000 aggregate dollar value of awards of RSUs tobe granted by the employee RSU committee, subject to the conditions specified above.Impact of Tax and AccountingAs a general matter, our compensation committee takes into account the various tax and accounting implications of the compensation vehiclesemployed by us. While structuring compensation programs to result in more favorable tax and financial reporting treatment is a general objective, ourcompensation committee balances this goal with other business needs that may be inconsistent with obtaining the most favorable tax and accountingtreatment for each component of compensation.Deductibility. Section 162(m) of the Code does not permit publicly traded companies to take income tax deductions for compensation paid to our chiefexecutive officer and certain other executive officers to the extent that his or her compensation exceeds $1 million in any taxable year and does not otherwisequalify as performance-based compensation. The 2010 Plan is structured so that the compensation deemed paid to an executive officer in connection withannual bonuses paid under our annual incentive bonus plan and PRSUs granted under the 2010 Plan should qualify as performance-based compensation notsubject to the $1 million limitation. Our time-based RSUs are not considered performance-based compensation for purposes of Section 162(m) because theyvest over time rather than based on the achievement of performance goals. Accordingly, compensation related to those RSUs held by our executive officerssubject to Section 162(m) may not be fully deductible (depending on the value of our stock and the amount of other nonperformance-based compensation anofficer has during the year in which any portion of the RSU vests).Our compensation committee will continue to consider steps that might be in our best interests to comply with Section 162(m) of the Code, includingthe impact from the Tax Cuts and Jobs Act signed into law on December 22, 2017. However, in establishing the cash and equity incentive compensationprograms for our executive officers, our compensation committee believes that the potential deductibility of the compensation payable under those programsshould be only one of a number of relevant factors taken into consideration, and not the sole or primary factor. Our compensation committee believes thatcash and equity incentive compensation must be maintained at the requisite level to attract and retain the executive officers essential to our financial success,even if all or part of that compensation may not be deductible by reason of the limitations of Section 162(m) of the Code.Additional Tax Implications. Section 409A of the Code imposes additional income taxes on executive officers and others for certain types of deferredcompensation that do not comply with Section 409A. We attempt, in good faith, to structure compensation so that it either conforms with the requirements ofor qualifies for an exception under Section 409A and will consider any changes resulting from the Tax Cuts and Jobs Act signed into law on December 22,2017. Sections 280G and 4999 of the Code impose an excise tax on payments to executive officers who hold significant equity interests and certain otherservice providers of payments and benefits received in connection with a change in control of our company that exceed the levels specified in the Section280G70rules. Our executive officers may receive the amounts shown in the section entitled “Executive Compensation-Potential Payments Upon Termination orChange in Control” as change of control payments and benefits that could trigger this excise tax. We do not offer our executive officers, as part of theirchange of control benefits, any gross ups or other payments related to this excise tax under Section 4999 of the Code.Accounting Considerations. When determining the size of long-term incentive awards to our executive officers and employees, our compensationcommittee examines the accounting cost associated with such awards. Under Financial Accounting Standards Board Accounting Standards Codification(ASC) Topic 718, “Compensation - Stock Compensation,” grants of stock options, PRSUs, and RSUs result in an accounting charge for us equal to the grantdate fair value of those securities. For stock options, the accounting cost is calculated using the Black Scholes option pricing model. The cost is thenamortized over the requisite vesting period. For time-based RSUs, the accounting cost is generally equal to the fair market value of the underlying shares ofcommon stock on the date of the award. The cost is then amortized over the requisite service period. For PRSUs, the accounting cost is generally equal to thefair market value of the underlying shares of common stock on the date of the award that are expected to vest under the performance criteria. Adjustments tothe accounting cost are made each quarter based on re-evaluations of expected vesting under the performance criteria.Compensation Committee Interlocks and Insider ParticipationIn 2016, Messrs. Urkiel, Doerr, and Staley served as members of our compensation committee. During such fiscal year, none of these individuals hadany relationship requiring disclosure under Item 404 of Regulation S-K.None of Messrs. Urkiel, Doerr, or Staley has, at any time, been an officer or employee of our company. During 2016, none of our executive officersserved on the compensation committee or board of directors of any entity whose executive officers serve as a member of our board of directors orcompensation committee.71Compensation Committee ReportOur compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Form 10-K.Based on such review and discussion, the compensation committee recommended to our board of directors, and our board of directors approved, that ourCompensation Discussion and Analysis be included in this Form 10-K for the year ended December 31, 2016 for filing with the SEC.William S. Urkiel, ChairmanScott L. DobakChristopher L. DoerrJames D. StaleyMichael P. WardFiscal Year 2016 Summary Compensation TableThe following table sets forth compensation information for our named executive officers.Name and Principal Position Year Salary StockAwards(1) OptionAwards(2) Non-EquityIncentive PlanCompensation (3) All OtherCompensation(4) TotalMark A. DiBlasi 2016 $537,154 $— $405,300 $— $9,138 $951,592Former Chief ExecutiveOfficer and President(5) 2015 $543,885 $661,534 $— $— $8,754 $1,214,173 2014 $498,846 $370,718 $— $163,368 $4,384 $1,037,316 Peter R. Armbruster 2016 $331,462 $322,302 $— $8,724 $662,488Former Chief FinancialOfficer, Treasurer, andSecretary(6) 2015 $335,192 $441,040 $— $8,754 $784,986 2014 $306,154 $231,704 $82,600 $4,370 $624,828 Curtis W. Stoelting 2016 $432,692 $— $595,600 $— $4,749 $1,033,041Chief Executive Officer(7) Patrick K. McKay 2016 $315,846 $322,302 $— $— $8,220 $646,368Senior Vice President -Enterprise Fleet Services(8) 2015 $286,692 $385,897 $— $— $8,230 $680,819 2014 $254,185 $162,186 $— $86,364 $3,880 $506,615 Grant M. Crawford 2016 $318,462 $214,857 $— $— $270 $533,589Former President - RoadrunnerFreight(9) 2015 $322,154 $330,780 $— $— $7,437 $660,371(1)Amounts reflect the grant date fair value of stock awards. The grant date fair value is calculated in accordance with ASC Topic 718, “Compensation - Stock Compensation.” Thefair value of time-vest RSUs is based on the closing market price of our common stock on the date of grant. The fair value of PRSUs is based on the closing market price of ourcommon stock on the date of grant and was calculated based on the probable achievement of the performance goals as determined at the date of grant, which was determined tobe the target level of performance. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For adiscussion of valuation assumptions, see Note 8 to our 2016 consolidated financial statements included in this Form 10-K. These amounts reflect our accounting expense for theseawards and do not correspond to the actual value that will be recognized by the named executive officers with respect to these awards.The table below reflects the target number of PRSUs granted under the PRSU Program to our named executive officers (other than Messrs. DiBlasi and Stoelting) for2016, the grant date fair value of the target PRSUs reflected in the table above for fiscal 2016, and the actual number of PRSUs earned under the PRSU Program for 2016. Sinceour financial performance did not meet the threshold financial performance level under the PRSU Program for 2016, none of the PRSUs awarded under the PRSU Program for2016, including to our named executive officers, were earned. See “Compensation Discussion and Analysis - Individual Executive Officer Compensation - Equity Awards -Performance RSUs”. Target Number ofPRSUs Probable Grant DateFair Value Number of EarnedPRSUsPeter R. Armbruster19,288 $214,868 —Patrick K. McKay19,288 $214,868 —Grant M. Crawford12,858 $143,238 —(2) Amounts reflect the grant date fair value of option awards. The grant date fair value is calculated in accordance with ASC Topic 718, “Compensation - Stock Compensation.” For adiscussion of valuation assumptions, see Note 8 to our 2016 consolidated financial statements included in this Form 10-K. These amounts72reflect our accounting expense for these awards and do not correspond to the actual value that will be recognized by the named executive officers with respect to these awards.(3) Amounts for fiscal 2016 and 2015 reflect that we did not meet the threshold level of financial performance under our 2016 and 2015 cash incentive plans; accordingly, our namedexecutive officers did not receive any payout under those plans. Amounts in this column for fiscal 2014 represent the amounts earned and payable under our 2014 cash incentiveplan, which were earned in fiscal 2014 but not paid until the second quarter of fiscal 2015. For a description of our 2016 cash incentive plan, see “Compensation Discussion andAnalysis - Individual Executive Officer Compensation - Annual Cash Incentive Plan - 2016 Cash Incentive Plan.” 100% of the bonus potential under our 2014 cash incentive planfor Mr. McKay was based on achieving at least 80% of the EBIT target for our truckload logistics business unit.(4)Amounts for 2014, 2015, and 2016 reflect matching contributions under our 401(k) plan and a gross-up tax reimbursement to cover taxes on term life insurance premiumscomputed in accordance with Internal Revenue Service guidelines. Our executive officers participate in our medical and disability insurance plans in the same manner as our otheremployees and do not receive any perquisites.(5)Mr. DiBlasi served as our Chief Executive Officer from January 2006 until April 2017 and as our President from January 2006 to January 2016. Mr. DiBlasi's employment wasterminated effective April 30, 2017.(6)Mr. Armbruster served as our Chief Financial Officer, Treasurer, and Secretary from December 2005 until March 2017. Mr Armbruster's employment was terminated effectiveMarch 29, 2017.(7)Mr. Stoelting was appointed our Chief Executive Officer, Principal Financial Officer, and Principal Accounting Officer in April 2017. Mr. Stoelting previously served as ourPresident and Chief Operating Officer from January 2016 until April 2017.(8)Mr. McKay was appointed our Senior Vice President - Enterprise Fleet Services in February 2017. Mr McKay previously served as our President - Truckload Logistics from July2014 until February 2017 and our President - Truckload Services from March 2012 to July 2014.(9)Mr. Crawford's employment as our President - Roadrunner Freight was terminated in June 2017.Employment and Other AgreementsHistorically, we did not have written employment agreements with our executive officers. We have, however, provided employment letter agreements toour executive officers, which provided them with the right to participate in our incentive compensation plans and the right to participate in all insurance,retirement, and other fringe benefit plans as may from time to time be provided to our executives. The employment letter agreements with Messrs. DiBlasi,Armbruster, and Cousins also contain severance benefits. Recently, however, we have entered into employment agreements with certain of our new executiveofficers, which are described below. For a discussion of the severance benefits provided to our named executive officers, see “Executive Compensation -Potential Payments Upon Termination or Change of Control.”On April 30, 2017, in connection with our appointment of Mr. Stoelting as our Chief Executive Officer, we entered into a second amended and restatedemployment agreement with Mr. Stoelting. Pursuant to the terms of the employment agreement, Mr. Stoelting will receive an annual base salary of $571,000.Mr. Stoelting is also eligible to earn bonus compensation under our bonus plan and is entitled to participate in and receive all benefits under our employeebenefit programs. The employment agreement provides that, in the event we terminate Mr. Stoelting’s employment without “cause” (as such term is definedin the employment agreement) or Mr. Stoelting terminates his employment for “good reason” (as such term is defined in the employment agreement), we willcontinue to pay Mr. Stoelting his base salary for the 18-month period following the date of such termination, and we will pay Mr. Stoelting a lump sumamount equal to 18 times the monthly COBRA premium that would be necessary to permit him to continue group insurance coverage under our plans for an18-month period. If, however, we terminate Mr. Stoelting’s employment without “cause” (as such term is defined in the employment agreement) or Mr.Stoelting terminates his employment for “good reason” (as such term is defined in the employment agreement) during the two year period immediatelyfollowing a “change in control” (as such term is defined in the 2010 Plan), then in lieu of the payments described in the preceding sentence, we will continueto pay Mr. Stoelting his base salary for the 24-month period following the date of such termination, we will pay Mr. Stoelting a lump sum amount equal totwo times Mr. Stoelting’s bonus, based on the target established under our bonus plan, payable during the year in which the termination of employmentoccurs, and we will pay Mr. Stoelting a lump sum amount equal to 24 times the monthly COBRA premium that would be necessary to permit him to continuegroup insurance coverage under our plans for an 24-month period. Mr. Stoelting must execute a general release in order to receive any severance benefits.On April 30, 2017, in connection with our appointment of Mr. Gettle as our President and Chief Operating Officer, we entered into a second amendedand restated employment agreement with Mr. Gettle. Pursuant to the terms of the employment agreement, Mr. Gettle will receive an annual base salary of$571,000. Mr. Gettle is also eligible to earn bonus compensation under our bonus plan and is entitled to participate in and receive all benefits under ouremployee benefit programs. The employment agreement provides that, in the event we terminate Mr. Gettle’s employment without “cause” (as such term isdefined in the employment agreement) or Mr. Gettle terminates his employment for “good reason” (as such term is defined in the employment agreement), wewill continue to pay Mr. Gettle his base salary for the 18-month period following the date of such termination, and we will pay Mr. Gettle a lump sum amountequal to 18 times the monthly COBRA premium that would be necessary to permit him to continue group insurance coverage under our plans for an 18-month period. If, however, we terminate Mr. Gettle’s employment without “cause” (as such term is defined in the employment agreement) or Mr. Gettleterminates his employment for “good reason” (as such term is defined in the employment agreement) during the two year period immediately following a“change in control” (as such term is defined in the 2010 Plan), then in lieu of the payments described in the preceding sentence, we will continue to payMr. Gettle his73base salary for the 24-month period following the date of such termination, we will pay Mr. Gettle a lump sum amount equal to two times Mr. Gettle’s bonus,based on the target established under our bonus plan, payable during the year in which the termination of employment occurs, and we will pay Mr. Gettle alump sum amount equal to 24 times the monthly COBRA premium that would be necessary to permit him to continue group insurance coverage under ourplans for an 24-month period. Mr. Gettle must execute a general release in order to receive any severance benefits.On May 22, 2017, in connection with our appointment of Mr. Rogers as our Executive Vice President and Chief Financial Officer, we entered into anemployment agreement with Mr. Rogers. Pursuant to the terms of the employment agreement, Mr. Rogers will receive an annual base salary of $400,000. Mr.Rogers is also eligible to earn bonus compensation under our bonus plan and is entitled to participate in and receive all benefits under our employee benefitprograms. The employment agreement provides that, in the event we terminate Mr. Rogers’ employment without “cause” (as such term is defined in theemployment agreement) or Mr. Rogers terminates his employment for “good reason” (as such term is defined in the employment agreement), we will continueto pay Mr. Rogers his base salary for the 12-month period following the date of such termination, and we will pay Mr. Rogers a lump sum amount equal to 12times the monthly COBRA premium that would be necessary to permit him to continue group insurance coverage under our plans for a 12-month period. If,however, we terminate Mr. Rogers’ employment without “cause” (as such term is defined in the employment agreement) or Mr. Rogers terminates hisemployment for “good reason” (as such term is defined in the employment agreement) during the two year period immediately following a “change incontrol” (as such term is defined in the 2010 Plan), then in lieu of the payments described in the preceding sentence, we will continue to pay Mr. Rogers hisbase salary for the 18-month period following the date of such termination, we will pay Mr. Rogers a lump sum amount equal to one and one-half times Mr.Rogers’ bonus, based on the target established under our bonus plan, payable during the year in which the termination of employment occurs, and we willpay Mr. Rogers a lump sum amount equal to 18 times the monthly COBRA premium that would be necessary to permit him to continue group insurancecoverage under our plans for an 18-month period. Mr. Rogers must execute a general release in order to receive any severance benefits.On July 31, 2017, in connection with our appointment of Mr. Hurst as our President - Roadrunner Freight, we entered into an employment agreementwith Mr. Hurst. Pursuant to the terms of the employment agreement, Mr. Hurst will receive an annual base salary of $295,000. Mr. Hurst is also eligible to earnbonus compensation under our bonus plan and is entitled to participate in and receive all benefits under our employee benefit programs. The employmentagreement provides that, in the event we terminate Mr. Hurst’s employment without “cause” (as such term is defined in the employment agreement) or Mr.Hurst terminates his employment for “good reason” (as such term is defined in the employment agreement), we will continue to pay Mr. Hurst his base salaryfor the 12-month period following the date of such termination, and we will pay Mr. Hurst a lump sum amount equal to 12 times the monthly COBRApremium that would be necessary to permit him to continue group insurance coverage under our plans for a 12-month period. Mr. Hurst must execute ageneral release in order to receive any severance benefits.On October 4, 2017, in connection with our appointment of Mr. Paulson as our Senior Vice President - Human Resources, we entered into anemployment agreement with Mr. Paulson. Pursuant to the terms of the employment agreement, Mr. Paulson will receive an annual base salary of $200,000.Mr. Paulson is also eligible to earn bonus compensation under our bonus plan and is entitled to participate in and receive all benefits under our employeebenefit programs. The employment agreement provides that, in the event we terminate Mr. Paulson’s employment without “cause” (as such term is defined inthe employment agreement) or Mr. Paulson terminates his employment for “good reason” (as such term is defined in the employment agreement), we willcontinue to pay Mr. Paulson his base salary for the nine-month period following the date of such termination, and we will pay Mr. Paulson a lump sumamount equal to nine times the monthly COBRA premium that would be necessary to permit him to continue group insurance coverage under our plans for anine-month period. Mr. Paulson must execute a general release in order to receive any severance benefits.74Fiscal Year 2016 Grants of Plan-Based AwardsThe following table provides information with respect to grants of plan-based awards to our named executive officers during the fiscal year endedDecember 31, 2016. Estimated Future Payouts UnderNon-Equity Incentive Plan Awards(1) Estimated Future Payouts underEquity Incentive Plan Awards(2) All OtherStockAwards:Numberof Sharesof Stockor Units(3)All OtherOptionAwards:Number ofSecuritiesUnderlyingOptions Exerciseof BasePriceOptionAwardsGrantDate FairValue ofAwards(4)NameGrantDateThresholdTargetMaximum ThresholdTargetMaximum Mark A.DiBlasi(5) $161,400$430,400$807,000 1/18/2016 125,000(6) $7.11$291,966 1/18/2016 125,000(6) $14.22$113,334Peter R.Armbruster(7) $83,000$199,200$365,200 2/12/2016 9,64419,28828,931 $214,868 2/12/2016 9,644 $107,434Curtis W.Stoelting $135,000$360,000$675,000 1/18/2016 150,000(8) $7.11$406,358 1/18/2016 150,000(8) $14.22$189,242Patrick K.McKay $39,875$127,600$287,100 2/12/2016 9,64419,28828,931 $214,868 2/12/2016 9,644 $107,434Grant M.Crawford(9) $39,875$127,600$287,100 2/12/2016 6,42912,85819,288 $143,238 2/12/2016 6,429 $71,619(1)Amounts reflect the threshold, target and maximum amounts that could have been paid to the named executive officer under our 2016 cash incentive plan. For fiscal 2016, wedid not meet the threshold level of financial performance under our 2016 cash incentive plan; accordingly, our named executive officers did not receive any payout under thatplan. For a description of our 2016 cash incentive plan, see “Compensation Discussion and Analysis - Individual Executive Officer Compensation - Annual Cash Incentive Plan -2016 Cash Incentive Plan.”(2)Amounts reflect the threshold, target, and maximum number of shares of our common stock subject to PRSUs granted to our named executive officers under the PRSU Programfor 2016. Our financial performance did not exceed the threshold financial performance level under the PRSU Program for 2016. Accordingly, none of the PRSUs awardedunder the PRSU Program for 2016, including to our named executive officers, were earned. See “Compensation Discussion and Analysis - Individual Executive OfficerCompensation - Equity Awards - 2016 Equity Awards.”(3)Such RSUs vest 25% on each of March 1, 2017, 2018, 2019, and 2020.(4)Amounts reflect the grant date fair value of stock and option awards. The grant date fair value is calculated in accordance with ASC Topic 718, “Compensation - StockCompensation.” See footnotes 1 and 2 of the Fiscal Year 2016 Summary Compensation Table above.(5)Mr. DiBlasi served as our Chief Executive Officer from January 2006 until April 2017 and as our President from January 2006 to January 2016. Mr. DiBlasi’s employment wasterminated effective April 30, 2017.(6)One-third of the total number of shares underlying this stock option vest on each of January 18, 2017, 2018, and 2019.(7)Mr. Armbruster served as our Chief Financial Officer, Treasurer, and Secretary from December 2005 until March 2017. Mr. Armbruster’s employment was terminated effectiveMarch 29, 2017.(8)20% of the total number of shares underlying this stock option vest on each of January 18, 2017, 2018, 2019, 2020, and 2021.(9)Mr. Crawford’s employment as our President - Roadrunner Freight was terminated in June 2017.75Outstanding Equity Awards at Fiscal Year-End 2016The following table sets forth the outstanding equity awards held by our named executive officers as of December 31, 2016. Option Awards Stock Awards Number of Securities UnderlyingUnexercised Options OptionExercisePrice OptionExpirationDate Number ofShares or Unitsof Stock thatHave Not Vested Market Value ofShares or Unitsof Stock thatHave NotVested(1)Name Exercisable Unexercisable Mark A. DiBlasi(2) 59,726 — $13.39 3/15/2017 — 125,000 (3) $7.11 1/18/2020 — 125,000 (3) $14.22 1/18/2020 4,563(4) $47,410 8,328(5) $86,528Peter R. Armbruster(6) 2,676(4) $27,804 5,205(5) $50,469 9,644(7) $100,201Curtis W. Stoelting — 150,000 (8) $7.11 1/18/2023 — 150,000 (8) $14.22 1/18/2023 Patrick K. McKay 2,131(4) $22,141 3,644(5) $37,861 9,644(7) $100,201Grant M. Crawford(9) 2,770(10) $28,780 6,429(7) $66,797(1) Based on the closing price of our common stock on December 31, 2016.(2) Mr. DiBlasi served as our Chief Executive Officer from January 2006 until April 2017 and as our President from January 2006 to January 2016. Mr. DiBlasi's employment wasterminated effective April 30, 2017.(3) One-third of the total number of shares underlying this stock option vest on each of January 18, 2017, 2018, and 2019.(4)Such RSUs vest 25% on each of March 1, 2014, 2015, 2016, and 2017.(5)Such RSUs vest 25% on each of March 1, 2015, 2016, 2017, and 2018.(6) Mr. Armbruster served as our Chief Financial Officer, Treasurer, and Secretary from December 2005 until March 2017. Mr. Armbruster's employment was terminated effectiveMarch 29, 2017.(7)Such RSUs vest 25% on each of March 1, 2017, 2018, 2019, and 2020.(8)20% of the total number of shares underlying this stock option vest on each of January 18, 2017, 2018, 2019, 2020, and 2021.(9)Mr. Crawford's employment as our President - Roadrunner Freight was terminated in June 2017.(10)Such RSUs vest 25% on each of June 23, 2015, 2016, 2017, and 2018.Option Exercises and Stock Vested in Fiscal Year 2016The following table sets forth information concerning the value realized by each of our named executive officers upon the exercise of stock options andthe vesting of stock awards during 2016. Option Awards Stock AwardsName Number of Shares Acquiredon Exercise Value Realized onExercise Number of Shares Acquiredon Vesting Value Realized onVesting(1)Mark A. DiBlasi 12,204 $144,495Peter R. Armbruster 7,095 $84,005Curtis W. Stoelting — $—Patrick K. McKay 4,817 $56,695Grant M. Crawford 1,385 $10,969(1) The value realized equals the fair market value of our common stock on the date of vesting multiplied by the number of shares released on vest date.76Pension BenefitsWe do not offer any defined benefit pension plans for any of our employees. We have a 401(k) plan in which our employees may participate. In 2016,no discretionary contributions to our 401(k) plan were made on behalf of our executive officers.Nonqualified Deferred Compensation and Retirement PlansWe do not offer any deferred compensation plans, defined benefit pension plans, or supplemental retirement plans for our executive officers.401(k) PlanWe sponsor a defined contribution profit sharing plan for our full-time employees, which is intended to qualify as a tax qualified plan under Section401 of the Code. The plan provides that each participant may contribute up to 100% of his or her pre-tax compensation, up to the statutory limit. The planpermits us to make discretionary contributions of up to an additional 50% of each participant’s contributions not to exceed 4% of his or her pre-taxcompensation, up to the statutory limit, which generally vest over three years. We match 50% of each participant’s contributions up to the first 6%contributed.Potential Payments Upon Termination or Change in ControlAs described above, the employment agreements with Messrs. Stoelting, Gettle, Rogers, Hurst, and Paulson provide for severance benefits upon certainterminations of employment, including following a change in control. See “Employment and Other Agreements.” In addition, the employment letteragreements with Messrs. DiBlasi and Armbruster provide for severance benefits upon certain terminations of employment. Pursuant to the employment letters,if Messrs. DiBlasi and Armbruster (i) is terminated for any reason other than for cause, (ii) terminates his employment voluntarily for good reason, or (iii) isterminated without cause during the one-year period following a change of control, he is entitled to receive his current base salary for a period of 12 monthsin accordance with our normal payroll practices and will be eligible to receive all benefits under all benefit plans and programs provided by us (includingmedical and group life plans and programs) for the same period. Our obligation to pay severance benefits is subject to Messrs. DiBlasi’s or Armbruster’scompliance with any confidentiality, non-competition, and non-solicitation agreements with us, as well as Messrs. DiBlasi’s or Armbruster’s execution anddelivery to us of a release. The definitions of “change of control,” “cause,” and “good reason” and the descriptions of the payments and benefits can be foundin the employment letter agreements, which we have filed with the SEC. Further, the employment letter agreement with Mr. Cousins provides for severancebenefits upon certain terminations of employment. Pursuant to the employment letter, if Mr. Cousins (i) is terminated for any reason other than for cause or(ii) is terminated because of a change of control, he is entitled to receive a severance payment equal to 12 months of his base pay. Our obligation to payseverance benefits is subject to Mr. Cousins’ execution and delivery to us of a release. The arrangements reflected in these agreements are designed toencourage the officers' full attention and dedication to our company currently and, in the event of termination following a change of control, provide theseofficers with individual financial security.In addition, in the event of a change in control (as defined in the 2010 Plan), all outstanding and unvested stock options, RSUs, and earned PRSUs, aswell as the target number of PRSUs if the change in control occurs before the “Performance Determination Date” (as defined in the PRSU Award Agreement, aform of which has been filed with the SEC) with respect to such PRSUs, including those held by our named executive officers, will immediately vest as of thedate of the change in control.The tables below provide certain information regarding potential payments and other benefits that would be payable to our named executive officersupon any termination of employment or a change of control of our company. The tables below assume that the termination or change of control eventoccurred on December 31, 2016.Mark A. DiBlasiExecutive Benefits Termination without Cause orfor Good Reason Termination without Causewithin 12 Months Following aChange of Control Change in Control Cash-based Severance $538,000 $538,000 $— Health and Welfare Benefits $15,256 $15,256 $— Equity Treatment $— $— $543,937(1) (1) The amounts shown represent the market value of unvested stock options and RSUs that would become fully vested upon a change in control and is based on the closing price ofour common stock on December 31, 2016.77Peter R. ArmbrusterExecutive Benefits Termination without Cause orfor Good Reason Termination without Causewithin 12 Months Following aChange of Control Change in Control Cash-based Severance $332,000 $332,000 $— Health and Welfare Benefits $15,256 $15,256 $— Equity Treatment $— $— $382,487(1) (1) The amounts shown represent the market value of unvested RSUs and the target number of PRSUs granted during 2016 that would become fully vested upon a change in controland is based on the closing price of our common stock on December 31, 2016.Curtis W. Stoelting(1) Executive Benefits Termination without Cause orfor Good Reason Termination without Causewithin 24 Months Following aChange of Control Change in Control Cash-based Severance $675,000 $900,000 $900,000 Health and Welfare Benefits $728 $728 $— Bonus $— $— $720,000 Equity Treatment $— $— $492,000(2) (1) Based on the second amended and restated employment agreement that we entered into with Mr. Stoelting on April 30, 2017.