SCHNEIDER NATIONAL, INC., 10-Q filed on 11/8/2017
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2017
Document Information [Line Items]
 
Document Type
10-Q 
Entity Registrant Name
Schneider National, Inc. 
Amendment Flag
false 
Document Period End Date
Sep. 30, 2017 
Document Fiscal Year Focus
2017 
Document Fiscal Period Focus
Q3 
Trading Symbol
SNDR 
Entity Central Index Key
0001692063 
Current Fiscal Year End Date
--12-31 
Entity Filer Category
Non-accelerated Filer 
Class A Common Shares
 
Document Information [Line Items]
 
Entity Common Stock, Shares Outstanding (shares)
83,029,500 
Class B Common Stock
 
Document Information [Line Items]
 
Entity Common Stock, Shares Outstanding (shares)
93,850,011 
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
 
 
 
 
OPERATING REVENUES
$ 1,110.8 
$ 1,053.2 
$ 3,192.4 
$ 2,975.8 
OPERATING EXPENSES:
 
 
 
 
Purchased transportation
403.9 
381.2 
1,158.7 
1,077.6 
Salaries, wages, and benefits
307.4 
289.8 
910.0 
848.2 
Fuel and fuel taxes
76.3 
66.6 
220.7 
184.4 
Depreciation and amortization
70.5 
70.0 
207.0 
197.7 
Operating supplies and expenses
135.3 
129.1 
369.2 
333.0 
Insurance and related expenses
22.2 
19.8 
64.3 
57.1 
Other general expenses, net
31.1 
25.9 
75.9 
75.3 
Total operating expenses
1,046.7 
982.4 
3,005.8 
2,773.3 
INCOME FROM OPERATIONS
64.1 
70.8 
186.6 
202.5 
OTHER EXPENSES (INCOME):
 
 
 
 
Interest expense—net
3.6 
5.8 
13.7 
15.7 
Other expenses (income)—net
(0.2)
0.5 
(0.3)
1.8 
Total other expenses
3.4 
6.3 
13.4 
17.5 
INCOME BEFORE INCOME TAXES
60.7 
64.5 
173.2 
185.0 
PROVISION FOR INCOME TAXES
23.8 
27.7 
67.2 
75.9 
NET INCOME
36.9 
36.8 
106.0 
109.1 
OTHER COMPREHENSIVE INCOME (LOSS):
 
 
 
 
Foreign currency translation adjustments
(0.1)
(0.7)
0.4 
Unrealized gain (loss) on marketable securities—net of tax
0.1 
(0.1)
0.2 
0.4 
Total other comprehensive income (loss)
(0.1)
(0.5)
0.8 
COMPREHENSIVE INCOME
$ 36.9 
$ 36.7 
$ 105.5 
$ 109.9 
Weighted average common shares outstanding (shares)
176.9 
156.4 
169.2 
156.1 
Basic earnings (usd per share)
$ 0.21 
$ 0.24 
$ 0.63 
$ 0.70 
Weighted average diluted shares outstanding (shares)
177.0 
156.6 
169.3 
156.3 
Diluted earnings (usd per share)
$ 0.21 
$ 0.24 
$ 0.63 
$ 0.70 
Dividends per share of common stock (usd per share)
$ 0.05 
$ 0 
$ 0.15 
$ 0 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
CURRENT ASSETS:
 
 
Cash and cash equivalents
$ 202.2 
$ 130.8 
Marketable securities
44.0 
52.5 
Trade accounts receivable—net of allowance of $4.0 million and $3.5 million, respectively
500.8 
444.0 
Other receivables
24.5 
41.8 
Current portion of lease receivables—net of allowance of $1.4 million and $1.0 million, respectively
99.7 
100.2 
Inventories
94.0 
74.1 
Prepaid expenses and other current assets
95.2 
80.2 
Total current assets
1,060.4 
923.6 
Property and equipment:
 
 
Transportation equipment
2,745.1 
2,596.7 
Land, buildings, and improvements
183.5 
178.9 
Other property and equipment
174.0 
191.6 
Total property and equipment
3,102.6 
2,967.2 
Accumulated depreciation
1,242.2 
1,209.2 
Net property and equipment
1,860.4 
1,758.0 
Lease receivables
141.5 
132.1 
Capitalized software and other noncurrent assets
76.0 
76.9 
Goodwill
164.5 
164.0 
Total noncurrent assets
2,242.4 
2,131.0 
TOTAL
3,302.8 
3,054.6 
CURRENT LIABILITIES:
 
 
Trade accounts payable
284.4 
227.3 
Accrued salaries and wages
78.9 
81.8 
Claims accruals - current
47.0 
52.2 
Current maturities of debt and capital lease obligations
22.1 
258.7 
Dividends payable
8.8 
Other current liabilities
58.7 
57.3 
Total current liabilities
499.9 
677.3 
Long-term Debt and Capital Lease Obligations
422.9 
439.6 
NONCURRENT LIABILITIES:
 
 
Claims accruals - noncurrent
100.6 
111.5 
Deferred income taxes
587.5 
538.6 
Other
75.1 
101.2 
Total noncurrent liabilities
1,186.1 
1,190.9 
COMMITMENTS AND CONTINGENCIES (Note 12)
   
   
TEMPORARY EQUITY - REDEEMABLE COMMON SHARES
 
 
Temp Equity Accumulated Earnings
125.1 
Temp Equity Accumulated Other Comp Income
0.9 
Total temporary equity
1,186.4 
SHAREHOLDERS' EQUITY
 
 
Additional paid-in capital
1,535.9 
Accumulated earnings/ retained earnings
80.5 
Accumulated other comprehensive income
0.4 
Total shareholders' equity
1,616.8 
TOTAL
3,302.8 
3,054.6 
Class A Redeemable Common Shares
 
 
TEMPORARY EQUITY - REDEEMABLE COMMON SHARES
 
 
Total temporary equity
563.2 
Class B Redeemable Common Shares
 
 
TEMPORARY EQUITY - REDEEMABLE COMMON SHARES
 
 
Total temporary equity
497.2 
Class A Common Shares
 
 
SHAREHOLDERS' EQUITY
 
 
Common stock
Total shareholders' equity
Class B Common Stock
 
 
SHAREHOLDERS' EQUITY
 
 
Common stock
Total shareholders' equity
$ 0 
$ 0 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Trade allowance
$ (4.0)
$ (3.5)
Allowance for lease receivables
(1.4)
(1.0)
Accumulated depreciation
$ 1,242.2 
$ 1,209.2 
Class A Redeemable Common Shares
 
