SCHNEIDER NATIONAL, INC., 10-Q filed on 5/2/2019
Quarterly Report
v3.19.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2019
Apr. 26, 2019
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q1  
Trading Symbol SNDR  
Entity Registrant Name Schneider National, Inc.  
Entity Central Index Key 0001692063  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Class A Common Shares    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   83,029,500
Class B Common Stock    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   94,072,221
v3.19.1
Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Mar. 31, 2019
Dec. 31, 2018
Current Assets:    
Cash and cash equivalents $ 441.0 $ 378.7
Marketable securities 47.1 51.3
Trade accounts receivable- net of allowance 536.8 593.1
Other receivables 41.3 31.8
Current portion of lease receivables- net of allowance 126.9 129.1
Inventories 49.6 60.8
Prepaid expenses and other current assets 122.3 79.5
Total current assets 1,365.0 1,324.3
Property and equipment:    
Transportation equipment 2,975.4 2,900.2
Land, buildings, and improvements 178.2 177.2
Other property and equipment 159.4 157.6
Total property and equipment 3,313.0 3,235.0
Accumulated depreciation 1,344.8 1,312.8
Net property and equipment 1,968.2 1,922.2
Lease receivables 138.1 133.2
Capitalized software and other noncurrent assets 237.7 82.6
Goodwill 162.4 162.2
Total noncurrent assets 2,506.4 2,300.2
Total Assets 3,871.4 3,624.5
CURRENT LIABILITIES:    
Trade accounts payable 308.0 226.0
Accrued salaries and wages 62.0 94.8
Claims accruals - current 79.5 58.3
Current maturities of debt and capital lease obligations 76.0 51.7
Dividends payable 10.7 10.6
Other current liabilities 114.1 81.2
Total current liabilities 650.3 522.6
NONCURRENT LIABILITIES:    
Long-term Debt and Capital Lease Obligations 334.7 359.6
Claims accruals - noncurrent 176.8 113.3
Deferred income taxes 458.0 450.6
Other 91.6 46.1
Total noncurrent liabilities 1,061.1 969.6
Liabilities 1,711.4 1,492.2
SHAREHOLDERS' EQUITY    
Additional paid-in capital 1,544.8 1,544.0
Retained earnings 615.5 589.3
Accumulated other comprehensive income (0.3) (1.0)
Total shareholders' equity 2,160.0 2,132.3
TOTAL 3,871.4 3,624.5
Class A Common Shares    
SHAREHOLDERS' EQUITY    
Common stock 0.0 0.0
Class B Common Stock    
SHAREHOLDERS' EQUITY    
Common stock $ 0.0 $ 0.0
v3.19.1
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
shares in Millions, $ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Statement of Comprehensive Income [Abstract]    
Operating revenues $ 1,194.1 $ 1,139.0
Operating expenses:    
Purchased transportation 473.3 425.0
Salaries, wages, and benefits 313.0 311.3
Fuel and fuel taxes 74.8 84.7
Depreciation and amortization 73.4 71.7
Operating supplies and expenses 145.1 119.1
Insurance and related expenses 28.2 23.1
Other general expenses 34.8 36.5
Total operating expenses 1,142.6 1,071.4
Income from operations 51.5 67.6
Other expenses (income):    
Interest Income, Other (2.2) (0.7)
Interest expense 3.9 4.2
Other expenses (income) 0.4 (0.4)
Total other expense 2.1 3.1
Income before income taxes 49.4 64.5
Provision for income taxes 12.5 16.9
Net income 36.9 47.6
Other comprehensive income (loss):    
Foreign currency translation adjustments 0.3 (0.4)
Unrealized gain (loss) on marketable securities—net of tax 0.4 (0.2)
Total other comprehensive income (loss) 0.7 (0.6)
Comprehensive income $ 37.6 $ 47.0
Weighted average common shares outstanding 177.0 176.9
Earnings Per Share, Basic $ 0.21 $ 0.27
Weighted average diluted shares outstanding (shares) 177.4 177.2
Diluted earnings per common share $ 0.21 $ 0.27
v3.19.1
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2019
Dec. 31, 2018
Trade allowance $ 7.9 $ 6.8
Allowance for lease receivables $ 0.5 $ 0.5
Class A Common Shares    
Common stock, par value (usd per share) $ 0 $ 0
Common stock, shares authorized (shares) 250,000,000 250,000,000
Common stock, shares issued (shares) 83,029,500 83,029,500
Common stock, shares outstanding (shares) 83,029,500 83,029,500
Class B Common Stock    
Common stock, par value (usd per share) $ 0 $ 0
Common stock, shares authorized (shares) 750,000,000 750,000,000
Common stock, shares issued (shares) 94,981,513 94,593,588
Common stock, shares outstanding (shares) 94,048,278 93,969,268
v3.19.1
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Cash and Cash Equivalents, at Carrying Value $ 441.0 $ 300.1
Operating Activities:    
Net income 36.9 47.6
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 73.4 71.7
Gains on sales of property and equipment (2.8) (0.9)
Increase (Decrease) in Leasing Receivables 20.0 0.0
Deferred income taxes 7.3 14.0
Share-based Compensation 6.1 5.9
Other noncash items 0.3 (2.8)
Changes in operating assets and liabilities:    
Receivables 46.9 1.7
Other assets (109.8) (24.2)
Payables 12.0 15.9
Other liabilities 42.9 (28.9)
Net cash provided by operating activities 133.2 100.0
Investing Activities:    
Purchases of transportation equipment (50.1) (44.8)
Purchases of other property and equipment (11.1) (7.5)
Proceeds from sale of property and equipment 11.1 26.3
Proceeds from Collection of Lease Receivables 0.0 13.3
Proceeds from sale of off-lease inventory 4.9 3.1
Purchases of lease equipment (18.7) (13.9)
Sales of marketable securities 6.1 0.9
Payments to Acquire Available-for-sale Securities (1.4) 0.0
Net cash used in investing activities (59.2) (22.6)
Net Cash Provided by (Used in) Financing Activities, Continuing Operations [Abstract]    
Repayments of Debt and Capital Lease Obligations (1.1) (7.0)
Payments of Dividends (10.6) (8.8)
Net cash used in financing activities (11.7) (15.8)
Cash and Cash Equivalents, Period Increase (Decrease) 62.3 61.6
Cash and Cash Equivalents, at Carrying Value 441.0 300.1
Noncash investing and financing activity:    
Capital Expenditures Incurred but Not yet Paid 72.2 33.8
Dividends declared but not yet paid 10.7 10.7
Cash paid during the period for:    
Interest 5.1 5.4
Income taxes—net of refunds $ 0.7 $ 0.5
v3.19.1
Consolidated Statements Shareholders' Equity - USD ($)
$ in Millions
Total
Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income
Balance at Dec. 31, 2017 $ 1,890.2 $ 0.0 $ 1,534.6 $ 355.6 $ 0.0
Increase (Decrease) in Stockholders' Equity          
Share issuances - post-IPO 0.2   0.2    
Net income - post-IPO 47.6     47.6  
Other comprehensive loss - post-IPO (0.6)       (0.6)
Share-based compensation expense 2.0   2.0    
Dividends declared at $0.24 per share (10.7)     (10.7)  
Shares withheld for employee taxes (1.8)   (1.8)    
Other 0.2   0.2    
Balance at Mar. 31, 2018 1,934.4 0.0 1,535.2 399.8 (0.6)
Increase (Decrease) in Stockholders' Equity          
Cumulative–effect adjustment of ASU 2014-09 adoption 7.3     7.3  
Balance at Dec. 31, 2018 2,132.3 0.0 1,544.0 589.3 (1.0)
Increase (Decrease) in Stockholders' Equity          
Net income - post-IPO 36.9     36.9  
Other comprehensive loss - post-IPO 0.7       0.7
Share-based compensation expense 2.0   2.0    
Dividends declared at $0.24 per share (10.7)     (10.7)  
Shares withheld for employee taxes (1.2)   (1.2)    
Balance at Mar. 31, 2019 $ 2,160.0 $ 0.0 $ 1,544.8 $ 615.5 $ (0.3)
v3.19.1
Consolidated Statements Shareholders' Equity (Parenthetical) - $ / shares
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Statement of Stockholders' Equity [Abstract]    
Dividends declared per share (usd per share) $ 0.06 $ 0.06
v3.19.1
General
3 Months Ended
Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
General GENERAL