(2) The amounts shown represent the market value of unvested stock options that would become fully vested upon a change in control and is based on the closing price of ourcommon stock on December 31, 2016.Patrick K. McKayExecutive Benefits Change in Control Equity Treatment $360,606(1) (1) The amounts shown represent the market value of unvested RSUs and the target number of PRSUs granted during 2016 that would become fully vested upon a change in controland is based on the closing price of our common stock on December 31, 2016.Grant M. CrawfordExecutive Benefits Change in Control Equity Treatment $229,173(1) (1) The amounts shown represent the market value of unvested RSUs and the target number of PRSUs granted during 2016 that would become fully vested upon a change in controland is based on the closing price of our common stock on December 31, 2016.Director CompensationWe use a combination of cash and share-based incentive compensation to attract and retain qualified candidates to serve on our board of directors. Insetting director compensation, we consider the amount of time that directors spend fulfilling their duties as a director, including committee assignments.We seek to provide director compensation packages that are customary for boards of directors for similarly situated companies. For fiscal 2016, we paideach independent director an annual cash retainer of $35,000, payable quarterly. Payments to directors are prorated for service provided for partial years. Inaddition, for fiscal 2016, the chairman of our audit committee received an annual cash retainer of $7,500, the chairman of our compensation committeereceived an annual cash retainer of $5,000, and the chairman of our nominating/corporate governance committee received an annual cash retainer of $3,000.In February 2016, each of our independent directors received a grant of 7,072 RSUs having a value on the grant date of $55,000 based upon the 20-daytrailing average closing sales price for our common stock as of the grant date. Each RSU is equal in value to one share of our common stock, and the RSUsvest 25% each year over four years. Each independent director generally must remain a member of our board of directors through the end of the relevantvesting period in order to receive any amount of the RSUs covered by that award, except that recipients may be entitled to accelerated delivery of a portion ofunvested RSUs in the case of the recipient's death or disability, or upon a change in control.78We also reimburse each director for travel and related expenses incurred in connection with attendance at board and committee meetings.Our non-independent directors are not compensated for service as directors.Director Summary Compensation Table for Fiscal 2016The following table sets forth the compensation earned by our independent directors in respect of their services as a director or committee chair duringfiscal 2016.Name Fees Earned or Paid in Cash Stock Awards(1) TotalChristopher L. Doerr $35,000 $78,782 $113,782John G. Kennedy, III $35,000 $78,782 $113,782Brian C. Murray $42,500 $78,782 $121,282James D. Staley $38,000 $78,782 $116,782William S. Urkiel $40,000 $78,782 $118,782Michael P. Ward(2) $21,731 $78,782 $100,513(1)Amounts reflect the fair value of RSUs at the date of grant. The value is calculated in accordance with ASC Topic 718, “Compensation - Stock Compensation.” The fair value ofan RSU is based on the closing market price of our common stock on the date of grant. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeituresrelated to service-based vesting conditions. For a discussion of valuation assumptions, see Note 8 to our 2016 consolidated financial statements included in this Form 10-K.These amounts reflect our accounting expense for these awards and do not correspond to the actual value that will be recognized by the directors with respect to these awards.The table below provides information with respect to the outstanding stock awards held by each of our independent directors as of December 31, 2016.(2)Mr. Ward was elected to our board of directors in February 2016.The following table lists all outstanding stock awards held by our independent directors as of December 31, 2016:NameStock AwardsChristopher L. Doerr10,524John G. Kennedy, III10,524Brian C. Murray7,072James D. Staley10,524William S. Urkiel10,524Michael P. Ward7,072ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSEquity Compensation Plan InformationThe following table sets forth information with respect to our common stock that may be issued upon the exercise of stock options, warrants, and rightsunder our incentive compensation plans as of December 31, 2016.79Plan Category (a) Number ofSecurities to be IssuedUpon Exercise ofOutstanding Options,Warrants, andRights(1) (b) Weighted AverageExercise Price ofOutstanding Options,Warrants, and Rights(2) (c) Number ofSecurities RemainingAvailable for FutureIssuance Under EquityCompensation Plans(Excluding SecuritiesReflected in Column(a))(3)Equity Compensation Plans Approved by Stockholders 1,020,023 $12.34 1,228,594Equity Compensation Plans Not Approved by Stockholders — — —Total 1,020,023 $12.34 1,228,594 (1) Includes 274,764 shares issuable upon the vesting and delivery of RSUs granted under the 2010 Plan and 650,000 shares issuable upon the exercise of outstanding stock optionsgranted under our 2010 Plan, and 95,259 shares issuable upon the exercise of outstanding stock options granted under our previously maintained key employee equity plan,which we have discontinued.(2) The weighted average exercise price does not take into account the 274,764 shares issuable upon the vesting and delivery of outstanding RSUs.(3) Under the 2010 Plan, we have reserved 2,500,000 shares of common stock for issuance pursuant to awards granted under such plan.2010 Incentive Compensation PlanThe purpose of the 2010 Plan is to assist our company and our subsidiaries and other designated affiliates, which we refer to as Related Entities, inattracting, motivating, retaining, and rewarding high-quality executives and other employees, officers, directors, consultants, and other persons who provideservices to our company or our Related Entities by enabling such persons to acquire or increase a proprietary interest in our company in order to strengthenthe mutuality of interests between such persons and our stockholders, and providing such persons with annual and long-term performance incentives toexpend their maximum efforts in the creation of stockholder value. The 2010 Plan is intended to qualify certain compensation awarded under the 2010 Planfor tax deductibility under Section 162(m) of the Code to the extent deemed appropriate by the plan administrator, described below.EligibilityOfficers, directors, employees, and consultants of our company and our Related Entities, as determined by the plan administrator (described below), areeligible to participate in the 2010 Plan, which we refer to each as an Eligible Person.Shares Available for Awards; Annual Per-Person LimitationsSubject to certain adjustments as described in the 2010 Plan, a total of 2,500,000 shares of our common stock were initially reserved for issuance asawards under the 2010 Plan. As of December 31, 2016, a total of 251,383 shares had been issued under the 2010 Plan, 1,020,023 shares were subject tooutstanding awards under the 2010 Plan, and 1,228,594 shares were available for the future grant of awards under the 2010 Plan.If any shares of our common stock subject to an award under the 2010 Plan are forfeited, repurchased by our company, expire, or otherwise terminatewithout issuance of such shares, or any award is settled for cash or otherwise does not result in the issuance of all or a portion of the shares subject to suchaward, the shares will, to the extent of such forfeiture, repurchase, expiration, termination, cash settlement, or non-issuance, again be available for awardsunder the 2010 Plan. In the event that any option or other award is exercised by the withholding of shares from the award by our company, or withholding taxliabilities arising from such option or other award are satisfied by the withholding of shares from the award by our company, then only the net number ofshares actually issued to the participant, excluding the shares withheld, will be counted as issued for purposes of determining the maximum number of sharesavailable for grant under the 2010 Plan.The 2010 Plan imposes individual limitations on the amount of certain awards in part with the intention to comply with Section 162(m) of the Code.Under these limitations, for each fiscal year in which awards granted under the 2010 Plan are subject to the requirements of Section 162(m) of the Code, anEligible Person may not be granted awards under the 2010 Plan under which more than 2,500,000 shares of our common stock could be received by theparticipant, subject to adjustment in certain circumstances. In addition, the maximum dollar value payable to any one participant with respect to a stock unit,the payment for which is conditioned upon the satisfaction of performance criteria, is $5,000,000 per each 12 month period in a performance period (pro-rated on a straight-line basis for any performance period that is greater than or less than 12 months in length).80AdministrationOur board of directors has the authority to administer the 2010 Plan as the plan administrator. However, our board of directors has the authority todelegate its authority as plan administrator to one or more committees, including its compensation committee. Subject to the terms of the 2010 Plan, the planadministrator determines which of the Eligible Persons will be granted awards, when and how each award will be granted, what type or combination of typesof awards will be granted, the provisions of each award granted (which need not be identical), including the time or times when a person will be permitted toreceive shares or cash pursuant to an award, and the number of shares or amount of cash with respect to which an award will be granted to each such person. Inaddition, the plan administrator may construe, interpret, and make all determinations under the 2010 Plan and awards granted under it, and establish, amend,and revoke rules and regulations for the 2010 Plan’s administration. The plan administrator may, with the consent of any adversely affected participant, (i)reduce the exercise price of any outstanding award under the 2010 Plan, (ii) cancel any outstanding award and grant a new award and/or cash or othervaluable consideration in substitution thereof, or (iii) perform any other action that is treated as a repricing under generally accepted accounting principles.Stock Options and Stock Appreciation RightsEach stock option and stock appreciation right award granted pursuant to the 2010 Plan must be set forth in an award agreement. The planadministrator determines the terms of the stock options and stock appreciation rights granted under the 2010 Plan, including the exercise price in the case ofa stock option, the grant price in the case of a stock appreciation right, the vesting schedule, the maximum term of the stock option or stock appreciationright, and the period of time the stock option or stock appreciation right remains exercisable after the participant's termination of service. The exercise priceof a stock option, however, may not be less than the fair market value of the stock on its grant date. All stock options granted under the 2010 Plan arenonstatutory stock options. Stock appreciation rights may be either freestanding or in tandem with other awards.Restricted Stock AwardsRestricted stock awards must be granted pursuant to an award agreement. The plan administrator determines the terms of the restricted stock award,including the restrictions on transferability, risk of forfeiture and other restrictions, if any, for the restricted stock, and the vesting schedule, if any, for therestricted stock award. Except to the extent restricted under the terms of the 2010 Plan and any award agreement relating to the restricted stock award, aparticipant granted restricted stock will have all of the rights of a stockholder, including the right to vote the restricted stock and the right to receivedividends thereon (subject to any mandatory reinvestment or other requirement imposed by the plan administrator).Stock UnitsStock unit awards must be granted pursuant to an award agreement. The plan administrator determines the terms of the stock unit award, including anyrestrictions (which may include a risk of forfeiture) as the plan administrator may impose, if any, which restrictions may lapse at the expiration of the timeperiod or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination,in installments or otherwise, as the plan administrator may determine. A stock unit award may be satisfied by delivery of shares of common stock, cash equalto the fair market value of the specified number of shares of common stock covered by the stock unit award, or a combination thereof, as determined by theplan administrator at the date of grant or thereafter. Prior to satisfaction of an award of stock units, an award of stock units carries no voting or dividend orother rights associated with share ownership.Bonus Stock and Awards in Lieu of ObligationsThe plan administrator is authorized to grant shares of our common stock as a bonus, or to grant shares of our common stock or other awards in lieu ofour obligations to pay cash or deliver other property under the 2010 Plan or under other plans or compensatory arrangements, subject to such terms asdetermined by the plan administrator and subject to certain limitations under the 2010 Plan.Dividend EquivalentsThe plan administrator is authorized to grant dividend equivalents to receive cash, shares of our common stock, other awards, or other property equal invalue to dividends paid with respect to a specified number of shares of our common stock, or other periodic payments. Dividend equivalents may be awardedon a free-standing basis or in connection with another award. The terms of an award of dividend equivalents will be set forth in a written award agreementwhich will contain provisions determined by the plan administrator and not inconsistent with the 2010 Plan. The plan administrator may provide thatdividend equivalents will be paid or distributed when accrued or will be deemed to have been reinvested in additional shares of our common stock, awards,or other investment vehicles, and subject to such restrictions on transferability and risks of forfeiture, as the plan administrator may specify.81Other Stock-Based AwardsThe plan administrator is authorized, subject to limitations under applicable law, to grant such other awards that may be denominated or payable in,valued in whole or in part by reference to, or otherwise based on, or related to, shares of our common stock, as deemed by the plan administrator to beconsistent with the purposes of the 2010 Plan, including, without limitation, convertible or exchangeable debt securities, other rights convertible orexchangeable into shares of our common stock, purchase rights for shares of our common stock, awards with value and payment contingent upon ourperformance or any other factors designated by the plan administrator, and awards valued by reference to the book value of our common stock or the value ofsecurities of or the performance of specified Related Entities or business units. The plan administrator will determine the terms and conditions of such awards,which will be set forth in a written award agreement. Cash awards, as an element of or supplement to any other award under the 2010 Plan, may also begranted under the 2010 Plan.Performance AwardsPerformance awards are payable in cash, shares of our common stock, other property, or other awards, on terms and conditions established by the planadministrator. The performance criteria to be achieved during any performance period and the length of the performance period will be determined by theplan administrator upon the grant of each performance award. Except as provided in the 2010 Plan or as may be provided in an award agreement, performanceawards will be distributed only after the end of the relevant performance period.If and to the extent that the plan administrator determines, at the time an award is granted to an Eligible Person who is, or is likely to be, as of the end ofthe tax year in which we would claim a tax deduction in connection with such award, a “covered employee,” the provisions of the 2010 Plan, which areintended to qualify such awards as “performance-based compensation” under Section 162(m) of the Code, will be applicable to such award. If and to theextent the foregoing provisions of the 2010 Plan are applicable to any award, one or more of the following business criteria for our company, on aconsolidated basis, and/or for our Related Entities, or for business or geographical units of our company and/or our Related Entities (except with respect tothe total stockholder return and earnings per share criteria), will be used by the plan administrator in establishing performance goals for performance awardsintended to qualify as “performance-based compensation” under Section 162(m) of the Code: (1) earnings per share; (2) revenues or margins; (3) cash flow;(4) operating margin; (5) return on net assets, investment, capital, or equity; (6) economic value added; (7) direct contribution; (8) net income; pretaxearnings; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings after interest expense and beforeextraordinary or special items; operating income; income before interest income or expense, unusual items and income taxes, local, state or federal andexcluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of our company; (9) working capital; (10) management of fixedcosts or variable costs; (11) identification or consummation of investment opportunities or completion of specified projects in accordance with corporatebusiness plans, including strategic mergers, acquisitions or divestitures; (12) total stockholder return; and (13) debt reduction. Any of the above goals may bedetermined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the plan administratorincluding, but not limited to, the Standard & Poor’s 500 Stock Index or a group of companies that are comparable to our company. The plan administratorwill exclude the impact of an event or occurrence which the plan administrator determines should appropriately be excluded, including without limitation (i)restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to theoperations of our company or not within the reasonable control of our management, or (iii) a change in accounting standards required by generally acceptedaccounting principles. For awards granted to covered employees, the performance goals and the determination of their achievement will be made inaccordance with Section 162(m) of the Code and the plan administrator may, in its discretion, reduce the amount of a settlement otherwise to be made inconnection with such awards.Other Terms of AwardsAwards granted under the 2010 Plan may, in the discretion of the plan administrator, be granted either alone or in addition to, in tandem with, or insubstitution or exchange for, any other award or any award granted under another plan of our company, any Related Entity, or any business entity to beacquired by our company or a Related Entity, or any other right of a participant to receive payment from our company or any Related Entity. In addition,awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of our company or any Related Entity.Subject to the terms of the 2010 Plan and any applicable award agreement, payments to be made by our company or a Related Entity upon the exerciseof an option or other award or settlement of an award may be made in such forms as the plan administrator determines, including, without limitation, cash,other awards, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. Except as may be prohibited bySection 409A of the Code, the settlement of any award may be accelerated in the discretion of the plan administrator or upon occurrence of one or morespecified events. Installment or deferred payments may be required by the plan administrator (subject to certain provisions of the 2010 Plan) or permitted atthe election of the participant on terms and conditions established by the plan administrator.82Except as provided in an award agreement, a participant may not assign, sell, transfer, or otherwise encumber or subject to any lien any award or otherright or interest granted under the 2010 Plan, in whole or in part, other than by will or by operation of the laws of descent and distribution, and such awards orrights that may be exercisable will be exercised during the lifetime of the participant only by the participant or his or her guardian or legal representative.Notwithstanding the foregoing, the plan administrator, in its sole discretion, may permit the transfer of an option as follows: (i) by gift to certain members ofthe participant’s immediate family (as set forth in the 2010 Plan) or (ii) by transfer by instrument to a trust providing that the option is to be passed tobeneficiaries upon death of the participant.Change in Control; Corporate TransactionThe plan administrator may, in its discretion, accelerate the vesting, exercisability, lapsing of restrictions, or expiration of deferral of any award,including upon a “change in control,” as defined in the 2010 Plan. In addition, the plan administrator may provide in an award agreement that theperformance goals relating to any award will be deemed to have been met upon the occurrence of any change in control.In the event of a “corporate transaction,” as defined in the 2010 Plan, any surviving corporation or acquiring corporation, which we refer to as asuccessor corporation, may either (i) assume any or all awards outstanding under the 2010 Plan; (ii) continue any or all awards outstanding under the 2010Plan; or (iii) substitute similar stock awards for outstanding awards. In the event that any successor corporation does not assume or continue any or all suchoutstanding awards or substitute similar stock awards for such outstanding awards, then with respect to awards that have been not assumed, continued, orsubstituted, then such awards will terminate if not exercised (if applicable) at or prior to such effective time (contingent upon the effectiveness of thecorporate transaction).In the event that the successor corporation in a corporate transaction refuses to assume, continue, or substitute for an award, then the award will fullyvest and be exercisable (if applicable) as to all of the shares of our common stock subject to such award, including shares of our common stock as to whichsuch award would not otherwise be vested or, if applicable, exercisable.The plan administrator, in its discretion and without the consent of any participant, may (but is not obligated to) either (i) accelerate the vesting of anyawards (and, if applicable, the time at which such awards may be exercised) in full or as to some percentage of the award to a date prior to the effective time ofsuch corporate transaction as the plan administrator will determine (contingent upon the effectiveness of the corporate transaction) or (ii) provide for a cashpayment in exchange for the termination of an award or any portion thereof where such cash payment is equal to the fair market value of the shares of ourcommon stock that the participant would receive if the award were fully vested and exercised (if applicable) as of such date (less any applicable exerciseprice).AdjustmentsIn the event that any dividend or other distribution (whether in the form of cash, shares of our common stock, or other property), recapitalization,forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution, or other similarcorporate transaction or event affects our common stock and/or such other securities of our company or any other issuer, then the plan administrator will, toavoid anti-dilution or other enlargement or loss of value to awards, equitably adjust (i) the number and kind of shares of our common stock reserved forissuance in connection with awards granted thereafter, (ii) the number and kind of shares of common stock by which annual per-person award limitations aremeasured, (iii) the number and kind of shares of our common stock subject to or deliverable in respect of outstanding awards, (iv) the exercise price, grantprice, or purchase price relating to any award and/or make provision for payment of cash or other property in respect of any outstanding award, and (v) anyother aspect of any award that the plan administrator determines to be appropriate.In addition, the plan administrator is authorized to make adjustments in the terms and conditions of, and the criteria included in, awards (includingawards subject to performance goals) in recognition of unusual or nonrecurring events affecting our company, any Related Entity, or any business unit, or thefinancial statements of our company or any Related Entity, or in response to changes in applicable laws, regulations, accounting principles, tax rates andregulations or business conditions or in view of the plan administrator’s assessment of the business strategy of our company, any Related Entity, or businessunit thereof, performance of comparable organizations, economic and business conditions, personal performance of a participant, and any othercircumstances deemed relevant. However, the plan administrator may not make any adjustment described in this paragraph if doing so would cause any awardgranted under the 2010 Plan to covered employees and intended to qualify as “performance-based compensation” under Section 162(m) of the Code and theregulations thereunder to otherwise fail to qualify as “performance-based compensation” under Section 162(m) of the Code and regulations thereunder.Amendment and TerminationOur board of directors may amend, alter, suspend, discontinue, or terminate the 2010 Plan, or any committee’s authority to grant awards under the 2010Plan, without the consent of stockholders or participants. Any amendment or alteration to the 2010 Plan will be subject to the approval of our company’sstockholders if such stockholder approval is deemed necessary and advisable83by our board of directors. However, without the consent of an affected participant, no such amendment, alteration, suspension, discontinuance, or terminationof the 2010 Plan may materially and adversely affect the rights of such participant under any previously granted and outstanding award. The planadministrator may waive any conditions or rights under, or amend, alter, suspend, discontinue, or terminate any award theretofore granted and any awardagreement relating thereto, except as otherwise provided in the 2010 Plan; provided that, without the consent of an affected participant, no such action maymaterially and adversely affect the rights of such participant under such award. The 2010 Plan will terminate no later than ten years from the date of the laterof (i) the 2010 Plan’s effective date and (ii) the date an increase in the number of shares reserved for issuance under the 2010 Plan is approved by our board ofdirectors (so long as such increase is also approved by our stockholders).Security Ownership of Certain Beneficial Owners and ManagementThe following table sets forth information regarding the beneficial ownership of our common stock as of January 15, 2018 by the following:•each of our named executive officers and directors;•all of our executive officers and directors as a group; and•each person, or group of affiliated persons, who is known by us to beneficially own more than five percent of our common stock.Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she,or it possesses sole or shared voting or investment power of that security, including options and warrants that are currently exercisable or exercisable within60 days of January 15, 2018 and RSUs that are currently vested or will be vested within 60 days of January 15, 2018. Shares issuable pursuant to options,warrants, and RSUs are deemed outstanding for computing the percentage of the person holding such options, warrants, or RSUs but are not deemedoutstanding for computing the percentage of any other person. Except as indicated by the footnotes below, we believe, based on the information furnished tous, that the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown that they beneficiallyown, subject to community property laws where applicable. The information does not necessarily indicate beneficial ownership for any other purpose. Ourcalculation of the percentage of beneficial ownership is based on 38,423,391 shares of common stock outstanding as of January 15, 2018.Except as otherwise indicated, the address of each person listed in the table is c/o Roadrunner Transportation Systems, Inc., 1431 Opus Place, Suite 530,Downers Grove, Illinois 60515.84 Shares Beneficially OwnedName of Beneficial Owner Number PercentNamed Executive Officers and Directors: Curtis W. Stoelting(1) 217,218 *Patrick K. McKay (2) 18,993 *Mark A. DiBlasi (3) 227,583 *Peter R. Armbruster 75,059 *Grant M. Crawford 3,485 *Scott L. Dobak (4) 1,397 *Christopher L. Doerr (5) 20,820 *John G. Kennedy, III (5) 15,335 *Ralph (“Cody”) W. Kittle III — *Brian C. Murray (6) 10,439 *Scott D. Rued (7) 7,901,625 20.6%James D. Staley (5) 16,520 *William S. Urkiel (8) 24,020 *Judith A. Vijums 5,000 *Michael P. Ward (6) 5,439 *All executive officers and directors as a group (22 persons) (9) 8,639,114 22.2% 5% Stockholders: HCI Entities (10) 7,801,625 20.3%Elliott Reporting Entities(11) 3,310,483 8.6%Barclays Reporting Entities(12) 4,199,056 10.9%BlackRock, Inc.(13) 3,903,766 10.2%Dimensional Fund Advisors LP(14) 2,151,602 5.6%FMR Reporting Entities (15) 4,285,280 11.2%The Vanguard Group (16) 2,576,613 6.7%* Represents beneficial ownership of less than 1% of our outstanding common stock(1)Includes 167,518 shares of common stock issuable upon the exercise of vested stock options and the delivery of shares underlying RSUs that will be vested within 60 days ofJanuary 15, 2018.(2)Includes 6,829 shares of common stock issuable upon the delivery of shares underlying RSUs that will be vested within 60 days of January 15, 2018.(3)Includes 170,831 shares of common stock issuable upon the exercise of vested stock options and the delivery of shares underlying RSUs that will be vested within 60 days ofJanuary 15, 2018.(4)Includes 1,397 shares of common stock issuable upon the delivery of shares underlying RSUs that will be vested within 60 days of January 15, 2018.(5)Includes 4,793 shares of common stock issuable upon the delivery of shares underlying RSUs that will be vested within 60 days of January 15, 2018.(6)Includes 3,671 shares of common stock issuable upon the delivery of shares underlying RSUs that will be vested within 60 days of January 15, 2018.(7)Consists of 100,000 shares of common stock held by Mr. Rued and 7,801,625 shares of common stock held by the HCI Entities, as described in note 7 below; Mr. Rued is aManaging Partner of HCI Equity Partners, L.L.C., which is an affiliate of the HCI Entities. Accordingly, Mr. Rued may be deemed to beneficially own the shares held by the HCIEntities. Mr. Rued disclaims beneficial ownership of any such shares in which he does not have a pecuniary interest. The address of Mr. Rued is c/o HCI Equity Partners, 1730Pennsylvania Avenue, N.W., Suite 525, Washington, D.C. 20006.(8)Includes 4,793 shares of common stock issuable upon the delivery of shares underlying RSUs that will be vested within 60 days of January 15, 2018 and 8,000 shares held byMr. Urkiel's trust.(9)Includes 463,259 shares of common stock issuable to our executive officers and directors as a group upon the exercise of vested stock options, the exercise of outstandingwarrants, and the delivery of shares underlying RSUs that will be vested within 60 days of January 15, 2018.(10)Represents shares held by Thayer Equity Investors V, L.P.; TC Roadrunner-Dawes Holdings, L.L.C.; TC Sargent Holdings, L.L.C.; HCI Equity Partners III, L.P.; and HCI Co-Investors III, L.P., all of which are affiliates and referred to collectively as the “HCI Entities.” Mr. Rued is a Managing Partner of HCI Equity Partners, L.L.C., which is an affiliateof the HCI Entities. Accordingly, Mr. Rued may be deemed to beneficially own the shares held by the HCI Entities. Mr. Rued disclaims beneficial ownership of any such shares inwhich he does not have a pecuniary interest. The address of each of the HCI Entities is c/o HCI Equity Partners, 1730 Pennsylvania Avenue, N.W., Suite 525, Washington, D.C.20006.(11)Represents shares of our common stock held by Elliott Associates, L.P., or “Elliott,” Elliott International, L.P., or “Elliott International,” and Elliott International Capital AdvisorsInc., or “EICA,” and collectively with Elliott and Elliott International, the “Elliott Reporting Entities.” Elliott has sole voting power and sole dispositive power with regard to1,059,356 shares, and Elliott International and EICA each have shared voting power and shared dispositive power with regard85to 2,251,127 shares. Such information is as reported on Schedule 13D filed by the Elliott Reporting Entities with the SEC on April 3, 2017 (as amended on May 4, 2017). TheElliott Reporting Entities also own shares of our preferred stock. See the Schedule 13D/A filed by the Elliott Reporting Entities on May 4, 2017. The address for each of the ElliottReporting Entities is 40 West 57th Street, New York, New York 10019.(12)Represents shares of our common stock held by Barclays Bank PLC, or “Barclays,” Barclays Bank PLC, or “Barclays Bank,” Barclays Capital Derivatives Funding LLC, or“Barclays Capital Derivatives,” and Barclays Capital Securities Limited, or “Barclays Capital Securities,” and collectively with Barclays, Barclays Bank, and Barclays CapitalDerivatives, the “Barclays Reporting Entities.” Barclays has sole voting power and sole dispositive power with regard to 2,099,528 shares, Barclays Bank has sole voting powerand sole dispositive power with regard to 721,097 shares, Barclays Capital Derivatives has sole voting power and sole dispositive power with regard to 22,831 shares, andBarclays Capital Securities has sole voting power and sole dispositive power with regard to 1,355,600 shares. Such information is as reported on Schedule 13G filed by theBarclays Reporting Persons with the SEC on February 14, 2017. The address for Barclays and Barclays Banks is 1 Churchill Place, London, E14 5HP, England, the address forBarclays Capital Derivatives is c/o Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801, and the address for Barclays CapitalSecurities is 5 The North Colonnade, Canary Wharf, London, E14 4BB, England.(13)Represents shares of our common stock held by BlackRock, Inc. and certain of its affiliates, referred to as BlackRock. BlackRock has sole voting power over 3,835,287 shares andsole dispositive power over 3,903,766 shares. Such information is as reported on Schedule 13G/A filed by BlackRock with the SEC on January 19, 2018. The address forBlackRock is 55 East 52nd Street, New York, New York 10055.(14)Represents shares of our common stock held by Dimensional Fund Advisors LP, referred to as Dimensional. Dimensional has sole voting power over 2,042,227 shares and soledispositive power over 2,151,602 shares. Such information is as reported on Schedule 13G filed by Dimensional with the SEC on February 9, 2017. The address for Dimensionalis Building One, 6300 Bee Cave Road, Austin, Texas, 78746.(15)Represents shares of our common stock held by FMR LLC and certain of its affiliates, referred to as “FMR.” FMR has sole voting power over 627,383 shares and sole dispositivepower over 4,285,280 shares. Such information is as reported on Schedule 13G/A filed by FMR with the SEC on February 14, 2017. The address for FMR is 245 Summer Street,Boston, Massachusetts 02210.(16)Represents shares of our common stock held by The Vanguard Group and certain of its affiliates, referred to as “Vanguard.” Vanguard has sole voting power over 37,391shares,shared voting power over 4,479 shares, sole dispositive power over 2,536,407 shares, and shared dispositive power over 40,206 shares. Such information is as reported onSchedule 13G/A filed by Vanguard with the SEC on February 10, 2017. The address for Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCECertain Relationships and Related Party TransactionsOther than as set forth below, there were no transactions or series of similar transactions since January 1, 2016 to which we were or are a party thatinvolved an amount exceeding $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities,or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.Management and Consulting AgreementUpon consummation of our May 2010 initial public offering, we entered into an advisory agreement with HCI Equity Management, L.P. (formerlyThayer | Hidden Creek Management, L.P.), which advisory agreement was amended and restated on September 12, 2011, pursuant to which HCI EquityManagement provided advisory services to us. These services included identification, support, negotiation, and analysis of acquisitions and dispositions andsupport, negotiation, and analysis of financing alternatives. In exchange for such services, HCI Equity Management was reimbursed for its expenses andcould be paid a transaction fee in connection with the consummation of each acquisition or divestiture by us or our subsidiaries, excluding certain specifiedtransactions, and in connection with any public or private debt offering by us or our subsidiaries negotiated by HCI Equity Management. The amount of anysuch fee was determined through good faith negotiations between our board of directors and HCI Equity Management. In 2016, we paid $0.2 million to HCIEquity Management for services performed in conjunction with the advisory fee and travel expenses. On May 2, 2017, we and HCI Equity Managemententered into a termination agreement, pursuant to which we and HCI Equity Management agreed to terminate the advisory agreement.Preferred Stock Investment AgreementOn May 1, 2017, we entered into the Investment Agreement, with Elliott, pursuant to which we issued and sold to Elliott, for an aggregate purchaseprice of $540,500,100, (a) 155,000 shares of a Series B Preferred Stock at a purchase price of $1,000 per share; (b) 55,000 shares of Series C Preferred Stock ata purchase price of $1,000 per share; (c) 100 shares of Series D Preferred Stock at a purchase price of $1.00 per share; (d) 90,000 shares of Series E PreferredStock at a purchase price of $1,000 per share; and (e) 240,500 shares of Series F Preferred Stock at a purchase price of $1,000 per share. We consummated thetransactions described above on May 2, 2017. The proceeds of the sale of the Preferred Stock were used to pay off and terminate our senior credit facility andto provide working capital to support our operations and future growth.We made certain customary representations and warranties in the Investment Agreement and agreed to certain covenants, including agreeing to usereasonable best efforts to enter into, within 90 days following the closing date, an asset based lending facility (the “New ABL Facility”) (the earlier of (i) thedate of such entry and (ii) the expiration of such 90-day period, the “Refinancing Date”). We agreed to use the proceeds from the New ABL Facility, if any, toredeem the outstanding shares of Series F Preferred Stock and, if and to the extent sufficient proceeds were available, shares of Series E Preferred Stock. Fromthe closing date until the Refinancing Date, we agreed to pay Elliott a daily payment in an amount equal to $33,333.33 per calendar day (which amountaccrued daily and was payable monthly in arrears). On July 21, 2017, we entered into the ABL Facility (which was deemed to be the “New ABL Facility”under the Investment Agreement) and used the initial proceeds from the ABL Facility for working capital purposes and to redeem all of the outstandingshares of the Series F Preferred Stock issued to Elliott.86On September 15, 2017, we closed the sale of Unitrans, Inc. for cash consideration of $95,000,000. We used a portion of the proceeds from the sale toredeem 52,500 shares of Series E Preferred Stock issued to Elliott.Warrant AgreementIn connection with the issuance of the Preferred Stock pursuant to the Investment Agreement, we and Elliott entered into a Warrant Agreement,pursuant to which we issued to Elliott eight year warrants to purchase an aggregate of 379,572 shares of our common stock at an exercise price of $0.01 pershare.Stockholders’ AgreementIn connection with the issuance of the Preferred Stock pursuant to the Investment Agreement, we and Elliott entered into the Stockholders’ Agreement,pursuant to which Elliott was granted certain preemptive rights and other rights. Subject to customary exceptions, each Eligible Elliott Party (as defined inthe Stockholders’ Agreement) shall have the right to purchase their pro rata percentage of subsequent issuances of equity securities offered by us in any non-public offering.Registration Rights AgreementIn connection with the issuance of the Preferred Stock pursuant to the Investment Agreement, we, Elliott, and investment funds affiliated with HCIentered into the Registration Rights Agreement, pursuant to which we granted certain demand and piggyback registration rights.Related Party Transaction Policies and ProceduresIt is the responsibility of our board of directors, with the assistance of our audit committee, to review and approve related party transactions. It is ourmanagement's responsibility to bring such related party transactions to the attention of our board of directors. From time to time our nominating/corporategovernance committee, in accordance with its charter, will also review potential conflict of interest transactions involving members of our board of directorsand our executive officers.Independence of DirectorsOur common stock is listed on the NYSE. Under the rules of the NYSE, independent directors must comprise a majority of a listed company's board ofdirectors.Our board of directors has undertaken a review of its composition, the composition of its committees, and the independence of each director. Basedupon all of the relevant facts and circumstances, including information requested from and provided by each director concerning his or her background,employment, and affiliations, including family relationships, our board of directors has affirmatively determined that each of Messrs. Dobak, Doerr, Kennedy,Murray, Staley, Urkiel, and Ward is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirementsand rules of the NYSE. Accordingly, a majority of our directors are independent, as required under applicable NYSE rules. Our board of directors found thatnone of these directors had a material or other disqualifying relationship with our company. In making this determination, our board of directors consideredthe current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemedrelevant in determining their independence, including each non-employee director's beneficial ownership of our capital stock. Messrs. DiBlasi and Stoeltingare not considered independent directors as a result of their positions as executive officers of our company. Mr. Rued and Ms. Vijums are not consideredindependent directors as a result of their relationships with HCI, which is affiliated with investment funds that hold approximately 20.3% of our outstandingcommon stock and which is affiliated with HCI Equity Management, to whom we paid $0.2 million in 2016 pursuant to our advisory agreement with HCIEquity Management. Mr. Kittle is not considered “independent” as a result of his relationship with Elliott, which holds approximately 8.6% of ouroutstanding common stock and all of our Preferred Stock, and to whom we paid $2.7 million in 2017 pursuant to the Investment Agreement.87ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICESIndependent Registered Public Accounting Firm FeesThe following is a summary of fees for audit and other professional services performed by Deloitte & Touche LLP (referred to as “D&T”) during thefiscal years ended December 31, 2016 and 2015: 2016(1) 2015Audit fees$1,800,000 $1,075,800Audit-related fees23,700 299,154Tax fees548,126 487,586All other fees— —Total$2,371,826 $1,862,540(1) 2016 fees reported include fees only through February 2017. Audit fees and related services related to the restatement are not included.Audit FeesThis category includes fees for the audit of our annual consolidated financial statements, for reviews of our quarterly financial statements, and forservices that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.Audit-Related FeesThis category consists of fees for assurance and related services provided by the independent registered public accounting firm that are reasonablyrelated to the performance of the audit or review of our consolidated financial statements and are not included under “Audit Fees” above. For 2016, auditrelated fees consisted of advisory services in connection with an SEC comment letter received. For 2015, audit related fees consisted of advisory services inconnection with a secondary offering and acquisition transactions.Tax FeesThis category consists of tax services provided by the independent registered public accounting firm with respect to tax compliance, tax advice, andtax planning.All Other FeesThis category consists of fees paid for products and services that would not otherwise be included in any of the categories listed above.Pre-Approval Policies and Procedures for Independent Registered Public Accounting Firm FeesAs set forth in its charter, the audit committee is responsible for pre-approving all audit, audit related, tax, and other services to be performed by theindependent registered public accounting firm. Any pre-approved services that involve fees or costs exceeding pre-approved levels will also require specificpre-approval by the audit committee. Unless otherwise specified by the audit committee in pre-approving a service, the pre-approval will be effective for the12-month period following pre-approval. The audit committee will not approve any non-audit services prohibited by applicable SEC regulations or anyservices in connection with a transaction initially recommended by the independent registered public accounting firm. The audit committee may delegate tothe audit committee chair or any one or more members of the audit committee the authority to grant pre-approvals of permissible audit and non-auditservices, provided that such pre-approvals by a member who has exercised such delegation must be reported to the full audit committee at the next scheduledmeeting. All of the audit services provided by D&T described in the table above for 2016 were approved by our audit committee pursuant to our auditcommittee's pre-approval policies.PART IVITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES(a) Financial Statements and Financial Statement Schedules(1) Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of this Form 10-K.88(2) Other schedules are omitted because they are not applicable, not required, or because required information is included in the consolidated financialstatements or notes thereto.89(b) Exhibits ExhibitNumber Exhibit 2.1 Agreement and Plan of Merger, dated as of August 8, 2014, by and among the Registrant, Project Falcon Merger Corp.,Active Aero Group Holdings, Inc. and Project Laser Holdings, LLC, as the Representative (1) 3.1 Amended and Restated Certificate of Incorporation (2) 3.2 Second Amended and Restated Bylaws (2) 4.1 Second Amended and Restated Stockholders’ Agreement, dated as of March 14, 2007, by and among the Registrantand the stockholders named therein (3) 10.10* Employment Letter Agreement, by and between the Registrant and Mark A. DiBlasi (4) 10.11* Employment Letter Agreement, by and between the Registrant and Peter R. Armbruster (4) 10.14* 2010 Incentive Compensation Plan (2) 10.15* Form of Indemnification Agreement (2) 10.17 Amended and Restated Advisory Agreement, dated September 12, 2011, by and between the Registrant and HCI EquityManagement, L.P. (5) 10.20* Form of Restricted Stock Unit Agreement (6) 10.26* Form of Performance Restricted Stock Unit Agreement (7) 10.27 Separation Agreement and Release, dated June 10, 2015, by and between the Registrant and Brian J. van Helden (8) 10.28 Sixth Amended and Restated Credit Agreement, dated September 24, 2015, among the Registrant, U.S. Bank NationalAssociation, a national banking association, the Lenders (as defined therein) and the other parties thereto (9) 10.28(A) Consent, Waiver and First Amendment to Sixth Amended and Restated Credit Agreement (10) 10.28(B) Waiver, dated November 14, 2016, among the Registrant, U.S. Bank National Association, a national bankingassociation, the Lenders (as defined therein) and the other parties thereto (11) 10.29* Employment Agreement, dated January 18, 2016 by and between the Registrant and Curtis W. Stoelting (12) 10.30* Form of Stock Option Agreement (12) 10.34* Separation Agreement and Release, dated October 3, 2015, by and between Registrant and Mark T. Peterson 21.1 List of Subsidiaries 24.1 Power of Attorney (included on the signature page of this Form 10-K) 31.1 Certification of Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer pursuant toExchange Act Rules 13a-14(a) and 15d-14(a) 32.1 Section 1350 Certification of Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 90(1)Incorporated by reference to the registrant's Current Report on Form 8-K filed with the SEC on August 11, 2014.(2)Incorporated by reference to the registrant’s registration statement on Form S-1 (Registration No. 333-152504) as filed with the SEC on May 7, 2010.(3)Incorporated by reference to the registrant’s registration statement on Form S-1 (Registration No. 333-152504) as filed with the SEC on September 11, 2008.(4)Incorporated by reference to the registrant’s registration statement on Form S-1 (Registration No. 333-152504) as filed with the SEC on March 4, 2010.(5)Incorporated by reference to the registrant’s Quarterly Report on Form 10-Q as filed with the SEC on November 14, 2011.(6)Incorporated by reference to the registrant’s Current Report on Form 8-K as filed with the SEC on March 7, 2011.(7)Incorporated by reference to the registrant's Current Report on Form 8-K as filed with the SEC on February 24, 2015.(8)Incorporated by reference to the registrant’s Quarterly Report on Form 10-Q as filed with the SEC on August 3, 2015.(9)Incorporated by reference to the registrant's Current Report on Form 8-K as filed with the SEC on September 28, 2015.(10)Incorporated by reference to the registrant's Current Report on Form 8-K as filed with the SEC on June 23, 2016.(11)Incorporated by reference to the registrant's Current Report on Form 8-K as filed with the SEC on November 17, 2016.(12)Incorporated by reference to the registrant's Quarterly Report on Form 10-Q as filed with the SEC on May 10, 2016.*Indicates management contract or compensation plan or agreement.ITEM 16.FORM 10-K SUMMARYNone.91SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. ROADRUNNER TRANSPORTATION SYSTEMS, INC. By: /s/ Curtis W. Stoelting Curtis W. Stoelting Chief Executive Officer Date: January 30, 2018 92POWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Curtis W.Stoelting, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name,place, and stead, in any and all capacities, to sign any and all amendments to this Form 10-K, and to file the same, with all exhibits thereto, and otherdocuments in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority todo and perform each and every act and thing required and necessary to be done in connection therewith, as fully to all intents and purposes as he or she mightor could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to bedone by virtue hereof.93Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. Signature Title Date /s/ Curtis W. Stoelting Chief Executive Officer and Director January 30, 2018Curtis W. Stoelting (Principal Executive Officer, Principal Financial Officer andPrincipal Accounting Officer) /s/ James D. Staley Chairman of the Board January 30, 2018James D. Staley Director January 30, 2018Mark A. DiBlasi /s/ Scott L. Dobak Director January 30, 2018Scott L. Dobak /s/ Christopher L. Doerr Director January 30, 2018Christopher L. Doerr /s/ John G. Kennedy, III Director January 30, 2018John G. Kennedy, III /s/ Ralph W. Kittle III Director January 30, 2018Ralph W. Kittle III /s/ Brian C. Murray Director January 30, 2018Brian C. Murray Director January 30, 2018Scott D. Rued /s/ William S. Urkiel Director January 30, 2018William S. Urkiel Director January 30, 2018Judith A. Vijums /s/ Michael P. Ward Director January 30, 2018Michael P. Ward 94INDEX TO FINANCIAL STATEMENTSROADRUNNER TRANSPORTATION SYSTEMS, INC.AND SUBSIDIARIES Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Stockholders’ Investment F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7F-1REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofRoadrunner Transportation Systems, Inc. and subsidiariesDowners Grove, IllinoisWe have audited the accompanying consolidated balance sheets of Roadrunner Transportation Systems, Inc. and subsidiaries (the “Company”) as ofDecember 31, 2016 and 2015, and the related consolidated statements of operations, stockholders' investment, and cash flows for each of the three years inthe period ended December 31, 2016. These financial statements are the responsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Roadrunner Transportation Systems,Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period endedDecember 31, 2016, in conformity with accounting principles generally accepted in the United States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal controlover financial reporting as of December 31, 2016, based on the criteria established in Internal Control -Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated January 30, 2018 expressed an adverse opinion on the Company'sinternal control over financial reporting because of material weaknesses./s/ Deloitte & Touche LLPMinneapolis, MinnesotaJanuary 30, 2018F-2ROADRUNNER TRANSPORTATION SYSTEMS, INC.CONSOLIDATED BALANCE SHEETS December 31, 2016 2015 As Restated(1) (In thousands, except par value)ASSETSCurrent assets: Cash and cash equivalents$29,513 $7,930Accounts receivable, net of allowances of $18,573 and $14,026, respectively272,924 260,029Deferred income taxes— 20,891Income tax receivable40,766 20,663Prepaid expenses and other current assets31,284 37,051Total current assets374,487 346,564Property and equipment, net of accumulated depreciation of $88,453 and $64,780, respectively171,857 195,364Other assets: Goodwill312,541 682,810Intangible assets, net65,549 75,694Other noncurrent assets9,120 7,321Total other assets387,210 765,825Total assets$933,554 $1,307,753LIABILITIES AND STOCKHOLDERS’ INVESTMENTCurrent liabilities: Current maturities of debt$445,589 $432,830Accounts payable149,067 116,166Accrued expenses and other current liabilities89,381 81,922Total current liabilities684,037 630,918Long-term deferred tax liabilities44,174 105,088Other long-term liabilities7,875 15,308Total liabilities736,086 751,314Commitments and contingencies (Note 12) Stockholders' investment: Common stock $.01 par value; 100,000 shares authorized; 38,341 and 38,266 shares issued andoutstanding, respectively383 383Additional paid-in capital398,602 397,253Retained (deficit) earnings(201,517) 158,803Total stockholders’ investment197,468 556,439Total liabilities and stockholders' investment$933,554 $1,307,753(1) See Note 15 “Restatement of Previously Issued Financial Statements.”See accompanying notes to consolidated financial statements.F-3ROADRUNNER TRANSPORTATION SYSTEMS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2016 2015 2014 As Restated (1) As Restated (1) (In thousands, except per share amounts)Revenues$2,033,200 $1,992,166 $1,872,470Operating expenses: Purchased transportation costs1,364,055 1,310,396 1,294,724Personnel and related benefits286,134 263,254 213,661Other operating expenses374,979 323,955 271,210Depreciation and amortization38,145 31,626 24,254Impairment charges373,661 — —Acquisition transaction expenses— 564 2,305Total operating expenses2,436,974 1,929,795 1,806,154Operating (loss) income(403,774) 62,371 66,316Interest expense22,827 19,439 13,363(Loss) income before provision for income taxes(426,601) 42,932 52,953(Benefit from) provision for income taxes(66,281) 17,312 20,243Net (loss) income$(360,320) $25,620 $32,710(Loss) earnings per share: Basic$(9.40) $0.67 $0.86Diluted$(9.40) $0.65 $0.83Weighted average common stock outstanding: Basic38,318 38,179 37,852Diluted38,318 39,180 39,259(1) See Note 15 “Restatement of Previously Issued Financial Statements.”See accompanying notes to consolidated financial statements.F-4ROADRUNNER TRANSPORTATION SYSTEMS, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT Common Stock Shares Amount AdditionalPaid-InCapital RetainedEarnings(Deficit) Total Stockholders'Investment (In thousands, except share