 
Redeemable common shares, par value (usd per share)
$ 0 
$ 0 
Redeemable common shares, shares authorized (shares)
250,000,000 
Redeemable common shares, shares issued (shares)
83,029,500 
Redeemable common shares, shares outstanding (shares)
83,029,500 
Class B Redeemable Common Shares
 
 
Redeemable common shares, par value (usd per share)
$ 0 
$ 0 
Redeemable common shares, shares authorized (shares)
750,000,000 
Redeemable common shares, shares issued (shares)
73,294,560 
Redeemable common shares, shares outstanding (shares)
73,300,000 
Class A Common Shares
 
 
Common stock, par value (usd per share)
$ 0 
 
Common stock, shares authorized (shares)
250,000,000 
 
Common stock, shares issued (shares)
83,029,500 
 
Common stock, shares outstanding (shares)
83,000,000 
Class B Common Stock
 
 
Common stock, par value (usd per share)
$ 0 
 
Common stock, shares authorized (shares)
750,000,000 
 
Common stock, shares outstanding (shares)
93,900,000 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
OPERATING ACTIVITIES:
 
 
Net income
$ 106.0 
$ 109.1 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
207.0 
197.7 
Gain on sale of property and equipment
(6.4)
(15.1)
Deferred income taxes
48.8 
49.3 
WSL contingent consideration adjustment
(13.2)
Other noncash items
3.1 
(1.0)
Changes in operating assets and liabilities:
 
 
Receivables
(39.0)
Other assets
(9.5)
(7.7)
Payables
22.1 
6.3 
Other liabilities
(3.2)
(21.1)
Net cash provided by operating activities
315.7 
317.5 
INVESTING ACTIVITIES:
 
 
Purchases of transportation equipment
(274.1)
(359.7)
Purchases of other property and equipment
(27.3)
(29.5)
Proceeds from sale of property and equipment
51.8 
39.6 
Proceeds from lease receipts and sale of off-lease inventory
42.4 
47.4 
Purchases of lease equipment
(89.8)
(68.7)
Advance funding of dividend to transfer agent
(6.7)
Sales of marketable securities
8.4 
11.1 
Purchases of marketable securities
(4.0)
Acquisition of businesses, net of cash acquired
(78.2)
Net cash used in investing activities
(295.3)
(442.0)
FINANCING ACTIVITIES:
 
 
Proceeds under revolving credit agreements
174.9 
Payments under revolving credit agreements
(135.0)
(89.9)
Proceeds from Other Debt
0.6 
Payments of debt and capital lease obligations
(118.5)
(37.7)
Payment of deferred consideration related to acquisition
(19.4)
Proceeds from IPO, net of issuance costs
340.6 
Dividends paid
(16.6)
Redemptions of redeemable common shares
(0.1)
(1.4)
Proceeds from issuances of redeemable common shares
2.3 
Net cash provided by financing activities
51.0 
48.8 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
71.4 
(75.7)
CASH AND CASH EQUIVALENTS:
 
 
Beginning of period
130.8 
160.7 
End of period
202.2 
 
Noncash investing and financing activity:
 
 
Equipment purchases in accounts payable
57.4 
40.0 
Dividends payable
8.8 
 
Increase in redemption value of redeemable common shares
(110.0)
Cash paid (refunded) during the year for:
 
 
Interest
16.6 
14.7 
Income taxes—net of refunds
$ (10.4)
$ 4.0 
Condensed Consolidated Statements Shareholders' Equity (Unaudited) (USD $)
In Millions, except Share data, unless otherwise specified
Total
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income
Class A Common Shares
Class B Common Shares
Beginning balance, value at Dec. 31, 2016
$ 0 
$ 0 
$ 0 
$ 0 
$ 0 
$ 0 
Beginning balance, shares at Dec. 31, 2016
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
Transfer from temporary equity to common equity, value
(1,201.2)
 
(13.3)
(0.9)
 
 
Net income
106.0 
 
 
 
 
 
Stock Issued During Period, Shares, Issued for Services
100,000 
 
 
 
 
 
Stock Issued During Period, Value, Issued for Services
0.6 
 
 
 
 
 
Ending balance, value at Sep. 30, 2017
1,616.8 
 
80.5 
0.4 
 
 
Beginning balance, value at Jun. 30, 2017
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
IPO proceeds, value
340.6 
340.6 
 
 
 
 
IPO proceeds, shares
 
 
 
 
 
20,100,000 
Transfer from temporary equity to common equity, value
1,201.2 
1,187.0 
13.3 
0.9 
Transfer from temporary equity to common equity, shares
 
 
 
 
83,000,000 
73,300,000 
Net income
36.9 
 
83.4 
 
 
 
Other comprehensive loss - post-IPO
(0.5)
 
 
(0.5)
 
 
Issuance of stock, value
2.9 
2.9 
 
 
 
 
Issuance of stock, shares
 
 
 
 
 
400,000 
Repurchases and retirements of stock, value
0.1 
(0.1)
 
 
 
 
Repurchases and retirements of stock, shares
 
 
 
 
 
Share-based compensation
6.3 
6.3 
 
 
 
 
Post-IPO dividends declared at $0.10 per share
(17.6)
 
(17.6)
 
 
 
Other
 
(1.4)
1.4 
 
 
 
Ending balance, value at Sep. 30, 2017
$ 1,616.8 
$ 1,535.9 
$ 80.5 
$ 0.4 
$ 0 
$ 0 
Ending balance, shares at Sep. 30, 2017
 
 
 
 
83,000,000 
93,900,000 
Condensed Consolidated Statements Shareholders' Equity (Unaudited) (Parenthetical)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Statement of Stockholders' Equity [Abstract]
 
 
 
 
Dividends declared per share (usd per share)
$ 0.05 
$ 0 
$ 0.15 
$ 0 
General
General
GENERAL

Description of Business

In this report, when we refer to “the Company,” “us,” “we,” “our,” or “ours,” 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.

Our IPO of shares of Class B Common Stock was completed in early April 2017, and additional shares were sold in May 2017 under an option granted to the underwriters. In connection with the offering, we sold a total of 20,145,000 shares of common stock at $19 per share and received proceeds of $382.7 million. Expenses related to the offering totaled approximately $42.1 million, resulting in net proceeds of $340.6 million.

