SCHNEIDER NATIONAL, INC., 10-Q filed on 8/1/2017
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2017
Jul. 28, 2017
Class A Common Shares
Jul. 28, 2017
Class B Common Stock
Document Information [Line Items]
Document Type
10-Q†
Entity Registrant Name
Schneider National, Inc.†
Amendment Flag
false†
Document Period End Date
Jun. 30, 2017†
Document Fiscal Year Focus
2017†
Document Fiscal Period Focus
Q2†
Trading Symbol
SNDR†
Entity Central Index Key
0001692063†
Current Fiscal Year End Date
--12-31†
Entity Filer Category
Non-accelerated Filer†
Entity Common Stock, Shares Outstanding (shares)
83,029,500†
93,811,890†
Condensed Consolidated Statements of Comprehensive Income (Unaudited)†(USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
OPERATING REVENUES
$†1,075,172†
$†994,573†
$†2,081,611†
$†1,922,676†
OPERATING EXPENSES:
Purchased transportation
387,541†
358,197†
754,869†
696,396†
Salaries, wages, and benefits
304,907†
280,904†
602,630†
558,370†
Fuel and fuel taxes
71,189†
64,336†
144,386†
117,745†
Depreciation and amortization
68,636†
63,843†
136,506†
127,738†
Operating supplies and expenses
127,667†
104,720†
233,901†
203,983†
Insurance and related expenses
20,252†
18,599†
42,083†
37,268†
Other general expenses, net
15,978†
24,335†
44,684†
49,504†
Total operating expenses
996,170†
914,934†
1,959,059†
1,791,004†
INCOME FROM OPERATIONS
79,002†
79,639†
122,552†
131,672†
NONOPERATING EXPENSES:
Interest expenseónet
4,624†
5,087†
10,110†
9,888†
Otherónet
(221)
941†
(88)
1,274†
Total nonoperating expenses
4,403†
6,028†
10,022†
11,162†
INCOME BEFORE INCOME TAXES
74,599†
73,611†
112,530†
120,510†
PROVISION FOR INCOME TAXES
28,126†
29,444†
43,488†
48,204†
NET INCOME
46,473†
44,167†
69,042†
72,306†
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments
(499)
249†
(620)
370†
Unrealized gain on marketable securitiesónet of tax
60†
141†
197†
462†
Total other comprehensive income (loss)
(439)
390†
(423)
832†
COMPREHENSIVE INCOME
$†46,034†
$†44,557†
$†68,619†
$†73,138†
Weighted average common shares outstanding (shares)
174,424†
156,295†
165,422†
156,000†
Basic earnings (usd per share)
$†0.27†
$†0.28†
$†0.42†
$†0.46†
Weighted average diluted shares outstanding (shares)
174,453†
156,425†
165,436†
156,160†
Diluted earnings (usd per share)
$†0.27†
$†0.28†
$†0.42†
$†0.46†
Dividends per share of common stock (usd per share)
$†0.05†
$†0†
$†0.1†
$†0†
Condensed Consolidated Balance Sheets (Unaudited)†(USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
CURRENT ASSETS:
Cash and cash equivalents
$†259,931†
$†130,787†
Marketable securities
45,282†
52,489†
Trade accounts receivableónet of allowance of $3,928 and $3,455, respectively
449,174†
443,984†
Other receivables
21,918†
41,807†
Current portion of lease receivablesónet of allowance of $1,493 and $1,036, respectively
94,917†
100,211†
Inventories
82,958†
74,126†
Prepaid expenses and other current assets
92,420†
80,244†
Total current assets
1,046,600†
923,648†
Property and equipment:
Transportation equipment
2,677,729†
2,596,668†
Land, buildings, and improvements
182,870†
178,895†
Other
174,479†
191,664†
Total property and equipment
3,035,078†
2,967,227†
Accumulated depreciation
1,222,664†
1,209,172†
Net property and equipment
1,812,414†
1,758,055†
Lease receivables
138,125†
132,121†
Capitalized software and other noncurrent assets
75,780†
76,782†
Goodwill
164,302†
164,035†
Total noncurrent assets
2,190,621†
2,130,993†
TOTAL
3,237,221†
3,054,641†
CURRENT LIABILITIES:
Trade accounts payable
256,633†
227,253†
Accrued salaries and wages
74,134†
81,799†
Claims accruals - current
54,477†
52,216†
Current maturities of debt and capital lease obligations
20,740†
258,658†
Dividends payable
8,842†
0†
Other current liabilities
52,826†
57,342†
Total current liabilities
467,652†
677,268†
NONCURRENT LIABILITIES:
Long-term debt
419,049†
428,807†
Capital lease obligations
8,873†
10,820†
Claims accruals - noncurrent
107,291†
111,542†
Deferred income taxes
575,029†
538,624†
Other
72,830†
101,130†
Total noncurrent liabilities
1,183,072†
1,190,923†
COMMITMENTS AND CONTINGENCIES (Note 12)
  †
  †
TEMPORARY EQUITY - REDEEMABLE COMMON SHARES
Total temporary equity
0†
1,186,450†
SHAREHOLDERS' EQUITY
Additional paid-in capital
1,533,653†
0†
Accumulated earnings/ retained earnings
52,384†
125,175†
Accumulated other comprehensive income
460†
883†
Total shareholders' equity
1,586,497†
0†
TOTAL
3,237,221†
3,054,641†
Class A Redeemable Common Shares
TEMPORARY EQUITY - REDEEMABLE COMMON SHARES
Redeemable common shares
0†
563,217†
Total temporary equity
0†
563,217†
Class B Redeemable Common Shares
TEMPORARY EQUITY - REDEEMABLE COMMON SHARES
Redeemable common shares
0†
497,175†
Total temporary equity
0†
497,175†
Class A Common Shares
SHAREHOLDERS' EQUITY
Common stock
0†
0†
Total shareholders' equity
0†
0†
Class B Common Stock
SHAREHOLDERS' EQUITY
Common stock