Description of Business
In this report, when we refer to “the Company,” “us,” “we,” “our,” “ours,” or “Schneider,” we are referring to Schneider National, Inc. and its subsidiaries. We are a leading transportation services organization headquartered in Green Bay, Wisconsin. We provide a broad portfolio of premier truckload, intermodal, and logistics solutions and operate one of the largest trucking fleets in North America.

Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP and the rules and regulations of the SEC applicable to quarterly reports on Form 10-Q. Therefore, these consolidated financial statements and footnotes do not include all disclosures required by GAAP for annual financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2018. Financial results for an interim period are not necessarily indicative of the results for a full year.

All intercompany transactions have been eliminated in consolidation.

In the opinion of management, these statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for the fair presentation of our financial results for the interim periods presented.

Accounting Standards Issued but Not Yet Adopted
In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for us as of January 1, 2020 with early adoption permitted. We are currently evaluating the impact the adoption of this ASU will have on our consolidated financial statements and do not believe the impact will be material. We expect to adopt this standard on a prospective basis.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Requirements, which removes, modifies, and adds certain disclosure requirements for fair value measurements. These changes include removing the disclosure requirements related to the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and adding disclosure requirements about the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements. Additionally, the amendments remove the phrase “at a minimum” from the codification clarifying that materiality should be considered when evaluating disclosure requirements. ASU 2018-13 is effective for us January 1, 2020 with early adoption permitted. We do not believe the adoption of this ASU will have a material impact on our disclosures and plan to early adopt this standard during the fourth quarter of 2019.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which requires companies to use a forward-looking, expected loss model to estimate credit losses on various types of financial assets and net investments in leases. It also requires additional disclosure related to credit quality of trade and other receivables, including information related to management’s estimate of credit allowances. In November 2018, this was further updated with the issuance of ASU 2018-19, which excludes receivables from operating leases from the scope. ASU 2016-13 is effective for us January 1, 2020. We currently cannot reasonably estimate the impact the adoption of this ASU will have on our consolidated financial statements.
v3.19.1
Leases Leases (Notes)
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Leases LEASES

We adopted ASU 2016-02, Leases, which is codified in ASC 842, as of January 1, 2019 using the optional transition method. The FASB’s authoritative guidance provided companies with the option to apply this ASU to new and existing leases within the scope of the guidance as of the beginning of the period of adoption. We elected this transition method of applying the new lease standard and have recognized right-of-use assets and lease liabilities as of January 1, 2019. Prior period amounts were not adjusted and will continue to be reported under the accounting standards in effect for those periods.
Adoption of the new standard resulted in the initial recording of right-of-use lease assets and related lease liabilities of $80.6 million and $85.2 million, respectively. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term. Schneider's incremental borrowing rates are used as the discount rates for leases and are determined based on U. S. Treasury rates plus an applicable margin to arrive at all-in rates. Schneider uses multiple discount rates based on lease terms and other economic factors. The operating lease right-of-use asset also includes accrued lease expense resulting from the straight-line accounting under prior accounting methods, which is now being amortized over the remaining life of the lease.
In addition, we elected the package of practical expedients provided under the guidance. The practical expedient package applies to leases that commenced prior to adoption of the new standard and permits companies not to reassess whether existing or expired contracts are or contain a lease, the lease classification, and any initial direct costs for any existing leases. We also elected the practical expedient related to land easements, allowing us to carry forward the accounting treatment of our existing agreements for land easements, none of which were material as of January 1, 2019.
As lessee
We lease real estate, transportation equipment, and office equipment under operating and finance leases. Our real estate operating leases include operating centers, distribution warehouses, offices, and drop yards. Our finance leases relate almost entirely to transportation equipment. A majority of our leases include an option to extend the lease, and a small number of our leases include an option to early terminate the lease, which may include a termination payment. If we are reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right-of-use asset and lease liability.
For our real estate leases, we have elected to apply the recognition requirement to leases of twelve months or less, therefore, an operating lease right-of-use asset and liability will be recognized for all these leases. For our equipment leases, we have elected to not apply the recognition requirements to leases of twelve months or less. These leases will be expensed on a straight-line basis and no operating lease right-of-use asset or liability will be recorded.

We have also elected to not separate the different components within the contract for our leases; therefore, all fixed costs associated with the lease are included in the right-of-use asset and the operating lease liability. This often relates to the requirement for us to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other operating costs in addition to a base or fixed rent. Some of our leases have variable payment amounts, and the variable portions of those payments are excluded from the right-of-use asset and the lease liability.

At the inception of our contracts we determine if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

A small number of our leased real estate assets contains subleases. The lease income related to subleases is shown in the lease cost table below.

Certain equipment leases contain residual value guarantees. These are guarantees made to the lessor that the value of the underlying asset returned to the lessor at the end of the lease will be at least a specified amount.

None of our leases contain restrictions or covenants that restrict us from incurring other financial obligations.

The following table presents our net lease costs for the three months ended March 31, 2019:
 
 
Financial Statement Classification
 
Three Months Ended March 31,
(in millions)
 
 
2019
Operating lease cost
 
 
 
 
Operating lease cost
 
Operating supplies and expenses
 
$
8.9

Short-term lease cost (1)
 
Operating supplies and expenses
 
1.8

Finance lease cost
 
 
 
 
Amortization of right-of-use assets
 
Depreciation and amortization
 
0.8

Interest on lease liabilities
 
Interest expense
 
0.1

Variable lease cost
 
Operating supplies and expenses
 
0.7

Sublease income
 
Operating revenues
 
(1.3
)
Total net lease cost
 
 
 
$
11.0

(1) Includes short-term lease costs for leases twelve months or less, including those with a duration of one month or less.
As of March 31, 2019, remaining lease terms and discount rates under operating and finance leases were as follows:
 
 
March 31, 2019
Weighted-average remaining lease term
 
 
Operating leases
 
4.2 years

Finance leases
 
0.8 years

 
 
 
Weighted-average discount rate
 
 
Operating leases
 
4.2
%
Finance leases
 
3.7
%

Other information related to our leases is as follows:
 
 
Three Months Ended March 31,
(in millions)
 
2019
Cash paid for amounts included in the measurement of lease liabilities
 
 
Operating cash flows from operating leases
 
$
8.8

Operating cash flows from finance leases
 
0.1

Financing cash flows from finance leases
 
0.7

 
 
 
Right-of-use assets obtained in exchange for new lease liabilities
 
 
Operating leases
 
$
11.2

Finance leases
 



Operating lease right-of-use assets, current operating lease liabilities, and noncurrent operating lease liabilities are included in capitalized software and other noncurrent assets, other current liabilities, and other, respectively, in the consolidated balance sheet as of March 31, 2019.