amounts)BALANCE, January 1, 2014 (1)37,564,446 $376 $384,292 $100,473 $485,141Issuance of common stock, net of issuance costs300,716 3 3,411 — 3,414Issuance of restricted stock units, net of taxes paid60,002 — (674) — (674)Share-based compensation— — 2,255 — 2,255Excess tax benefit on share-based compensation— — 1,441 — 1,441Net income(1)— — 32,710 32,710BALANCE, December 31, 2014 (1)37,925,164 $379 $390,725 $133,183 $524,287Issuance of common stock, net of issuance costs265,734 3 4,008 — 4,011Issuance of restricted stock units, net of taxes paid74,971 1 (930) — (929)Issuance costs from secondary stock offering— — (225) — (225)Share-based compensation— — 2,500 — 2,500Excess tax benefit on share-based compensation— — 1,175 — 1,175Net income(1)— — — 25,620 25,620BALANCE, December 31, 2015 (1)38,265,869 $383 $397,253 $158,803 $556,439Issuance of restricted stock units, net of taxes paid74,738—— (303) — (303)Issuance costs from secondary stock offering— — (33) — (33)Share-based compensation——— 2,232 — 2,232Tax deficiency on share-based compensation— — (547) — (547)Net loss— — — (360,320) (360,320)BALANCE, December 31, 201638,340,607 $383 $398,602 $(201,517) $197,468(1) See Note 15 “Restatement of Previously Issued Financial Statements.”See accompanying notes to consolidated financial statements.F-5ROADRUNNER TRANSPORTATION SYSTEMS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2016 2015 2014 As Restated (1) As Restated (1) (In thousands)Cash flows from operating activities: Net income (loss)$(360,320) $25,620 $32,710Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization40,720 33,911 26,321Loss on disposal of property and equipment4,144 1,300 209Gain on sale of business(5,416) — —Share-based compensation2,232 2,500 2,255Adjustments to contingent purchase obligations(2,458) (2,931) (1,722)Provision for bad debts5,127 4,816 9,653Tax deficiency (excess tax benefit) on share-based compensation547 (1,175) (1,441)Deferred tax (benefit) provision(43,441) 2,754 2,467Impairment charges373,661 — —Changes in (net of acquisitions): Accounts receivable(18,020) 19,041 (43,628)Income taxes receivable(20,103) (7,020) (5,899)Prepaid expenses and other assets8,152 (6,028) (5,035)Accounts payable32,901 (11,929) 14,921Accrued expenses and other liabilities11,675 7,355 6,417Net cash provided by operating activities29,401 68,214 37,228Cash flows from investing activities: Acquisition of business, net of cash acquired— (32,765) (230,818)Capital expenditures(17,573) (49,984) (41,975)Proceeds from sale of property and equipment6,980 6,078 6,951Proceeds from sale of business1,000 — —Net cash used in investing activities(9,593) (76,671) (265,842)Cash flows from financing activities: Borrowings under revolving credit facilities292,124 183,852 383,074Payments under revolving credit facilities(262,573) (275,703) (170,089)Debt borrowings— 110,000 33,750Debt payments(18,500) (8,750) (9,375)Debt issuance cost(871) (2,798) (2,524)Payments of contingent purchase obligations(2,455) (3,317) (4,804)Proceeds from issuance of common stock, net of issuance costs— 3,786 3,414Proceeds from issuance of restricted stock units, net of taxes paid(303) (929) (674)(Tax deficiency) excess tax benefit on share-based compensation(547) 1,175 1,441Reduction of capital lease obligation(5,100) (1,738) (228)Net cash provided by financing activities1,775 5,578 233,985Net increase (decrease) in cash and cash equivalents21,583 (2,879) 5,371Cash and cash equivalents: Beginning of period7,930 10,809 5,438End of period$29,513 $7,930 $10,809Supplemental cash flow information: Cash paid for interest$19,473 $16,725 $11,351Cash paid for income taxes (net of refunds)$(3,943) $20,812 $21,802Non-cash sale of business$3,860 $— $—Non-cash capital leases and other obligations to acquire assets$— $12,417 $—Non-cash contingent purchase obligation$— $4,114 $—(1) See Note 15 “Restatement of Previously Issued Financial Statements.”See accompanying notes to consolidated financial statements.F-6Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements1. Organization, Nature of Business and Significant Accounting PoliciesNature of BusinessRoadrunner Transportation Systems, Inc. (the “Company”) is headquartered in Downers Grove, Illinois and has the following three segments:Truckload Logistics (“TL”); Less-than-Truckload (“LTL”); and Global Solutions. Within its TL business, the Company operates 42 TL service centers, hasover 40 company brokers and is augmented by over 90 independent brokerage agents. Within its LTL business, the Company operates 44 LTL servicecenters throughout the United States, complemented by relationships with over 150 delivery agents. Within its Global Solutions business, the Companyoperates from 18 office locations to support its international freight forwarding and domestic third party logistics business. The Company also operates fivedistribution facilities used to support its warehousing and consolidation business. From pickup to delivery, the Company leverages relationships with adiverse group of third-party carriers to provide scalable capacity and reliable, customized service, including domestic and international air and oceantransportation services, to its customers. The Company operates primarily in the United States.Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its subsidiaries. As of December 31, 2016, all subsidiaries were 100%owned and all intercompany balances and transactions have been eliminated in consolidation. The consolidated balance sheets as of December 31, 2015, andthe consolidated statements of operations, stockholders' investment, and cash flows for the years ended December 31, 2015 and 2014 have been revised forthe effects of the restatements of previously issued financial statements disclosed in Note 15.The Company owned 37.5% of Central Minnesota Logistics, Inc. (“CML”), which operates as one of the Company's brokerage agents. CML isaccounted for under the equity method and is insignificant to the consolidated financial statements. The Company records its investment in CML in othernoncurrent assets and recognizes its share of the net income and loss of CML.Change in Accounting PrincipleOn January 1, 2016, the Company adopted a new methodology for accounting for debt issuance costs in accordance with the Accounting StandardsUpdate No. 2015-03 (ASU 2015-03), Interest - Imputation of Interest (Subtopic 835-30), which requires debt issuance costs related to a recognized debtliability in the balance sheet to be presented as a direct reduction from the carrying amount of that debt liability. The change in methodology has beenapplied retrospectively. Debt issuance costs of $4.9 million and $6.6 million have been reclassified from other noncurrent assets to a direct reduction of debton the consolidated balance sheets as of December 31, 2016 and 2015, respectively.In the fourth quarter of 2016, the Company adopted a new methodology for accounting for deferred taxes in accordance with Accounting StandardsUpdate No. 2015-17, Income Taxes (Topic 740) (“ASU 2015-17”), which simplifies the presentation of deferred income taxes by requiring deferred tax assetsand liabilities be classified as noncurrent in the consolidated balance sheet. The Company adopted ASU 2015-17 prospectively and reclassified the deferredincome taxes previously reported within current assets to deferred tax liabilities reported in other long-term liabilities on the consolidated balance sheet.Prior periods were not retrospectively adjusted.Use of EstimatesThe preparation of financial statements, in conformity with accounting principles generally accepted in the United States (“GAAP”), requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities atthe date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from thoseestimates.Segment ReportingThe Company determines its segments based on the information utilized by the chief operating decision maker, the Company’s Chief ExecutiveOfficer, to allocate resources and assess performance. Based on this information, the Company has determined that it has three segments: TL, LTL, and GlobalSolutions. In 2016, the Company realigned two of its operating companies to different existing segments based on consideration of services provided,alignment with segment management, and consistent with how the business is viewed by the chief operating decision maker. The change in segments did nothave any impact on previouslyF-7Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)reported consolidated financial results, but prior year segment results have been retrospectively revised to align with the new segment structure.Cash and Cash EquivalentsCash equivalents are defined as short-term investments that have an original maturity of three months or less at the date of purchase and are readilyconvertible into cash. The Company maintains cash in several banks and, at times, the balances may exceed federally insured limits. Cash equivalents consistof overnight investments in an interest bearing sweep account.Accounts Receivable and Related ReservesAccounts receivable represent trade receivables from customers and are stated net of an allowance for doubtful accounts of approximately $18.6 millionand $14.0 million as of December 31, 2016 and 2015, respectively. Management estimates the portion of accounts receivable that will not be collected andaccounts are written off when they are determined to be uncollectible. Accounts receivable are uncollateralized and are generally due 30 days from theinvoice date.The Company provides reserves for accounts receivable. The rollforward of the allowance for doubtful accounts is as follows (in thousands): Year Ended December 31, 2016 2015 2014Beginning balance$14,026 $10,775 $4,571Provision, charged to expense5,127 4,816 9,653Write-offs, less recoveries(580) (1,565) (3,449)Ending balance$18,573 $14,026 $10,775Property and EquipmentProperty and equipment are stated at cost. Maintenance and repair costs are charged to expense as incurred. For financial reporting purposes,depreciation is calculated using the straight-line method over the following estimated useful lives: Buildings and leasehold improvements5-30 yearsComputer equipment and software3-5 yearsOffice equipment, furniture, and fixtures3-15 yearsDock, warehouse, and other equipment5-7 yearsTractors and trailers3-7 yearsAircraft fleet and spare parts3-8 yearsLeasehold improvements are amortized over the shorter of their useful lives or the remaining lease term. Accelerated depreciation methods are used fortax reporting purposes.Property and equipment and other long-lived assets are reviewed periodically for possible impairment. The Company evaluates whether current facts orcircumstances indicate that the carrying value of the assets to be held and used may not be recoverable. If such circumstances are determined to exist, anestimate of undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value todetermine whether impairment exists. If an asset is determined to be impaired, the loss is measured and recorded based on quoted market prices in activemarkets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including discounted valueof estimated future cash flows. The Company reports an asset to be disposed of at the lower of its carrying value or its fair value less the cost to sell.Spare Parts for Aircraft FleetSpare parts for aircraft fleet are categorized into several categories: rotables, repairables, expendables, and materials and supplies. Rotable andrepairable spare parts for aircraft fleet are typically significant in value, can be repaired and re-used, and generally have an expected useful life consistentwith the aircraft fleet these parts support. Spare parts for aircraft fleet are recordedF-8Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)at cost and depreciated over the lesser of the life of the aircraft or spare part. The cost of repairing the aircraft fleet spare parts is expensed as incurred.Expendables and materials and supplies are expensed when purchased.Goodwill and Other IntangiblesGoodwill and other intangible assets result from business acquisitions. The Company accounts for business acquisitions by assigning the purchaseprice to tangible and intangible assets and liabilities. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchaseprice over amounts assigned is recorded as goodwill.Goodwill is tested for impairment at least annually on July 1 or more frequently whenever events or changes in circumstances indicate that the assetmay 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 goodwillrequires a two-step approach, the first of which is to compare the estimated fair value at each of the reporting units to its carrying amount, including goodwill.If the carrying amount of a reporting unit exceeds its fair value, a second step is required to measure the goodwill impairment loss. The second step includesvaluing all the tangible and intangible assets of the reporting unit as if the reporting unit had been acquired in a business combination. Then, the implied fairvalue of the reporting unit's goodwill is compared to the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds theimplied fair value of the goodwill, a non-cash goodwill impairment loss is recognized in an amount equal to the excess, not to exceed the carrying amount.For purposes of the impairment analysis, the fair value of the Company's reporting units is estimated based upon an average of the market approach andthe income approach, both of which incorporate numerous assumptions and estimates such as company forecasts, discount rates and growth rates, amongothers. The determination of the fair value of the reporting units and the allocation of that value to individual assets and liabilities within those reportingunits requires the Company to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: theselection of appropriate peer group companies; control premiums appropriate for acquisitions in the industries in which the Company competes; the discountrate; terminal growth rates; and forecasts of revenue, operating income, and capital expenditures. The allocation requires several analyses to determine fairvalue of assets and liabilities including, among others, customer relationships, and property and equipment. Although the Company believes its estimates offair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates.Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of thereporting units, the amount of the goodwill impairment charge, or both. Future declines in the overall market value of the Company may also result in aconclusion that the fair value of one or more reporting units has declined below its carrying value.The Company has four reporting units for its three segments: TL, LTL, Global Solutions, and Warehousing & Consolidation, which is consolidated intothe Company's Global Solutions segment. The Company conducted its goodwill impairment analysis for each of its four reporting units as of July 1, 2016. Asa result of the first step of the Company's goodwill impairment analysis, the Company determined that the fair value of the Global Solutions reporting unitexceeded its carrying value by 8.4%; thus no impairment was indicated for this reporting unit. However, resulting from a combination of the weakenedenvironment, the inability to meet forecast results, and the Company's lower share price, the Company determined that the fair value of the TL, LTL, andWarehousing & Consolidation reporting units were less than their respective carrying values, requiring the Company to perform the second step of thegoodwill impairment analysis for its TL, LTL, and Warehousing & Consolidation reporting units. The Company completed the second step of the goodwillimpairment analysis and recorded non-cash goodwill impairment charges of $157.5 million, $197.3 million, and $17.2 million for its TL, LTL, andWarehousing & Consolidation reporting units, respectively.Other intangible assets recorded consist primarily of definite lived customer relationships. The Company evaluates its other intangible assets forimpairment when current facts or circumstances indicate that the carrying value of the assets to be held and used may not be recoverable. During 2016,indicators of impairment were identified in connection with certain of the Company's business operations and the Company performed the requiredimpairment analysis for the long-lived assets associated with these business operations. No impairment was identified; however, the Company did record $1.6million of non-cash impairment charges in connection with the shutdown of one of its other business operations. No indicators of impairment were identifiedin 2015 or 2014. See Note 4 for additional information on the Company's goodwill and intangible assets. Debt Issuance CostsDebt issuance costs represent costs incurred in connection with the financing agreement described in Note 6 . The unamortized debt issuance costsaggregate to $4.9 million and $6.6 million as of December 31, 2016 and 2015, respectively, and as noted above,F-9Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)have been classified as a reduction to debt in the consolidated balance sheets. Such costs are being amortized over the expected maturity of the financingagreements using the effective interest rate method.Share-Based CompensationThe Company’s share-based payment awards are comprised of stock options, restricted stock units, and performance restricted stock units. The cost forthe Company’s stock options is measured at fair value using the Black-Scholes option pricing model. The cost for restricted stock units and performancerestricted stock units is measured using the stock price at the grant date. The cost is recognized over the vesting period of the award, which is typically fouryears. The amount of costs recognized for performance restricted stock units over the vesting period is dependent on the Company meeting the pre-established financial performance goals.Income TaxesThe Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities forthe expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred taxassets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effectfor the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income inthe period that includes the enactment date.The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such adetermination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize itsdeferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance,which would reduce the provision for income taxes.The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determineswhether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position, and (2) for those tax positionsthat meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to berealized upon ultimate settlement with the related tax authority.Fair Value of Financial InstrumentsThe fair value of cash approximates cost. The estimated fair value of the Company's debt approximated its carrying value as of December 31, 2016 and2015 as the debt agreement bears interest based on prevailing variable market rates currently available and as such would be categorized as a Level 2 in thefair value hierarchy as defined in Note 5.Revenue RecognitionTL revenue is recorded when all of the following have occurred: an agreement of sale exists; pricing is fixed or determinable; delivery has occurred;and the Company’s obligation to fulfill a transaction is complete and collection of revenue is reasonably assured. This occurs when the Company completesthe delivery of a shipment or the service has been fulfilled.LTL revenue is recorded when all of the following have occurred: an agreement of sale exists; pricing is fixed or determinable; and collection ofrevenue is reasonably assured. The Company uses a percentage of services completed method to recognize revenue, which results in an allocation of revenuebetween reporting periods based on the distinctive phases of each LTL transaction completed in each reporting period, with expenses recognized as incurred.The Company believes that this is the most appropriate method for LTL revenue recognition based on the multiple distinct phases of a typical LTLtransaction, which is in contrast to the single phase of a typical TL transaction.Global Solutions revenue is recorded when the shipment has been delivered by a third-party carrier. Fees for services revenue is recognized when theservices have been rendered. At the time of delivery or rendering of services, as applicable, the Company’s obligation to fulfill a transaction is complete andcollection of revenue is reasonably assured. The Company offers volume discounts to certain customers. Revenue is reduced as discounts are earned. In someinstances, the Company performs multiple services. Typically separate fees are quoted and recognized as revenue when services are rendered. Occasionally,customers request an all-inclusive “door-to-door” fee for a set of services and revenue is allocated to the elements and recognized as each service iscompleted.F-10Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)The Company typically recognizes revenue on a gross basis, as opposed to a net basis, because it bears the risks and benefits associated with revenue-generated activities by, among other things, (1) acting as a principal in the transaction, (2) establishing prices, (3) managing all aspects of the shippingprocess, and (4) taking the risk of loss for collection, delivery, and returns. Certain Global Solutions transactions to provide specific services are recorded atthe net amount charged to the client due to the following factors: (A) the Company does not have latitude in establishing pricing and (B) the Company doesnot bear the risk of loss for delivery and returns; these items are the risk of the carrier.InsuranceThe Company uses a combination of purchased insurance and self-insurance programs to provide for the cost of auto liability, general liability, cargodamage, workers’ compensation claims, and benefits paid under employee health care programs. Insurance reserves are established for estimates of the lossthat the Company will ultimately incur on reported claims, as well as estimates of claims that have been incurred but not yet reported.The measurement and classification of self-insured costs requires the consideration of historical cost experience, demographic and severity factors, andjudgments about the current and expected levels of cost per claim and retention levels. These methods provide estimates of the liability associated withclaims incurred as of the balance sheet date, including claims not reported. The Company believes these methods are appropriate for measuring these self-insurance accruals.Lease Purchase GuaranteeIn connection with leases of certain equipment used exclusively for the Company, the Company has a guarantee to perform in the event of default bythe driver. The Company estimates the costs associated with the guarantee by estimating the default rate at the inception of the lease. The Company recordsthe liability and a corresponding asset, which is subsequently amortized over the life of the lease.New Accounting PronouncementsIn March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09, Compensation - StockCompensation (Topic 718), Improvements to Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 will be effective for the Company in 2017and includes simplification of the following aspects of share-based payment transactions:Accounting for income taxes - All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) willbe recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards will be treated as discreteitems in the reporting period in which they occur. An entity also will recognize excess tax benefits regardless of whether the benefit reduces taxespayable in the current period.Classification of excess tax benefits on the statement of cash flow - Excess tax benefits will be classified along with other income tax cash flows asan operating activity.Forfeitures - An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (currentGAAP) or account for forfeitures when they occur.The Company expects to prospectively adopt ASU 2016-09 in January 2017. Upon adoption of ASU 2016-09 in January 2017, the Company willrecognize any excess tax benefits or tax deficiencies through the consolidated statements of operations. The Company has historically been able to offsetexcess tax benefits and/or tax deficiencies against taxes payable, so no cumulative effect adjustment to retained earnings is expected upon adoption.Effective January 1, 2017, the Company will no longer present excess tax benefits and/or tax deficiencies under both operating activities and financingactivities within the consolidated statements of cash flows for any year presented. The Company will elect to recognize forfeitures as they occur and theCompany expects that the cumulative effect of adjustments to retained earnings, if any, will be de minimis.In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), which was updated in August 2015 by AccountingStandards Update No. 2015-14, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognizerevenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to beentitled in exchange for those goods or services. In March 2016, the FASB issued Accounting Standards Update No. 2016-08 (“ASU 2016-08”), Revenuefrom Contracts with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net). Under ASU 2016-08, when another party isinvolved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide theF-11Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)specified good or service (that is, the entity is a principal) or to arrange for that good or service to be provided by another party. When the principal entitysatisfies a performance obligation, the entity recognizes revenue in the gross amount. When an entity that is an agent satisfies the performance obligation,that entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled. Both ASU 2014-09 and ASU 2016-08 will beeffective for the Company in 2018 and can be adopted using either the retrospective or cumulative effect transition method. The Company is in the process ofevaluating the effect that the guidance will have on revenue recognition within each of its segments. The Company's revenue within its TL and LTLsegments are primarily generated from freight sales which contain a single delivery element. Revenue within the Company's TL segment is recognized whenownership and control transfer and, as such, the Company does not expect there to be a material impact on the TL segment revenues. The Company currentlyrecognizes revenue when all of the following have occurred: an agreement of sale exists; pricing is fixed or determinable; and collection of revenue isreasonably assured; however, revenue is recognized based on a percentage of services completed for freight-in-transit. The Company expects that the timingof LTL revenues may be affected. Global Solutions revenue includes both freight and services revenues. Freight revenue is recognized when the shipment isdelivered and fees for services are recognized when the service has been rendered. Occasionally, customers request an all-inclusive “door-to-door” fee for aset of services and revenue is allocated to the elements and recognized as each service is completed. The Company is in the process of determining whatimpact, if any, the principal versus agent considerations may have on the revenue recognized within its Global Solutions segment. The Company has not yetconcluded on its adoption methodology or quantified the potential impact.In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230) (“ASU 2016-15”), which will beeffective for the Company in 2018. ASU 2016-15 provides guidance on specific cash flow issues, including but not limited to: debt prepayment or debtextinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; anddistributions received from equity method investees. ASU 2016-15 provides guidance on how to account for the cash inflows and/or outflows in thestatement of cash flows. The Company is in the process of evaluating the guidance for ASU 2016-15, but does not expect this to have a material impact onthe Company's consolidated financial statements.In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other thanInventory (“ASU 2016-16”), which will be effective for the Company in 2018. Current GAAP prohibits the recognition of current and deferred income taxesfor intra-entity asset transfers other than inventory (e.g. property and equipment) until the asset has been sold to an outside party. Under ASU 2016-16, theFASB decided that an entity should recognize the income tax consequences of an intra-entity transfer of an asset when the transfer occurs. ASU 2016-16 doesnot include any new disclosure requirements; however, existing disclosure around the rate reconciliations and types of temporary differences and/orcarryforward that give rise to a significant portion of deferred income taxes may be applicable. The Company is in the process of evaluating the guidance forASU 2016-16 and has not yet quantified the potential impact on the Company’s consolidated financial statements.In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which will be effective for theCompany in 2019. For financing leases, a lessee is required to: (1) recognize a right-of-use asset and a lease liability, initially measured at the present value ofthe lease payments; (2) recognize interest on the lease liability separately from amortization of the right-of-use asset; and (3) classify repayments of theprincipal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operatingactivities in the statement of cash flows. For operating leases, a lessee is required to: (1) recognize the right-to-use asset and a lease liability, initiallymeasured at the present value of the lease payments; (2) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease termon a generally straight-line basis; and (3) classify all cash payments within operating activities in the statement of cash flows. For leases with a term of 12months or less, a lessee is permitted to make an accounting policy election by class of underlying assets not to recognize lease assets and lease liabilities. If alessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The Company is in theprocess of evaluating the guidance in ASU 2016-02 and will determine the total impact of the new guidance based on the current lease arrangements that areexpected to remain in place. The Company expects adoption of this guidance will have a material impact on the Company's consolidated balance sheet giventhe Company will be required to record operating leases with lease terms greater than 12 months within assets and liabilities on the consolidated balancesheets. The Company has not yet determined how it will handle lease terms of 12 months or less.In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test forGoodwill Impairment (“ASU 2017-04”), which will be effective for the Company in 2020, but early adoption is permitted for interim and annual goodwillimpairment tests performed on testing dates after January 1, 2017. ASUF-12Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)2017-04 eliminates step two from the goodwill impairment test and instead requires an entity to recognize an impairment charge for the amount by which thecarrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to thatreporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unitwhen measuring the goodwill impairment loss, if applicable. ASU 2017-04 reduces the amount of time and money spent determining the implied fair value ofgoodwill, which would allow the Company to more quickly evaluate and identify a recognized impairment.2. Property and EquipmentProperty and equipment consisted of the following as of December 31 (in thousands): 2016 2015Land$3,189 $4,721Buildings and leasehold improvements18,520 17,553Computer equipment and software47,313 40,683Office equipment, furniture, and fixtures6,250 4,259Dock, warehouse, and other equipment8,852 9,815Tractors and trailers147,015 156,953Aircraft fleet and rotable spare parts29,171 26,160Property and equipment, gross260,310 260,144Less: Accumulated depreciation88,453 64,780Property and equipment, net$171,857 $195,364Depreciation expense was $29.6 million, $23.2 million, and $18.4 million for the years ended December 31, 2016, 2015, and 2014, respectively.3. AcquisitionsOn February 24, 2014, the Company acquired all of the outstanding capital stock of Rich Logistics and Everett Transportation Inc. and certain assets ofKeith Everett (collectively, “Rich Logistics”) for the purpose of expanding its current market presence in the TL segment. Cash consideration paid was $46.5million. The acquisition was financed with borrowings under the Company's credit facility.On March 14, 2014, the Company acquired all of the outstanding capital stock of Unitrans, Inc. (“Unitrans”) for the purpose of expanding its currentmarket presence in the Global Solutions segment. Cash consideration paid was $53.3 million. The acquisition was financed with borrowings under theCompany's credit facility.On July 18, 2014, the Company acquired all of the outstanding capital stock of ISI Acquisition Corp. (which wholly owns Integrated Services, Inc. andISI Logistics Inc.) and ISI Logistics South, Inc. (collectively, “ISI”) for the purpose of expanding its current market presence in the TL segment. Cashconsideration paid was $13.0 million. The acquisition was financed with borrowings under the Company's credit facility.On August 27, 2014, the Company acquired all of the outstanding capital stock of Active Aero Group Holdings, Inc. (“Active Aero”) for the purpose ofexpanding its presence within the TL segment. Cash consideration paid was $118.1 million. The acquisition was financed with borrowings under theCompany's credit facility.On July 28, 2015, the Company acquired all of the outstanding partnership interests of Stagecoach Cartage and Distribution LP (“Stagecoach”) for thepurpose of expanding its presence within the TL segment. Cash consideration paid was $32.3 million. The acquisition was financed with borrowings underthe Company's credit facility. The Stagecoach purchase agreement called for contingent consideration in the form of a contingent purchase obligationcapped at $5.0 million. The former owners of Stagecoach were entitled to receive a payment equal to the amount by which Stagecoach's operating incomebefore depreciation and amortization, as defined in the purchase agreement, exceeded $7.0 million for the twelve month periods ending July 31, 2016, 2017,2018, and 2019. Approximately $4.1 million was recorded as a contingent purchase obligation on the opening balance sheet. The Company paid $1.7million of the contingent purchase obligation in the fourth quarter of 2016. Based on future expected earnings, the Company did not expect to pay anyadditional contingent purchase obligation and recorded an adjustment to write-F-13Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)off the remaining contingent purchase obligation in 2016. In December 2017, the Company and the former owners of Stagecoach signed an agreementreleasing the Company from any further obligation under the contingent purchase obligation.The results of operations and financial condition of these acquisitions have been included in the Company's consolidated financial statements sincetheir acquisition dates. The acquisition of Stagecoach is considered immaterial. The acquisitions of Rich Logistics, Unitrans, ISI, and Active Aero(collectively, “2014 acquisitions”) are considered individually immaterial, but material in the aggregate. The following table summarizes the allocation ofthe purchase price paid to the fair value of the net assets for the 2014 acquisitions, in the aggregate (in thousands):Accounts receivable$69,857Other current assets8,813Property and equipment39,604Goodwill146,150Customer relationship intangible assets54,347Accounts payable and other liabilities(87,866)Total$230,905The goodwill for the acquisitions, in the aggregate, is a result of acquiring and retaining the existing workforces and expected synergies fromintegrating the operations into the Company. Purchase accounting is considered final for the 2014 acquisitions and the 2015 acquisition of Stagecoach.From the dates of acquisition through December 31, 2014, the 2014 acquisitions contributed revenues of $331.7 million and net income of $16.4million. The following supplemental unaudited pro forma financial information of the Company for the year ended December 31, 2014 includes the results ofoperations for the 2014 acquisitions, in the aggregate, as if the acquisitions had been completed on January 1, 2014 (in thousands): Year Ended December 31, 2014Revenues$2,103,346Net income$40,514The supplemental unaudited pro forma financial information above is presented for information purposes only. It is not necessarily indicative of whatthe Company's financial position or results of operations actually would have been had the Company completed the acquisitions at the dates indicated, nor isit intended to project the future financial position or operating results of the combined company.4. Goodwill and Intangible AssetsGoodwill represents the excess of the purchase price of all acquisitions over the estimated fair value of the net assets acquired. The Company evaluatesgoodwill and intangible assets for impairment at least annually or more frequently whenever events or changes in circumstances indicate that the asset maybe 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 goodwillrequires a two-step approach, the first of which is to compare the estimated fair value at each of its reporting units to its carrying amount, including goodwill.If the carrying amount of a reporting unit exceeds its fair value, a second step is required to measure the goodwill impairment loss. The second step includesvaluing all the tangible and intangible assets of the reporting unit as if the reporting unit had been acquired in a business combination. Then, the implied fairvalue of the reporting unit's goodwill is compared to the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds theimplied fair value of the goodwill, a non-cash goodwill impairment loss is recognized in an amount equal to the excess, not to exceed the carrying amount.For purposes of the impairment analysis, the fair value of the Company’s reporting units is estimated based upon an average of the market approach andthe income approach, both of which incorporate numerous assumptions and estimates such as company forecasts, discount rates and growth rates, amongothers. The determination of the fair value of the reporting units and the allocation of that value to individual assets and liabilities within those reportingunits requires the Company to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: theselection of appropriate peer groupF-14Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)companies; control premiums appropriate for acquisitions in the industries in which the Company competes; the discount rate; terminal growth rates; andforecasts of revenue, operating income, and capital expenditures. The allocation requires several analyses to determine fair value of assets and liabilitiesincluding, among others, customer relationships, and property and equipment. Although the Company believes its estimates of fair value are reasonable,actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptionsconcerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting units, the amountof the goodwill impairment charge, or both. Future declines in the overall market value of the Company's stock may also result in a conclusion that the fairvalue of one or more reporting units has declined below its carrying value.The Company has four reporting units for its three segments: TL, LTL, Global Solutions, and Warehousing & Consolidation, which is consolidated intothe Company's Global Solutions segment. The Company conducts its goodwill impairment analysis for each of its four reporting units as of July 1 of eachyear. As a result of the first step of the Company's goodwill impairment analysis as of July 1, 2016, the Company determined that the fair value of the GlobalSolutions reporting unit exceeded its carrying value by 8.4%; thus no impairment was indicated for this reporting unit. However, resulting from acombination of the weakened environment, the inability to meet forecast results, and the lower share price, the Company determined that the fair value of theTL, LTL, and Warehousing & Consolidation reporting units were less than their respective carrying values, requiring the Company to perform the secondstep of the goodwill impairment analysis for its TL, LTL, and Warehousing & Consolidation reporting units. The Company completed the second step of thegoodwill impairment analysis for its TL, LTL, and Warehousing & Consolidation reporting units and recorded non-cash goodwill impairment charges of$157.5 million, $197.3 million, and $17.2 million for its TL, LTL, and Warehousing & Consolidation reporting units, respectively. No goodwill impairmentcharges were recorded in 2015 or 2014. The gross amount of accumulated goodwill impairment losses are equal to the 2016 goodwill impairment charges. As indicated in Note 1, in connection with the change in segments, the Company reallocated goodwill of $77.5 million between the TL and GlobalSolutions segments as of December 31, 2014. Additionally, the goodwill balances have been adjusted for the effects of the restatement discussed in Note 15.The following is a rollforward of goodwill from December 31, 2014 to December 31, 2016 by segment (in thousands): TL LTL Global Solutions TotalGoodwill balance as of December 31, 2014$236,585 $197,312 $230,780 $664,677Adjustments to goodwill for purchase accounting984 — (222) 762Goodwill related to acquisitions17,371 — — 17,371Goodwill balance as of December 31, 2015$254,940 197,312 230,558 682,810Adjustments to goodwill for purchase accounting1,812 — — 1,812Goodwill impairment(157,538) (197,312) (17,231) (372,081)Goodwill balance as of December 31, 2016$99,214 $— $213,327 $312,541Intangible assets consist primarily of customer relationships acquired from business acquisitions. As indicated in Note 1, in connection with the changein segments, the Company reallocated net intangible assets of $2.7 million between the TL and Global Solutions segments as of December 31, 2015.Additionally, the gross carrying amount of the TL customer relationship intangible has been reduced by $1.6 million of impairment discussed below andadjusted for the effects of the restatement discussed in Note 15. Intangible assets were as follows as of December 31 (in thousands): 2016 2015 GrossCarryingAmount AccumulatedAmortization NetCarryingValue GrossCarryingAmount AccumulatedAmortization NetCarryingValueTL$54,973 $(13,606) $41,367 $57,468 $(9,714) $47,754LTL1,358 (1,083) 275 1,358 (1,017) 341Global Solutions38,427 (14,520) 23,907 38,427 (10,828) 27,599Total intangible assets$94,758 $(29,209) $65,549 $97,253 $(21,559) $75,694F-15Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)The customer relationships intangible assets are amortized over their estimated five to 12 year useful lives. Amortization expense was $8.6 million,$8.4 million, and $5.8 million for the years ended December 31, 2016, 2015, and 2014, respectively. In the fourth quarter of 2016, the Company decided toshut down one of its TL business operations due to the significant decline in volume resulting from the loss of a significant customer. The Company reviewedthe customer relationship intangible associated with the business operation, considered the decline in volumes and determined the customer relationshipintangible was impaired. An impairment loss of $1.6 million was recorded in 2016 to impairment charge included in the results of operations. The Companyidentified indicators of impairment with certain other business operations and performed the required impairment analysis, but no impairment was identified.Estimated amortization expense for each of the next five years based on intangible assets as of December 31, 2016 is as follows (in thousands): AmountYear Ending: 2017 $8,1982018 7,9332019 7,6292020 7,2572021 7,075Thereafter 27,457Total $65,5495. Fair Value MeasurementAccounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value beclassified and disclosed in one of the following three categories:Level 1 — Quoted market prices in active markets for identical assets or liabilities.Level 2 — Observable market-based inputs or unobservable inputs that are corroborated by market data.Level 3 — Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair valuemeasurement.Certain of the Company’s acquisitions contain contingent purchase obligations as described in Note 3. The contingent purchase obligation related toacquisitions is measured at fair value on a recurring basis, according to the valuation techniques the Company uses to determine fair value. Changes to thefair value are recognized as income or expense within other operating expenses in the consolidated statements of operations. In measuring the fair value ofthe contingent purchase obligation, the Company used an income approach that considers the expected future earnings of the acquired businesses, for thevarying performance periods, based on historical performance and the resulting contingent payments, discounted at a risk-adjusted rate. There are noremaining contingent purchase obligations as of December 31, 2016.F-16Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)The following table presents information as of December 31, 2015, about the Company’s financial liabilities (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Fair ValueContingent purchase obligation related to acquisitions$— $— $4,913 $4,913Total liabilities at fair value$— $— $4,913 $4,913The table below sets forth a reconciliation of the Company’s beginning and ending Level 3 financial liability balance for the three years endedDecember 31 (in thousands): 2016 2015 2014Balance, beginning of period$4,913 $6,842 $13,005Contingent purchase obligation recorded on the opening balance sheet— 4,114 —Payment of contingent purchase obligations(2,455) (3,317) (4,804)Interest expense— 205 363Adjustments to contingent purchase obligations (1)(2,458) (2,931) (1,722)Balance, end of period$— $4,913 $6,842(1)Adjustments to contingent purchase obligations are reported in other operating expenses in the consolidated statements of operations.6. DebtDebtDebt consisted of the following at December 31 (in thousands): 2016 2015Senior debt: Revolving credit facility$172,700 $143,149Term loans277,750 296,250Total debt450,450 439,399Less: Debt issuance costs(4,861) (6,569)Total debt, net of debt issuance costs445,589 432,830Less: Current maturities(445,589) (432,830)Total debt, net of current maturities$— $—Maturities for each of the next five years based on debt as of December 31, 2016 are as follows (in thousands) AmountYear Ending: 2017 $450,450Total $450,450On July 9, 2014, the Company entered into a fifth amended and restated credit agreement with U.S. Bank National Association (“U.S. Bank”) and otherlenders, which increased the revolving credit facility from $200.0 million to $350.0 million and the term loan from $175.0 million to $200.0 million. OnSeptember 24, 2015, the Company entered into a sixth amended and restated credit agreement (the “credit agreement”) with U.S. Bank and other lenders,which increased the revolving credit facility to $400.0 million and the term loan to $300.0 million. The credit facility had a maturity date of July 9, 2019.Principal on the term loan was due in quarterly installments of $3.8 million. On June 17, 2016, the Company entered into a Consent, Waiver, and FirstAmendment (the “Amendment”) to the credit agreement. Pursuant to the Amendment, the Company, among other things, reduced the revolving line of creditunder the senior credit facility from a maximum aggregate amount of $400.0 million to $300.0 million.F-17Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)The Company further reduced the revolving line of credit under the senior credit facility to $250.0 million pursuant to a Waiver entered into on November14, 2016.The credit agreement was collateralized by all assets of the Company and contained certain financial covenants, including a maximum cash flowleverage ratio and a minimum fixed charge coverage ratio. Pursuant to the Amendment, the maximum cash flow leverage ratio and minimum fixed chargecoverage ratio were modified for certain future periods. As modified by the Amendment, the maximum cash flow leverage ratio was 3.75 to 1.0 for the fourquarters ending December 31, 2016 and the minimum fixed charge coverage ratio was 1.15 to 1.0 for the four quarters ended December 31, 2016.Additionally, the credit agreement contained negative covenants limiting, among other things, additional indebtedness, capital expenditures,transactions with affiliates, additional liens, sales of assets, dividends, investments, advances, prepayments of debt, mergers and acquisitions, and othermatters customarily restricted in such agreements.The Company categorizes the borrowings under the credit agreement as Level 2 in the fair value hierarchy as defined in Note 5. The carrying value ofthe Company's debt approximates fair value as the debt agreement bears interest based on prevailing variable market rates currently available. Borrowingsunder the credit agreement bore interest at either (a) the Eurocurrency Rate (as defined in the credit agreement), plus an applicable margin in the range of2.0% to 3.5%, or (b) the Base Rate (as defined in the credit agreement), plus an applicable margin in the range of 1.0% to 2.5%. The revolving credit facilityalso provided for the issuance of up to $40.0 million in letters of credit. As of December 31, 2016, the Company had outstanding letters of credit totaling$21.8 million. As of December 31, 2016, total availability under the revolving credit facility was $55.5 million and the average interest rate on the creditagreement was 4.3%.The Company was not in compliance with its debt covenants for the year ended December 31, 2016 or December 31, 2015 and accordingly, theCompany's senior debt has been classified as current on its consolidated balance sheets. Additionally, the Company's announcement of the restatement ofpreviously issued financial statements resulted in a default. On February 27, 2017, the Company entered into a Forbearance Agreement and SecondAmendment to the credit agreement (the “Forbearance Agreement”). Pursuant to the Forbearance Agreement, the Company's lenders agreed to forbear fromexercising the remedies available under the credit agreement in respect to certain disclosed credit agreement events of default. until the earliest to occur of (i)a breach by the Company of any of its covenants in the Forbearance Agreement, (ii) any other default or event of default under the credit agreement, (iii)March 31, 2017, and (iv) certain other specified events, including a material adverse effect. The Forbearance Agreement also amended certain creditagreement covenants and other provisions, required certain reporting and information, and imposed other obligations on the Company. On March 31, 2017,the Company entered into a Forbearance Agreement Extension and Third Amendment to the credit agreement (the “Forbearance Extension”). Pursuant to theForbearance Extension, the Company’s lenders agreed to forbear from exercising the remedies available under the credit agreement in respect of certaindisclosed credit agreement events of default until the earliest to occur of (i) a breach by the Company of any of its covenants in the Forbearance Extension,(ii) any other default or event of default under the credit agreement, (iii) May 19, 2017, and (iv) certain other specified events, including a material adverseeffect. The Forbearance Extension also amended certain credit agreement covenants and other provisions, required certain reporting and information, andimposed other obligations on the Company.On May 1, 2017, the Company entered into an Investment Agreement (“Investment Agreement”) with affiliates of Elliott Management Corporation(“Elliott”), pursuant to which the Company issued and sold shares of its preferred stock, which will be accounted for similar to debt, for an aggregate purchaseprice of $540.5 million. The proceeds from the sale of the preferred stock were used to pay off and terminate the senior credit facility and to provide workingcapital to support the Company's current operations and future growth. See Note 16 for additional information regarding the Investment Agreement.In addition, on July 21, 2017, the Company entered into a credit agreement with BMO Harris Bank, N.A. and certain other lenders (the “ABL Facility”).The Company used the initial proceeds from the ABL Facility for working capital purposes and to redeem all of the outstanding shares of its Series FPreferred Stock. See Note 16 for additional information regarding the ABL Facility.F-18Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)Capital Lease ObligationsThe Company has a building and certain equipment classified as capital leases. As of December 31, 2016, the gross property and equipment value ofcapital lease assets was $11.6 million. The following is a schedule of future minimum lease payments under the capital leases with the present value of the netminimum lease payments as of December 31, 2016 (in thousands): AmountYear Ending: 2017 $2,9282018 1,9322019 1,8692020 2042021 21Total minimum lease payments 6,954Less: amount representing interest (590)Present value of net minimum lease payments(1) $6,364 (1) Reflected in the consolidated balance sheets as $2.7 million of accrued expenses and other current liabilities and $3.7 million of other long-term liabilities.7. Stockholders’ InvestmentCommon StockThe Company's common stock has voting rights — one vote for each share of common stock. In March 2007, the Company entered into a secondamended and restated stockholders’ agreement (the “Stockholders' Agreement”). The Stockholders' Agreement provided that, any time after the Company waseligible to register its common stock on a Form S-3 registration statement under the Securities Act, certain of the Company’s stockholders, including entitiesaffiliated with HCI Equity Partners, L.L.C. (the “HCI Stockholders”), could request registration under the Securities Act of all or any portion of their shares ofcommon stock. These stockholders were limited to a total of two of such registrations. In addition, if the Company proposed to file a registration statementunder the Securities Act for any underwritten sale of shares of any of its securities, certain of the Company's stockholders could request that the Companyinclude in such registration the shares of common stock held by them on the same terms and conditions as the securities otherwise being sold in suchregistration. In connection with the closing of the transactions contemplated by the Investment Agreement, the Company, affiliates of Elliott, and the HCIStockholders entered into a Registration Rights Agreement that, with respect to the HCI Stockholders, amended and restated the Stockholders’ Agreements.See Note 16 for additional information regarding the Investment Agreement.In August 2015, in a secondary offering, the HCI Stockholders sold 2.0 million shares of common stock. The Company did not issue any shares in theoffering and did not receive any proceeds from the sale of the shares; however, the Company incurred costs of $0.2 million.Warrants to Acquire Common StockIn connection with a business combination entered in 2007, the Company issued to existing Sargent Transportation Group, Inc. stockholders warrantsthat, upon the closing of the Company's initial public offering, became the right to acquire 2,269,263 shares of common stock at an exercise price of $13.39per share. The warrants were exercisable at the option of the holder any time prior to March 13, 2017. Subsequent to year-end, but prior to filing, all of thesewarrants expired. No warrants were exercised during the year ended December 31, 2016 or 2015.On December 11, 2009, in connection with financing the acquisition of Bullet Freight Systems, Inc. (“Bullet”), the Company issued warrants that, uponthe closing of the Company's initial public offering, became the right to acquire 1,746,971 shares of common stock at an exercise price of $8.37 per share.The warrants were exercisable at the option of the holder any time prior to December 11, 2017. Subsequent to year-end, but prior to filing, all of thesewarrants expired. No warrants were exercised during the year ended December 31, 2016 or 2015.F-19Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)On May 1, 2017, in connection with the issuance of Preferred Stock pursuant to the Investment Agreement, the Company issued 8-year warrants topurchase an aggregate of 379,572 shares of common stock, at an exercise price of $0.01 per share. See Note 16 for additional information regarding theInvestment Agreement.8. Share-Based CompensationThe Company's 2010 Incentive Compensation Plan (the “2010 Plan”) allows for the issuance of 2,500,000 shares of common stock. The 2010 Planprovides for the grant of stock options, restricted stock units, performance restricted stock units, and other awards to the Company's employees and directors.In 2015, the Company added performance restricted stock units to its share-based compensation plan. Under the new program, performance restrictedstock units were awarded to eligible employees based on pre-established financial performance goals. No performance restricted stock unit awards wereearned as of December 31, 2016 or 2015.The Company awards restricted stock units to certain key employees and independent directors. The restricted stock units vest ratably over a four yearservice period from the grant date. Restricted stock units are valued based on the market price on the date of the grant and are amortized on a straight-linebasis over the vesting period. Compensation expense for restricted stock units is based on fair market value at the grant date.The following table summarizes the nonvested restricted stock units as of December 31, 2016 and 2015: Number of Restricted Stock Units Weighted Average Grant DateFair Value Weighted AverageRemaining ContractualTerm(Years)Nonvested as of December 31, 2014 332,136 $22.76 2.5Granted 19,051 23.60 Vested (111,180) 21.34 Forfeitures (31,232) 23.17 Nonvested as of December 31, 2015 208,775 $23.75 1.7Granted 190,179 11.12 Vested (104,886) 22.05 Forfeitures (19,304) 20.04 Nonvested as of December 31, 2016 274,764 $15.67 1.8Unrecognized share-based compensation expense for restricted stock units was $2.8 million and $3.1 million as of December 31, 2016 and 2015,respectively.The Company previously maintained a Key Employee Equity Plan (“Equity Plan”), a stock-based compensation plan that permitted the grant of stockoptions to Company employees and directors. Stock options under the Equity Plan were granted with an exercise price equal to or in excess of the fair valueof the Company’s stock on the date of grant. Such options vested ratably over a two or four year service period and were exercisable ten years from the date ofgrant, but only to the extent vested as specified in each option agreement. The Company no longer issues awards under this plan.Group Transportation Services (“GTS”) previously maintained a Key Employee Equity Plan (“GTS Plan”), which permitted the grant of stock optionsto employees and directors. Stock options under the GTS Plan were granted with an exercise price equal to or in excess of the fair value of GTS’ stock on thedate of grant. Such options vested ratably over a two or four year service period and were exercisable ten years from the date of grant, but only to the extentvested as specified in each option agreement. In connection with the Company’s merger with GTS effective upon the IPO, all options granted pursuant to theGTS Plan outstanding at the effective time of the merger became options to purchase shares of the Company’s common stock. The Company no longer issuesawards under this plan.Under the 2010 Plan, the Company may award stock options to certain key employees. The stock options vest ratably over a three to five year serviceperiod and are exercisable four to seven years from the date of grant, but only to the extent vested as specified in each option agreement. Stock optionsawarded are valued based upon the Black-Scholes option pricing model andF-20Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)the Company recognizes this value as stock compensation expense over the periods in which the options vest. Use of the Black Scholes option-pricing modelrequires that the Company make certain assumptions, including expected volatility, risk-free interest rate, expected dividend yield, and the expected life ofthe options. During 2016, the Company granted stock options to purchase 650,000 shares. No stock options were granted by the Company in 2015 or 2014.Stock option fair value assumptions for the stock options granted during the year ended December 31, 2016 are as follows: 2016Option life (years) 4 to 7 yearsRisk free interest rate 1.3% to 1.8%Dividend yield —Expected volatility 40.8% to 46.9%Expected life (years) 3 to 5 yearsWeighted average fair value of stock options granted $2.04A summary of the option activity for the years ended December 31, 2016 and 2015 is as follows: Shares WeightedAverageExercisePrice Weighted AverageRemaining ContractualTerm(Years) AggregateIntrinsicValue (In thousands)Outstanding as of December 31, 2014555,101 $14.92 1.7 $4,680Granted— — Exercised(265,734) 15.09 Outstanding as of December 31, 2015289,367 $14.77 0.7 $—Granted650,000 $10.20 Forfeited(194,108) 15.97 Outstanding as of December 31, 2016745,259 $12.34 4.4 $—Unrecognized stock compensation expense for stock options was $1.0 million as of December 31, 2016. There was no unrecognized stockcompensation expense as of December 31, 2015.All outstanding options are non-qualified options. There were 95,259, 289,367, and 555,101 options exercisable as of December 31, 2016, 2015, and2014, respectively. As of December 31, 2016, for exercisable options, the weighted-average exercise price was $12.34, the weighted average remainingcontractual term was approximately four years and there was no estimated aggregate intrinsic value per share. As of December 31, 2016, 650,000 options wereunvested.Stock-based compensation expense for restricted stock units and stock options was $2.2 million, $2.5 million, and $2.3 million for the years endedDecember 31, 2016, 2015, and 2014, respectively. The related estimated income tax benefit recognized in the accompanying consolidated statements ofoperations, net of estimated forfeitures, was $0.9 million for each of the years ended December 31, 2016, 2015, and 2014. 