Basis of Presentation

The accompanying unaudited interim Condensed 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 financial statements and footnotes do not include all disclosures required by GAAP for annual financial statements. These financial statements should be read in conjunction with the Consolidated Financial Statements and related notes included in our Prospectus. 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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which is codified as ASC 606. This guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. As amended, the new revenue recognition standard will be effective for us beginning with the reporting period ending March 31, 2018. The standard permits the use of either the full retrospective or modified retrospective transition method. We plan to use the modified retrospective approach for adoption, which requires us to record the cumulative effect of the transition through retained earnings as of January 1, 2018. While we are still in the process of completing our evaluation of the standard, we currently believe the most significant impact will be related to the timing of recognition of revenue for transportation services. We currently recognize revenue related to transportation services at delivery, but upon adoption of the standard, we will be required to recognize revenue over time. We have begun to quantify the differences in timing, measurement, and presentation of our revenue recognition. Based on our analysis to date, we do not expect this change or the adoption of ASC 606 to have an overall material impact on our consolidated financial position, results of operations, and cash flows. We are still evaluating the disclosure requirements of this standard.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This update was issued to enhance the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. These provisions are effective for us beginning with the reporting period ending March 31, 2018, but we do not expect the adoption of this ASU to have an impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize in the consolidated balance sheets assets and liabilities for leases with lease terms of more than 12 months. Consistent with current accounting principles, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current accounting principles, which require only capital leases to be recognized in the consolidated balance sheets, the new ASU will require both types of leases to be recognized in the consolidated balance sheets. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that companies may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The transition guidance also provides specific guidance for sale and leaseback transactions, build-to-suit leases, leveraged leases, and amounts previously recognized in accordance with the business combinations guidance for leases. The new standard is effective for us beginning with the reporting period ending March 31, 2019, with early adoption permitted. We currently cannot reasonably estimate the impact that the adoption of this ASU will have on our consolidated financial statements.

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. This guidance is effective for us beginning with the reporting period ending March 31, 2020. We currently cannot reasonably estimate the impact that the adoption of this ASU will have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively if retrospective application would be impracticable. The provisions of this update are effective for us beginning with the reporting period ending March 31, 2018. Several of the changes to the presentation of items identified in the guidance could impact our classification on our cash flow statements, but the impact will be dependent on circumstances after adoption.

In January 2017, the FASB issued ASU 2017-4, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment testing process. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. Under the new standard, a goodwill impairment loss is measured as the excess of the carrying value of a reporting unit over its fair value. The provisions of this update will be effective for our goodwill impairment test in 2020, but we plan to early-adopt this standard in the fourth quarter of 2017 for our annual goodwill impairment test. The impact of adoption cannot be reasonably estimated at this time.
Acquisition
Acquisition
ACQUISITION

On June 1, 2016, we acquired 100% of the shares of WSL, for $150.4 million in cash and future payments. WSL brings together final-mile delivery, claims-free handling, and an innovative technology platform. It provides LTL, truckload, and logistics services for difficult to handle goods, such as furniture and floor coverings, across North America. It uses proprietary technology to handle supply chain complexities within the national home delivery industry. We acquired WSL because it creates integrated first-to-final-mile-delivery capabilities, which reduce supply chain complexities for omnichannel retailers and manufacturers.

The acquisition was accounted for as a purchase in accordance with FASB ASC Topic 805, Business Combinations. Assets acquired and liabilities assumed were recorded in the Truckload segment at their fair values as of the acquisition date. The fair values of identifiable intangible assets, which were primarily customer relationships and trade names, were based on valuations using the income approach. The excess of the purchase price over the estimated fair values of tangible assets, identifiable intangible assets, and assumed liabilities was recorded as goodwill. The goodwill is attributable to expected synergies and expected growth opportunities. We believe that 100% of the goodwill will be deductible for United States income tax purposes. No adjustments were made to the estimated fair values of the assets acquired and liabilities assumed during the nine months ended September 30, 2017, and the measurement period has ended.
(in millions)
 
Recognized amounts of identifiable assets acquired and liabilities assumed
 
Cash
$
1.3

Receivables
16.2

Inventories
0.5

Prepaid expenses and other current assets
4.4

Property and equipment
81.8

Capitalized software and other noncurrent assets
5.8

Intangible assets
10.9

Goodwill
138.2

Total assets acquired
259.1

 
 
Payables assumed
7.8

Accrued liabilities assumed
5.3

Current maturities of debt and capital lease obligations assumed
47.7

Debt and capital lease obligations assumed
46.2

Other noncurrent liabilities assumed
1.7

Fair value of total consideration transferred
$
150.4



In addition to the cash paid at closing, the purchase and sale agreement included guaranteed payments of $20.0 million to the former owners of WSL on each of the first three anniversary dates of the closing. The liability recorded was discounted between one percent and three percent, based on credit-adjusted discount rates. The initial payment in the amount of $19.7 million, including calculated interest based on the discounted amount recorded, was made in June 2017 and reflected an adjustment for a working capital true-up. The total present value of the remaining two payments was $38.0 million at September 30, 2017.

A contingent payment arrangement based on the achievement of specified earnings targets is also 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 September 30, 2017. See Note 3, Fair Value, for information regarding the fair value of this contingent arrangement.

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 operation of the business and that, as a result, the former owners are entitled to an accelerated payment of the contingent amount described above 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 following unaudited pro forma condensed combined financial information presents our results as if we had acquired WSL on January 1, 2016.
 (in millions, except per share data)
Nine Months Ended September 30, 2016
Pro forma net sales
$
3,049.4

Pro forma net income
$
107.0

Basic earnings per share as reported
$
0.70

Pro forma basic earnings per share
$
0.69

Diluted earnings per share as reported
$
0.70

Pro forma diluted earnings per share
$
0.68

Fair Value
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).

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.

The fair value of the contingent consideration related to the 2016 acquisition of WSL was $0.3 million at September 30, 2017. This valuation was based on significant inputs that are not observable in the market, which are referred to as Level 3 inputs. Key assumptions include a probability-adjusted level of earnings before interest, taxes, depreciation, and amortization estimated using the Monte Carlo simulation method. The following table sets forth a reconciliation of changes in the fair value of the contingent consideration:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in millions)
2017
 
2016
 
2017
 
2016
Beginning balance
$
0.6

 
$
13.5

 
$
13.5

 
$
13.5

Change in fair value
(0.3
)
 

 
(13.2
)
 

Ending balance
$
0.3

 
$
13.5

 
$
0.3

 
$
13.5


(1) We recorded adjustments to the contingent consideration liability in the second and third quarters of 2017, resulting in an increase in income from operations. The adjustments were caused by a change in the fair value of the contingent liability, which reflected three-year growth targets established by the seller prior to the close of the acquisition.