0†
0†
Total shareholders' equity
$†0†
$†0†
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical)†(USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Trade allowance
$†3,928†
$†3,455†
Allowance for lease receivables
1,493†
1,036†
Accumulated depreciation
$†1,222,664†
$†1,209,172†
Class A Redeemable Common Shares
Redeemable common shares, par value (usd per share)
†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)
0†
83,029,500†
Class B Redeemable Common Shares
Redeemable common shares, par value (usd per share)
†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)
0†
73,294,560†
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)
83,029,500†
0†
Class B Common Stock
Common stock, par value (usd per share)
$†0†
Common stock, shares authorized (shares)
750,000,000†
Common stock, shares issued (shares)
93,811,890†
Common stock, shares outstanding (shares)
93,811,890†
0†
Condensed Consolidated Statements of Cash Flows (Unaudited)†(USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
OPERATING ACTIVITIES:
Net income
$†69,042†
$†72,306†
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
136,506†
127,738†
Gain on sale of property and equipment
(6,114)
(10,977)
Deferred income taxes
36,299†
15,890†
WSL contingent consideration adjustment
(12,900)
0†
Other noncash items
1,616†
(661)
Changes in operating assets and liabilities:
Receivables
15,026†
36,573†
Other assets
(11,849)
(13,985)
Payables
1,986†
18,316†
Other liabilities
(2,919)
20,166†
Net cash provided by operating activities
226,693†
265,366†
INVESTING ACTIVITIES:
Purchases of transportation equipment
(163,029)
(212,735)
Purchases of other property and equipment
(18,320)
(20,017)
Proceeds from sale of property and equipment
34,595†
24,141†
Proceeds from lease receipts and sale of off-lease inventory
29,943†
26,279†
Purchases of lease equipment
(51,993)
(45,998)
Sales of marketable securities
7,232†
3,096†
Purchases of marketable securities
0†
(4,002)
Acquisition of businesses, net of cash acquired
0†
(78,221)
Net cash used in investing activities
(161,572)
(307,457)
FINANCING ACTIVITIES:
Proceeds under revolving credit agreements
0†
75,000†
Payments under revolving credit agreements
(135,000)
(83,948)
Payments of debt and capital lease obligations
(114,751)
(13,255)
Payment of deferred consideration related to acquisition
(19,383)
0†
Proceeds from IPO, net of issuance costs
341,059†
0†
Dividends on redeemable common shares
(7,816)
0†
Redemptions of redeemable common shares
(86)
(16)
Proceeds from issuances of redeemable common shares
0†
2,298†
Net cash provided by (used in) financing activities
64,023†
(19,921)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
129,144†
(62,012)
CASH AND CASH EQUIVALENTS:
Beginning of period
130,787†
160,676†
End of period
259,931†
98,664†
Noncash investing and financing activity:
Equipment purchases in accounts payable
49,365†
66,671†
Dividends payable
8,842†
0†
Costs in accounts payable related to our IPO
412†
0†
Increase in redemption value of redeemable common shares
0†
(109,961)
Cash paid during the year for:
Interest
11,074†
10,069†
Income taxesónet of refunds
$†(13,546)
$†(32,432)
Condensed Consolidated Statements Shareholders' Equity (Unaudited)†(USD $)
In Thousands, 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
0†
0†
Increase (Decrease) in Stockholders' Equity
Transfer from temporary equity to common equity, value
1,201,219†
13,305†
899†
Net income
69,042†
Ending balance, value at Jun. 30, 2017
1,586,497†
52,384†
460†
Beginning balance, value at Mar. 31, 2017
0†
0†
0†
0†
0†
0†
Beginning balance, shares at Mar. 31, 2017
0†
0†
Increase (Decrease) in Stockholders' Equity
IPO proceeds, value
340,647†
340,647†
IPO proceeds, shares
20,145,000†
Transfer from temporary equity to common equity, value
1,201,219†
1,187,015†
13,305†
899†
0†
0†
Transfer from temporary equity to common equity, shares
83,029,500†
73,294,560†
Net income
46,473†
46,473†
Other comprehensive loss - post-IPO
(439)
(439)
Issuance of stock, value
2,912†
2,912†
Issuance of stock, shares
383,640†
Repurchases and retirements of stock, value
(86)
(86)
Repurchases and retirements of stock, shares
(11,310)
Share-based compensation
4,613†
4,613†
Post-IPO dividends declared at $0.05 per share
(8,842)
(8,842)
Other
(1,448)
1,448†
Ending balance, value at Jun. 30, 2017
$†1,586,497†
$†1,533,653†
$†52,384†
$†460†
$†0†
$†0†
Ending balance, shares at Jun. 30, 2017
83,029,500†
93,811,890†
Condensed Consolidated Statements Shareholders' Equity (Unaudited) (Parenthetical)
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Statement of Stockholders' Equity [Abstract]
Dividends declared per share (usd per share)
$†0.05†
$†0†
$†0.1†
$†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 $382,755. Expenses related to the offering totaled approximately $42,108, resulting in net proceeds of $340,647.

