F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q 

For the transition period fromto

Commission file number: 333-210698

Jack Cooper Holdings Corp.

(Exact name of Registrant as specified in its charter)

(816) 983-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate 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 1934 during 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 filing requirements for the past 90 days. Yes ☒ No ◻ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required 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 shorter period that the registrant was required to submit and post such files). Yes ☒ No ◻ 

  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No ☒

As of June 30, 2016, there were outstanding 100 shares of the Registrant’s common stock, all of which were issued to the Registrant’s parent company.

INDEX

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JACK COOPER HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(in thousands)

See accompanying Notes to Condensed Consolidated Financial Statements

JACK COOPER HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)

See accompanying Notes to Condensed Consolidated Financial Statements

JACK COOPER HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

See accompanying Notes to Condensed Consolidated Financial Statements

Note 1: ACCOUNTING POlicies and basis of presentation

The condensed consolidated financial statements include all the accounts of Jack Cooper Holdings Corp. and its subsidiaries (“we,” the “Company” or “JCHC”). All significant intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements, and the notes thereto, included in our Registration Statement on Form S-4 (Commission File Number 333-210698, effective May 11, 2016) (the “Registration Statement”), as filed with the Securities and Exchange Commission, and the prospectus contained therein. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal, recurring adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Results of operations for interim periods are not necessarily indicative of results to be expected for a full year.

Organization and Business Overview

The Company is a specialty transportation and other logistics provider and the largest over-the-road finished vehicle logistics company in North America. The Company provides premium asset-heavy and asset-light based solutions to the global new and previously owned vehicle markets, specializing in finished vehicle transportation and other logistics services for major automotive original equipment manufacturers, fleet ownership companies, remarketers, dealers and auctions. The Company offers a broad, complementary suite of asset-heavy and asset-light transportation and logistics solutions, operating through a fleet of 2,186 active rigs and a network of 53 strategically located terminals across North America as of June 30, 2016. The Company believes its scale and full range of over-the-road transportation and value-added logistics services, offered in over 80 locations across the U.S., Canada and Mexico, allow it to operate efficiently and deliver superior customer service, which the Company believes gives it a competitive advantage in maintaining and winning new business.

Revenue

The Company primarily earns revenues under multi-year or single-year contracts from the intrastate and interstate transportation of vehicles. Approximately 42%,  30%, and 11% of the Company’s revenues were from its three largest customers, General Motors Company, Ford Motor Company, and Toyota Motor Sales, USA, Inc., respectively, during the six months ended June 30, 2016, and 39%, 30%, and 14%, respectively, during the six months ended June 30, 2015. For the three months ended June 30, 2016, approximately 45%, 30% and 10%, and for the three months ended June 30, 2015 approximately 39%, 30% and 13% of the Company’s revenues were from General Motors Company, Ford Motor Company, and Toyota Motor Sales, USA, Inc., respectively. These customers also represented approximately 70% and 67% of accounts receivable at June 30, 2016 and December 31, 2015, respectively. The allowance for doubtful accounts totaled $2.0 million and $1.8 million as of June 30, 2016 and December 31, 2015, respectively. 

Goodwill and Intangible Assets

Goodwill and other indefinite-lived intangible assets not subject to amortization are evaluated annually as of November 30 for impairment, or more frequently if circumstances indicate that impairment may exist. In assessing indefinite-lived assets not subject to amortization, the Company assesses qualitative factors to determine if it is more likely than not that the fair value of the indefinite-lived assets exceeds their carrying values. If the qualitative assessment is inconclusive, the Company performs Step 1 of a two-step process to compare the fair value of the indefinite-lived assets to their carrying values. If Step 1 indicates the fair value is less than the carrying value, the Company performs Step 2 of the assessment to determine the difference between the implied fair value of the indefinite-lived assets and the carrying amounts. In assessing goodwill for impairment, the Company initially evaluates qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than their carrying amount. If the qualitative assessment is not conclusive and it is necessary to calculate the fair value of a reporting unit, then a two-step process is utilized to test goodwill for impairment. First, a comparison of the fair value of the applicable reporting unit with the aggregate carrying value, including goodwill, is performed utilizing an income approach and market approach. The income approach develops an estimated fair value based on discounted cash flows, where the estimated fair value is calculated by discounting projected future cash flows. The market approach compares actual market transactions of businesses that are