There were no transfers between levels for the periods shown.

Fair Value of Other Financial Instruments

The recorded value of cash, receivables, and payables approximates fair value.

Based on borrowing rates available to us in the applicable year, a fixed-rate debt portfolio with similar terms and maturities would have had a fair value of approximately $440.5 million and $683.9 million as of September 30, 2017 and December 31, 2016, respectively.
Marketable Securities
Marketable Securities
MARKETABLE SECURITIES

Our marketable securities have maturities ranging from 3 months to 87 months, but our intent is to hold them for less than one year. They are classified as available for sale and carried at fair value in current assets on the condensed consolidated balance sheets. Any unrealized gains and losses, net of tax, are included as a component of accumulated other comprehensive income.

The following table presents the values of our marketable securities as of the dates shown.
 
September 30, 2017
 
December 31, 2016
(in millions)
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Zero coupon bonds
$
3.8

 
$
3.8

 
$
3.8

 
$
3.8

U.S. treasury and government agencies
6.0

 
6.0

 
8.0

 
8.1

Asset-backed securities
0.3

 
0.3

 
0.4

 
0.4

Corporate debt securities
11.2

 
11.4

 
14.4

 
14.5

State and political subdivisions
22.7

 
22.5

 
26.2

 
25.7

Total marketable securities
$
44.0

 
$
44.0

 
$
52.8

 
$
52.5



Gross realized and unrealized gains and losses on sales of marketable securities were not material for the three or nine months ended September 30, 2017 and 2016.
Goodwill and Other Intangible Assets
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, 2016
$
138.1

 
$
14.2

 
$
11.7

 
$
164.0

Foreign currency translation

 

 
0.5

 
0.5

Balance at September 30, 2017
$
138.1

 
$
14.2

 
$
12.2

 
$
164.5



The identifiable intangible assets other than goodwill listed below are included in other noncurrent assets on the condensed consolidated balance sheets.
 
September 30, 2017
 
December 31, 2016
(in millions)
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer lists
$
10.5

 
$
2.3

 
$
8.2

 
$
10.5

 
$
1.4

 
$
9.1

Trade names
1.4

 
0.6

 
0.8

 
1.4

 
0.3

 
1.1

Total intangible assets
$
11.9

 
$
2.9

 
$
9.0

 
$
11.9

 
$
1.7

 
$
10.2



Amortization expense for intangible assets was $0.4 million and $0.3 million for the three months ended September 30, 2017 and 2016, respectively, and $1.1 million and $0.6 million for the nine months ended September 30, 2017 and 2016, 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 2017
$
0.4

2018
1.4

2019
1.2

2020
0.9

2021
0.9

2022 and thereafter
4.2

 
$
9.0

Debt and Credit Facilities
Debt and Credit Facilities
DEBT AND CREDIT FACILITIES

As of September 30, 2017 and December 31, 2016, debt included the following:
(in millions)
September 30,
2017
 
December 31,
2016
Unsecured senior notes: principal payable at maturity; interest payable in quarterly or semiannual installments through 2025; weighted-average interest rate of 3.36% and 3.66% for 2017 and 2016, respectively
$
400.0

 
$
500.0

Equipment financing notes: principal and interest payable in monthly installments through 2023; weighted average interest rate of 3.76% and 3.82% for 2017 and 2016, respectively
34.0

 
49.3

Secured credit facility: collateralized by certain trade receivables; interest rate of 1.68% for 2016

 
135.0

Total principal outstanding
434.0

 
684.3

Current maturities
(18.2
)
 
(254.4
)
Debt issuance costs
(0.9
)
 
(1.1
)
Long-term debt
$
414.9

 
$
428.8



As of September 30, 2017, we were in compliance with all covenants and financial ratios under the credit agreement and the indentures governing the senior notes.

We used $100.0 million of the proceeds from our IPO to repay our 4.83% unsecured senior note that matured on May 7, 2017.

We had no outstanding borrowings under our revolving credit agreement as of September 30, 2017 or December 31, 2016. Standby letters of credit under this agreement amounted to $3.9 million and $4.1 million at September 30, 2017, and December 31, 2016, respectively, and were primarily related to the requirements of certain of our real estate leases.

We have a secured credit facility that allows us to borrow up to $200.0 million against qualifying trade receivables at rates based on the 30-day London InterBank Offered Rate. At September 30, 2017 and December 31, 2016, standby letters of credit under this agreement amounted to $63.8 million and $60.1 million, respectively, and were primarily related to the requirements of certain of our insurance obligations.
Lease Receivables
Lease Receivables
LEASE RECEIVABLES

We finance various types of transportation-related equipment for independent third parties. The transactions are generally for one to five years and are accounted for as sales-type or direct financing leases. As of September 30, 2017 and December 31, 2016, the investment in lease receivables was as follows:
(in millions)
September 30, 2017
 
December 31, 2016
Future minimum payments to be received on leases
$
145.9

 
$
137.3

Guaranteed residual lease values
125.6

 
124.5

Total minimum lease payments to be received
271.5

 
261.8

Unearned income
(30.3
)
 
(29.5
)
Net investment in leases
241.2

 
232.3

Current maturities of lease receivables
101.1

 
101.2

Less—allowance for doubtful accounts
(1.4
)
 
(1.0
)
Current portion of lease receivables—net of allowance
99.7

 
100.2

Lease receivables—noncurrent
$
141.5

 
$
132.1

Income Taxes
Income Taxes
INCOME TAXES

Our effective income tax rate was 39.2% and 42.9% for the three months ended September 30, 2017, and 2016, respectively, and 38.8% and 41.0% for the nine months ended September 30, 2017, and 2016, 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.
Temporary Equity
Temporary Equity
TEMPORARY EQUITY

Prior to our IPO in April 2017, our Class A and Class B Common Stock was considered redeemable under GAAP because of certain repurchase rights granted to our shareholders pursuant to the Schneider National, Inc. Employee Stock Purchase Plan and certain agreements governing ownership of our common stock held by existing shareholders, including members of the Schneider family and their family trusts. As a result, all vested Class A and Class B common shares were recorded as temporary equity (redeemable common shares) on the consolidated balance sheets at their redemption value as of the respective balance sheet dates. Accumulated earnings on the consolidated balance sheets were adjusted for the changes during the period in the current redemption value of vested Class A and Class B redeemable common shares.