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 2014-9, Revenue from Contracts with Customers. 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 are in the process of reviewing and assessing our contracts with customers in accordance with the guidance in the ASU. Based on our analysis to date, we do not expect the adoption of this ASU to have a material impact on our consolidated financial position, results of operations, and cash flows. 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. We are still evaluating the disclosure requirements of this standard.

In January 2016, the FASB issued ASU 2016-1, 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. The standard is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-2, 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. We currently cannot reasonably estimate the impact that the adoption of this ASU will have on our consolidated financial statements.

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. We currently cannot reasonably estimate the impact that the adoption of this ASU will have on our consolidated financial statements.
Acquisition
Acquisition
ACQUISITION

On June 1, 2016, we acquired 100% of the shares of WSL, for $150,420 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 reduces supply chain complexities for omnichannel retailers and manufacturers.

The acquisition was accounted for as a purchase in accordance with FASB Accounting Standards Codification 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 six months ended June 30, 2017.
Recognized amounts of identifiable assets acquired and liabilities assumed
 
Cash
$
1,318

Receivables
16,156

Inventories
480

Prepaid expenses and other current assets
4,392

Property and equipment
81,844

Capitalized software and other noncurrent assets
5,807

Intangible assets
10,900

Goodwill
138,168

Total assets acquired
259,065

 
 
Payables assumed
7,807

Accrued liabilities assumed
5,289

Current maturities of debt and capital lease obligations assumed
47,692

Debt and capital lease obligations assumed
46,211

Other noncurrent liabilities assumed
1,646

Fair value of total consideration transferred
$
150,420



In addition to the cash paid at closing, the purchase and sale agreement included guaranteed payments of $20,000 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 $19,668, 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 $37,998 at June 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 $40,000. No payments have been made through June 30, 2017. See Note 3, Fair Value, for information regarding the fair value of this contingent arrangement.