At March 31, 2019, future lease payments under operating and finance leases were as follows:
(in millions)
 
Operating Leases
 
Finance Leases
Remaining 2019
 
$
25.0

 
$
6.4

2020
 
24.9

 
0.3

2021
 
15.2

 

2022
 
9.2

 

2023
 
7.3

 

2024 and thereafter
 
14.2

 

Total
 
95.8

 
6.7

Amount representing interest
 
(8.3
)
 
(0.1
)
Present value of lease payments
 
87.5

 
6.6

Current maturities
 
(29.1
)
 
(6.4
)
Long-term lease obligations
 
$
58.4

 
$
0.2



For certain of our real estate leases, there are options contained within the lease agreement to extend beyond the initial lease term. The Company will recognize these options as right-of-use assets and lease liabilities when we deem they are reasonably certain to be exercised. Future operating lease payments at March 31, 2019 include $10.2 million related to options to extend lease terms that we are reasonably certain to exercise.

Under ASC 840, future minimum lease payments as of December 31, 2018 were as follows:
(in millions)
 
Operating Leases
 
Capital Leases
2019
 
$
35.8

 
$
6.9

2020
 
25.7

 
0.2

2021
 
14.9

 

2022
 
8.4

 

2023
 
6.8

 

2024 and thereafter
 
12.7

 

Total
 
$
104.3

 
7.1

Amount representing interest
 

 
(0.2
)
Present value of minimum lease payments
 

 
6.9

Current maturities
 

 
(6.7
)
Long-term capital lease obligations
 

 
$
0.2



As of March 31, 2019, we had additional operating leases that had not yet commenced of $3.3 million. These leases will commence during the remainder of 2019 and have lease terms of one year to five years.

The consolidated balance sheets include right-of-use assets acquired under finance leases as components of property and equipment as of March 31, 2019 and January 1, 2019, as follows:
(in millions)
 
March 31, 2019
 
January 1, 2019
Transportation equipment
 
$
19.9

 
$
19.9

Real property
 
0.8

 
0.8

Other property
 
1.5

 
0.6

Accumulated amortization
 
(12.2
)
 
(11.2
)
Total
 
$
10.0

 
$
10.1



Transportation equipment is being amortized to the estimated residual value by the end of the lease. Real and other property under finance leases are being amortized to a zero net book value over the initial lease term.

As lessor

We finance various types of transportation-related equipment for independent third parties under lease contracts which are generally for one year to five years and are accounted for as sales-type leases with fully guaranteed residual values. At the inception of the contracts, we determine if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

With the adoption of ASC 842, all leases for which we are the lessor meet the definition of sales-type leases. In addition, as required under ASC 842, all cash flows from lease receipts are classified as operating activities on the consolidated statement of cash flows beginning January 1, 2019. We previously presented all cash flows from lease receipts as investing activities.

As of March 31, 2019 and January 1, 2019, the investment in lease receivables was as follows:
(in millions)
 
March 31, 2019
 
January 1, 2019
Future minimum payments to be received on leases
 
$
142.3

 
$
140.0

Guaranteed residual lease values
 
152.4

 
151.0

Total minimum lease payments to be received
 
294.7

 
291.0

Unearned income
 
(29.7
)
 
(28.7
)
Net investment in leases
 
265.0

 
262.3

 
 
 
 
 
Current maturities of lease receivables
 
127.4

 
129.6

Less—allowance for doubtful accounts
 
(0.5
)
 
(0.5
)
Current portion of lease receivables—net of allowance
 
126.9

 
129.1

 
 
 
 
 
Lease receivables—noncurrent
 
$
138.1

 
$
133.2



The amounts to be received on lease receivables as of March 31, 2019 were as follows:
(in millions)
 
March 31, 2019
Remaining 2019
 
$
116.6

2020
 
122.6

2021
 
50.7

2022
 
4.7

2023
 
0.1

2024 and thereafter
 

Total undiscounted lease cash flows
 
294.7

Amount representing interest
 
(29.7
)
Present value of lease receivables
 
265.0

Current lease receivables, net of allowance
 
(126.9
)
Long-term lease receivable
 
$
138.1



Leases are generally placed on nonaccrual status (nonaccrual of interest and other fees) when a payment becomes 90 days past due or upon receipt of notification of bankruptcy, upon the death of a customer, or in other instances in which management concludes collectability is not reasonably assured. The accrual of interest and other fees is resumed when all payments are less than 60 days past due. At March 31, 2019, there were $0.3 million of lease payments greater than 90 days past due. The terms of the lease agreements generally give us the ability to take possession of the underlying asset in the event of default. We may incur credit losses in excess of recorded allowances if the full amount of any anticipated proceeds from the sale or re-lease of the asset supporting the third party’s financial obligation is not realized. Repossession and estimated reconditioning costs are recorded in the consolidated statements of comprehensive income in the period incurred.

Our lease payments primarily include base rentals and guaranteed residual values. In addition, we also collect one-time administrative fees and heavy vehicle use tax on our leases. We have elected to not separate the different components within the contract as the administrative fees were not material for the three months ended March 31, 2019. We have also elected to
exclude all taxes assessed by a governmental authority from the consideration (e.g., heavy vehicle use tax). All of our leases require fixed payments, therefore we have no variable payment provisions.
Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount. This is estimated to approximate the fair value of the equipment. Equipment is leased under sales-type leases where the lessees guarantee the residual value of the equipment. The table below provides additional information on our sales-type leases.
 