All contractual redemption features were removed at the time of the IPO. As a consequence, all outstanding shares of Class A and Class B Common Stock ceased to be considered temporary equity and were reclassified to Shareholders’ Equity, including the associated balances of accumulated earnings and accumulated other comprehensive income. As the common shares have no par value, the amounts recorded in temporary equity for the share redemption value were recorded to additional paid-in capital within Shareholders’ Equity upon the transfer.

The following table shows all changes to temporary equity during the nine months ended September 30, 2017.
 
Class A
Redeemable Common
Shares
 
Class B
Redeemable Common
Shares
 
Accumulated Earnings
 
Accumulated Other Comprehensive Income
 
 
(in millions)
Shares
 
Amount
 
Shares
 
Amount
 
 
 
Total
BALANCE—December 31, 2016
83.0

 
$
563.2

 
73.3

 
$
497.2

 
$
125.1

 
$
0.9

 
$
1,186.4

Net income

 

 

 

 
22.6

 

 
22.6

Other comprehensive income

 

 

 

 

 

 

Dividends declared at $0.05 per share

 

 

 

 
(7.8
)
 

 
(7.8
)
Change in redemption value of redeemable common shares

 
67.3

 

 
59.3

 
(126.6
)
 

 

Transfer from temporary equity to common equity
(83.0
)
 
(630.5
)
 
(73.3
)
 
(556.5
)
 
(13.3
)
 
(0.9
)
 
(1,201.2
)
BALANCE—September 30, 2017

 
$

 

 
$

 
$

 
$

 
$

Common Equity
Common Equity
COMMON EQUITY

All share redemption provisions mentioned in Note 9, Temporary Equity, were removed effective with the IPO of Class B common shares in April 2017. Therefore, all Class A and Class B common shares were reclassified from temporary equity to permanent equity as of April 2017.

Prior to the IPO, restricted share awards that were not yet vested and held for more than 180 days were classified as liabilities at their redemption values, taking into consideration the portion of the requisite service that had been provided as of the reporting date. At the IPO date, these unvested shares were reclassified to equity.

Earnings Per Share

As disclosed in Note 1, General, our IPO of shares of Class B Common Stock was effective in April 2017. In connection with the offering, we sold additional shares of common stock.
(in millions, except per share data)
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Basic earnings per common share:
 
 
 
 
 
 
 
Net income available to common shareholders
$
36.9

 
$
36.8

 
$
106.0

 
$
109.1

Weighted average common shares issued and outstanding
176.9

 
156.4

 
169.2

 
156.1

Basic earnings per common share
$
0.21

 
$
0.24

 
$
0.63

 
$
0.70

Diluted earnings per common share:
 
 
 
 
 
 
 
Net income applicable to diluted earnings per common share
$
36.9

 
$
36.8

 
$
106.0

 
$
109.1

Dilutive potential common shares:
 
 
 
 
 
 
 
Restricted share units
0.1

 
0.2

 
0.1

 
0.2

Dilutive potential common shares
0.1

 
0.2

 
0.1

 
0.2

Total diluted average common shares issued and outstanding
177.0

 
156.6

 
169.3

 
156.3

Diluted earnings per common share
$
0.21

 
$
0.24

 
$
0.63

 
$
0.70



The calculation of diluted earnings per share for the three and nine months ended September 30, 2017 excluded an immaterial amount of share-based compensation awards that had an anti-dilutive effect.

Subsequent Event - Dividends Declared

In October 2017, our Board of Directors declared a quarterly cash dividend for the fourth fiscal quarter of 2017 in the amount of $0.05 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 December 15, 2017, and is expected to be paid on January 8, 2018.
Share-based Compensation
Share-based Compensation
SHARE-BASED COMPENSATION

In April 2017, we granted various equity-based awards relating to Class B Common Stock under our 2017 Omnibus Incentive Plan. These awards consisted of the following:
 
Number of Shares Subject to Awards
 
Vesting Period in Years
 
Grant Date Fair
Value
Performance-based restricted shares
307,933

 
3
 
$
19.00

Performance-based restricted stock units
88,268

 
3
 
$
19.00

Restricted shares
76,980

 
4
 
$
19.00

Restricted stock units
169,536

 
4
 
$
19.00

Stock options
229,620

 
4
 
$
6.37


Prior to our IPO, we granted restricted shares of Class B Common Stock ("Pre-IPO Restricted Shares") to certain management employees that vest generally over a three-year period. The Pre-IPO Restricted Shares must be paid out in shares and are accounted for as equity awards. Cash dividends are not paid on the nonvested Pre-IPO Restricted Shares, nor do they accumulate during the vesting period. No new Pre-IPO Restricted Shares were granted in the nine months ended September 30, 2017.

We adopted ASU No. 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting, effective January 1, 2017. This guidance simplified several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We elected to estimate forfeitures of share-based payment awards up front. The impact of adopting the ASU on our consolidated financial statements was immaterial.
Commitments and Contingencies
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES

In the ordinary course of conducting our business we become involved in certain legal matters and investigations on a number of matters, 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 financial statements.

At September 30, 2017, our firm commitments to purchase transportation equipment totaled approximately $68.2 million.
Segment Reporting
Segment Reporting
SEGMENT REPORTING

We have three reportable segments – Truckload, Intermodal, and Logistics – which are based primarily on the services each segment provides.

The Truckload reportable segment consists of three operating segments (Van Truckload, Specialty Dedicated, and Bulk) that are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting. Van Truckload delivers truckload quantities over irregular routes using dry van trailers. Specialty Dedicated is similar except that it involves recurring routes, and specified trucks are dedicated to the routes using specialty trailers. Bulk transports key inputs to the manufacturing process such as specialty chemicals using specialty trailers.

The Intermodal reportable segment provides rail intermodal and drayage services to our customers. Company-owned containers and generally Company-owned dray tractors are used to provide these transportation services.

The Logistics reportable segment consists of three operating segments (Brokerage, Supply Chain Management, and Import/Export Services) that are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting. In the Logistics segment, we provide additional sources of truck capacity, manage transportation-systems analysis requirements for individual customers, and provide trans-loading and warehousing services.

We generate other revenues from a captive insurance business and from a leasing business which are operated by wholly-owned subsidiaries. We also have operations in Asia that meet the definition of an operating segment. None of these operations meets the quantitative reporting thresholds. As a result, these operations are grouped in “Other” in the tables below. We have also included in “Other” revenues and expenses that are incidental to our activities and are not attributable to any of the reportable segments.