9. Earnings (Loss) Per ShareBasic earnings or basic loss per common share is calculated by dividing net income or net loss by the weighted average number of common stockoutstanding during the period. Diluted earnings or diluted loss per share is calculated by dividing net income or net loss by the weighted average commonstock outstanding plus stock equivalents that would arise from the assumed exercise of stock options and conversion of warrants using the treasury stockmethod.F-21Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)The Company had stock options and warrants outstanding of 3,037,447 and 2,499,606 as of December 31, 2016 and 2015, respectively, that were notincluded in the computation of diluted earnings (loss) per share because they were not assumed to be exercised under the treasury stock method or becausethey were anti-dilutive. All restricted stock units were anti-dilutive for the year ended December 31, 2016. As of December 31, 2014, all stock options andwarrants were included in the computation of diluted earnings (loss) per share. The following table reconciles basic weighted average common stockoutstanding to diluted weighted average common stock outstanding (in thousands): Year Ended December 31, 2016 2015 2014Basic weighted average common stock outstanding38,318 38,179 37,852Effect of dilutive securities: Stock Options— 72 169Warrants— 885 1,183Restricted Stock Units— 44 55Diluted weighted average common stock outstanding38,318 39,180 39,25910. Income TaxesThe components of the Company’s (benefit from)/provision for income taxes were as follows (in thousands): Year Ended December 31, 2016 2015 2014Current: Federal$(23,500) $10,931 $14,922Foreign, state and local660 3,627 2,854Deferred: Federal(39,695) 1,874 2,388Foreign, state and local(3,746) 880 79(Benefit from) provision for income taxes$(66,281) $17,312 $20,243The Company’s income tax (benefit)/provision varied from the amounts calculated by applying the U.S. statutory income tax rate to the pretax(loss)/income as shown in the following reconciliations (in thousands): Year Ended December 31, 2016 2015 2014Statutory federal rate$(149,310) $15,026 $18,534Meals and entertainment324 287 247State income taxes — net of federal benefit(5,368) 1,294 1,348Goodwill impairment86,776 — —Contingent purchase obligation adjustments(860) (955) (408)Change in valuation allowance1,624 99 126Other533 1,561 396Total$(66,281) $17,312 $20,243 The Company recorded assets for refundable current federal and state income taxes of $40.8 million and $20.7 million as of December 31, 2016 and2015, respectively. These are classified in the consolidated balance sheets as income tax receivable.F-22Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)The tax rate effects of temporary differences that give rise to significant elements of deferred tax assets and deferred tax liabilities as of December 31were as follows (in thousands): 2016 2015Current deferred income tax assets: Accounts receivable$— $5,701Accrued expenses and other current liabilities— 15,190Total$— $20,891Noncurrent deferred income tax assets (liabilities): Accounts receivable$7,140 $—Accrued expenses and other current liabilities18,823 —Prepaid expenses and other current assets(6,572) —Net operating losses3,358 726Goodwill and intangible assets(20,005) (64,747)Property and equipment(45,711) (41,187)Deferred compensation746 449Total$(42,221) $(104,759) Valuation allowance(1,953) (329) Total, net of valuation allowance$(44,174) $(105,088)The Company had $21.5 million of current deferred tax assets and $0.6 million of current deferred tax liabilities as of December 31, 2015. As discussedin Note 1, the Company is adopting the amendments of ASU 2015-17 on a prospective basis, as of December 31, 2016. Therefore, there is no current asset asof December 31, 2016 classified as deferred income taxes in the consolidated balance sheet. A net current deferred tax asset of $20.9 million as ofDecember 31, 2015 was classified as deferred income taxes in the consolidated balance sheet. The Company had $0.8 million of noncurrent deferred taxassets (net of valuation allowance) and $105.9 million of noncurrent deferred tax liabilities as of December 31, 2015. The net noncurrent deferred income taxliability of $44.2 million (net of current deferred tax assets and valuation allowance) as of December 31, 2016 and $105.1 million as of December 31, 2015(net of valuation allowance) is classified in the consolidated balance sheets as long-term deferred tax liabilities.Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit useof the existing deferred tax assets, including through reversals of existing cumulative temporary differences. With respect to separate state and local taxreturns filed by certain subsidiaries, a significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year periodended December 31, 2016. Such objective evidence limits the ability to consider other subjective evidence, such as the Company's projections for futuregrowth. On the basis of the Company's evaluation, the Company has recorded a valuation allowance of $2.0 million and $0.3 million as of December 31,2016 and 2015, respectively, primarily related to net operating loss carryforwards and other deferred tax assets that will not “more likely than not” be realizedin the future on separately filed state and local tax returns. Federal net operating loss carryforwards (some of which are subject to annual Section 382limitations) expire between 2030 and 2036. State net operating loss carryforwards expire between 2019 and 2036.There was an immaterial liability for unrecognized tax benefits recorded as of December 31, 2016 and 2015. It is the Company’s policy to recognizeinterest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying consolidated statements of operations.Income tax related interest and penalties were immaterial as of December 31, 2016 and 2015. The Company is subject to federal tax examinations for all taxyears subsequent to December 31, 2012, and state tax examinations for tax years subsequent to December 31, 2011. The Internal Revenue Service (“IRS”) iscurrently reviewing the Company's 2013 amended federal tax return and 2014-2016 originally filed federal tax returns. Although the pre-2013 and pre-2012years are no longer subject to examinations by the IRS and various state taxing authorities, respectively, certain state net operating loss carryforwardsgenerated in those years were used by the Company during 2015 and may still be adjusted upon examination by state taxing authorities if they were usedafter 2011 or will be used in a future period.11. GuaranteesF-23Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)The Company provides a guarantee for a portion of the value of certain independent contractors' (“IC”) leased tractors. The guarantees expire atvarious dates through 2020. The potential maximum exposure under these lease guarantees was approximately $13.8 million as of December 31, 2016. Upon an IC default, the Company has the option to purchase the tractor or return the tractor to the leasing company if the residual value is greater than theCompany’s guarantee. Alternatively, the Company can contract another IC to assume the lease. The Company estimated the fair value of its liability underthis on-going guarantee to be $1.6 million and $4.7 million, which is recorded in accrued expenses and other current liabilities, as of December 31, 2016 andDecember 31, 2015, respectively.In 2016, the Company began to offer a new lease purchase program that did not include a guarantee, and offered newer equipment under factorywarranty that was more cost effective to the ICs. ICs began electing the newer lease purchase program over the legacy lease guarantee programs which led toan increase in unseated legacy tractors. In late 2016, management committed to a plan to divest of these older assets. The Company recorded a loss reserve of$8.9 million as of December 31, 2016 for the guarantee and reconditioning costs associated with the planned divestiture.The Company made payments for the termination of certain lease purchase assets and associated reconditioning costs of $9.3 million for the year endedDecember 31, 2016 and $5.9 million for the year ended December 31, 2015.12. Commitments and ContingenciesEmployee Benefit PlansThe Company sponsors defined contribution profit sharing plans for substantially all employees of the Company and its subsidiaries. The Companyprovides matching contributions on some of these plans. Total expense under these plans was $2.4 million, $2.8 million, and $2.3 million for the years endedDecember 31, 2016, 2015, and 2014, respectively.Operating LeasesThe Company leases terminals, office space, trucks, trailers, and other equipment under noncancelable operating leases expiring on various datesthrough 2027. The Company incurred rent expense from operating leases of $72.8 million, $66.6 million, and $56.1 million for the years ended December 31,2016, 2015, and 2014, respectively.Aggregate future minimum lease payments under noncancelable operating leases with an initial term in excess of one year were as follows as ofDecember 31, 2016 (in thousands): Year Ending: Amount2017 $52,7202018 44,8072019 29,8022020 19,2002021 10,868Thereafter 23,285Total 180,682ContingenciesIn the ordinary course of business, the Company is a defendant in several legal proceedings arising out of the conduct of its business. Theseproceedings include claims for property damage or personal injury incurred in connection with the Company’s services. Although there can be no assuranceas to the ultimate disposition of these proceedings, the Company does not believe, based upon the information available at this time, that these propertydamage or personal injury claims, in the aggregate, will have a material impact on its consolidated financial statements. The Company maintains anaggregate of $100 million of auto liability and general liability insurance. The Company maintains auto liability insurance coverage for claims in excess of$1.0 million per occurrence and cargo coverage for claims in excess of $100,000 per occurrence. The Company is self-insured up to $1.0 million for workerscompensation. The Company believes it has adequate insurance to cover losses in excess of the self-insured and deductible amounts. As of December 31,2016 and 2015, the Company had reserves for estimated uninsured losses of $21.5 million and $25.9 million, respectively, included in accrued expenses andother current liabilities.F-24In addition to the legal proceedings described above, the Company is a defendant in various purported class-action lawsuits alleging violations ofvarious California labor laws and one purported class-action lawsuit alleging violations of the Illinois Wage Payment and Collection Act. Additionally, theCalifornia Division of Labor Standards and Enforcement has brought administrative actions against the Company alleging that the Company violatedvarious California labor laws. In May 2017, the California Division of Labor Standards and Enforcement ruled against the Company in a number of thesecases, which the Company intends to appeal. In 2017 and 2018, the Company reached settlement agreements on a number of these labor related lawsuits andadministrative actions and recorded a reserve of $3.7 million as of December 31, 2016 in aggregate legal settlements. As of December 31, 2016 the Companyhas recorded additional litigation and defense reserves of approximately $6.7 million related to pending lawsuits, which are recorded in the consolidatedbalance sheets in accrued expenses and other current liabilities.Jeffrey Cox and David Chidester filed a Complaint against certain of the Company’s subsidiaries in state court in California in a post-acquisitiondispute. The Complaint alleges contract, statutory and tort based claims arising out of the Stock Purchase Agreement, dated November 2, 2012, between thedefendants, as buyers, and the plaintiffs, as sellers, for the purchase of the shares of Central Cal Transportation, Inc. and Double C Transportation, Inc. (the“Central Cal Agreement”). The plaintiffs claim that a contingent purchase obligation payment of more than $2.4 million is due and owing pursuant to theCentral Cal Agreement, and that defendants have furnished fraudulent calculations to the plaintiffs to avoid payment. The plaintiffs also claim violations ofCalifornia’s Labor Code related to the plaintiffs’ respective employment with Central Cal Transportation, LLC. On October 27, 2017, the state court grantedthe Company’s motion to compel arbitration of all non-employment claims alleged in the Complaint. The plaintiffs are now required to comply with thedispute resolution process outlined in the Central Cal Agreement, and submit the dispute to a Settlement Accountant. The plaintiffs have indicated that theywould like to transfer the remaining employment claims to the related and also pending employment dispute.Following the Company's press release on January 30, 2017, three putative class actions were filed in the United States District Court for the EasternDistrict of Wisconsin on behalf of a class of persons who acquired common stock of the Company between May 8, 2014 and January 30, 2017, inclusive. TheComplaints allege that the Company, Mark A. DiBlasi, and Peter R. Armbruster violated Section 10(b) of the Exchange Act, and Messrs. DiBlasi andArmbruster violated Section 20(a) of the Exchange Act, by making materially false or misleading statements, or failing to disclose material facts, regarding itsinternal control over financial reporting and its financial statements. The Complaints seek certification as a class action, compensatory damages, andattorney’s fees and costs. On May 19, 2017, the Court consolidated the actions under the caption In re Roadrunner Transportation Systems, Inc. SecuritiesLitigation, and appointed Public Employees’ Retirement System as lead plaintiff. Counsel for lead plaintiff has advised the Company of their intent to file aconsolidated Amended Complaint after the Company issues its restated financial statements.On May 25, 2017, Richard Flanagan filed a complaint alleging derivative claims on the Company's behalf in the Circuit Court of Milwaukee County,State of Wisconsin (Case No. 17-cv-004401) against Scott Rued, Mark DiBlasi, Christopher Doerr, John Kennedy, III, Brian Murray, James Staley, CurtisStoelting, William Urkiel, Judith Vijums, Michael Ward, Chad Utrup, Ivor Evans, Peter Armbruster, and Brian van Helden. Count I of the Complaint allegesthe Director Defendants breached their fiduciary duties by “knowingly failing to ensure that the Company implemented and maintained adequate internalcontrols over its accounting and financial reporting functions,” and seeks unspecified damages. Count II of the Complaint alleges the Officer DefendantsDiBlasi, Armbruster, and van Helden received substantial performance-based compensation and bonuses for fiscal year 2014 that should be disgorged. Theaction has been stayed by agreement pending a decision on an anticipated motion to dismiss the Amended Complaint to be filed in the securities class actiondescribed above.On June 28, 2017, Jesse Kent filed a complaint alleging derivative claims on the Company's behalf and class action claims in the United States DistrictCourt for the Eastern District of Wisconsin (Case No. 17-cv-00893-PP) against Scott Rued, Mark DiBlasi, Christopher Doerr, John Kennedy, III, Brian Murray,James Staley, Curtis Stoelting, William Urkiel, Judith Vijums, Michael Ward, Chad Utrup, Ivor Evans, Peter Armbruster, Brian van Helden, Scott Dobak, andRalph Kittle. Count I of the Complaint alleges the Individual Defendants other than Armbruster, Dobak, Evans, Kittle, and van Helden, violated Section 14(a)of the Exchange Act by making false and misleading statements in proxies concerning the Company's financial statements and internal controls. Count II ofthe Complaint alleges: (i) all the Individual Defendants breached their fiduciary duties of good faith, candor, and loyalty by creating a culture of lawlessness;(ii) the Officer Defendants knew, were reckless, or were grossly negligent in not knowing that the Company lacked effective internal controls and its financialstatements were inaccurate; (iii) the Director Defendants other than Dobak and Kittle breached their duty of loyalty by recklessly permitting the improperstatements concerning the Company's internal controls and financial statements; (iv) the Director Defendants other than Dobak and Kittle breached theirfiduciary duty and committed the ultra vires act of appointing the interlocking director defendant Dobak to the Board in violation of Section 8 of theClayton Act; and (v) the Audit Committee Defendants breached their fiduciary duty of loyalty by approvingF-25the statements concerning the Company's internal controls and financial statements. Count III of the Complaint alleges all the Individual Defendants wastedcorporate assets by: (i) spending hundreds of millions of dollars to purchase various companies in connection with its alleged reckless growth-through-acquisition strategy; (ii) forcing the Company to have to defend itself in the securities fraud lawsuits; and (iii) paying improper compensation and bonuses tocertain of its executive officers and directors who breached their fiduciary duty. Count IV of the Complaint alleges all the Individual Defendants wereunjustly enriched as a result of the compensation and director remuneration they received while breaching their fiduciary duties. Count V of the Complaintalleges a direct claim against the Company's current directors based on its failure to hold an annual meeting of stockholders by June 18, 2017 (13 monthsafter its previous annual meeting of stockholders). The Complaint seeks judgment awarding unspecified damages, directing us to make certain corporategovernance changes, awarding restitution, ordering disgorgement, directing the Company to hold its annual meeting of stockholders, and directing its Boardto remove Dobak from the Board. On September 29, 2017, all the Defendants filed a motion to dismiss the complaint. The motion is being held in abeyancepending the Company filing its restated consolidated financial statements.On December 22, 2017, Chester County Employees Retirement Fund filed a Complaint alleging derivative claims on the Company's behalf in theUnited States District Court for the Eastern District of Wisconsin (Case No. 2:17-cv-01788-NJ) against the same defendants as those named in the Kent action.The allegations are substantially the same as those in the Kent Complaint.In addition, subsequent to the Company's announcement that certain previously filed financial statements should not be relied upon, the Company wascontacted by the SEC, FINRA, and the Department of Justice. The Department of Justice and Division of Enforcement of the SEC have commencedinvestigations into the events giving rise to the restatement. The Company has received formal requests for documents and other information. The Companyis cooperating fully with all of these agencies.The Company is unable to estimate the costs associated with the above matters at this time.13. Related Party TransactionsThe Company had an advisory agreement with HCI Equity Management L.P. (“HCI”) to pay transaction fees and an annual advisory fee of $0.1million. The Company owed $0.1 million to HCI for advisory services and travel expenses for the year ended December 31, 2016. The Company paid anaggregate of $0.2 million to HCI for services performed in connection with the sixth amended and restated credit agreement, advisory fees, and travelexpenses during the year ended December 31, 2016. The Company paid an aggregate of $0.9 million to HCI for services performed in connection with thefifth amended and restated credit agreement, advisory fees, and travel expenses during the year ended December 31, 2015. As disclosed in Note 16, theadvisory agreement was terminated on May 2, 2017.As part of the acquisition of Bullet, certain existing stockholders and their affiliates received eight-year warrants that, upon the closing of theCompany's initial public offering, became the right to acquire 1,388,620 shares of the Company's common stock. No warrants were exercised by affiliatedparties during 2016 or 2015. There were 274,362 warrants outstanding as of December 31, 2016 and 2015. Subsequent to year-end, but prior to filing, all ofthese warrants expired.The Company has a number of dedicated carriers that haul freight for the operating companies that are owned by employees of the operatingcompanies. The Company paid an aggregate of $8.3 million and $5.6 million to these carriers during the years ended December 31, 2016 and 2015,respectively.The Company has a number of facility leases with related parties. At one of the facilities the Company also contracts dock workers from the leasingcompany. The Company paid an aggregate of $3.7 million and $1.5 million for the lease and dock workers during the years ended December 31, 2016 and2015, respectively.During 2016, the Company entered into and completed a sale leaseback transaction to sell the Stagecoach warehouse and corporate office to an entityowned by the individual who manages Stagecoach for a total sale price of $3.5 million.The Company leases certain equipment through leasing companies owned by related parties and paid an aggregate of $0.9 million and $0.2 millionduring the years ended December 31, 2016 and 2015, respectively.14. Segment ReportingThe Company determines its segments based on the information utilized by the chief operating decision maker, the Company’s Chief ExecutiveOfficer, to allocate resources and assess performance. Based on this information, the Company has determined that it has three segments: TL; LTL; andGlobal Solutions. As indicated in Note 1, the Company realigned two of its operating companies into different segments. Segment disclosures as of and forthe years ended December 31, 2015 and 2014 have beenF-26Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)retrospectively revised to reflect the change in segments. Subsequent to December 31, 2016, the Company re-branded Global Solutions as Ascent GlobalLogistics.These segments are strategic business units through which the Company offers different services. The Company evaluates the performance of thesegments primarily based on their respective revenues and operating income. Accordingly, interest expense and other non-operating items are not reported insegment results. In addition, the Company has disclosed corporate, which is not a segment and includes legal expenses, lease purchase guarantee reserveexpenses, acquisition transaction expenses, corporate salaries, and share-based compensation expense. One direct customer, General Motors, accounted for approximately 12% of revenue, or approximately $252.1 million within the Company's TLsegment, for the year ended December 31, 2016. No single direct customer accounted for more than 10% of revenue for the years ended December 31, 2015and 2014.F-27Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)The following table reflects certain financial data of the Company’s segments, which has been adjusted for the effects of the restatement described inNote 15 (in thousands): Year Ended December 31, 2016 2015 2014Revenues: TL$1,246,798 $1,128,390 $943,055LTL461,540 515,328 577,175Global Solutions335,510 377,137 367,423Eliminations(10,648) (28,689) (15,183)Total2,033,200 1,992,166 1,872,470Impairment charges: TL$159,118 $— $—LTL197,312 — —Global Solutions17,231 — —Total373,661 — —Operating (loss) income: TL$(164,100) $48,717 $42,187LTL(203,600) 15,438 17,929Global Solutions8,143 28,268 26,242Corporate(44,217) (30,052) (20,042)Total operating (loss) income(403,774) 62,371 66,316Interest expense22,827 19,439 13,363(Loss) income before income taxes$(426,601) $42,932 $52,953Depreciation and amortization: TL$27,622 $22,587 $15,285LTL4,052 2,801 2,964Global Solutions4,938 4,903 4,868Corporate1,533 1,335 1,137Total$38,145 $31,626 $24,254Capital expenditures(1): TL$9,630 $48,527 $32,525LTL4,051 11,367 5,147Global Solutions3,813 429 1,715Corporate79 2,078 2,588Total$17,573 $62,401 $41,975(1) The total capital expenditures for the year ended December 31, 2015 includes both the cash and non-cash portions as reflected in the Consolidated Statement of Cash Flows.F-28Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued) December 31, 2016 2015 2014Total assets: TL$498,330 $656,491 $594,296LTL129,899 330,203 326,489Global Solutions302,164 317,453 330,559Corporate4,189 8,057 6,050Eliminations (1)(1,028) (4,451) (6,756)Total$933,554 $1,307,753 $1,250,638(1) Eliminations represents intercompany trade receivable balances between the three segments.15. Restatement of Previously Issued Financial StatementsIn November 2016, the Company commenced an internal investigation into certain accounting discrepancies at its Morgan Southern and Bruengeroperating companies. Subsequently, an independent internal investigation was undertaken by the Audit Committee of the Board of Directors (the “AuditCommittee”), with assistance from outside counsel and outside consultants to provide forensic and investigative support (the “Audit CommitteeInvestigation”). The expanded Audit Committee Investigation included detailed reviews of financial records at other operating companies and at theCompany's corporate headquarters. The Audit Committee Investigation identified material accounting errors that impacted substantially all financialstatement line items and disclosures.On January 27, 2017, the Audit Committee, as a result of the information obtained in connection with the ongoing internal investigation and afterconsidering the recommendation of management, determined that previously issued (1) consolidated financial statements as of December 31, 2015 and 2014and for the three years in the period ended December 31, 2015; (2) unaudited condensed consolidated financial statements for the quarterly periods in theyears ended December 31, 2015 and 2014; and (3) the unaudited condensed consolidated financial statements for the quarterly periods ended March 31,2016, June 30, 2016, and September 30, 2016, should no longer be relied upon due to the identification of material accounting errors. The restatement alsoaffects periods prior to the year ended December 31, 2014, with the cumulative effect of the errors reflected in the adjustment to the January 1, 2014 openingstockholders' investment balance.Based on the Audit Committee Investigation, current management determined that there were deficiencies in the design and/or execution of