The following unaudited pro forma condensed combined financial information presents our results as if we had acquired WSL on January 1, 2016.
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2016
Pro forma net sales
$
1,024,866

 
$
1,996,241

Pro forma net income
$
42,633

 
$
69,621

Basic earnings per share as reported
$
0.28

 
$
0.46

Pro forma basic earnings per share
$
0.28

 
$
0.45

Diluted earnings per share as reported
$
0.28

 
$
0.46

Pro forma diluted earnings per share
$
0.28

 
$
0.45

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 $600 at June 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:
 
 
Balance at December 31, 2016
$
13,500

Change in fair value (1)
(12,900
)
Balance at June 30, 2017
$
600


(1) We recorded an adjustment to the contingent consideration liability in the second quarter of 2017, resulting in an increase in income from operations. The adjustment was 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 $443,465 and $683,923 as of June 30, 2017 and December 31, 2016, respectively.
Marketable Securities
Marketable Securities
MARKETABLE SECURITIES

Our marketable securities have maturities ranging from three to 84 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.
 
June 30, 2017
 
December 31, 2016
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Zero coupon bonds
$
3,806

 
$
3,844

 
$
3,768

 
$
3,811

U.S. treasury and government agencies
6,026

 
6,024

 
8,048

 
8,042

Asset-backed securities
287

 
279

 
409

 
399

Corporate debt securities
11,215

 
11,383

 
14,415

 
14,541

State and political subdivisions
23,988

 
23,752

 
26,192

 
25,696

Total marketable securities
$
45,322

 
$
45,282

 
$
52,832

 
$
52,489



Gross realized and unrealized gains and losses on sales of marketable securities were not material for the three or six months ended June 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:
 
Truckload
 
Logistics
 
Other
 
Total
Balance at December 31, 2016
$
138,168

 
$
14,173

 
$
11,694

 
$
164,035

Foreign currency translation

 

 
267

 
267

Balance at June 30, 2017
$
138,168

 
$
14,173

 
$
11,961

 
$
164,302



The identifiable intangible assets other than goodwill listed below are included in other noncurrent assets on the condensed consolidated balance sheets.
 
June 30, 2017
 
December 31, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer lists
$
10,500

 
$
1,973

 
$
8,527

 
$
10,500

 
$
1,445

 
$
9,055

Trade names
1,400

 
505

 
895

 
1,400

 
272

 
1,128

Total intangible assets
$
11,900

 
$
2,478

 
$
9,422

 
$
11,900

 
$
1,717

 
$
10,183



Amortization expense for intangible assets was $381 and $147 for the three months ended June 30, 2017 and 2016, respectively, and $763 and $176 for the six months ended June 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:
Remaining 2017
$
765

2018
1,416

2019
1,145

2020
950

2021
950

2022 and thereafter
4,196

 
$
9,422

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

As of June 30, 2017 and December 31, 2016, debt included the following:
 
June 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
$
400,000

 
$
500,000

Equipment financing notes: principal and interest payable in monthly installments through 2023; weighted average interest rate of 3.77% and 3.82% for 2017 and 2016, respectively
36,694

 
49,296

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

 
135,000

Total principal outstanding
436,694

 
684,296

Current maturities
(16,682
)
 
(254,398
)
Debt issuance costs
(963
)
 
(1,091
)
Long-term debt
$
419,049

 
$
428,807



As of June 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 $100,000 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 June 30, 2017 or December 31, 2016. Standby letters of credit under this agreement amounted to $4,100 at both June 30, 2017, and December 31, 2016, 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 $200,000 against qualifying trade receivables at rates based on the 30-day London InterBank Offered Rate. At March 31, 2017, we had $50,000 outstanding under this agreement, which we repaid on April 8, 2017 with proceeds from our IPO. At June 30, 2017 and December 31, 2016, standby letters of credit under this agreement amounted to $63,784 and $60,085, 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 June 30, 2017 and December 31, 2016, the investment in lease receivables was as follows:
 
June 30, 2017
 
December 31, 2016
Future minimum payments to be received on leases
$
145,200

 
$
137,339

Guaranteed residual lease values
118,536

 
124,487

Total minimum lease payments to be received
263,736

 
261,826

Unearned income
(30,694
)
 
(29,494
)
Net investment in leases
233,042

 
232,332

Current maturities of lease receivables
96,410

 
101,247

Less—allowance for doubtful accounts
(1,493
)
 
(1,036
)
Current portion of lease receivables—net of allowance
94,917

 
100,211

Lease receivables—noncurrent
$
138,125

 
$
132,121

Income Taxes
Income Taxes
INCOME TAXES

Our effective income tax rate was 37.7% and 40.0% for the three months ended June 30, 2017, and 2016, respectively, and 38.6% and 40.0% for the six months ended June 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, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits.
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 six months ended June 30, 2017.
 