 
Three Months Ended March 31,
(in millions)
 
2019
Revenue
 
$
56.2

Cost of goods sold
 
(49.9
)
Operating profit
 
$
6.3

 
 
 
Interest income on lease receivable
 
$
6.6

Initial direct cost incurred
 



The amounts to be received on lease receivables as of December 31, 2018 under ASC 840 were as follows:
(in millions)
 
December 31, 2018
2019
 
$
149.0

2020
 
112.7

2021
 
29.0

2022
 
0.3

2023
 

2024 and thereafter
 

Total
 
$
291.0

Leases LEASES

We adopted ASU 2016-02, Leases, which is codified in ASC 842, as of January 1, 2019 using the optional transition method. The FASB’s authoritative guidance provided companies with the option to apply this ASU to new and existing leases within the scope of the guidance as of the beginning of the period of adoption. We elected this transition method of applying the new lease standard and have recognized right-of-use assets and lease liabilities as of January 1, 2019. Prior period amounts were not adjusted and will continue to be reported under the accounting standards in effect for those periods.
Adoption of the new standard resulted in the initial recording of right-of-use lease assets and related lease liabilities of $80.6 million and $85.2 million, respectively. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term. Schneider's incremental borrowing rates are used as the discount rates for leases and are determined based on U. S. Treasury rates plus an applicable margin to arrive at all-in rates. Schneider uses multiple discount rates based on lease terms and other economic factors. The operating lease right-of-use asset also includes accrued lease expense resulting from the straight-line accounting under prior accounting methods, which is now being amortized over the remaining life of the lease.
In addition, we elected the package of practical expedients provided under the guidance. The practical expedient package applies to leases that commenced prior to adoption of the new standard and permits companies not to reassess whether existing or expired contracts are or contain a lease, the lease classification, and any initial direct costs for any existing leases. We also elected the practical expedient related to land easements, allowing us to carry forward the accounting treatment of our existing agreements for land easements, none of which were material as of January 1, 2019.
As lessee
We lease real estate, transportation equipment, and office equipment under operating and finance leases. Our real estate operating leases include operating centers, distribution warehouses, offices, and drop yards. Our finance leases relate almost entirely to transportation equipment. A majority of our leases include an option to extend the lease, and a small number of our leases include an option to early terminate the lease, which may include a termination payment. If we are reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right-of-use asset and lease liability.
For our real estate leases, we have elected to apply the recognition requirement to leases of twelve months or less, therefore, an operating lease right-of-use asset and liability will be recognized for all these leases. For our equipment leases, we have elected to not apply the recognition requirements to leases of twelve months or less. These leases will be expensed on a straight-line basis and no operating lease right-of-use asset or liability will be recorded.

We have also elected to not separate the different components within the contract for our leases; therefore, all fixed costs associated with the lease are included in the right-of-use asset and the operating lease liability. This often relates to the requirement for us to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other operating costs in addition to a base or fixed rent. Some of our leases have variable payment amounts, and the variable portions of those payments are excluded from the right-of-use asset and the lease liability.

At the inception of our contracts we determine if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

A small number of our leased real estate assets contains subleases. The lease income related to subleases is shown in the lease cost table below.

Certain equipment leases contain residual value guarantees. These are guarantees made to the lessor that the value of the underlying asset returned to the lessor at the end of the lease will be at least a specified amount.

None of our leases contain restrictions or covenants that restrict us from incurring other financial obligations.

The following table presents our net lease costs for the three months ended March 31, 2019:
 
 
Financial Statement Classification
 
Three Months Ended March 31,
(in millions)
 
 
2019
Operating lease cost
 
 
 
 
Operating lease cost
 
Operating supplies and expenses
 
$
8.9

Short-term lease cost (1)
 
Operating supplies and expenses
 
1.8

Finance lease cost
 
 
 
 
Amortization of right-of-use assets
 
Depreciation and amortization
 
0.8

Interest on lease liabilities
 
Interest expense
 
0.1

Variable lease cost
 
Operating supplies and expenses
 
0.7

Sublease income
 
Operating revenues
 
(1.3
)
Total net lease cost
 
 
 
$
11.0

(1) Includes short-term lease costs for leases twelve months or less, including those with a duration of one month or less.
As of March 31, 2019, remaining lease terms and discount rates under operating and finance leases were as follows:
 
 
March 31, 2019
Weighted-average remaining lease term
 
 
Operating leases
 
4.2 years

Finance leases
 
0.8 years

 
 
 
Weighted-average discount rate
 
 
Operating leases
 
4.2
%
Finance leases
 
3.7
%

Other information related to our leases is as follows:
 
 
Three Months Ended March 31,
(in millions)
 
2019
Cash paid for amounts included in the measurement of lease liabilities
 
 
Operating cash flows from operating leases
 
$
8.8

Operating cash flows from finance leases
 
0.1

Financing cash flows from finance leases
 
0.7

 
 
 
Right-of-use assets obtained in exchange for new lease liabilities
 
 
Operating leases
 
$
11.2

Finance leases
 



Operating lease right-of-use assets, current operating lease liabilities, and noncurrent operating lease liabilities are included in capitalized software and other noncurrent assets, other current liabilities, and other, respectively, in the consolidated balance sheet as of March 31, 2019.

At March 31, 2019, future lease payments under operating and finance leases were as follows:
(in millions)
 
Operating Leases
 
Finance Leases
Remaining 2019
 
$
25.0

 
$
6.4

2020
 
24.9

 
0.3

2021
 
15.2

 

2022
 
9.2

 

2023
 
7.3

 

2024 and thereafter
 
14.2

 

Total
 
95.8

 
6.7

Amount representing interest
 
(8.3
)
 
(0.1
)
Present value of lease payments
 
87.5

 
6.6

Current maturities
 
(29.1
)
 
(6.4
)
Long-term lease obligations
 
$
58.4

 
$
0.2



For certain of our real estate leases, there are options contained within the lease agreement to extend beyond the initial lease term. The Company will recognize these options as right-of-use assets and lease liabilities when we deem they are reasonably certain to be exercised. Future operating lease payments at March 31, 2019 include $10.2 million related to options to extend lease terms that we are reasonably certain to exercise.

Under ASC 840, future minimum lease payments as of December 31, 2018 were as follows:
(in millions)
 
Operating Leases
 
Capital Leases
2019
 
$
35.8

 
$
6.9

2020
 
25.7

 
0.2

2021
 
14.9

 

2022
 
8.4

 

2023
 
6.8

 

2024 and thereafter
 
12.7

 

Total
 
$
104.3

 
7.1

Amount representing interest
 

 
(0.2
)
Present value of minimum lease payments
 

 
6.9

Current maturities
 

 
(6.7
)
Long-term capital lease obligations
 

 
$
0.2



As of March 31, 2019, we had additional operating leases that had not yet commenced of $3.3 million. These leases will commence during the remainder of 2019 and have lease terms of one year to five years.

The consolidated balance sheets include right-of-use assets acquired under finance leases as components of property and equipment as of March 31, 2019 and January 1, 2019, as follows:
(in millions)
 
March 31, 2019
 
January 1, 2019
Transportation equipment
 
$
19.9

 
$
19.9

Real property
 
0.8

 
0.8

Other property
 
1.5

 
0.6

Accumulated amortization
 
(12.2
)
 
(11.2
)
Total
 
$
10.0

 
$
10.1



Transportation equipment is being amortized to the estimated residual value by the end of the lease. Real and other property under finance leases are being amortized to a zero net book value over the initial lease term.

As lessor

We finance various types of transportation-related equipment for independent third parties under lease contracts which are generally for one year to five years and are accounted for as sales-type leases with fully guaranteed residual values. At the inception of the contracts, we determine if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

With the adoption of ASC 842, all leases for which we are the lessor meet the definition of sales-type leases. In addition, as required under ASC 842, all cash flows from lease receipts are classified as operating activities on the consolidated statement of cash flows beginning January 1, 2019. We previously presented all cash flows from lease receipts as investing activities.