similar to those of the Company's reporting units. If the carrying amount of a reporting unit exceeds the reporting unit's fair value, the second step of the goodwill impairment test is performed to determine the amount of impairment loss. The second step includes comparing the implied fair value of the affected reporting unit's goodwill with the carrying value of that goodwill. Some of the key assumptions utilized in determining future projected cash flows include estimated growth rates, expected future pricing and costs, the weighted average cost of capital and discount rates, and future capital expenditure requirements. In addition, market multiples of publicly traded guideline companies are also considered. The Company considers the relative strengths and weaknesses inherent in the valuation methodologies utilized in each approach and consults with a third party valuation specialist to assist in determining the fair value.

Any one event or a combination of events such as a change in the business climate, a negative change in relationships with significant customers, and changes to strategic decisions, could require an interim assessment prior to the next required annual assessment. As a result of the negative changes in the business climate at Auto Export Shipping, Inc. (“AES”), a subsidiary of the Company within its Logistics segment, which provides the brokering of international shipments of cars, trucks and construction equipment from various ports in the U.S. to various international destinations by third-party ships, an interim assessment of the goodwill and intangibles assets at AES was performed during the second quarter of 2015. As a result of the assessment, the Company determined that the book values of goodwill and intangible assets at AES exceeded the fair values and recognized $14.2 million of goodwill impairment and $1.2 million of intangible asset impairment during the six months ended June 30, 2015. The decrease in fair value of the AES reporting unit and intangible assets was due to reduced rates of growth for sales, profits, and cash flows, and revised expectations for future performance that were below the Company’s previous projections, primarily as a result of increased price competition starting in the second quarter of 2015, and weak export demand of vehicles to Nigeria, a major market within which AES operates. No impairment was recorded for the six months ended June 30, 2016.

Foreign Currency

The Company’s financial condition and results of operations are recorded in multiple currencies, including the Canadian dollar and the Mexican peso, and the Company has an accounts receivable balance denominated in Nigerian naira. Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar were translated at the exchange rate in effect at the balance sheet date, and revenues and expenses were translated at average exchange rates for the period. Translation adjustments are included in other comprehensive income (loss). Gains and losses on certain of the Company's intercompany loans are included in other, net in the condensed consolidated statements of comprehensive loss due to the intercompany loans not being considered long-term investment in nature.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events relating to the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of expenses during the reporting periods. Significant items subject to such estimates and assumptions include those related to workers’ compensation insurance, pension withdrawal liabilities, allowance for doubtful accounts, the recoverability and useful lives of assets, litigation provisions and income taxes. Estimates are revised when facts and circumstances change. As such, actual results could differ materially from those estimates.

Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting, which provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard will be effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years and will be applied either prospectively, retrospectively or using a modified retrospective transition approach depending on the area covered in this update. The Company does not expect the adoption of this guidance to have any significant impact on its financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize a lease liability and a right of use asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. This update is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with earlier application permitted. This update will be applied using a modified retrospective transition approach for leases existing at, or entered into, after the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the effect adoption of this update will have on its consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest, which amends the current guidance to change the manner in which debt issuance costs are presented on an entity’s balance sheet. This new guidance requires the Company to present debt issuance costs related to recognized debt liabilities on the balance sheet as a direct deduction from the debt liability, as opposed to the previous guidance that provides for presentation of the cost of issuing debt as a separate asset. ASU 2015-03 required retrospective application to all prior periods presented in the financial statements. This new guidance was effective for the Company in the first quarter of 2016. As a result of adopting this standard on January 1, 2016, deferred financing costs of $10.1 million as of December 31, 2015 previously reported within long-term assets, were reclassified to long-term debt in the consolidated balance sheets. As of June 30, 2016, $9.1 million of deferred financing costs were reported within long-term debt in the consolidated balance sheet.

In February 2015, the FASB issued ASU 2015-02, Consolidation, which amends the current consolidation guidance to change the manner in which a reporting entity assesses certain characteristics used to determine if an entity is a variable interest entity. This new guidance was effective for the Company in the first quarter of 2016, with early adoption permitted, including in any interim period. The Company adopted this guidance on January 1, 2016 and the adoption of this guidance did not have any impact on its financial position, results of operations or cash flows.