Class A
Redeemable Common
Shares
 
Class B
Redeemable Common
Shares
 
Accumulated Earnings
 
Accumulated Other Comprehensive Income
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
Total
BALANCE—December 31, 2016
83,029,500

 
$
563,217

 
73,294,560

 
$
497,175

 
$
125,175

 
$
883

 
$
1,186,450

Net income

 

 

 

 
22,569

 

 
22,569

Other comprehensive income

 

 

 

 

 
16

 
16

Dividends declared at $0.05 per share

 

 

 

 
(7,816
)
 

 
(7,816
)
Change in redemption value of redeemable common shares

 
67,254

 

 
59,369

 
(126,623
)
 

 

Transfer from temporary equity to common equity
(83,029,500
)
 
(630,471
)
 
(73,294,560
)
 
(556,544
)
 
(13,305
)
 
(899
)
 
(1,201,219
)
BALANCE—June 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 thousands, except per share data)
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Basic earnings per common share:
 
 
 
 
 
 
 
Net income available to common shareholders
$
46,473

 
$
44,167

 
$
69,042

 
$
72,306

Weighted average common shares issued and outstanding
174,424

 
156,295

 
165,422

 
156,000

Basic earnings per common share
$
0.27

 
$
0.28

 
$
0.42

 
$
0.46

Diluted earnings per common share:
 
 
 
 
 
 
 
Net income applicable to diluted earnings per common share
$
46,473

 
$
44,167

 
$
69,042

 
$
72,306

Dilutive potential common shares:
 
 
 
 
 
 
 
Restricted share units
29

 
130

 
14

 
160

Dilutive potential common shares
29

 
130

 
14

 
160

Total diluted average common shares issued and outstanding
174,453

 
156,425

 
165,436

 
156,160

Diluted earnings per common share
$
0.27

 
$
0.28

 
$
0.42

 
$
0.46



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





Subsequent Event - Dividends Declared

In July 2017, our Board of Directors declared a quarterly cash dividend for the third 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 September 20, 2017, and is expected to be paid on October 2, 2017.
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 six months ended June 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 upfront. 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 June 30, 2017, our firm commitments to purchase transportation equipment totaled approximately $168,410.
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 between the same locations for which specified trucks are dedicated to the route 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 $20,506 and $13,697 for the three months ended June 30, 2017 and 2016, respectively and $37,379 and $27,894 for the six months ended June 30, 2017 and 2016, respectively.

Revenues by Segment
(in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Truckload
 
$
543,004

 
$
519,497

 
$
1,065,114

 
$
1,010,222

Intermodal
 
194,260

 
187,209

 
375,350

 
372,034

Logistics
 
191,751

 
178,847

 
375,655

 
345,597

Other
 
78,900

 
55,559

 
129,183

 
105,108

Fuel surcharge
 
92,557

 
72,290

 
182,807

 
128,444

Inter-segment eliminations
 
(25,300
)
 
(18,829
)
 
(46,498
)
 
(38,729
)
Operating revenues
 
$
1,075,172

 
$
994,573

 
$
2,081,611

 
$
1,922,676

Income from Operations by Segment
(in thousands)
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Truckload
$
53,231

 
$
61,705

 
$
91,751

 
$
103,893

Intermodal
11,232

 
13,646

 
17,866

 
20,735

Logistics
6,592

 
8,103

 
11,775

 
13,280

Other
7,947

 
(3,815
)
 
1,160

 
(6,236
)
Income from operations
$
79,002

 
$
79,639

 
$
122,552

 
$
131,672

Depreciation and Amortization Expense by Segment
(in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Truckload
$
50,598

 
$
46,763

 
$
101,011

 
$
90,546

Intermodal
8,454

 
6,205

 
16,480

 
15,444

Logistics
99

 
98

 
198

 
196

Other
9,485

 
10,777

 
18,817

 
21,552

Depreciation and amortization expense
$
68,636

 
$
63,843

 
$
136,506

 
$
127,738

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 2014-9, Revenue from Contracts with Customers. 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 are in the process of reviewing and assessing our contracts with customers in accordance with the guidance in the ASU. Based on our analysis to date, we do not expect the adoption of this ASU to have a material impact on our consolidated financial position, results of operations, and cash flows. 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. We are still evaluating the disclosure requirements of this standard.