As of March 31, 2019 and January 1, 2019, the investment in lease receivables was as follows:
(in millions)
 
March 31, 2019
 
January 1, 2019
Future minimum payments to be received on leases
 
$
142.3

 
$
140.0

Guaranteed residual lease values
 
152.4

 
151.0

Total minimum lease payments to be received
 
294.7

 
291.0

Unearned income
 
(29.7
)
 
(28.7
)
Net investment in leases
 
265.0

 
262.3

 
 
 
 
 
Current maturities of lease receivables
 
127.4

 
129.6

Less—allowance for doubtful accounts
 
(0.5
)
 
(0.5
)
Current portion of lease receivables—net of allowance
 
126.9

 
129.1

 
 
 
 
 
Lease receivables—noncurrent
 
$
138.1

 
$
133.2



The amounts to be received on lease receivables as of March 31, 2019 were as follows:
(in millions)
 
March 31, 2019
Remaining 2019
 
$
116.6

2020
 
122.6

2021
 
50.7

2022
 
4.7

2023
 
0.1

2024 and thereafter
 

Total undiscounted lease cash flows
 
294.7

Amount representing interest
 
(29.7
)
Present value of lease receivables
 
265.0

Current lease receivables, net of allowance
 
(126.9
)
Long-term lease receivable
 
$
138.1



Leases are generally placed on nonaccrual status (nonaccrual of interest and other fees) when a payment becomes 90 days past due or upon receipt of notification of bankruptcy, upon the death of a customer, or in other instances in which management concludes collectability is not reasonably assured. The accrual of interest and other fees is resumed when all payments are less than 60 days past due. At March 31, 2019, there were $0.3 million of lease payments greater than 90 days past due. The terms of the lease agreements generally give us the ability to take possession of the underlying asset in the event of default. We may incur credit losses in excess of recorded allowances if the full amount of any anticipated proceeds from the sale or re-lease of the asset supporting the third party’s financial obligation is not realized. Repossession and estimated reconditioning costs are recorded in the consolidated statements of comprehensive income in the period incurred.

Our lease payments primarily include base rentals and guaranteed residual values. In addition, we also collect one-time administrative fees and heavy vehicle use tax on our leases. We have elected to not separate the different components within the contract as the administrative fees were not material for the three months ended March 31, 2019. We have also elected to
exclude all taxes assessed by a governmental authority from the consideration (e.g., heavy vehicle use tax). All of our leases require fixed payments, therefore we have no variable payment provisions.
Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount. This is estimated to approximate the fair value of the equipment. Equipment is leased under sales-type leases where the lessees guarantee the residual value of the equipment. The table below provides additional information on our sales-type leases.
 
 
Three Months Ended March 31,
(in millions)
 
2019
Revenue
 
$
56.2

Cost of goods sold
 
(49.9
)
Operating profit
 
$
6.3

 
 
 
Interest income on lease receivable
 
$
6.6

Initial direct cost incurred
 



The amounts to be received on lease receivables as of December 31, 2018 under ASC 840 were as follows:
(in millions)
 
December 31, 2018
2019
 
$
149.0

2020
 
112.7

2021
 
29.0

2022
 
0.3

2023
 

2024 and thereafter
 

Total
 
$
291.0

Leases LEASES

We adopted ASU 2016-02, Leases, which is codified in ASC 842, as of January 1, 2019 using the optional transition method. The FASB’s authoritative guidance provided companies with the option to apply this ASU to new and existing leases within the scope of the guidance as of the beginning of the period of adoption. We elected this transition method of applying the new lease standard and have recognized right-of-use assets and lease liabilities as of January 1, 2019. Prior period amounts were not adjusted and will continue to be reported under the accounting standards in effect for those periods.
Adoption of the new standard resulted in the initial recording of right-of-use lease assets and related lease liabilities of $80.6 million and $85.2 million, respectively. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term. Schneider's incremental borrowing rates are used as the discount rates for leases and are determined based on U. S. Treasury rates plus an applicable margin to arrive at all-in rates. Schneider uses multiple discount rates based on lease terms and other economic factors. The operating lease right-of-use asset also includes accrued lease expense resulting from the straight-line accounting under prior accounting methods, which is now being amortized over the remaining life of the lease.
In addition, we elected the package of practical expedients provided under the guidance. The practical expedient package applies to leases that commenced prior to adoption of the new standard and permits companies not to reassess whether existing or expired contracts are or contain a lease, the lease classification, and any initial direct costs for any existing leases. We also elected the practical expedient related to land easements, allowing us to carry forward the accounting treatment of our existing agreements for land easements, none of which were material as of January 1, 2019.
As lessee
We lease real estate, transportation equipment, and office equipment under operating and finance leases. Our real estate operating leases include operating centers, distribution warehouses, offices, and drop yards. Our finance leases relate almost entirely to transportation equipment. A majority of our leases include an option to extend the lease, and a small number of our leases include an option to early terminate the lease, which may include a termination payment. If we are reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right-of-use asset and lease liability.
For our real estate leases, we have elected to apply the recognition requirement to leases of twelve months or less, therefore, an operating lease right-of-use asset and liability will be recognized for all these leases. For our equipment leases, we have elected to not apply the recognition requirements to leases of twelve months or less. These leases will be expensed on a straight-line basis and no operating lease right-of-use asset or liability will be recorded.

We have also elected to not separate the different components within the contract for our leases; therefore, all fixed costs associated with the lease are included in the right-of-use asset and the operating lease liability. This often relates to the requirement for us to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other operating costs in addition to a base or fixed rent. Some of our leases have variable payment amounts, and the variable portions of those payments are excluded from the right-of-use asset and the lease liability.

At the inception of our contracts we determine if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

A small number of our leased real estate assets contains subleases. The lease income related to subleases is shown in the lease cost table below.

Certain equipment leases contain residual value guarantees. These are guarantees made to the lessor that the value of the underlying asset returned to the lessor at the end of the lease will be at least a specified amount.

None of our leases contain restrictions or covenants that restrict us from incurring other financial obligations.

The following table presents our net lease costs for the three months ended March 31, 2019:
 
 
Financial Statement Classification
 
Three Months Ended March 31,
(in millions)
 
 
2019
Operating lease cost
 
 
 
 
Operating lease cost
 
Operating supplies and expenses
 
$
8.9

Short-term lease cost (1)
 
Operating supplies and expenses
 
1.8

Finance lease cost
 
 
 
 
Amortization of right-of-use assets
 
Depreciation and amortization
 
0.8

Interest on lease liabilities
 
Interest expense
 
0.1

Variable lease cost
 
Operating supplies and expenses
 
0.7

Sublease income
 
Operating revenues
 
(1.3
)
Total net lease cost
 
 
 
$
11.0

(1) Includes short-term lease costs for leases twelve months or less, including those with a duration of one month or less.
As of March 31, 2019, remaining lease terms and discount rates under operating and finance leases were as follows:
 
 
March 31, 2019
Weighted-average remaining lease term
 
 
Operating leases
 
4.2 years

Finance leases
 
0.8 years

 
 
 
Weighted-average discount rate
 
 
Operating leases
 
4.2
%
Finance leases
 
3.7
%

Other information related to our leases is as follows:
 
 
Three Months Ended March 31,
(in millions)
 
2019
Cash paid for amounts included in the measurement of lease liabilities
 
 
Operating cash flows from operating leases
 
$
8.8

Operating cash flows from finance leases
 
0.1

Financing cash flows from finance leases
 
0.7

 
 
 
Right-of-use assets obtained in exchange for new lease liabilities
 
 
Operating leases
 
$
11.2

Finance leases
 



Operating lease right-of-use assets, current operating lease liabilities, and noncurrent operating lease liabilities are included in capitalized software and other noncurrent assets, other current liabilities, and other, respectively, in the consolidated balance sheet as of March 31, 2019.