Separate balance sheets are not prepared by segment and, as a result, assets are not separately identifiable by segment. All transactions between reporting segments are eliminated in consolidation.

The chief operating decision maker reviews revenue for each segment without the inclusion of fuel surcharge revenue. For segment purposes, any fuel surcharge revenues earned are recorded as a reduction of the segment’s fuel expenses. Income from operations at a segment level reflects the measures presented to the chief operating decision maker for each segment.

The following tables summarize our segment information. Intersegment revenues were immaterial for all segments, with the exception of Other, which included revenues from insurance premiums charged to other segments for workers’ compensation, auto, and other types of insurance. Intersegment revenues included in Other revenues below were $20.5 million and $12.6 million for the three months ended September 30, 2017 and 2016, respectively and $57.9 million and $40.5 million for the nine months ended September 30, 2017 and 2016, respectively.

Revenues by Segment
(in millions)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Truckload
 
$
551.7

 
$
540.8

 
$
1,616.8

 
$
1,551.0

Intermodal
 
196.0

 
187.6

 
571.4

 
559.7

Logistics
 
209.1

 
194.3

 
584.7

 
539.9

Other
 
85.4

 
66.5

 
214.5

 
171.5

Fuel surcharge
 
93.9

 
81.3

 
276.8

 
209.7

Inter-segment eliminations
 
(25.3
)
 
(17.3
)
 
(71.8
)
 
(56.0
)
Operating revenues
 
$
1,110.8

 
$
1,053.2

 
$
3,192.4

 
$
2,975.8

Income from Operations by Segment
(in millions)
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Truckload
$
41.1

 
$
53.6

 
$
132.9

 
$
157.5

Intermodal
12.2

 
10.9

 
30.0

 
31.6

Logistics
9.1

 
8.4

 
20.8

 
21.7

Other
1.7

 
(2.1
)
 
2.9

 
(8.3
)
Income (Expense) from operations
$
64.1

 
$
70.8

 
$
186.6

 
$
202.5

Depreciation and Amortization Expense by Segment
(in millions)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Truckload
$
51.7

 
$
50.5

 
$
152.7

 
$
141.1

Intermodal
8.8

 
7.8

 
25.3

 
23.2

Logistics
0.1

 
0.1

 
0.3

 
0.3

Other
9.9

 
11.6

 
28.7

 
33.1

Depreciation and amortization expense
$
70.5

 
$
70.0

 
$
207.0

 
$
197.7

General (Policies)
Description of Business

In this report, when we refer to “the Company,” “us,” “we,” “our,” or “ours,” 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 Condensed 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 financial statements and footnotes do not include all disclosures required by GAAP for annual financial statements. These financial statements should be read in conjunction with the Consolidated Financial Statements and related notes included in our Prospectus. 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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which is codified as ASC 606. This guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. As amended, the new revenue recognition standard will be effective for us beginning with the reporting period ending March 31, 2018. The standard permits the use of either the full retrospective or modified retrospective transition method. We plan to use the modified retrospective approach for adoption, which requires us to record the cumulative effect of the transition through retained earnings as of January 1, 2018. While we are still in the process of completing our evaluation of the standard, we currently believe the most significant impact will be related to the timing of recognition of revenue for transportation services. We currently recognize revenue related to transportation services at delivery, but upon adoption of the standard, we will be required to recognize revenue over time. We have begun to quantify the differences in timing, measurement, and presentation of our revenue recognition. Based on our analysis to date, we do not expect this change or the adoption of ASC 606 to have an overall material impact on our consolidated financial position, results of operations, and cash flows. We are still evaluating the disclosure requirements of this standard.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This update was issued to enhance the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. These provisions are effective for us beginning with the reporting period ending March 31, 2018, but we do not expect the adoption of this ASU to have an impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize in the consolidated balance sheets assets and liabilities for leases with lease terms of more than 12 months. Consistent with current accounting principles, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current accounting principles, which require only capital leases to be recognized in the consolidated balance sheets, the new ASU will require both types of leases to be recognized in the consolidated balance sheets. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that companies may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The transition guidance also provides specific guidance for sale and leaseback transactions, build-to-suit leases, leveraged leases, and amounts previously recognized in accordance with the business combinations guidance for leases. The new standard is effective for us beginning with the reporting period ending March 31, 2019, with early adoption permitted. We currently cannot reasonably estimate the impact that the adoption of this ASU will have on our consolidated financial statements.

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. This guidance is effective for us beginning with the reporting period ending March 31, 2020. We currently cannot reasonably estimate the impact that the adoption of this ASU will have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively if retrospective application would be impracticable. The provisions of this update are effective for us beginning with the reporting period ending March 31, 2018. Several of the changes to the presentation of items identified in the guidance could impact our classification on our cash flow statements, but the impact will be dependent on circumstances after adoption.

In January 2017, the FASB issued ASU 2017-4, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment testing process. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. Under the new standard, a goodwill impairment loss is measured as the excess of the carrying value of a reporting unit over its fair value. The provisions of this update will be effective for our goodwill impairment test in 2020, but we plan to early-adopt this standard in the fourth quarter of 2017 for our annual goodwill impairment test.
Acquisition (Tables) (WSL)
(in millions)
 
Recognized amounts of identifiable assets acquired and liabilities assumed
 
Cash
$
1.3

Receivables
16.2

Inventories
0.5

Prepaid expenses and other current assets
4.4

Property and equipment
81.8

Capitalized software and other noncurrent assets
5.8

Intangible assets
10.9

Goodwill
138.2

Total assets acquired
259.1

 
 
Payables assumed
7.8

Accrued liabilities assumed
5.3

Current maturities of debt and capital lease obligations assumed
47.7

Debt and capital lease obligations assumed
46.2

Other noncurrent liabilities assumed
1.7

Fair value of total consideration transferred
$
150.4

The following unaudited pro forma condensed combined financial information presents our results as if we had acquired WSL on January 1, 2016.
 (in millions, except per share data)
Nine Months Ended September 30, 2016
Pro forma net sales
$
3,049.4

Pro forma net income
$
107.0

Basic earnings per share as reported
$
0.70

Pro forma basic earnings per share
$
0.69

Diluted earnings per share as reported
$
0.70

Pro forma diluted earnings per share
$
0.68

Fair Value Fair Value (Tables)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
The following table sets forth a reconciliation of changes in the fair value of the contingent consideration:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in millions)
2017
 
2016
 
2017
 
2016
Beginning balance
$
0.6

 
$
13.5

 
$
13.5

 
$
13.5

Change in fair value
(0.3
)
 

 
(13.2
)
 

Ending balance
$
0.3

 
$
13.5

 
$
0.3

 
$
13.5


(1) We recorded adjustments to the contingent consideration liability in the second and third quarters of 2017, resulting in an increase in income from operations. The adjustments were caused by a change in the fair value of the contingent liability, which reflected three-year growth targets established by the seller prior to the close of the acquisition.
Marketable Securities (Tables)
Schedule of Marketable Securities
The following table presents the values of our marketable securities as of the dates shown.
 