In January 2016, the FASB issued ASU 2016-1, 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. The standard is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-2, 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. We currently cannot reasonably estimate the impact that the adoption of this ASU will have on our consolidated financial statements.

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. We currently cannot reasonably estimate the impact that the adoption of this ASU will have on our consolidated financial statements.
Acquisition (Tables) (WSL)
Recognized amounts of identifiable assets acquired and liabilities assumed
 
Cash
$
1,318

Receivables
16,156

Inventories
480

Prepaid expenses and other current assets
4,392

Property and equipment
81,844

Capitalized software and other noncurrent assets
5,807

Intangible assets
10,900

Goodwill
138,168

Total assets acquired
259,065

 
 
Payables assumed
7,807

Accrued liabilities assumed
5,289

Current maturities of debt and capital lease obligations assumed
47,692

Debt and capital lease obligations assumed
46,211

Other noncurrent liabilities assumed
1,646

Fair value of total consideration transferred
$
150,420

The following unaudited pro forma condensed combined financial information presents our results as if we had acquired WSL on January 1, 2016.
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2016
Pro forma net sales
$
1,024,866

 
$
1,996,241

Pro forma net income
$
42,633

 
$
69,621

Basic earnings per share as reported
$
0.28

 
$
0.46

Pro forma basic earnings per share
$
0.28

 
$
0.45

Diluted earnings per share as reported
$
0.28

 
$
0.46

Pro forma diluted earnings per share
$
0.28

 
$
0.45

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:
 
 
Balance at December 31, 2016
$
13,500

Change in fair value (1)
(12,900
)
Balance at June 30, 2017
$
600


(1) We recorded an adjustment to the contingent consideration liability in the second quarter of 2017, resulting in an increase in income from operations. The adjustment was 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.
 
June 30, 2017
 
December 31, 2016
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Zero coupon bonds
$
3,806

 
$
3,844

 
$
3,768

 
$
3,811

U.S. treasury and government agencies
6,026

 
6,024

 
8,048

 
8,042

Asset-backed securities
287

 
279

 
409

 
399

Corporate debt securities
11,215

 
11,383

 
14,415

 
14,541

State and political subdivisions
23,988

 
23,752

 
26,192

 
25,696

Total marketable securities
$
45,322

 
$
45,282

 
$
52,832

 
$
52,489

Goodwill and Other Intangible Assets (Tables)
Changes in the carrying amount of goodwill were as follows:
 
Truckload
 
Logistics
 
Other
 
Total
Balance at December 31, 2016
$
138,168

 
$
14,173

 
$
11,694

 
$
164,035

Foreign currency translation

 

 
267

 
267

Balance at June 30, 2017
$
138,168

 
$
14,173

 
$
11,961

 
$
164,302

The identifiable intangible assets other than goodwill listed below are included in other noncurrent assets on the condensed consolidated balance sheets.
 
June 30, 2017
 
December 31, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer lists
$
10,500

 
$
1,973

 
$
8,527

 
$
10,500

 
$
1,445

 
$
9,055

Trade names
1,400

 
505

 
895

 
1,400

 
272

 
1,128

Total intangible assets
$
11,900

 
$
2,478

 
$
9,422

 
$
11,900

 
$
1,717

 
$
10,183

Estimated future amortization expense related to intangible assets is as follows:
Remaining 2017
$
765

2018
1,416

2019
1,145

2020
950

2021
950

2022 and thereafter
4,196

 
$
9,422

Debt and Credit Facilities (Tables)
Summary of Debt
As of June 30, 2017 and December 31, 2016, debt included the following:
 
June 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
$
400,000

 
$
500,000

Equipment financing notes: principal and interest payable in monthly installments through 2023; weighted average interest rate of 3.77% and 3.82% for 2017 and 2016, respectively
36,694

 
49,296

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

 
135,000

Total principal outstanding
436,694

 
684,296

Current maturities
(16,682
)
 