internalcontrols that constituted material weaknesses. Current management determined that structural and environmental factors, including the increased size andcomplexity arising from the acquisition of 25 non-public companies between February 2011 and September 2015, the inconsistency of the Company'saccounting systems, policies and procedures, and management override of internal controls contributed to the material weaknesses and resulting materialaccounting errors. The Company's internal controls failed to prevent or were overridden by management in certain instances to allow recording accountingentries without appropriate support, recording accounting entries that were inconsistent with information known by management at the time, notcommunicating relevant information within the organization and, in some cases, withholding information from the Company's independent directors, AuditCommittee, and independent auditors, which resulted in material accounting errors.Accounting AdjustmentsThe following is a discussion of the significant accounting adjustments that were made to the Company's previously issued financial statements.Receivables and Related ReservesTrade Receivables and Allowance for Doubtful AccountsThe Company identified and corrected certain errors related to its accounting for trade receivables and related allowance for doubtful accounts thatwere misstated. In its original analysis, the Company did not consider all of the relevant information available with respect to the deteriorated aging andcollection information available at the time its consolidated financial statements were previously issued, which resulted in an understatement of theallowance for doubtful accounts and other operating expenses. There were also instances in which a customer's receivables and the corresponding revenuewere overstated for shipments that did notF-29Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)occur. Accounts receivable and allowance for doubtful accounts and the corresponding revenue and other operating expenses have been corrected in therestated consolidated financial statements.The Company also corrected goodwill in the restated consolidated financial statements related to an allowance for doubtful accounts at the acquisitiondate.Contractor Receivables and Related ReservesThe Company identified and corrected certain errors related to its accounting for contractor receivables and related reserves recorded as either contraliabilities or other assets. The Company determined gross contractor receivables were understated because amounts were reported as contra liabilities with noright of offset. The Company also noted that contractor receivables were overstated and other operating expenses understated because the Company, in itsoriginal analysis, did not consider all of the relevant information available with respect to historical IC turnover or the collectibility of contractor receivableswhen a driver was no longer contracted by the Company. Contractor receivables and related reserves and the corresponding other operating expenses havebeen corrected in the restated consolidated financial statements.Unrecorded Charges and Contingent LiabilitiesUnrecorded ChargesThe Company identified and corrected certain errors related to the overstatement of cash and prepaid expenses (including other receivables) andunderstatement of accounts payable and accrued expenses, which resulted in an understatement of the related other operating expenses. Errors in the cashaccounts resulted from certain operating companies failing to complete their bank reconciliations on-time. Errors in the prepaid expense and other currentassets, accounts payable, and accrued expense accounts resulted from not amortizing prepaid balances across relevant service periods, not consideringcollectibility of other receivables (excluding contractor receivables), and not recording expenses in the period incurred. Cash, prepaid expenses and othercurrent assets, accounts payable, and accrued expenses and other current liabilities and the related other operating expenses have been corrected in therestated consolidated financial statements.The Company determined that it did not properly establish an accrual for contractor or driver payables incurred but not paid at the acquisition date forone of its operating companies. It was also determined that subsequent accruals were also not established, thereby understating purchase transportation costs.Using actual payment data, the Company determined the accrual for its driver and contractor payables at the date of acquisition and at the end of eachsubsequent period. Additionally, the Company identified discrepancies between how certain operating companies were recording settlement deductions forICs resulting in an overstatement of purchased transportation costs and an understatement of other operating expenses. The Company corrected purchasedtransportation costs and other operating expenses in the restated consolidated financial statements.The Company also corrected goodwill and intangible assets in the restated consolidated financial statements related to an incorrect allocation recordedat the acquisition date.Lease Purchase GuaranteeThe Company identified and corrected errors related to its accounting for the lease purchase guarantees it makes for its IC's that lease tractors fromcertain leasing companies. The Company previously underestimated the default rate under these leases, which resulted in an understatement of accruedexpenses, the corresponding prepaid expense, and other operating expenses in subsequent periods. The Company corrected other operating expensesresulting from subsequent amortization of the prepaid expense and increased accrued expense and other liabilities in the restated consolidated financialstatements.Contingent Purchase ObligationsThe Company identified and corrected errors related to its subsequent accounting for contingent purchase obligations related to certain acquisitions.The subsequent adjustments of the contingent purchase obligations were not based on management's best estimate or information available at the time theCompany completed its analysis for each period resulting in the misstatement of other operating expenses in particular periods. The Company recordedadjustments to other operating expenses, accrued expenses and other current liabilities, and other long-term liabilities in the restated consolidated financialstatements.F-30Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)Insurance Reserves and Related ReceivablesThe Company identified and corrected certain errors related to its accounting for insurance reserves. The Company did not consider certain informationavailable at the time its consolidated financial statements were previously issued, resulting in an understatement of accrued expenses and other currentliabilities and related other operating expenses. The Company reviewed claims submitted and paid, as well as claims incurred but not reported for autoliability, workers compensation, and short or damaged cargo to estimate the required reserves. The Company corrected accrued expenses and other currentliabilities and other operating expenses for the increased insurance reserves in the restated consolidated financial statements.The Company also recorded receivables from insurers related to some of these claims but over-estimated the amount of the reimbursement, whichresulted in an overstatement of prepaid expenses and other current assets and an understatement of other operating expenses. The Company corrected theprepaid expenses and other current assets and other operating expenses in the restated consolidated financial statements.Capital Improvements and Aircraft Spare PartsCapital ImprovementsThe Company identified and corrected errors related to its accounting for capitalized improvements. Specifically, the Company capitalized certainrepair and maintenance expenses and other operating expenses that did not extend the useful life of the primary asset. This resulted in an understatement ofoperating expenses in the period which this occurred and an overstatement of depreciation expense in subsequent periods. Property and equipment andaccumulated depreciation and related other operating expenses and depreciation expenses have been corrected in the restated consolidated financialstatements.Aircraft Spare PartsThe Company identified and corrected certain errors related to its accounting for its spare parts associated with its aircraft fleet, which were previouslyexpensed when purchased as opposed to capitalizing. In connection with the restatement, the Company determined that the cost of the spare parts for itsaircraft was material at the acquisition date and should have been capitalized. The Company corrected its accounting policy accordingly. The Companyrecorded the capitalization of spare parts for aircraft, which increased property and equipment and decreased other operating expenses as the spare parts werepurchased. The Company recorded increases to depreciation and amortization in subsequent periods. The Company also increased property and equipmentand reduced goodwill to capitalize the spare parts on-hand at acquisition.Income Taxes and Debt ReclassificationIncome TaxesThe Company reviewed the tax impact of the above mentioned restatement adjustments and has recorded the tax effects of these adjustments to taxesreceivable, deferred tax assets and liabilities, and provision for income taxes as appropriate. Tax adjustments reflect the nature and timing of the specificaccounting adjustments and the ability to amend federal and state income tax returns for tax periods beginning after December 31, 2012. Changes to theCompany's effective tax rate are primarily the result of changes to contingent purchase obligations on non-taxable transactions.Debt ReclassificationAs discussed in Note 6, after considering the effects of the restatement adjustments, the Company was not in compliance with its debt covenants and assuch, reclassified all of its debt from long-term to current.F-31Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)Impact on Consolidated Statements of OperationsThe net effect of the restatement described above on the Company's previously issued consolidated statements of operations for the years endedDecember 31, 2015 and 2014 is as follows (in thousands): For the Year Ended December 31, 2015 AsPreviouslyReported Receivables &Related Reserves UnrecordedCharges &ContingentLiabilities Insurance Reserves& RelatedReceivables CapitalImprovements &Aircraft Spare Parts Income Taxes & DebtReclassification As RestatedRevenues$1,995,019 $(2,853) $— $— $— $— $1,992,166Operating expenses: Purchased transportation costs1,315,494 — (5,098) — — — 1,310,396Personnel and related benefits263,522 — (268) — — — 263,254Other operating expenses286,443 7,978 16,130 5,672 7,732 — 323,955Depreciation and amortization32,323 — — — (697) — 31,626Acquisition transaction expenses564 — — — — — 564Total operating expenses1,898,346 7,978 10,764 5,672 7,035 — 1,929,795Operating income96,673 (10,831) (10,764) (5,672) (7,035) — 62,371Interest expense19,439 — — — — — 19,439Income before provision for incometaxes77,234 (10,831) (10,764) (5,672) (7,035) — 42,932Provision for income taxes29,234 — — — — (11,922) 17,312Net income$48,000 $(10,831) $(10,764) $(5,672) $(7,035) $11,922 $25,620Earnings per share: Basic$1.26 $0.67Diluted$1.23 $0.65Weighted average common stockoutstanding: Basic(1)37,969 38,179Diluted(1)38,974 39,180(1) As restated amounts for basic and diluted weighted average common stock outstanding have been corrected for a computational error identified.F-32Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued) For the Year Ended December 31, 2014 AsPreviouslyReported Receivables &Related Reserves UnrecordedCharges &ContingentLiabilities Insurance Reserves& RelatedReceivables CapitalImprovements &Aircraft Spare Parts Income Taxes & DebtReclassification As RestatedRevenues$1,872,816 $(346) $— $— $— $— $1,872,470Operating expenses: Purchased transportation costs1,293,006 — 1,718 — — — 1,294,724Personnel and related benefits213,079 — 582 — — — 213,661Other operating expenses243,662 8,576 10,204 5,450 3,318 — 271,210Depreciation and amortization25,078 — — — (824) — 24,254Acquisition transaction expenses2,305 — — — — — 2,305Total operating expenses1,777,130 8,576 12,504 5,450 2,494 — 1,806,154Operating income95,686 (8,922) (12,504) (5,450) (2,494) — 66,316Interest expense13,363 — — — — — 13,363Income before provision for incometaxes82,323 (8,922) (12,504) (5,450) (2,494) — 52,953Provision for income taxes30,349 — — — — (10,106) 20,243Net income$51,974 $(8,922) $(12,504) $(5,450) $(2,494) $10,106 $32,710Earnings per share: Basic$1.37 $0.86Diluted$1.32 $0.83Weighted average common stockoutstanding: Basic37,852 37,852Diluted39,259 39,259F-33Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)Impact on Consolidated Balance SheetsThe net effect of the restatement described above on the Company's previously issued consolidated balance sheets as of December 31, 2015 is asfollows (in thousands): December 31, 2015 AsPreviouslyReported(1) Receivables &Related Reserves UnrecordedCharges &ContingentLiabilities Insurance Reserves& RelatedReceivables CapitalImprovements &Aircraft SpareParts Income Taxes & DebtReclassification As RestatedASSETSCurrent assets: Cash and cash equivalents$8,664 $— $(734) $— $— $— $7,930Accounts receivable272,176 (12,147) — — — — 260,029Deferred income taxes4,876 — — — — 16,015 20,891Income taxes receivable11,262 — — — — 9,401 20,663Prepaid expenses and other currentassets50,839 (112) (10,464) (2,405) (807) 37,051Total current assets347,817 (12,259) (11,198) (2,405) (807) 25,416 346,564Property and equipment, net197,744 — 302—— (2,682) — 195,364Other assets: Goodwill691,118 (2,136) (530) — (9,626) 3,984 682,810Intangible assets, net76,694 — (1,000) — — — 75,694Other noncurrent assets12,752 (230) 1,368 — — (6,569) 7,321Total other assets780,564 (2,366) (162) — (9,626) (2,585) 765,825Total assets$1,326,125 $(14,625) $(11,058) $(2,405) $(13,115) $22,831 $1,307,753LIABILITIES AND STOCKHOLDERS’ INVESTMENTCurrent liabilities: Current maturities of debt$15,000 $— $— $— $— $417,830 $432,830Accounts payable104,357 11,125 684 — — — 116,166Accrued expenses and other currentliabilities48,657 288 15,225 17,644 — 108 81,922Total current liabilities168,014 11,413 15,909 17,644 — 417,938 630,918Long-term debt, net of current maturities424,399 — — — — (424,399) —Long-term deferred tax liabilities104,400 — — — — 688 105,088Other long-term liabilities16,005 — (697) — — — 15,308Total liabilities712,818 11,413 15,212 17,644 — (5,773) 751,314Commitments and contingencies(Note 12) Stockholders' investment: Common stock383 — — — — — 383Additional paid-in capital397,253 — — — — — 397,253Retained earnings215,671 (26,038) (26,270) (20,049) (13,115) 28,604 158,803Total stockholders’ investment613,307 (26,038) (26,270) (20,049) (13,115) 28,604 556,439Total liabilities and stockholders'investment$1,326,125 $(14,625) $(11,058) $(2,405) $(13,115) $22,831 $1,307,753(1) As previously reported balances have been revised to separate taxes receivable from prepaid expenses and other current assets and long-term deferred tax liabilities from otherlong-term liabilities.F-34Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)Cumulative Effect of Prior Period AdjustmentsThe following table presents the impact of the restatement on the Company's beginning retained earnings and other stockholders' investment balances,cumulatively to reflect adjustments recorded to all periods prior to January 1, 2014 (in thousands, except share amounts): Common Stock Shares Amount AdditionalPaid-InCapital RetainedEarnings Total Stockholders'InvestmentBALANCE, January 1, 2014 (as previously reported)37,564,446 $376 $384,292 $115,697 $500,365Receivables & related reserves— — — (6,285) (6,285)Unrecorded charges & contingent liabilities— — — (3,002) (3,002)Insurance reserves & related receivables— — — (8,927) (8,927)Capital improvements & aircraft spare parts— — — (3,586) (3,586)Income taxes & debt reclassification— — — 6,576 6,576BALANCE, January 1, 2014 (As Restated)37,564,446 $376 $384,292 $100,473 $485,141Impact on Consolidated Statements of Cash FlowsThe net effect of the restatement described above on the Company's previously issued consolidated statements of cash flows for the years endedDecember 31, 2015 and 2014 is as follows (in thousands): For the Year Ended December 31, 2015 AsPreviouslyReported Adjustments As RestatedCash flows from operating activities: Net income$48,000 $(22,380) $25,620Depreciation and amortization34,608 (697) 33,911(Gain) loss on disposal of buildings and equipment(424) 1,724 1,300Share-based compensation2,500 — 2,500Adjustments to contingent purchase obligation— (2,931) (2,931)Provision for bad debts3,010 1,806 4,816Excess tax benefit on share-based compensation(1,175) — (1,175)Deferred tax provision10,534 (7,780) 2,754Changes in (net of acquisitions): Accounts receivable13,984 5,057 19,041Income tax receivable— (7,020) (7,020)Prepaid expenses and other assets(17,603) 11,575 (6,028)Accounts payable(15,658) 3,729 (11,929)Accrued expenses and other liabilities(4,414) 11,769 7,355Net cash provided by operating activities73,362 (5,148) 68,214Cash flows from investing activities: Acquisition of business, net of cash acquired(32,765) — (32,765)Capital expenditures(54,859) 4,875 (49,984)Proceeds from sale of buildings and equipment6,080 (2) 6,078Net cash used in investing activities(81,544) 4,873 (76,671)Cash flows from financing activities: Net cash provided by financing activities5,501 77 5,578Net (decrease) increase in cash and cash equivalents(2,681) (198) (2,879)Cash and cash equivalents: Beginning of period11,345 (536) 10,809End of period$8,664 $(734) $7,930F-35Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued) For the Year Ended December 31, 2014 AsPreviouslyReported Adjustments As RestatedCash flows from operating activities: Net income$51,974 $(19,264) $32,710Depreciation and amortization27,145 (824) 26,321(Gain) loss on disposal of buildings and equipment(106) 315 209Share-based compensation2,255 — 2,255Adjustments to contingent purchase obligation— (1,722) (1,722)Provision for bad debts4,499 5,154 9,653Excess tax benefit on share-based compensation(1,441) — (1,441)Deferred tax provision7,512 (5,045) 2,467Changes in (net of acquisitions): Accounts receivable(44,520) 892 (43,628)Income tax receivable— (5,899) (5,899)Prepaid expenses and other assets(5,180) 145 (5,035)Accounts payable10,877 4,044 14,921Accrued expenses and other liabilities(12,385) 18,802 6,417Net cash provided by operating activities40,630 (3,402) 37,228Cash flows from investing activities: Acquisition of business, net of cash acquired(230,818) — (230,818)Capital expenditures(44,977) 3,002 (41,975)Proceeds from sale of buildings and equipment6,951 — 6,951Net cash used in investing activities(268,844) 3,002 (265,842)Cash flows from financing activities: Net cash provided by financing activities234,121 (136) 233,985Net (decrease) increase in cash and cash equivalents5,907 (536) 5,371Cash and cash equivalents: Beginning of period5,438 — 5,438End of period$11,345 $(536) $10,80916. Subsequent EventsInvestment AgreementOn May 1, 2017, the Company entered into the Investment Agreement with Elliott, pursuant to which the Company issued and sold shares of itsPreferred Stock to Elliott for an aggregate purchase price of $540.5 million. The proceeds of the sale of the Preferred Stock were used to pay off and terminatethe Company’s senior credit facility and to provide working capital to support the Company’s current operations and future growth.The Company made certain customary representations and warranties in the Investment Agreement and agreed to certain covenants, including agreeingto use reasonable best efforts to enter into, within 90 days following the Closing Date, an asset based lending facility (the earlier of (i) the date of such entryand (ii) the expiration of such 90 day period, the “Refinancing Date”).From the closing date until the Refinancing Date, the Company agreed to pay Elliott a daily payment in an amount equal to $33,333.33 per calendarday (which amount accrued daily and was payable monthly in arrears). On July 21, 2017, the Company entered into the ABL Facility (which was deemed tobe the “New ABL Facility” under the Investment Agreement) and used the initial proceeds from the ABL Facility for working capital purposes and to redeemall of the outstanding shares of the Series F Preferred Stock issued to Elliott.F-36Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)Certain Terms of the Preferred Stock Series B Preferred StockSeries C Preferred StockSeries DPreferred StockSeries E PreferredStockSeries FPreferredStockShares at$0.01 ParValue155,00055,00010090,000240,500Price /Share$1,000$1,000$1.00$1,000$1,000DividendRateAdjusted Libor + 3.00% +Additional Rate (4.75-12.50%) based on leverage.Additional 3.00% uponcertain triggering events.Adjusted Libor + 3.00% +Additional Rate (4.75-12.50%) based on leverage.Additional 3.00% uponcertain triggering events.Right toparticipateequally andratably in all cashdividends paid oncommon stock.Libor + 5.25% +Additional Rate(8.50%).Additional 3.00%upon certaintriggering events.Libor + 6.25%at closing.Additional3.00% uponcertaintriggeringevents.RedemptionTerm8 Years8 Years8 Years6 Years6 YearsRedemptionRightsFrom Closing Date:12-24 months: 105%24-36 months: 103%65% premium (subject tostock movement) From ClosingDate: 0-12 months:106.5%12-24 months:103.5%(a) RefinancingDate: 101.0%uponredemptionwith new ABL(b) FromClosing Date: RefinancingDate-12months:106.5%12-24 months:103.5%Redemption rights are at the option of the Company or upon a change in control, at the option of the holder. The holders of Series C Preferred Stockand Series D Preferred Stock have the right to participate equally and ratably with holders of common stock in all cash dividends paid on shares of commonstock.Other Terms of the Preferred StockVoting. The holders of Preferred Stock will generally not be entitled to vote on any matters submitted to a vote of the stockholders of the Company. Solong as any shares of Preferred Stock are outstanding, the Company may not take certain actions without the prior approval of the holders of shares ofPreferred Stock representing a majority of the aggregate liquidation value of all of the shares of Preferred Stock (the “Preferred Requisite Vote”), voting as aseparate class, including, among other matters: (1) amending, altering, repealing or otherwise modifying any provision of the Company’s certificate ofincorporation, certificate of designations or bylaws in a manner that would alter or change the terms or the powers, preferences, rights or privileges of thePreferred Stock; (2) declaring, paying or setting aside for payment any dividends or distributions upon any junior securities; (3) repurchasing, redeeming orotherwise acquiring any junior securities or parity securities (other than for certain ordinary course purposes) for any consideration or paying any moneys ormaking available for a sinking fund for the redemption of any shares of such junior securities or parity securities; (4) authorizing, creating, increasing theauthorized amount of, or issuing any class or series of senior securities or parity securities, including any securities convertible into, or exchangeable orexercisable for, any senior securities or parity securities; (5) amending, restating, supplementing, modifying or replacing any debt agreement or otherfinancing agreement which would restrict the minimum cash dividend payments contemplated by the certificates of designations for the Preferred Stock; (6)subject to various exceptions (including the New ABL Facility), incurring any indebtedness; or (7) subject to an agreed upon exception, during the sixmonths following the Closing Date, making any divestiture, or series of related divestitures, valued at or more than $10 million.Board of Directors. For so long as (a) any shares of Series B Preferred Stock or Series C Preferred Stock are issued and outstanding and (b) Elliott holdshares of Preferred Stock collectively representing a majority of the liquidation value of the Preferred Stock, the holders of Preferred Stock shall have theexclusive right, acting with the Preferred Requisite Vote, to nominate and elect two (2) individuals selected by the holders of Preferred Stock, or to require theCompany’s Board of Directors to fill two (2) vacancies in the Board of Directors with individuals selected by the holders of Preferred Stock, to serve as,respectively, a Class II director and a Class III director of the Company (the “Preferred Stock Directors”).F-37Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)Following the redemption of all shares of Series B Preferred Stock and Series C Preferred Stock have been redeemed, and until such time as all shares ofSeries D Preferred Stock are redeemed, for so long as Elliott holds at least 5.0% of the equity value of the Company, the holders of Preferred Stock shall havethe exclusive right acting with the Preferred Requisite Vote, to (i) nominate and elect one (1) Preferred Stock Director, and (ii) designate one individual to actas an observer to the Board of Directors.In the event of any Triggering Event (as defined in the Certificates of Designations), subject to applicable rules of the New York Stock Exchange,including, without limitation, independent director requirements, the number of directors constituting the Board of Directors shall be increased such that thenumber of vacancies on the Board of Directors resulting from such increase (the “Triggering Event Vacancies”), together with the Preferred Stock Directors(to the extent then serving on the Board of Directors), constitutes a majority of the Board of Directors. The holders of Preferred Stock shall have the right,acting with the Preferred Requisite Vote, to nominate and elect individuals selected by the holders of Preferred Stock to fill such Triggering Event Vacanciesand thereby serve as directors of the Company, or to require the Board of Directors to act to fill such Triggering Event Vacancies with individuals selected bysuch holders of Preferred Stock, to serve as directors of the Company, and the size of the Board of Directors shall be increased as needed. Each such directorso elected is referred to as a “Triggering Event Director”. When a Triggering Event is no longer continuing, then the right of the holders of Preferred Stock toelect the Triggering Event Directors will cease, the terms of office of the Triggering Event Directors will immediately terminate and the number of directorsconstituting the Board of Directors will be reduced accordingly. The holders of Preferred Stock have other rights in the event of a Triggering Event, asdescribed in the Certificate of Designations.Board Committees. Until such time as all shares of Series B Preferred Stock has been redeemed, the Company shall, upon the request of the holders ofPreferred Stock, acting with the Preferred Requisite Vote, cause each of the Compensation Committee of the Board of Directors and the Nominating andCorporate Governance Committee of the Board of Directors to include one Preferred Stock Director, in each case, to the extent permitted under applicablerequirements of the New York Stock Exchange or applicable law.Warrant AgreementIn connection with the issuance of the Preferred Stock pursuant to the Investment Agreement, the Company and Elliott entered into a WarrantAgreement (the “Warrant Agreement”), pursuant to which the Company issued to Elliott eight year warrants (the “Warrants”) to purchase an aggregate of379,572 shares of the Company's common stock at an exercise price of $0.01 per share.Stockholders’ AgreementIn connection with the issuance of the Preferred Stock pursuant to the Investment Agreement, the Company and Elliott entered into a Stockholders’Agreement (the “Stockholders’ Agreement”), pursuant to which Elliott was granted certain preemptive rights and other rights.Subject to customary exceptions, each Eligible Elliott Party (as defined in the Stockholders’ Agreement) shall have the right to purchase their pro ratapercentage of subsequent issuances of equity securities offered by the Company in any non-public offering.Registration Rights AgreementIn connection with the issuance of the Preferred Stock pursuant to the Investment Agreement, the Company, Elliott, and investment funds affiliatedwith HCI entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Company granted certain demand andpiggyback registration rights.Termination of HCI Advisory AgreementIn connection with the issuance of the Preferred Stock pursuant to the Investment Agreement, the Company and HCI entered into a TerminationAgreement dated May 2, 2017 (the “Termination Agreement”), pursuant to which the Company and HCI agreed to terminate the Amended and RestatedAdvisory Agreement, dated as of September 12, 2011 (the “Advisory Agreement”). Pursuant to the Termination Agreement, HCI waived the Company’spayment of any and all unpaid fees and expenses accrued under the Advisory Agreement through the Closing Date.F-38Roadrunner Transportation Systems, Inc. and SubsidiariesNotes to Consolidated Financial Statements — (Continued)Credit Agreement and Senior Credit FacilityOn July 21, 2017, the Company entered into a credit agreement with BMO Harris Bank, N.A. and certain other lenders (“ABL Facility”). The proceedsfrom the ABL Facility were used to redeem all of the outstanding shares of the Series F cumulative redeemable preferred stock and working capital purposes.The ABL Facility consists of:•$200.0 million asset-based revolving line of credit, of which $20.0 million may be used for swing line loans and $30.0 million may be used forletters of credit;•Approximately $56.8 million term loan facility; and•$35.0 million asset-based facility available to finance future capital expendituresThe ABL Facility matures on July 21, 2022. Principal on the term loan facility is due in quarterly installments commencing on March 31, 2018. TheABL Facility contains a minimum fixed charge coverage ratio financial covenant that must be maintained when excess availability falls below a specifiedamount. In addition, the ABL Facility contains negative covenants limiting, among other things, additional indebtedness, transactions with affiliates,additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions, and other matters customarily restricted.The ABL Facility also contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults,events of bankruptcy and insolvency, failure of any guaranty or security document supporting the credit agreement to be in full force and effect, and a changeof control of the Company's business.On December 15, 2017, the Company entered into a First Amendment to the ABL Facility. Pursuant to the Amendment the ABL Facility was amendedto (i) reduce the maximum borrowing amount under the revolving line of credit by $15.0 million and (ii) terminate the asset-based facility available tofinance future capital expenditures.Sale of UnitransOn September 15, 2017, Ascent Global Logistics Holdings, Inc. (“Ascent”), a wholly owned subsidiary of the Company, sold all of the issued andoutstanding capital stock of Unitrans, Inc., a wholly owned subsidiary of Ascent, pursuant to the terms of a Stock Purchase Agreement, dated as of August 16,2017 for cash consideration of $95.0 million. The proceeds of the sale were used to redeem a portion of the Series E cumulative redeemable preferred stock.As of December 31, 2016, Unitrans Inc. did not meet the criteria to be classified as held for sale and accordingly, its results are presented with continuingoperations.Enactment of US Tax ReformOn December 22, 2017, the Tax Cuts and Jobs Act was signed into United States law, and most changes are effective as of January 1, 2018. The lawincludes various provisions that will affect corporations, including a reduction of the corporate income tax rate from a 35% maximum rate to a 21% flat rate,enhanced “bonus depreciation” for capital equipment purchases, limitations on interest expense deductions, changes to net operating loss carryback andcarryforward rules, and changes to US taxation of foreign profits. The corporate tax rate reduction is expected to result in a discrete tax benefit during thethree months ended December 31, 2017 as a result of recalculating the carrying value of the Company's deferred tax assets and liabilities. The Company is inthe process of reviewing and analyzing the law in detail, and will provide an update regarding its impact on the business and the Company's consolidatedfinancial statements in subsequent filings.F-39SEPARATION AGREEMENT AND RELEASE​ This Separation Agreement and Release ("Agreement") is entered into by Mark T. Peterson("Employee") and Roadrunner Transportation $ystems, lnc. ("Employer') (collectively, "the​ Parties");​ Whereas, Employee was separated from employment effective August 31, 2016;​ Whereas, the Parties wish to conclude their employment relationship amicably, with Employee​ receiving the separation benefits described in this Agreement;​ NOW, THEREFORE, it is hereby agreed by and between the Parties as follows:​ 1, Terminatlgn of Current Fmplovment Rqlationship​ Employee's current employment with Employer will terminate effective August 31,2016​ ("Separation Date"),​ 2. Faymg-nt and Beng.Iits​ Employee will be paid wages earned through the Separation Date and any earned but unused​ PTO regardless of whether or not Employee signs this Agreement. No other amounts are due​ and owing or will be paid to Employee other than those contained within this Agreemeni,​ lf Employee signs this Agreement and does not revoke, Employer agrees to pay Employee​ twenty six (26) weeks of regular base salary ($12,269.23 per biweekly period), pursuant to​ Employer's normal payroll procedures ("Separation Payment"). The Separation Payment will​ have the same taxes and governmentally-mandated withholdingsdeducted. Payment of the​ Separation Payment will not begin untilthe next'normal payroll period occurring after expiration​ of the revocation period (without revocation by Employee) referenced in Paragraph 15(f).