In August 2014, the FASB issued guidance on the disclosure of uncertainties about an entity’s ability to continue as a going concern. This standard provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for annual reporting periods ending after December 15, 2016, and early adoption is permitted. The guidance will be applicable to the Company’s financial statements for fiscal year 2016, and for interim periods thereafter, and the Company expects to adopt this guidance in the fourth quarter of 2016. The Company does not expect the adoption of this guidance to have any impact on its financial position, results of operations or cash flows.

In May 2014, the FASB issued guidance on revenue recognition. This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB agreed to a one-year deferral of the effective date of the new revenue recognition guidance so that it is now effective for interim and annual periods beginning after December 15, 2017. The new guidance will become effective for the Company beginning with the first quarter of 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the effect adoption of this update will have on its financial position, results of operations and cash flows.

Note 2: Property and equipment

Property and equipment, net were as follows for the periods presented below:

The Company performs periodic reviews of the appropriateness of depreciable lives for each category of property and equipment, taking into consideration actual usage, physical wear and tear, and replacement history to determine the remaining life of the asset base. No changes to the remaining useful life of the asset base were made during the six months ended June 30, 2016.

The Company identified certain assets that meet the criteria for assets held for sale classification.  The Company had approximately $0.2 million and $1.9 million in assets held for sale as of June 30, 2016 and December 31, 2015, respectively, on its condensed consolidated balance sheets. These assets primarily consist of tractors and trailers that do not fit the Company’s fleet needs and as of December 31, 2015, real property at one location that the Company sold for $1.8 million during the quarter ended June 30, 2016. The Company plans to sell substantially all of the remaining assets during 2016 and, as such, the assets were measured at fair value less cost to sell.

Note 3: LINE OF CREDIT

The Company is party to an Amended and Restated Credit Agreement with the lenders party thereto and Wells Fargo Capital Finance, LLC, as agent, dated June 18, 2016 (as amended, modified and supplemented, the “Credit Facility”), which provides a revolving line of credit of $100 million, with the amount available to borrow determined by a borrowing base calculation based on accounts receivable and vehicles owned less letters of credit and other offsets. The Credit Facility matures at the earlier of (i) June 18, 2018 or (ii) the date that is 90 days prior to the then extant maturity date of the Term Loan (as defined in Note 4, which is currently October 18, 2018). As of June 30, 2016 and December 31, 2015, there were $64.0 million and $50.6 million, respectively, in outstanding borrowings under the Credit Facility with a weighted average interest rate of 2.99%. As of June 30, 2016 and December 31, 2015, the Company had available borrowing capacity of $26.8 million and $39.3 million, respectively, without consideration of the maximum revolver threshold disclosed below. Borrowings under the Credit Facility are reflected within current liabilities on the consolidated balance sheets. Debt issuance costs associated with the Credit Facility of $0.8 million as of June 30, 2016, and $1.0 million as of December 31, 2015 are included within deposits and other assets on the condensed consolidated balance sheets.

All borrowings under the Credit Facility bear interest at the Base Rate plus the Base Rate Margin, or at the Company’s option, at the LIBOR Rate plus the LIBOR Rate Margin (in minimum amounts of $1 million, each such term as defined under the Credit Agreement).

The Credit Facility contains customary representations, warranties and covenants including, but not limited to, certain limitations on the Company’s and its subsidiaries’ ability to incur additional debt, guarantee other obligations, create or incur liens on assets, make investments or acquisitions, make certain dispositions of assets, make optional payments or modifications of certain debt instruments, pay dividends or other payments to the Company’s equity holders, engage in mergers or consolidations, sell assets, change the Company’s line of business and engage in transactions with affiliates. If availability under the Credit Facility falls below 12.50% of the Maximum Revolver Amount (as defined in the Credit Facility), the Company will be required to maintain a fixed charge coverage maintenance ratio of at least 1.10:1.00 for a

specified time. If excess availability under the Credit Facility falls below 12.50% of the Maximum Revolver Amount, the lender may automatically sweep funds from the Company’s cash accounts to pay down the revolver. At June 30, 2016 and December 31, 2015, the Company’s availability under the Credit Facility exceeded the specified threshold amounts and accordingly, the Company was not subject to the financial maintenance covenants in a financial covenant period.