(254,398
)
Debt issuance costs
(963
)
 
(1,091
)
Long-term debt
$
419,049

 
$
428,807

Lease Receivables (Tables)
Summary of Investment in Lease Receivables
As of June 30, 2017 and December 31, 2016, the investment in lease receivables was as follows:
 
June 30, 2017
 
December 31, 2016
Future minimum payments to be received on leases
$
145,200

 
$
137,339

Guaranteed residual lease values
118,536

 
124,487

Total minimum lease payments to be received
263,736

 
261,826

Unearned income
(30,694
)
 
(29,494
)
Net investment in leases
233,042

 
232,332

Current maturities of lease receivables
96,410

 
101,247

Less—allowance for doubtful accounts
(1,493
)
 
(1,036
)
Current portion of lease receivables—net of allowance
94,917

 
100,211

Lease receivables—noncurrent
$
138,125

 
$
132,121

Temporary Equity (Tables)
Temporary Equity
The following table shows all changes to temporary equity during the six months ended June 30, 2017.
 
Class A
Redeemable Common
Shares
 
Class B
Redeemable Common
Shares
 
Accumulated Earnings
 
Accumulated Other Comprehensive Income
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
Total
BALANCE—December 31, 2016
83,029,500

 
$
563,217

 
73,294,560

 
$
497,175

 
$
125,175

 
$
883

 
$
1,186,450

Net income

 

 

 

 
22,569

 

 
22,569

Other comprehensive income

 

 

 

 

 
16

 
16

Dividends declared at $0.05 per share

 

 

 

 
(7,816
)
 

 
(7,816
)
Change in redemption value of redeemable common shares

 
67,254

 

 
59,369

 
(126,623
)
 

 

Transfer from temporary equity to common equity
(83,029,500
)
 
(630,471
)
 
(73,294,560
)
 
(556,544
)
 
(13,305
)
 
(899
)
 
(1,201,219
)
BALANCE—June 30, 2017

 
$

 

 
$

 
$

 
$

 
$

Common Equity (Tables)
Calculation of Basic and Diluted Earnings Per Share
(in thousands, except per share data)
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Basic earnings per common share:
 
 
 
 
 
 
 
Net income available to common shareholders
$
46,473

 
$
44,167

 
$
69,042

 
$
72,306

Weighted average common shares issued and outstanding
174,424

 
156,295

 
165,422

 
156,000

Basic earnings per common share
$
0.27

 
$
0.28

 
$
0.42

 
$
0.46

Diluted earnings per common share:
 
 
 
 
 
 
 
Net income applicable to diluted earnings per common share
$
46,473

 
$
44,167

 
$
69,042

 
$
72,306

Dilutive potential common shares:
 
 
 
 
 
 
 
Restricted share units
29

 
130

 
14

 
160

Dilutive potential common shares
29

 
130

 
14

 
160

Total diluted average common shares issued and outstanding
174,453

 
156,425

 
165,436

 
156,160

Diluted earnings per common share
$
0.27

 
$
0.28

 
$
0.42

 
$
0.46

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 $20,506 and $13,697 for the three months ended June 30, 2017 and 2016, respectively and $37,379 and $27,894 for the six months ended June 30, 2017 and 2016, respectively.

Revenues by Segment
(in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Truckload
 
$
543,004

 
$
519,497

 
$
1,065,114

 
$
1,010,222

Intermodal
 
194,260

 
187,209

 
375,350

 
372,034

Logistics
 
191,751

 
178,847

 
375,655

 
345,597

Other
 
78,900

 
55,559

 
129,183

 
105,108

Fuel surcharge
 
92,557

 
72,290

 
182,807

 
128,444

Inter-segment eliminations
 
(25,300
)
 
(18,829
)
 
(46,498
)
 
(38,729
)
Operating revenues
 
$
1,075,172

 
$
994,573

 
$
2,081,611

 
$
1,922,676

Income from Operations by Segment
(in thousands)
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Truckload
$
53,231

 
$
61,705

 
$
91,751

 
$
103,893

Intermodal
11,232

 
13,646

 
17,866

 
20,735

Logistics
6,592

 
8,103

 
11,775

 
13,280

Other
7,947

 
(3,815
)
 
1,160

 
(6,236
)
Income from operations
$
79,002

 
$
79,639

 
$
122,552

 
$
131,672

Depreciation and Amortization Expense by Segment
(in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Truckload
$
50,598

 
$
46,763

 
$
101,011

 
$
90,546

Intermodal
8,454

 
6,205

 
16,480

 
15,444

Logistics
99

 
98

 
198

 
196

Other
9,485

 
10,777

 
18,817

 
21,552

Depreciation and amortization expense
$
68,636

 
$
63,843

 
$
136,506

 
$
127,738



General - Additional Information (Details)†(USD $)
In Thousands, except Share data, unless otherwise specified
6 Months Ended 3 Months Ended 1 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Class B Common Stock
May 31, 2017
IPO
Class B Common Stock
Subsidiary, Sale of Stock [Line Items]
Share issued during the period (shares)
20,145,000†
20,145,000†
Share issued, (price per share)
$†19†
Proceeds from IPO, net of issuance costs
$†341,059†
$†0†
$†382,755†
Expenses related to the offering
42,108†
Net proceeds from initial public offering
$†340,647†
Acquisition - Additional Information (Details)†(USD $)
6 Months Ended 0 Months Ended 1 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Former Owners [Member]
Jun. 30, 2017
Former Owners [Member]
Minimum
Jun. 30, 2017
Former Owners [Member]
Maximum
Jun. 1, 2016
WSL
Jun. 30, 2017
WSL
Jun. 1, 2016
WSL
Business Acquisition [Line Items]
Percentage of voting interest acquired
100.00%†
Purchase price of acquisition
$†150,420,000†
Percentage of goodwill deductible for income tax purpose
100.00%†
Cash payments
0†
78,221,000†
20,000,000†
Credit adjusted discount rate on cash payment
1.00%†
3.00%†
Initial guaranteed payment
19,668†
Guaranteed payments
37,998,000†
Aggregate payment of contingent consideration
$†40,000,000†
Acquisition - Schedule of Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed (Details)†(USD $)
In Thousands, unless otherwise specified
0 Months Ended
Jun. 30, 2017
Dec. 31, 2016
Jun. 1, 2016
WSL
Jun. 1, 2016
WSL
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash
$†1,318†
Receivables
16,156†
Inventories
480†
Prepaid expenses and other current assets
4,392†
Property and equipment
81,844†
Capitalized software and other noncurrent assets
5,807†
Intangible assets
10,900†
Goodwill
164,302†
164,035†
138,168†
Total assets acquired
259,065†
Payables assumed
7,807†
Accrued liabilities assumed
5,289†
Current maturities of debt and capital lease obligations assumed
47,692†
Debt and capital lease obligations assumed
46,211†
Other noncurrent liabilities assumed
1,646†
Fair value of total consideration transferred
$†150,420†
Acquisition - Schedule of Pro Forma Condensed Combined Financial Information (Details)†(USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Business Combination Segment Allocation [Line Items]
Basic earnings per share as reported (usd per share)
$†0.27†
$†0.28†
$†0.42†
$†0.46†
Diluted earnings per share as reported (usd per share)
$†0.27†
$†0.28†
$†0.42†
$†0.46†
WSL
Business Combination Segment Allocation [Line Items]
Pro forma net sales
$†1,024,866†
$†1,996,241†
Pro forma net income
$†42,633†
$†69,621†
Basic earnings per share as reported (usd per share)
$†0.28†
$†0.46†
Pro forma basic earnings per share (usd per share)
$†0.28†
$†0.45†
Diluted earnings per share as reported (usd per share)
$†0.28†
$†0.46†
Pro forma diluted earnings per share (usd per share)
$†0.28†
$†0.45†
Fair Value - Additional Information (Details)†(USD $)
6 Months Ended
Jun. 30, 2017
Dec. 31, 2016
Business Acquisition [Line Items]
Transfers between fair value hierarchy levels
$†0†
Fair value of fixed-rate debt portfolio
443,465,000†
683,923,000†
WSL
Business Acquisition [Line Items]
Fair value of contingent consideration
$†600,000†
Fair Value Fair Value - Liability Rollforward (Details) (WSL, USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Ending balance
$†600†
Recurring |
Level 3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance
13,500†
Change in fair value
(12,900)
Ending balance
$†600†
Marketable Securities - Additional Information (Details)
6 Months Ended
Jun. 30, 2017