​ lf Employee signs this Agreement and does not revoke, Employer agrees ihat, notwithstanding​ any provision of an RSU Agreernent to the contrary, upon Employee's signing of the Additional​ Release (without revocation) all2014 and 2016 Restricted $tock Units granted by Employer to​ Employee that are curently unvested (8,840 units) will become "Vested Units' (as such term is​ defined in the Restricted Stock Unit Agreement(s) between Employer and Employee pursuant to​ which Employer granted to Employee the Restricted Stock Units (such agreements, the "RSU​ Agreements")). Employee's further rights and obligations regarding the Restricted Stock Units are​ as described in the RSU Agreements as well as Employer's 2010 lncentive Compensation PIan.​ Employer agrees to pay Employee the amount of eleven thousand, two hundred seventeen​ dollars and sixty six cents {$11,217.66), subject to normal withholding for payroll, income taxes​ and such other deductions as may be required by law, to be used by Enrployee to obtain health​ insurance coverage, or for any other purpose Employee chooses to use it for. This payment​ willnot be made until the first regular payroll after the expiration of the revocation period​ (without revocation by Employee) referenced in Paragraph 15(f).​ 3. Belease​ Employee does hereby fully and forever discharge and release Ernployer, its owners,​ stockholders, officers, directors, agents, employees, representatives, attorneys, affiliates,​ ,^fi.!​ ​ subsidiaries, related or parent entities (and offlcers, directors, agents, employees,​ representatives and attorneys of such affiliates, subsidiaries, related or parent entities),​ insurers, predecessors, successors, heirs and assigns ("Released Persons and Entities") from​ any and all actions, causes of action, charges, complaints, claims, attorneys' fees, demands,​ damages, costs, expenses or compensation of any kind or character whatsoever which​ Employee has, had or might have been able to assert or claim based on any action, omission or​ conduct of any kind, known or unknown, on the part of the Released Persons and Entities from​ the beginning of time up to the date of this Agreement. By way of example only and without in​ any way limiting the generality of the foregoing language, Employee's release shall include any​ claims for relief or causes of action under the Age Discrimination in Emptoyment Act, as​ amended,29 U.S.C, sec^ 621, g!-SEg., including the Older Workers Benefit Protection Act of​ 1990; Title Vll of the Civil Rights Act of 1964, as amended, 42 U.S.C. sec. 2000e, et seq.; the​ Americans With Disabilities Act of 1991,42 U.S,C. $ 12101 et seq.; the Rehabititation Act of​ 1973, as amended,29 U.S.C, secs.791,793 and 794; the WorkerAdjustment and Retraining​ Notification Act; the Civil Rights Enforcement Statutes,42 U,S.C. secs. 1981 through 19BB;​Employee Retirement lncome Security Act of 1974,29 U.S.C. sec. 1001, et gleq.; the National​ Labor Relations Act; 29 U.S.C. sec 151, et seq..; the Fair Labor Standards Act of 1gg8,29​ U.S,C. $ 201 et seq.; the Occupational Safety and Health Act of 197A,29 U.S,C. g 651 et seq.;​ the Family and Medical Leave Act of 1993, 29 U,S.C. $ 2601 et ses.; the Sherman Act, as​ amended, 15 u.s.c. $1 et seq.; the clayton Act, as amended, $1s u.s.c. g12 et seq.;​ Wisconsin Fair Employment Act; and any other federal, state or local statute, ordinance, or​ regulation and, in addition, from any claims, demands, or actions brought on the basis of​ alleged wrongful or retaliatory discharge, breach of an implied or express contract,​ misrepresentaiion, defamation, interference with contract or intentional or negligent infliction of​ ernotional distress, damage to business or professional reputation, conspiracy, negligence,​ invasion of privaey, or any other tort, contract or common law claim. Employee intenOs in​ executing this Agreement that it shall be effective as a bar to each and every claim, demand,​ and cause of action Employee may have at the time of the execution of this Agreement.​ Employee further understands, acknowledges and agrees that, by signing this Agreement,​ Employee is giving up all rights which Employee or Employee's successors, assigns, spouse,​ children or any other thirdparty may have to bring a claim or cause of action arising out of or​ related to Employee's employment or employment separation, and that Employee voluntarily​ does so.​ This Agreement shall serve as a bar to any claims relating to the matters generally and​ specifically released above, except charges filed with the Equal Employment Opportunity​ Commission ('EEOC')^ With regard to any claims fited by Employee or on behalf of Employee​ with any court or agency, Employee shall take whatever actions are necessary to effect the​ dismissal with prejudice of any and all claims Employee has against Employer, including but not​ limited to the execution of additional documents to cause the expeditious dismissal of such​ charge or suit with prejudice. lf any charges are filed or have been filed with the EEOC,​ Employee shall take whatever actions are necessary to effect the dismissal with prejudice of​ any and all EEOC charges entployee has against Employer, including but not limited to the​ execution of additional documents to cause the expeditious dismissal of such charge withprejudice; and, should the EEOC pursue a claim on Employee's behalf, Employee hereby​ waives and releases any right or claim to recovery thereunder. This Agreement does no1​ otheruise bar Employee from participating in an EEOC investigation.​ Employeeacknowledges and agrees that, as of the date of this Agreement, Employee has not​ suffered any unreporled on-the-job or work-related accident, injury, occupational disease, or​ disability, whether temporary, permanent, partial, or total. This Agreement does not waive or​ -2-​ til{​ ​ release any right or claim(s) that Employee may have which arises after execution of this​ Agreement by Employee, for breach of this Agreement, or which cannot be waived by law.​ 4. Return of EmployqlDocuments and Propertv​ Employee agrees that Employee has and/or will turn over to Employer all files, memoranda,​ records, and other documents (including any of the foregoing which are electronically stored),​ and any physical or personal property (including, but not limited to, keys, company credtts​ cards, cell phones, computers, etc,) which Employee received from Employer and which are the​ property of Employer.​ 5. Non-Disparaqement​ Employee agrees that Employee will not communicate in any manner, anything negative​ regarding the Released Persons and Entities. However, this Paragraph shall not prevent​ Employee from responding candidly to any subpoena or as otherwise compelled by law, or​ engaging in communication that is protect by law. This is not a restriction on statements​ Employee has a legally protected right to make, such as to the EEOC, Employer agrees that in​ response to any request for a reference, Employer will only confirm dates of employment and​ position held.​ 6. Non-Disclosgfe of Confidential lnformatiqn​ Employee agrees for a period of two (2) years following the Separation Date to maintain the​ confidentiality of "Confidentiallnformation," Confidential lnformation is defined as information​ {to the extent it is not a Trade Secret), whether oral, written, recorded, magnetically or​ electronically or otherwise stored, and whether originated by Ernployee or otherwise coming​ into the possession or knowledge of Employee, which is possessed by or developed for​ Employer and which relates to Employer's existing or potential business, which information is​ not reasonably ascertainable by Employer's competitors or by the general public through lawful​ means, and which information Employer treats as confidential, including but not limited to​ information regarding Employer's business affairs, plans, strategies, products, designs,​ finances, computer programs, research, customers, purchasing, marketing, and other​ information. Employee agrees to never disclose Employer Trade Secrets, as that term is​ defined under the Uniform Trade Secrets Act. This prohibition does not prohibit Employee's​ use of general skills and know-how acquired during and prior to employment by Employer, as​ long as such use does not involve the use or disclosure of Confidential lnformation. This​ prohibition also does not prohibit the description by Employee of Employee's employment​ history and duties, for work search or other purposes, as long as such use does not involve the​ use or disclosure of Confidentiallnformation.​ 7. Post-A,q.reement Restrietions on A$tivitv​ (a) Definitions. When used in this Agreement the following terms have the definition​ set forth below:​ (i) "Competing Product" means any product or service which is sold or​ provided in competition with a product or service: that Employee sold or​ provided on behalf of Employer at some time during the twelve (12)​ months immediately preceding the execution of this Agreement; that one​ or more Employer employees or business units managed, supervised, or​ directed by Employee sold or provided on behalf of Employer at some​ time during the twelve (12) months immediately preceding the execution​ .(​ w(​ -J-​ ​ of this Agreement; that was designed, developed, tested, distributed,​ marketed, provided, or produced by Employee (individually or in​ collaboration with other Employer employees) or one or more Employer​ employees or business units managed, supervised, or directed by​ Employee at sonre time during the twelve (12) months immediately​ preceding the execution of this Agreement; or that was designed, tested,​ developed, distributed, marketed, produced, sold, or provided by​ Employer with management or executlve support from Employee at some​ time during the twelve (12) months immediately preceding the execution​ of this Agreement.​ "Employer" means Roadrunner Transportation Systems, lnc. and all​ affiliates, related or parent entities, subsidiaries, successors or assigns.​ "Restricted Customer" means a customer of Employer to which​ Employee, or one or more individuals or Employer business units​ supervised, managed, or directed by Employee, sold or provided​ products or services on behalf of Employer during the twelve (12) month​ period immediately preceding the execution of this Agreement.​ "Services" means services of the type performed for Employer by​ Employee or one or more Employer employees managed, supervised, or​ directed by Employee during the final twelve (12) months preceding the​ execution of this Agreement, but shaltnot include clerical, menial, or​ manual labor.​ "Strategic Customer" means a customer of Employer that purchased a​ product or service from Employer during the twelve (12) rnonth period​ immediately preceding the execution of this Agreement, but is limited to​ customers concerning which Employee learned, created, or reviewed​ Confidential lnformation or Trade Secrets on behalf of Emptoyer during​ the twelve (12) month period immediately preceding the execution of this​ Agreement.​ "Territory" means a state within the United States of America.​ "Restricted Territory' means Territories in which Employer sold or​ provided products, or services during the six (6) month period​ immediately precedlng the execution of this Agreement. Notwithstanding​ the foregoing, the term Restricted Territory is limited to Territories in​ which Employer sells or provides in excess of one hundred thousand​ dollars (US$100,000) in the aggregate worth of products or services in​ the six (6) month period immediately preceding the execution of this​ Agreement. Also, notwithstanding the foregoing, the term Restricted​ Territory is limited to Territories which were part of Employee's​ responsibility on behalf of Employer during the six (6) month period​ immediately preceding the execution of this Agreement and/or Territories​ in which Employer sold or provided products or services with sales,​ marketing, production, management or otherassistance or direction of​ Employee during the six (6) month period imrnediately preceding the​ execution of this Agreement.​ (i i)​ (iii)​ (iv)​ (v)​ (vi)​ (vii)​ rp​ UJ​ (b) Limited Restrictions on Activity.​ -4-​ ​ (i) For eleven (11) months following the execution of this Agreement​ Employee shall not sell or solicit the sale of a Competing Product to a​ Restricted Customer.(ii) For eleven (11) months following the execution of this Agreement​ Employee shall not perform Services as part of or in support of providing,​ selling, or soliciting the sale of a Competing Product to a Restricted​ Customer.(iii) For eleven (1'1) months following execution of this Agreement Employee​ shall not sell or solicit the sale of a Competing Product to a Strategic​ Customer.(iv) For eleven (11) months following execution of this Agreement Employee​ shall not perform Services as part of or in support of providing, selling or​ soliciting the sale of a Competing Product to a Strategic Customer.​ 8. Ng_n:SolicitatioJr​ (a) Nlon-solicitation of Employees: Employee agrees, for the period of eighteen (18)​ months after the Separation Date, that he will not directly or indirectly solicit any​ of Employer's employees for a competing business, or otherwise induce or​ attempt to induce such employees (either current or who were employed for the​ six (6) month period preceding the Separation Date) to terminate their​ employment with Employer.​ (b) Non-soliqitirtion of Vpndors/Agents: Fora period of eighteen (18) months​ following the Separation Date, Employee shall not, directly or indirectly, call on,​ solicit, take away, or attempt to call on, solicit, or take away any entity that​ Employer hascontracted with to transport freight of an Employer customer (a​ vendor) or any entity that Employer uses to coordinate the transportation of​ freight with an Employer customer (an agent) (either a current vendor or agent or​ one whom did business with the Employer for the twelve (12) month period​ preceding the Separation Date), This provision shall not prohibit Employee from​ working directly for an Employer customer as a consultant or independent​ contractor during this non-solicitation period,​ (c) Non-intederence with Business Oppoftunity: For a period of eighteen (18)​ months following the Separation Date, Employee shall not, directly or indirectly,​ divert from Employer any investment or financial opportunity that could be​ considered an oppofiunity of Employer andlor which Employer had or was​ pursuing in the twelve (12) month period preceding the Separation Date.​ Employee understands and agrees that Employer would not have an adequate remedy at law for​ the breach or threatened breach by Employee of the covenants set forth above, and agrees that if​ there is any such breach or threatened breach, Employer may, in addition to the other lega[ or​ equitable remedies that may be available to it, obtain a court-imposed injunction or restraining​ order to enjoin or restrain Employee from the breach or threatened breach of such covenants.​ Employee agrees that Employershall not have to post any bond to obtain such a court-imposed​ injunction or restraining order.​ 0​ v14​ L,n​ -5-​ ​ 9. Enfpf-cement​ This Agreement does not bar actions or proceedings instituted for the sole purpose of enforcing​ the provisions of this Agreement, Any violation of the provisions of this Agreement by​ Employee would allow Employer to revoke this Agreement and require Employee to​ immediately reimburse Employer in full for the Separation Payment.​ 10. Nen-Admission​ Employer's or Employee's participation in this Agreement ls not to be construed as an​ admission of any wrongdoing or liability whatsoever by or on behatf of either Party. This​ Agreement is intended for the sole purpose of resolving any issues between the Parties​ concerning Employee's employment and separation of employment from Employer. lt is not​ intended for any other purpose and shall not be used by any other party for another reason.​ 1 1. Confidentia,litv​ Employee shall not disclose the existence of or the terms of this Agreement to any third party​ (except Employee's spouse) without the written consent of Employer, except for the purpose of​ enforcing this Agreement, for the purpose of consulting with an attorney or accountant for legal​ or tax advice concerning this Agreement, or pursuant to legal process or as othenryise required​ by law, rule or regulation.​ 12, Waiver of ,Future Emplpyment​ Employee agrees that Employee's employment with Employer has ended, and Employee​acknowledges that Employee has received all wages, compensation, benefits, and other​ amounts to which Employee was entitled because of Employee's employment with Employer,​ Employee affirmatively represents that Employee has no interest in returning to employment​ with Emptoyer (or any of the Released Persons and Entities), and Employee understands that​ Employer (and the Released Persons and Entities) has made the determination that Employee​ is not eligible for rehire. Employee therefore agrees that Employee will not apply or reapply for​ employment, reemployment, or reinstatement with Employer (or the Released Persons and​ Entities), and Employee waives any right to seek such employnrent, reemployment, or​ reinstatemeni. Employee further agrees that the execution of this Agreement is good and​ sufficient cause for Employer and the Released Persons and Entities to reject any such​ application for employment, reemployment, or reinstatement.​ 13, Separabilitv​ Each provision of this Agreement is separate and severable. lf any provision of this Agreement​ is held invalid by any court, agency or tribunal, that provision shall be modified to the minimum​ extent necessary to make it valid, and shall not impair the validity of any other provision of this​ Agreement, which shall remain in full force and effect. This Agreement shall be interpreted in​accordance with the laws of the State of Wisconsin.​ 1 4. Entire Understandin=q.​ This Agreement constitutes the entire understanding between the Parties concerning​ Employee's employment with Employer and related entities, and supersedes all prior​ agreements, representations, practices, and understandings between the Parties, including​ without limitation, any prior employment agreement Employee may have had with Employer or​ any of its related entities, the provisions of any personnel documents, handbooks or policies​ and any prior customs or practices of Employer with respect to business, severance pay, fringe​ benefits, or othenrise, Employee remains subject to any non-compete or non-solicitation​ ,'(​ Ul/(​ agreements that Employee signed off on​ -6-​ ​ 15. Elnolovee agknowledqe-g that:​ (a) Employee has read this Agreement, understands its contents and agrees to its​ (s)​ Employeg​ terms and conditions of Employee's own free will;​ Employee is hereby advised by Employer to consult with an attorney prior to​ signing this Agreement, has been advised in writing to do so, and has had the​ opportunity to do so;​ The Agreement is signed in exchange for consideration to which Emptoyee​ would otherwise not be entitled;​ Employee understands that the Agreement includes a final general release and​ that Employee can make no further claims against the Released Persons and​ Entities in connection with the events described in the release;​ Employee has been given twenty one (21) days to consider whether to accept​ and sign this Agreement;​ Employee has seven (7) days after signing the Agreement within which to revoke​ acceptance of it, by sending a written document stating that Employee wishes to​ revoke acceptance of this Agreement to Paul Hoff, Vice President of Human​ Resources, Roadrunner Transportation Systems, 4900 S. Pennsylvania Ave.,​ Cudahy, Wisconsin 53110; and​ This Agreement will not become effective or enforceable (the "Effective Date")​ untilthe expiration of the revocation period referenced in Paragraph 15(f).​ Roadrunneq.Jransportatign Systems, lnc.:​101312016​ 081 062-01 1 0\1 9583805.1​ (b)​ (c)​ (d)​ (e)​ (0​ By:​ Mark T. Peterson​ -7-​ ​ Exhibit 21.1LIST OF SUBSIDIARIES ROADRUNNER TRANSPORTATION SYSTEMS, INC.Name of Subsidiary State/County ofIncorporation/Organization ParentRoadrunner Equipment Leasing, LLC Delaware Roadrunner Transportation Systems, Inc.Roadrunner Transportation Services, Inc. Delaware Roadrunner Transportation Systems, Inc.Roadrunner Truckload Agent Investment, Inc. Delaware Roadrunner Transportation Systems, Inc.Prime Distribution Services, Inc. Delaware Roadrunner Transportation Systems, Inc.Group Transportation Services Holdings, Inc. Delaware Roadrunner Transportation Systems, Inc.International Transportation Holdings, Inc. Delaware Roadrunner Transportation Systems, Inc.Roadrunner Truckload Holdings, LLC Delaware Roadrunner Transportation Systems, Inc.Active Aero Group, Inc. Delaware Roadrunner Transportation Systems, Inc.Morgan Southern, Inc. Delaware Roadrunner Transportation Services, Inc.Expedited Freight Systems, LLC Delaware Roadrunner Transportation Services, Inc.Roadrunner Intermodal Services, LLC Delaware Morgan Southern, Inc.Wando Trucking, LLC Delaware Morgan Southern, Inc.Central Cal Transportation, LLC Delaware Roadrunner Intermodal Services, LLCGroup Transportation Services, Inc. Delaware Group Transportation Services Holdings, Inc.MESCA Freight Services, LLC Delaware Group Transportation Services Holdings, Inc.Adrian Carriers, LLC Delaware Group Transportation Services Holdings, Inc.Marisol International, LLC Delaware Group Transportation Services Holdings, Inc.Unitrans Inc. Delaware Group Transportation Services Holdings, Inc.Great Northern Transportation Services, LLC Delaware Group Transportation Services, Inc.Alpha Freight Systems, LLC Delaware Group Transportation Services, Inc.Capital Transportation Logistics, LLC Delaware Group Transportation Services, Inc.World Transport Services, LLC Delaware MESCA Freight Services, LLCBeech Hill Enterprises, LLC Delaware MESCA Freight Services, LLCUnitrans International Corporation California Unitrans Inc.Combi Maritime Corporation California Unitrans Inc.Unitrans International USA (S) PTE. LTD Republic of Singapore Unitrans International CorporationMidwest Transit, Inc. Canada International Transportation Holdings, Inc.Roadrunner Truckload, LLC Delaware Roadrunner Truckload Holdings, LLCStagecoach Cartage and Distribution, LLC Delaware Roadrunner Truckload Holdings, LLCRich Transport, LLC Delaware Roadrunner Truckload Holdings, LLCEverett Logistics, LLC Delaware Roadrunner Truckload Holdings, LLCD&E Transport, LLC Delaware Roadrunner Truckload Holdings, LLCConsolidated Transportation World, LLC Delaware Roadrunner Truckload Holdings, LLCISI Logistics, LLC Delaware Roadrunner Truckload Holdings, LLCISI Logistics South, LLC Delaware Roadrunner Truckload Holdings, LLCThe Meadowlark Group, LLC Delaware Roadrunner Truckload Holdings, LLCM. Bruenger & Co., Inc. Delaware Roadrunner Truckload, LLCGWP Logistics, LLC Delaware Roadrunner Truckload, LLCDirect Connection Transportation, LLC Delaware Roadrunner Truckload, LLCBig Rock Transportation, LLC Delaware Roadrunner Truckload, LLCRoadrunner Truckload 2, LLC Delaware Roadrunner Truckload, LLCA&A Logistics, LLC Delaware Roadrunner Truckload, LLCA&A Express, LLC Delaware Roadrunner Truckload, LLCCTW Transport, LLC Delaware Roadrunner Truckload, LLCSargent Trucking, LLC Delaware Roadrunner Truckload, LLCR&M Transportation, LLC Delaware M. Bruenger & Co., Inc.Sortino Transportation, LLC Delaware M. Bruenger & Co., Inc.USA Jet Airlines, Inc. Delaware Active Aero Group, Inc.Active Aero Charter, LLC Michigan Active Aero Group, Inc.Active Global Solutions, LLC Michigan Active Aero Group, Inc.Active Aero Motor Carrier, LLC Michigan Active Aero Group, Inc.Active PTM, LLC Michigan Active Aero Group, Inc.Active On Demand de Mexico S. de R.L. de C.V. Mexico Active Aero Group, Inc. (90%) and Active PTM, LLC (10%)Exhibit 31.1Certification of Principal Executive Officer and Principal Financial OfficerI, Curtis W. Stoelting, certify that:1. I have reviewed this Annual Report on Form 10-K of Roadrunner Transportation Systems, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.Date: January 30, 2018 /s/ Curtis W. Stoelting Curtis W. Stoelting Chief Executive Officer (Principal Executive Officer and PrincipalFinancial Officer)Exhibit 32.1Section 1350 Certification of Principal Executive Officer and Principal Financial OfficerIn connection with the Annual Report on Form 10-K of Roadrunner Transportation Systems, Inc. (the “Company”) for the year ended December 31, 2016 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, Curtis W. Stoelting, Chief Executive Officer of the Company, certify,to the best of my knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or78o(d)); and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ Curtis W. StoeltingCurtis W. StoeltingChief Executive Officer (Principal Executive Officer andPrincipal Financial Officer)Date: January 30, 2018This certification accompanies the Annual Report on Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and isnot to be incorporated by reference into any filing of Roadrunner Transportation Systems, Inc. under the Securities Act of 1933, as amended, or the SecuritiesExchange Act of 1934, as amended (whether made before or after the date of the Annual Report on Form 10-K), irrespective of any general incorporationlanguage contained in such filing.

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