During the six months ended June 30, 2016, borrowings under the Credit Facility ranged from $50.0 million to $79.0 million. As of June 30 and December 31, 2015, the Company had $0.3 million and $3.8 million, respectively, in letters of credit outstanding under the Credit Facility. The Company was in compliance with all applicable covenants under the Credit Facility as of June 30, 2016 and December 31, 2015.

Note 4: Long-Term Debt

2020 Notes

As of June 30, 2016, the Company had outstanding $375 million principal amount of 9.25% Senior Secured Notes due 2020 (the “2020 Notes”), issued pursuant to an indenture dated June 18, 2013. The outstanding principal balance of the 2020 Notes recorded within long-term debt on the condensed consolidated balance sheets is net of unamortized premium and debt financing costs totaling $2.5 million as of June 30, 2016 and $2.7 million as of December 31, 2015.

Interest on the 2020 Notes, accruing at a rate of 9.25% as of June 30, 2016, is payable semi-annually in cash in arrears on June 1 and December 1 of each year. The indenture governing the 2020 Notes contains certain covenants, including covenants, which, subject to certain exceptions, limit the ability of the Company and its restricted subsidiaries (as defined in the indenture) to incur additional indebtedness, engage in certain asset sales, make certain types of restricted payments, engage in transactions with affiliates and create liens on assets of the Company or the guarantors. The Company was in compliance with all applicable covenants under the indenture governing the 2020 Notes as of June 30, 2016 and December 31, 2015.

In connection with the issuance of the 2020 Notes, the Company entered into registration rights agreements requiring the Company to exchange the 2020 Notes for notes registered under the Securities Act within 365 days of the initial issuance on June 18, 2013 (the “Exchange Notes”), or pay additional interest of 0.25% per annum for each 90-day period thereafter until completion of the exchange, not to exceed 1.0% of additional interest per annum. On June 13, 2016, we completed the offer to exchange the Exchange Notes for the outstanding 2020 Notes and all $375 million in aggregate principal amount of the 2020 Notes were validly tendered in exchange of an equal amount of Exchange Notes. As a result of the completion of the exchange offer, the Company recognized in the three months ended June 30, 2016 a reversal of $0.6 million interest expense for registration rights interest that was accrued as of December 31, 2015. Any references in this quarterly report on Form 10-Q to the 2020 Notes for periods following June 13, 2016 shall be deemed to mean the registered Exchange Notes.

Term Loan

On March 31, 2015, the Company entered into a senior secured term loan facility (as amended, the “Term Loan”) in the principal amount of $62.5 million issued at a 4.0% discount with MSDC JC Investments, LLC (“MSDC”), as agent and lender. MSDC is an affiliate of MSD Credit Opportunity Fund, L.P., a Class B stockholder of Jack Cooper Enterprises, Inc., which is the parent company of JCHC. The outstanding principal balance recorded within long-term debt on the condensed consolidated balance sheets is net of the unamortized discount and deferred financing costs totaling $3.3 million as of June 30, 2016, and $3.9 million as of December 31, 2015. The proceeds from the Term Loan were used to pay down outstanding borrowings on the Credit Facility and for general corporate purposes.

Interest on the Term Loan accrues at LIBOR plus 7.0% (10.0% at June 30, 2016), subject to a LIBOR floor of 3.0% per annum. The Term Loan matures on October 18, 2018. The Term Loan also imposes an availability block under the Credit Facility of $6.25 million so long as any indebtedness is outstanding under the Term Loan (or MSDC has any commitment to extend credit resulting in incurrence of such indebtedness). The Term Loan is guaranteed by certain domestic subsidiaries of the Company and is secured by substantially all of the assets of the Company and its domestic subsidiaries and a pledge of 65% of the outstanding equity of the Company’s first-tier foreign subsidiaries. MSDC’s

liens have first priority status on the ABL Collateral (as defined in the indenture governing the 2020 Notes) and second priority status on the Notes Collateral (as defined in the indenture governing the 2020 Notes) to the same extent as the liens of the lenders under the Credit Facility in such assets (as contemplated by the Intercreditor Agreement (as defined in the indenture governing the 2020 Notes)), but are junior to the liens of the lenders under the Credit Facility.