At March 31, 2019, future lease payments under operating and finance leases were as follows:
(in millions)
 
Operating Leases
 
Finance Leases
Remaining 2019
 
$
25.0

 
$
6.4

2020
 
24.9

 
0.3

2021
 
15.2

 

2022
 
9.2

 

2023
 
7.3

 

2024 and thereafter
 
14.2

 

Total
 
95.8

 
6.7

Amount representing interest
 
(8.3
)
 
(0.1
)
Present value of lease payments
 
87.5

 
6.6

Current maturities
 
(29.1
)
 
(6.4
)
Long-term lease obligations
 
$
58.4

 
$
0.2



For certain of our real estate leases, there are options contained within the lease agreement to extend beyond the initial lease term. The Company will recognize these options as right-of-use assets and lease liabilities when we deem they are reasonably certain to be exercised. Future operating lease payments at March 31, 2019 include $10.2 million related to options to extend lease terms that we are reasonably certain to exercise.

Under ASC 840, future minimum lease payments as of December 31, 2018 were as follows:
(in millions)
 
Operating Leases
 
Capital Leases
2019
 
$
35.8

 
$
6.9

2020
 
25.7

 
0.2

2021
 
14.9

 

2022
 
8.4

 

2023
 
6.8

 

2024 and thereafter
 
12.7

 

Total
 
$
104.3

 
7.1

Amount representing interest
 

 
(0.2
)
Present value of minimum lease payments
 

 
6.9

Current maturities
 

 
(6.7
)
Long-term capital lease obligations
 

 
$
0.2



As of March 31, 2019, we had additional operating leases that had not yet commenced of $3.3 million. These leases will commence during the remainder of 2019 and have lease terms of one year to five years.

The consolidated balance sheets include right-of-use assets acquired under finance leases as components of property and equipment as of March 31, 2019 and January 1, 2019, as follows:
(in millions)
 
March 31, 2019
 
January 1, 2019
Transportation equipment
 
$
19.9

 
$
19.9

Real property
 
0.8

 
0.8

Other property
 
1.5

 
0.6

Accumulated amortization
 
(12.2
)
 
(11.2
)
Total
 
$
10.0

 
$
10.1



Transportation equipment is being amortized to the estimated residual value by the end of the lease. Real and other property under finance leases are being amortized to a zero net book value over the initial lease term.

As lessor

We finance various types of transportation-related equipment for independent third parties under lease contracts which are generally for one year to five years and are accounted for as sales-type leases with fully guaranteed residual values. At the inception of the contracts, we determine if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

With the adoption of ASC 842, all leases for which we are the lessor meet the definition of sales-type leases. In addition, as required under ASC 842, all cash flows from lease receipts are classified as operating activities on the consolidated statement of cash flows beginning January 1, 2019. We previously presented all cash flows from lease receipts as investing activities.

As of March 31, 2019 and January 1, 2019, the investment in lease receivables was as follows:
(in millions)
 
March 31, 2019
 
January 1, 2019
Future minimum payments to be received on leases
 
$
142.3

 
$
140.0

Guaranteed residual lease values
 
152.4

 
151.0

Total minimum lease payments to be received
 
294.7

 
291.0

Unearned income
 
(29.7
)
 
(28.7
)
Net investment in leases
 
265.0

 
262.3

 
 
 
 
 
Current maturities of lease receivables
 
127.4

 
129.6

Less—allowance for doubtful accounts
 
(0.5
)
 
(0.5
)
Current portion of lease receivables—net of allowance
 
126.9

 
129.1

 
 
 
 
 
Lease receivables—noncurrent
 
$
138.1

 
$
133.2



The amounts to be received on lease receivables as of March 31, 2019 were as follows:
(in millions)
 
March 31, 2019
Remaining 2019
 
$
116.6

2020
 
122.6

2021
 
50.7

2022
 
4.7

2023
 
0.1

2024 and thereafter
 

Total undiscounted lease cash flows
 
294.7

Amount representing interest
 
(29.7
)
Present value of lease receivables
 
265.0

Current lease receivables, net of allowance
 
(126.9
)
Long-term lease receivable
 
$
138.1



Leases are generally placed on nonaccrual status (nonaccrual of interest and other fees) when a payment becomes 90 days past due or upon receipt of notification of bankruptcy, upon the death of a customer, or in other instances in which management concludes collectability is not reasonably assured. The accrual of interest and other fees is resumed when all payments are less than 60 days past due. At March 31, 2019, there were $0.3 million of lease payments greater than 90 days past due. The terms of the lease agreements generally give us the ability to take possession of the underlying asset in the event of default. We may incur credit losses in excess of recorded allowances if the full amount of any anticipated proceeds from the sale or re-lease of the asset supporting the third party’s financial obligation is not realized. Repossession and estimated reconditioning costs are recorded in the consolidated statements of comprehensive income in the period incurred.

Our lease payments primarily include base rentals and guaranteed residual values. In addition, we also collect one-time administrative fees and heavy vehicle use tax on our leases. We have elected to not separate the different components within the contract as the administrative fees were not material for the three months ended March 31, 2019. We have also elected to
exclude all taxes assessed by a governmental authority from the consideration (e.g., heavy vehicle use tax). All of our leases require fixed payments, therefore we have no variable payment provisions.
Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount. This is estimated to approximate the fair value of the equipment. Equipment is leased under sales-type leases where the lessees guarantee the residual value of the equipment. The table below provides additional information on our sales-type leases.
 
 
Three Months Ended March 31,
(in millions)
 
2019
Revenue
 
$
56.2

Cost of goods sold
 
(49.9
)
Operating profit
 
$
6.3

 
 
 
Interest income on lease receivable
 
$
6.6

Initial direct cost incurred
 



The amounts to be received on lease receivables as of December 31, 2018 under ASC 840 were as follows:
(in millions)
 
December 31, 2018
2019
 
$
149.0

2020
 
112.7

2021
 
29.0

2022
 
0.3

2023
 

2024 and thereafter
 

Total
 
$
291.0

v3.19.1
Revenue Recognition Revenue Recognition
3 Months Ended
Mar. 31, 2019
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer [Text Block] REVENUE RECOGNITION

Disaggregated Revenues

The majority of our revenues are related to transportation and have similar characteristics. The following table summarizes our revenues by type of service, and each type of service is further described below.
 
 
Three Months Ended March 31,
Disaggregated Revenues (in millions)
 
2019
 
2018
Transportation
 
$
1,071.4

 
$
1,049.9

Logistics management
 
58.1

 
52.1

Other
 
64.6

 
37.0

Total operating revenues
 
$
1,194.1

 
$
1,139.0


Transportation
Transportation revenues relate to the Truckload and Intermodal reportable segments, as well as to our brokerage business, which is included in the Logistics reportable segment.

In the Transportation portfolio, our service obligation to customers is satisfied over time. We do not believe there is a significant impact on the nature, amount, timing, and uncertainty of revenue or cash flows based on the mode of transportation. The economic factors that impact our transportation revenue are generally consistent across these modes given the relatively short-term nature of each contract. For the majority of our transportation business, the “contract with a customer” is identified as an individual order under a negotiated agreement. Some consideration is variable in that a final transaction price is uncertain and is susceptible to factors outside of Schneider's influence, such as the weather or the accumulation of accessorial charges. Pricing information is supplied by rate schedules that accompany negotiated contracts.
Logistics Management
Logistics Management revenues relate to our Supply Chain Management and Import/Export Services operating segments, both of which are included in our Logistics reportable segment. Within this portfolio, the key service we provide to the customer is management of freight shipping and/or storage.

Other
Other revenues relate to activities that are out of scope for purposes of ASC 606, including our leasing and captive insurance businesses.

Quantitative Disclosure

The following table provides information related to transactions and expected timing of revenue recognition related to performance obligations that are fixed in nature and relate to contracts with terms greater than one year as of date shown:
Remaining Performance Obligations (in millions)
 
March 31, 2019
Expected to be recognized within one year
 
 
Transportation
 
$
1.9

Logistics Management
 
10.0

Expected to be recognized after one year
 
 
Transportation
 
1.6

Logistics Management
 
7.5

Total
 
$
21.0


This disclosure does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less. In addition, this disclosure does not include expected consideration related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice (e.g., usage-based pricing terms).

The following table provides information related to contract balances associated with our contracts with customers as of the dates shown.
Contract Balances (in millions)
 
March 31, 2019
 
December 31, 2018
Other current assets - Contract assets
 
$
27.8

 
$
21.7

Other current liabilities - Contract liabilities
 

 


We generally receive payment within 40 days of completion of performance obligations. Contract assets in the table above relate to revenue in-transit at the end of the reporting period. Contract liabilities relate to amounts that customers paid in advance of the associated service.
v3.19.1
Fair Value
3 Months Ended
Mar. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value FAIR VALUE

Fair value focuses on the estimated price that would be received to sell an asset or paid to transfer a liability, which is referred to as the exit price. Inputs to valuation techniques used to measure fair value fall into three broad levels (Levels 1, 2, and 3) as follows:

Level 1—Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that we have the ability to access at the measurement date.

Level 2—Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities.

Level 3—Unobservable inputs reflecting the reporting entity’s estimates of the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. All marketable securities were valued based on quoted prices for similar assets in active markets or quoted prices
for identical or similar assets in markets that are not active (Level 2 in the fair value hierarchy). We measure our marketable securities on a recurring, monthly basis. See Note 5Investments, for information on the fair value of our marketable securities.

In connection with the June 1, 2016 acquisition of WSL, a contingent payment arrangement based on the achievement of specified earnings targets is in place for three consecutive 12-month periods after the closing, with the aggregate payment total not to exceed $40.0 million. No payments have been made through March 31, 2019. The fair value of the contingent consideration at March 31, 2019 and December 31, 2018 was zero. The valuation was based on Level 3 inputs.

Our ownership interest in Platform Science, Inc. discussed in Note 5, Investments, was valued based on Level 3 inputs.

There were no transfers between levels for the periods shown.

Fair Value of Other Financial Instruments

The recorded value of cash, trade accounts receivable, and trade accounts payable approximates fair value.

The table below presents the carrying value of our debt portfolio along with the fair value of a fixed-rate debt portfolio with similar terms and maturities, which is based on borrowing rates available to us in the applicable year. This valuation used Level 2 inputs.
 
 
March 31, 2019
 
December 31, 2018
(in millions)
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Fixed-rate debt portfolio
 
$
404.6

 
$
402.3

 
$
405.0

 
$
398.4

v3.19.1
Investments
3 Months Ended
Mar. 31, 2019
Investments Schedule [Abstract]  
Investment [Text Block] INVESTMENTS

Marketable Securities
Our marketable securities are classified as available for sale and carried at fair value in current assets on the consolidated balance sheets. Our portfolio of securities has maturities ranging from 1 to 78 months. While our intent is to hold our securities to maturity, sudden changes in the market or to our liquidity needs may cause us to sell certain securities in advance of their maturity date.

Any unrealized gains and losses, net of tax, are included as a component of accumulated other comprehensive income on our consolidated balance sheets, unless we determine that an unrealized loss is other-than-temporary. If we determine that an unrealized loss is other-than-temporary, we recognize the loss in earnings. We did not have any other-than-temporary impairments for the periods ended March 31, 2019 and 2018, respectively. Cost basis is determined using the specific identification method.

The following table presents the values of our marketable securities as of the dates shown:
 
 
March 31, 2019
 
December 31, 2018
(in millions)
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Zero coupon bonds
 
$
1.9

 
$
1.9

 
$
3.9

 
$
3.9

U.S. treasury and government agencies
 
17.0

 
16.9

 
20.0

 
19.8

Asset-backed securities
 
0.1

 
0.1

 
0.1

 
0.1

Corporate debt securities
 
15.1

 
15.3

 
15.1

 
15.0

State and municipal bonds
 
12.8

 
12.9

 
12.5

 
12.5

Total marketable securities
 
$
46.9

 
$
47.1

 
$
51.6

 
$
51.3



Gross realized gains and losses on marketable securities were not material for the three months ended March 31, 2019 and 2018. Gross unrealized gains and losses on marketable securities were not material for the three months ended March 31, 2019, and for the year ended December 31, 2018.


Ownership Interest in Platform Science, Inc.
In 2018, we received a 30% ownership interest in Platform Science, Inc. in exchange for our contribution of a non-exclusive license for telematics mobile software that was developed to enable driver productivity and ensure regulatory compliance. Our ownership interest in Platform Science, Inc. is being accounted for under ASC 321, Investments - Equity Securities and is recorded at fair value in other noncurrent assets on the consolidated balance sheets. The fair value of the ownership interest as of December 31, 2018 was determined to be $3.5 million through an independent valuation. As of March 31, 2019, there have been no transactions that would indicate that the value of our ownership interest in Platform Science, Inc. has changed.
v3.19.1
Goodwill and Other Intangible Assets
3 Months Ended
Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the excess of the purchase price of our acquisitions over the fair value of the identifiable net assets acquired. Changes in the carrying amount of goodwill were as follows:
(in millions)
 
Truckload
 
Logistics
 
Other
 
Total
Balance at December 31, 2018
 
$
138.2

 
$
14.2

 
$
9.8

 
$
162.2

Foreign currency translation
 

 

 
0.2

 
0.2

Balance at March 31, 2019
 
$
138.2

 
$
14.2

 
$
10.0

 
$
162.4



At March 31, 2019 and December 31, 2018, we had accumulated goodwill impairment charges of $8.0 million.

The identifiable intangible assets other than goodwill listed below are included in capitalized software and other noncurrent assets on the consolidated balance sheets.
 
 
March 31, 2019
 
December 31, 2018
(in millions)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer lists
 
$
10.5

 
$
3.7

 
$
6.8

 
$
10.5

 
$
3.5

 
$
7.0

Trade names
 
1.4

 
1.3

 
0.1

 
1.4

 
1.2

 
0.2

Total intangible assets
 
$
11.9

 
$
5.0

 
$
6.9

 
$
11.9

 
$
4.7

 
$
7.2



Amortization expense for intangible assets was $0.3 and $0.4 million for the three months ended March 31, 2019 and 2018, respectively. Accumulated amortization in the table above includes foreign currency translation related to a customer list.

Estimated future amortization expense related to intangible assets is as follows:
(in millions)
 
 
Remaining 2019
 
$
0.8

2020
 
1.0

2021
 
1.0

2022
 
1.0

2023
 
1.0

2024 and thereafter
 
2.1

 
 
$
6.9

v3.19.1
Debt and Credit Facilities
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Debt and Credit Facilities DEBT AND CREDIT FACILITIES

As of March 31, 2019 and December 31, 2018, debt included the following:
(in millions)
 
March 31,
2019
 
December 31,
2018
Unsecured senior notes: principal payable at maturities ranging from 2019 through 2025; interest payable in semiannual installments through the same timeframe; weighted-average interest rate of 3.36% for both 2019 and 2018
 
$
400.0

 
$
400.0

Equipment financing notes: principal and interest payable in monthly installments through 2019; weighted average interest rate of 3.72% for both 2019 and 2018
 
4.6

 
5.0

Total principal outstanding
 
404.6

 
405.0

Current maturities
 
(69.6
)
 
(45.0
)
Debt issuance costs
 
(0.5
)
 
(0.6
)
Long-term debt
 
$
334.5

 
$
359.4



Our Credit Agreement (the “2018 Credit Facility”) provides borrowing capacity of $250.0 million and allows us to request an increase in total commitment by up to $150.0 million, for a total potential commitment of $400.0 million through August 2023. The agreement also provides a sublimit of $100.0 million to be used for the issuance of letters of credit. We had no outstanding borrowings under these agreements as of March 31, 2019 or December 31, 2018. Standby letters of credit under these agreements amounted to $3.9 million at March 31, 2019 and December 31, 2018 and were primarily related to the requirements of certain of our real estate leases.

We also have a Receivables Purchase Agreement (the “2018 Receivables Purchase Agreement”) that allows us to borrow funds against qualifying trade receivables at rates based on one-month LIBOR up to $200.0 million and provides for the issuance of standby letters of credit through September 2021. We had no outstanding borrowings under this facility at March 31, 2019 or December 31, 2018. At March 31, 2019 and December 31, 2018, standby letters of credit under this agreement amounted to $70.3 million and $65.3 million, respectively, and were primarily related to the requirements of certain of our insurance obligations.
v3.19.1
Income Taxes
3 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES

Our effective income tax rate was 25.4% and 26.2% for the three months ended March 31, 2019 and 2018, respectively. In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, and best estimate of nontaxable and nondeductible items of income and expense.
v3.19.1
Common Equity
3 Months Ended
Mar. 31, 2019
Equity [Abstract]  
Common Equity COMMON EQUITY

Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2019 and 2018.
 
 
Three Months Ended March 31,
(in millions, except per share data)
 
2019
 
2018
Numerator:
 
 
 
 
    Net income available to common shareholders
 
$
36.9

 
$
47.6


 
 
 
 
Denominator:
 
 
 
 
    Weighted average common shares outstanding
 
177.0

 
176.9

    Effect of dilutive restricted share units
 
0.4

 
0.3

    Weighted average diluted common shares outstanding
 
177.4

 
177.2


 
 
 
 
Basic earnings per common share
 
$
0.21

 
$
0.27

Diluted earnings per common share
 
0.21

 
0.27



The calculation of diluted earnings per share for the three months ended March 31, 2019 excluded an immaterial amount of share-based compensation awards that had an anti-dilutive effect.

Subsequent Event - Dividends Declared
In April of 2019, our Board of Directors declared a quarterly cash dividend for the second fiscal quarter of 2019 in the amount of $0.06 per share to holders of our Class A and Class B common stock. The dividend is payable to shareholders of record at the close of business on June 14, 2019 and is expected to be paid on July 9, 2019.
v3.19.1
Share-based Compensation
3 Months Ended
Mar. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-based Compensation 10. SHARE-BASED COMPENSATION

We grant various equity-based awards relating to Class B Common Stock under our 2017 Omnibus Incentive Plan (“the Plan”). These awards consist of the following: restricted shares, restricted stock units (“RSUs”), performance-based restricted shares (“Performance Shares”), performance-based restricted stock units (“PSUs”), and non-qualified stock options.

Share-based compensation expense was $2.0     million for each of the three months ended March 31, 2019 and 2018. We recognize share-based compensation expense over the awards' vesting period. As of March 31, 2019, we had $24.2 million of pre-tax unrecognized compensation cost related to outstanding share-based compensation awards that is expected to be recognized over a weighted-average period of 2.5 years.

The Black-Scholes valuation model is used by the Company to determine the grant date fair value of option awards. The Company uses its stock price on the grant date as the fair value assigned to the restricted shares, RSUs, performance shares, and PSUs. Performance shares and PSUs are earned based on attainment of threshold performance of return on capital and earnings or net income targets.
Equity-based awards granted during the first quarter of 2019 had a grant date fair value of $15.4 million and were as follows:
2019 Grants
 
Number of Awards Granted
 
Weighted Average Grant Date Fair Value
Restricted Shares and RSUs
 
239,830

 
$
22.96

Performance Shares and PSUs
 
367,037

 
22.96

Nonqualified Stock Options
 
194,375

 
7.60

     Total Grants
 
801,242

 

v3.19.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies COMMITMENTS AND CONTINGENCIES
In the ordinary course of conducting our business we become involved in certain legal matters and investigations including liability claims, taxes other than income taxes, contract disputes, employment, and other litigation matters. We accrue for anticipated costs to defend and resolve matters that are probable and estimable. We believe the outcomes of these matters will not have a material impact on our business or our consolidated financial statements.
We record liabilities for claims accruals based on our best estimate of expected losses. The primary claims arising for the Company consist of accident-related claims for personal injury, collision, and comprehensive compensation, in addition to workers' compensation and cargo liability claims. We maintain self-insurance levels related to these claims and also maintain insurance to cover liabilities in excess of self-insurance amounts. Although it is reasonably possible that our claims accruals will change based on future developments, we do not believe these changes will be material to our results of operations considering our insurance coverage and other factors.
At March 31, 2019, our firm commitments to purchase transportation equipment totaled approximately $182.5 million.
The representative of the former owners of WSL has claimed that we have not fulfilled certain obligations under the purchase and sale agreement relating to the post-closing operations of the business, and as a result, the former owners are entitled to an accelerated payment of the contingent amount described in Note 4, Fair Value, without regard to whether the specified earnings targets are met. We believe this claim is meritless and have filed an action in the Delaware Court of Chancery seeking a declaratory judgment that we have complied with our obligations under the agreement and that no accelerated payment is owed. The representative of the former owners has filed a counterclaim seeking the full amount of the accelerated payment.