September 30, 2017
 
December 31, 2016
(in millions)
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Zero coupon bonds
$
3.8

 
$
3.8

 
$
3.8

 
$
3.8

U.S. treasury and government agencies
6.0

 
6.0

 
8.0

 
8.1

Asset-backed securities
0.3

 
0.3

 
0.4

 
0.4

Corporate debt securities
11.2

 
11.4

 
14.4

 
14.5

State and political subdivisions
22.7

 
22.5

 
26.2

 
25.7

Total marketable securities
$
44.0

 
$
44.0

 
$
52.8

 
$
52.5

Goodwill and Other Intangible Assets (Tables)
Changes in the carrying amount of goodwill were as follows:
(in millions)
Truckload
 
Logistics
 
Other
 
Total
Balance at December 31, 2016
$
138.1

 
$
14.2

 
$
11.7

 
$
164.0

Foreign currency translation

 

 
0.5

 
0.5

Balance at September 30, 2017
$
138.1

 
$
14.2

 
$
12.2

 
$
164.5

The identifiable intangible assets other than goodwill listed below are included in other noncurrent assets on the condensed consolidated balance sheets.
 
September 30, 2017
 
December 31, 2016
(in millions)
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer lists
$
10.5

 
$
2.3

 
$
8.2

 
$
10.5

 
$
1.4

 
$
9.1

Trade names
1.4

 
0.6

 
0.8

 
1.4

 
0.3

 
1.1

Total intangible assets
$
11.9

 
$
2.9

 
$
9.0

 
$
11.9

 
$
1.7

 
$
10.2

Estimated future amortization expense related to intangible assets is as follows (in millions):
Remaining 2017
$
0.4

2018
1.4

2019
1.2

2020
0.9

2021
0.9

2022 and thereafter
4.2

 
$
9.0

Debt and Credit Facilities (Tables)
Summary of Debt
As of September 30, 2017 and December 31, 2016, debt included the following:
(in millions)
September 30,
2017
 
December 31,
2016
Unsecured senior notes: principal payable at maturity; interest payable in quarterly or semiannual installments through 2025; weighted-average interest rate of 3.36% and 3.66% for 2017 and 2016, respectively
$
400.0

 
$
500.0

Equipment financing notes: principal and interest payable in monthly installments through 2023; weighted average interest rate of 3.76% and 3.82% for 2017 and 2016, respectively
34.0

 
49.3

Secured credit facility: collateralized by certain trade receivables; interest rate of 1.68% for 2016

 
135.0

Total principal outstanding
434.0

 
684.3

Current maturities
(18.2
)
 
(254.4
)
Debt issuance costs
(0.9
)
 
(1.1
)
Long-term debt
$
414.9

 
$
428.8

Lease Receivables (Tables)
Summary of Investment in Lease Receivables
As of September 30, 2017 and December 31, 2016, the investment in lease receivables was as follows:
(in millions)
September 30, 2017
 
December 31, 2016
Future minimum payments to be received on leases
$
145.9

 
$
137.3

Guaranteed residual lease values
125.6

 
124.5

Total minimum lease payments to be received
271.5

 
261.8

Unearned income
(30.3
)
 
(29.5
)
Net investment in leases
241.2

 
232.3

Current maturities of lease receivables
101.1

 
101.2

Less—allowance for doubtful accounts
(1.4
)
 
(1.0
)
Current portion of lease receivables—net of allowance
99.7

 
100.2

Lease receivables—noncurrent
$
141.5

 
$
132.1

Temporary Equity (Tables)
Temporary Equity
The following table shows all changes to temporary equity during the nine months ended September 30, 2017.
 
Class A
Redeemable Common
Shares
 
Class B
Redeemable Common
Shares
 
Accumulated Earnings
 
Accumulated Other Comprehensive Income
 
 
(in millions)
Shares
 
Amount
 
Shares
 
Amount
 
 
 
Total
BALANCE—December 31, 2016
83.0

 
$
563.2

 
73.3

 
$
497.2

 
$
125.1

 
$
0.9

 
$
1,186.4

Net income

 

 

 

 
22.6

 

 
22.6

Other comprehensive income

 

 

 

 

 

 

Dividends declared at $0.05 per share

 

 

 

 
(7.8
)
 

 
(7.8
)
Change in redemption value of redeemable common shares

 
67.3

 

 
59.3

 
(126.6
)
 

 

Transfer from temporary equity to common equity
(83.0
)
 
(630.5
)
 
(73.3
)
 
(556.5
)
 
(13.3
)
 
(0.9
)
 
(1,201.2
)
BALANCE—September 30, 2017

 
$

 

 
$

 
$

 
$

 
$

Common Equity (Tables)
Calculation of Basic and Diluted Earnings Per Share
(in millions, except per share data)
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Basic earnings per common share:
 
 
 
 
 
 
 
Net income available to common shareholders
$
36.9

 
$
36.8

 
$
106.0

 
$
109.1

Weighted average common shares issued and outstanding
176.9

 
156.4

 
169.2

 
156.1

Basic earnings per common share
$
0.21

 
$
0.24

 
$
0.63

 
$
0.70

Diluted earnings per common share:
 
 
 
 
 
 
 
Net income applicable to diluted earnings per common share
$
36.9

 
$
36.8

 
$
106.0

 
$
109.1

Dilutive potential common shares:
 
 
 
 
 
 
 
Restricted share units
0.1

 
0.2

 
0.1

 
0.2

Dilutive potential common shares
0.1

 
0.2

 
0.1

 
0.2

Total diluted average common shares issued and outstanding
177.0

 
156.6

 
169.3

 
156.3

Diluted earnings per common share
$
0.21

 
$
0.24

 
$
0.63

 
$
0.70

Share-based Compensation (Tables)
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award
In April 2017, we granted various equity-based awards relating to Class B Common Stock under our 2017 Omnibus Incentive Plan. These awards consisted of the following:
 
Number of Shares Subject to Awards
 
Vesting Period in Years
 
Grant Date Fair
Value
Performance-based restricted shares
307,933

 
3
 
$
19.00

Performance-based restricted stock units
88,268

 
3
 
$
19.00

Restricted shares
76,980

 
4
 
$
19.00

Restricted stock units
169,536

 
4
 
$
19.00

Stock options
229,620

 
4
 
$
6.37


Segment Reporting (Tables)
Summary of Segment Reporting Information
The following tables summarize our segment information. Intersegment revenues were immaterial for all segments, with the exception of Other, which included revenues from insurance premiums charged to other segments for workers’ compensation, auto, and other types of insurance. Intersegment revenues included in Other revenues below were $20.5 million and $12.6 million for the three months ended September 30, 2017 and 2016, respectively and $57.9 million and $40.5 million for the nine months ended September 30, 2017 and 2016, respectively.

Revenues by Segment
(in millions)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Truckload
 
$
551.7

 
$
540.8

 
$
1,616.8

 
$
1,551.0

Intermodal
 
196.0

 
187.6

 
571.4

 
559.7

Logistics
 
209.1

 
194.3

 
584.7

 
539.9

Other
 
85.4

 
66.5

 
214.5

 
171.5

Fuel surcharge
 
93.9

 
81.3

 
276.8

 
209.7

Inter-segment eliminations
 
(25.3
)
 
(17.3
)
 
(71.8
)
 
(56.0
)
Operating revenues
 
$
1,110.8

 
$
1,053.2

 
$
3,192.4

 
$
2,975.8

Income from Operations by Segment
(in millions)
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Truckload
$
41.1

 
$
53.6

 
$
132.9

 
$
157.5

Intermodal
12.2

 
10.9

 
30.0

 
31.6

Logistics
9.1

 
8.4

 
20.8

 
21.7

Other
1.7

 
(2.1
)
 
2.9

 
(8.3
)
Income (Expense) from operations
$
64.1

 
$
70.8

 
$
186.6

 
$
202.5

Depreciation and Amortization Expense by Segment
(in millions)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Truckload
$
51.7

 
$
50.5

 
$
152.7

 
$
141.1

Intermodal
8.8

 
7.8

 
25.3

 
23.2

Logistics
0.1

 
0.1

 
0.3

 
0.3

Other
9.9

 
11.6

 
28.7

 
33.1

Depreciation and amortization expense
$
70.5

 
$
70.0

 
$
207.0

 
$
197.7



General - Additional Information (Details) (USD $)
9 Months Ended 3 Months Ended 1 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Class B Common Stock
May 31, 2017
IPO
Class B Common Stock
Sep. 30, 2017
IPO
Class B Common Stock
Subsidiary, Sale of Stock [Line Items]
 
 
 
 
 
Share issued during the period (shares)
 
 
20,100,000 
20,145,000 
 
Share issued, (price per share)
 
 
 
$ 19 
 
Proceeds from IPO, net of issuance costs
$ 340,600,000 
$ 0 
 
$ 382,700,000 
 
Expenses related to the offering
 
 
 
42,100,000 
 
Net proceeds from initial public offering
 
 
 
 
$ 340.6 
Acquisition - Additional Information (Details) (USD $)
9 Months Ended 0 Months Ended 1 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Former Owners [Member]
Sep. 30, 2017
Former Owners [Member]
Minimum
Sep. 30, 2017
Former Owners [Member]
Maximum
Jun. 1, 2016
WSL
Jun. 30, 2017
WSL
Sep. 30, 2017
WSL
Jun. 1, 2016
WSL
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
Percentage of voting interest acquired
 
 
 
 
 
 
 
 
100.00% 
Purchase price of acquisition
 
 
 
 
 
$ 150,400,000 
 
 
 
Percentage of goodwill deductible for income tax purpose
 
 
 
 
 
100.00% 
 
 
 
Cash payments
78,200,000 
20,000,000 
 
 
 
 
 
 
Credit adjusted discount rate on cash payment
 
 
 
1.00% 
3.00% 
 
 
 
 
Initial guaranteed payment
 
 
 
 
 
 
 
 
Guaranteed payments
 
 
 
 
 
 
 
38,000,000 
 
Aggregate payment of contingent consideration
 
 
 
 
 
 
 
$ 40,000,000 
 
Acquisition - Schedule of Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Jun. 1, 2016
WSL
Jun. 1, 2016
WSL
Recognized amounts of identifiable assets acquired and liabilities assumed
 
 
 
 
Cash
 
 
 
$ 1.3 
Receivables
 
 
 
16.2 
Inventories
 
 
 
0.5 
Prepaid expenses and other current assets
 
 
 
4.4 
Property and equipment
 
 
 
81.8 
Capitalized software and other noncurrent assets
 
 
 
5.8 
Intangible assets
 
 
 
10.9 
Goodwill
164.5 
164.0 
 
138.2 
Total assets acquired
 
 
 
259.1 
Payables assumed
 
 
 
7.8 
Accrued liabilities assumed
 
 
 
5.3 
Current maturities of debt and capital lease obligations assumed
 
 
 
47.7 
Debt and capital lease obligations assumed
 
 
 
46.2 
Other noncurrent liabilities assumed
 
 
 
1.7 
Fair value of total consideration transferred
 
 
$ 150.4 
 
Acquisition - Schedule of Pro Forma Condensed Combined Financial Information (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Business Combination Segment Allocation [Line Items]
 
 
 
 
Basic earnings per share as reported (usd per share)
$ 0.21 
$ 0.24 
$ 0.63 
$ 0.70 
Diluted earnings per share as reported (usd per share)
$ 0.21 
$ 0.24 
$ 0.63 
$ 0.70 
WSL
 
 
 
 
Business Combination Segment Allocation [Line Items]
 
 
 
 
Pro forma net sales
 
 
 
$ 3,049.4 
Pro forma net income
 
 
 
$ 107.0 
Basic earnings per share as reported (usd per share)
 
 
 
$ 0.70 
Pro forma basic earnings per share (usd per share)
 
 
 
$ 0.69 
Diluted earnings per share as reported (usd per share)
 
 
 
$ 0.70 
Pro forma diluted earnings per share (usd per share)
 
 
 
$ 0.68 
Fair Value - Additional Information (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016