NOTE 5: INCOME TAXES

For the six months ended June 30, 2016 and 2015, the Company determined the interim tax expense using an effective tax rate by jurisdiction which was calculated using an estimate of annual earnings and annual tax. The Company’s effective tax rate for the six months ended June 30, 2016 and 2015 was (3.7)% and (1.1)%, respectively. The Company’s effective tax rate for the three months ended June 30, 2016 and 2015 was (4.1)% and (2.3)%, respectively. The accounting for income taxes requires deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. There have not been any significant changes in unrecognized income tax benefits since December 31, 2015. As of June 30, 2016 and December 31, 2015, the Company had $90.4 million and $85.4 million, respectively, recorded for valuation allowances.

Note 6: Commitments and ContingencieS

Letters of Credit

At June 30, 2016, the Company had $0.3 million in outstanding letters of credit to be used as collateral for certain insurance bonds. At December 31, 2015, the Company had $3.8 million in outstanding letters of credit used as collateral for certain insurance bonds and for the Company’s obligation to fund losses under various retrospectively‑rated and large deductible insurance programs.

Litigation

As previously reported, the Company was in a dispute with American Zurich Insurance Company and Zurich Services Corporation (collectively referred to herein as “Zurich”) regarding the handling of workers’ compensation claims for the policy period January 1, 2008 through July 26, 2009. In April 2016, the Company and Zurich executed a full settlement agreement with releases and other terms agreeable to both parties. The Company had total reserves of $4.1 million at December 31, 2015, net of liabilities for which corresponding assets were recorded related to insurance recoveries for claims in excess of per claim maximum exposures. During the three months ended June 30, 2016, the Company fully satisfied its obligations to Zurich under the settlement agreement.

On April 27, 2016, we filed a lawsuit against Applied Underwriters, Inc. and certain of its affiliates, collectively referred to herein as the Applied Defendants, in California State Court. We have alleged the following three claims in the lawsuit: (1) declaratory relief and rescission; (2) tortious breach of the implied covenant of good faith and fair dealing; and (3) fraud and misrepresentation. In connection with these claims, we have demanded compensatory damages, rescission, punitive damages, and/or attorney’s fees. The claims are related to the Applied Defendants’ sale and management of our workers’ compensation program, and specifically the Reinsurance Participation Agreements that the Applied Defendants sold to us starting in 2009. On May 24, 2016, the Applied Defendants submitted a demand for arbitration alleging that the Company has failed to pay certain money owed to them. On July 26, 2016, the California State Court denied the Applied Defendants’ motion to compel arbitration. We have concluded that a loss related to the Applied Defendants’ arbitration demand is not reasonably possible.

From time to time and in the ordinary course of business, the Company is a plaintiff or a defendant in other legal proceedings related to various issues, including workers’ compensation claims, tort claims, contractual disputes, and collections. The Company carries insurance that provides protection against certain types of claims, up to the policy limits of its insurance. It is the opinion of management that none of the other known legal actions will have a material adverse impact on the Company’s financial position, results of operations, or liquidity.

Other Commitments

In March 2016, the Company received a $0.3 million assessment in connection with triggering a full withdrawal from the Western Conference of Teamsters Pension Trust (the “Western Conference Trust”), which the Company had fully accrued as of December 31, 2015. The Company had estimated and recorded liabilities in the amount of $1.9 million as of June 30, 2016 and $4.4 million as of December 31, 2015 for all Western Conference Trust partial withdrawal liabilities as a result of declines in its contributions to the fund during the periods between 2011 and 2014 and the full withdrawal in 2015.

During the three months ended June 30, 2016, the Company estimated it had triggered a full withdrawal liability from the Teamsters of Philadelphia and Vicinity Pension Plan (the “Philadelphia Plan”) due to the closure of one of the Company’s terminals during the second quarter of 2016. The Company recorded a $2.9 million estimate, net of previously recorded estimated partial withdrawal liabilities, for the full withdrawal liability during the three months ended June 30, 2016. The Company recorded total estimated liabilities of $5.8 million as of June 30, 2016 and $3.3 million as of December 31, 2015 for all withdrawal liabilities from the Philadelphia Plan as a result of declines in its contributions to the fund during the periods since 2009 and the full withdrawal during 2016.

Note 7: Fair value of financial instruments

GAAP has established a hierarchy for ranking the quality and reliability of the information used to determine fair values and requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: 

Level 1: Unadjusted quoted market prices in active markets for identical assets or liabilities.

Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3: Unobservable inputs for the asset or liability. 

The Company utilizes the best available information in measuring fair value.  Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Cash and cash equivalents, accounts receivable and payables approximate fair value due to their liquid and short term nature. The estimated fair value of the 2020 Notes outstanding at June 30, 2016 and December 31, 2015 was approximately $378.3 million and $370.6 million, respectively. The estimated fair value of the remaining outstanding debt (including the unsecured debt and outstanding balance on the Credit Facility and Term Loan) was approximately $151.5 million and $142.2 million at June 30, 2016 and December 31, 2015, respectively. The fair value was estimated by comparing interest rates to debt with similar terms and maturities, which represents a Level 2 input in the fair value hierarchy.

NOTE 8: GOODWILL AND ACQUIRED INTANGIBLE ASSETS

The Company had total goodwill of $32.2 million as of June 30, 2016 and December 31, 2015, and net intangible assets of $27.4 million and $28.6 million as of June 30, 2016 and December 31, 2015, respectively.

The tables below present the change in carrying values by segment:

Note 9: Related Party Transactions

The Company paid EVE Partners, LLC, an affiliate of one of the Company’s directors, less than $0.1 million during the three and six months ended June 30, 2016 and 2015, for financial advisory services and related travel expenses. The arrangement with Eve Partners was terminated in February 2016.

The Company paid EVE Merchant Holdings, LLC, an affiliate of one of the Company’s directors, less than $0.1 million during the three and six months ended June 30, 2016 and 2015, as a non-exclusive advisor in connection with certain operations of the Company.  

Note 10: Segment Reporting

The Company had two reportable segments at June 30, 2016 and 2015: the Transport segment and the Logistics segment.

Transport Segment.  The Transport segment provides automotive transportation services to OEMs of finished vehicles in the U.S. and Canada. Specific services include (i) transportation of new vehicles from OEM manufacturing plants, vehicle distribution centers and seaports and railheads to new vehicle dealerships or other intermediate destinations, in connection with which the Company also collects fuel surcharges and (ii) yard management services, including railcar loading and gate releasing services at OEM assembly centers. The consolidated entities that comprise the Transport segment are: Jack Cooper Transport Company, Inc. and its wholly-owned subsidiaries, and Jack Cooper Transport Canada, Inc. and its wholly-owned subsidiaries.

Logistics Segment.  The Logistics segment engages in the global asset-light automotive supply chain for new and used finished vehicles, including the brokering of transportation of used vehicles and vehicles sold through automotive auction processes in the growing remarketed vehicle sector, in which our customers are typically OEM remarketing departments, automotive auction companies and logistics brokers; brokering of the international shipment of cars and trucks from various ports in the U.S. to various international destinations; vehicle inspection and title storage services for pre-owned and off-lease vehicles; and supply chain management services as well as rail and yard management and port processing. Other items shipped include heavy construction equipment, farm equipment and commercial trucking vehicles. The consolidated entities that comprise the Logistics segment are: Jack Cooper Logistics, LLC and AES, and their wholly-owned subsidiaries, including, Axis Logistics Services, Inc., Jack Cooper CT Services, Inc., Jack Cooper Rail & Shuttle, Inc. and five Mexican operating companies.

The following table sets forth the specific financial information about each segment as reviewed by the Company’s management as of and for the three and six months ended June 30, 2016 and 2015:

Administrative services provided by the corporate office allocated to the individual segments represent corporate services rendered to and costs incurred for each segment including allocation of general corporate management oversight costs.

NOTE 11: CONDENSED CONSOLIDATING SUBSIDIARY GUARANTOR FINANCIAL INFORMATION

The following tables present condensed consolidating financial statements under the equity method of (a) the parent company, Jack Cooper Holdings Corp., as issuer of the 2020 Notes; (b) the subsidiary guarantors of the 2020 Notes; and (c) the subsidiaries that are not guarantors of the 2020 Notes. Separate financial statements of the subsidiary guarantors are not presented because the Company owns all outstanding voting stock of each of the subsidiary guarantors and the guarantee by each subsidiary guarantor is full and unconditional and joint and several. As a result and in accordance with

Rule 3-10(f) of Regulation S-X under the Securities Exchange Act of 1934, as amended, the Company includes the following tables in these notes to the consolidated financial statements: