What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-10-29 compared with 2020-07-29 · 81 added, 87 removed, 203 unchanged (45% of the section changed)

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the creditworthiness of our customers and their ability to pay for services;

widespread outbreak of an illness or any other communicable disease, including the COVID-19 pandemic, or any other public health crisis, or business disruptions that may arise from the COVID-19 pandemic in the future;

widespread outbreak of an illness or any other communicable disease, including the COVID-19 pandemic, or any other health crisis or business disruptions that may arise from the COVID-19 pandemic in the future;

failure to achieve acquisition synergies;

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Through the date of this filing, as a result of these efforts, the Company has not experienced significant disruptions in the Company’s LTL network operations.

Beginning in the latter part of the first quarter of 2020, we experienced lower demand for our transportation services along with increased costs and other challenges related to COVID-19 that has adversely affected our business.

We believe we have significant liquidity available to continue business operations during this volatile period.

As discussed in the Financial Condition section, the Company has a revolving credit facility (including a $100 million accordion feature that is available, subject to certain conditions and lender commitments) and other sources of borrowing in place that provides liquidity of up to $300 million in addition to its regular cash inflows from operations.

The Company was in compliance with the debt covenants under its debt agreements at June 30, 2020 .

The Company began to see the impacts of COVID-19 on customer demand in late March and continue d to see declines during the second quarter of 2020.

The situation surrounding COVID-19 remains fluid and we believe the adverse impact on the Company increases the longer the virus affects the level of economic activity in the United States.

The Company was in compliance with the debt covenants under its debt agreements at September 30, 2020 .

The situation surrounding COVID-19 remains fluid and we believe that there still could be an adverse impact on the Company the longer the virus affects the level of economic activity in the United States.

In these circumstances, there may be developments outside our control requiring us to adjust our operating plan.

As such, given the dynamic nature of this situation , we are unable to predict the extent to which the pandemic and related impacts will continue to adversely impact our business operations, financial condition, results of operations, liquidity and cash flows .

As such, given the dynamic nature of this situation , we are unable to predict the extent to which the pandemic and related impacts could adversely impact our business operations, financial condition, results of operations, liquidity and cash flows .

See Par t II, Item 1A - “Risk Factors” for further discussion concerning COVID-19.

Second Quarter Overview

The Company’s operating revenue decreased by 9.9 percent in the second quarter of 2020 compared to the same period in 2019.

The decrease resulted primarily from decreases in shipments and tonnage due to the economic impact of COVID-19.

Consolidated operating income was $35.7 million for the second quarter of 2020 compared to $51.2 million for the second quarter of 2019.

In the second quarter of 2020, LTL shipments were down 9.7 percent per workday and LTL tonnage was down 8.9 percent per workday versus the prior year quarter.

The decrease in shipments and tonnage was most significant in April with improvements in average shipments per day and monthly revenue in May and June.

Diluted earnings per share were $1.07 in the second quarter of 2020, compared to diluted earnings per share of $1.40 in the prior year quarter.

The operating ratio (operating expenses divided by operating revenue) was 91.5 percent in the second quarter of 2020 compared to 89.0 percent in the second quarter of 2019.

The Company generated $148.2 million in net cash provided by operating activities in the first six months of 2020 compared with $113.6 million in the same period last year.

Third Quarter Overview

The Company’s operating revenue increased by 2.7 percent in the third quarter of 2020 compared to the same period in 2019.

The increase resulted primarily from increases in shipments and revenue per shipment.

Consolidated operating income was $55.2 million for the third quarter of 2020 compared to $45.4 million for the third quarter of 2019.

In the third quarter of 2020, LTL shipments were up 0.9 percent per workday and LTL tonnage was flat per workday compared to the prior year quarter.

Diluted earnings per share were $1.56 in the third quarter of 2020, compared to diluted earnings per share of $1.25 in the prior year quarter.

The operating ratio (operating expenses divided by operating revenue) was 88.5 percent in the third quarter of 2020 compared to 90.3 percent in the third quarter of 2019.

The improved operating ratio compared to prior year is due to the Company’s continued focus on pricing initiatives, cost control and operational efficiencies.

The Company generated $239.0 million in net cash provided by operating activities in the first nine months of 2020 compared with $207.3 million in the same period last year.

The increase is primarily due to a change in working capital compared to the same period last year.

The Company’s net cash used in investing activities was $142.7 million during the first six months of 2020 compared to $166.1 million in the first six months of 2019, primarily as a result of decreased capital expenditures for revenue equipment and real estate in the first six months of 2020.

The Company’s net cash provided by financing activities was $23.5 million in the first six months of 2020 compared to $50.8 million net cash provided by financing activities during the same period last year.

This change was primarily due to reduced borrowing (net of repayments) to fund capital expenditures .

The Company had $80.0 million in outstanding borrowings under its revolving credit agreement, outstanding letters of credit of $29.8 million and a cash and cash equivalents balance of $29.3 million at June 30, 2020.

The Company also had $80.8 million in obligations under finance leases at June 30, 2020.

At June 30, 2020, the Company had $192.0 million in availability under the revolving credit facility, subject to the Company’s satisfaction of existing debt covenants.

The Company’s net cash used in investing activities was $197.5 million during the first nine months of 2020 compared to $244.5 million in the first nine months of 2019, primarily as a result of decreased capital expenditures for revenue equipment and real estate in the first nine months of 2020 in response to COVID-19.

The Company’s net cash used in financing activities was $16.2 million in the first nine months of 2020 compared to $35.0 million net cash provided by financing activities during the same period last year.

This change was primarily due to improved net borrowings .

The Company had $45.0 million in outstanding borrowings under its revolving credit agreement, outstanding letters of credit of $29.8 million and a cash and cash equivalents balance of $25.5 million at September 30, 2020.

The Company also had $75.9 million in obligations under finance leases at September 30, 2020.

At September 30, 2020, the Company had $227.0 million in availability under the revolving credit facility, subject to the Company’s satisfaction of existing debt covenants.

The revolving credit facility also has an accordion feature that allows for an additional $100 million availability, subject to certain conditions and availability of lender commitments.

The Company was in compliance with the debt covenants under its revolving credit agreement at June 30, 2020.

The Company was in compliance with the debt covenants under its revolving credit agreement at September 30, 2020.

The following Management’s Discussion and Analysis describes the principal factors affecting the results of operations, liquidity and capital resources, as well as the critical accounting policies of Saia, Inc.

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Selected Results of Operations and Operating Statistics

For the quarters ended June 30, 2020 and 2019

For the quarters ended September 30, 2020 and 2019

(in thousands, except ratios, workdays and revenue per

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Nonoperating Expense

Working Capital (as of June 30, 2020 and 2019)

Working Capital (as of September 30, 2020 and 2019)

Cash Flows provided by Operating Activities (year to date)

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LTL Revenue per hundredweight

Quarter and six months ended June 30, 2020 compared to quarter and six months ended June 30, 2019

Quarter and nine months ended September 30, 2020 compared to quarter and nine months ended September 30, 2019

Revenue and volume

Consolidated revenue for the quarter ended June 30, 2020 decreased 9.9 percent to $418.1 million primarily as a result of decreased shipments and tonnage, due to a downturn in business volumes across our network caused by the impact of COVID-19.

Saia’s LTL revenue per hundredweight (a measure of yield) decreased 0.6 percent to $17.95 per hundredweight for the second quarter of 2020 as a result of changes in business mix, in addition to a 27.6 percent decrease in fuel surcharge revenue due to lower fuel prices.

For the second quarter of 2020, Saia’s LTL tonnage decreased 8.9 percent per workday to 1.1 million tons, and LTL shipments decreased 9.7 percent per workday to 1.7 million shipments.

For the second quarter of 2020, approximately 75 to 80 percent of Saia’s operating revenue was subject to specific customer price negotiations that occur throughout the year.

Consolidated revenue for the quarter ended September 30, 2020 increased 2.7 percent to $481.4 million primarily as a result of increased shipments and revenue per shipment.

Saia’s LTL revenue per hundredweight (a measure of yield) increased 2.6 percent to $18.59 per hundredweight for the third quarter of 2020 as a result of changes in business mix, partially offset by a 16.7 percent decrease in fuel surcharge revenue due to lower fuel prices.

For the third quarter of 2020, Saia’s LTL tonnage was flat per workday at 1.3 million tons, and LTL shipments increased 0.9 percent per workday to 2.0 million shipments.

For the third quarter of 2020, approximately 75 to 80 percent of Saia’s operating revenue was subject to specific customer price negotiations that occur throughout the year.

The remaining 20 to 25 percent of operating revenue was subject to a general rate increase which is based on market conditions.

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Fuel surcharges are an integral part of customer contract negotiations but represent only one portion of overall customer price negotiations as customers may negotiate increases in base rates instead of increases in fuel surcharges or vice versa.

Fuel surcharge revenue as a percentage of operating revenue decreased to 10.6 percent for the quarter ended June 30, 2020 compared to 13.2 percent for the quarter ended June 30, 2019, as a result of decreases in the cost of fuel.

For the six months ended June 30, 2020 , operating revenues were $864.5 million , down 1.2 percent from $874.8 million for the six months ended June 30, 2019 , primarily due to decreased volumes as a result of the COVID-19 economic impact .

Fuel surcharge revenue as a percentage of operating revenue decrease d to 11.8 percent for the six months ended June 30, 2020 , compared to 13.0 percent for the six months ended June 30, 2019 , as a result of decreases in the cost of fuel.

Fuel surcharge revenue as a percentage of operating revenue decreased to 10.4 percent for the quarter ended September 30, 2020 compared to 12.8 percent for the quarter ended September 30, 2019, as a result of decreases in the cost of fuel.

For the nine months ended September 30, 2020 , operating revenues were $1,345.9 million , up 0.2 percent from $1,343.7 million for the nine months ended September 30, 2019 , primarily due to favorable pricing, partially offset by decreased volumes as a result of the COVID-19 economic impact .

Fuel surcharge revenue as a percentage of operating revenue decrease d to 11.3 percent for the nine months ended September 30, 2020 , compared to 12.9 percent for the nine months ended September 30, 2019 , as a result of decreases in the cost of fuel.

Operating expenses and margin

Consolidated operating income was $35.7 million in the second quarter of 2020 compared to $51.2 million in the prior year quarter.

Overall, the operations were negatively impacted in the second quarter of 2020 by the economic impact of the COVID-19 pandemic which caused lower shipments and tonnage, partially offset by corresponding reductions in fuel and operating expenses, a decrease in salary and wage expense, and a decrease in purchased transportation expense.

The second quarter of 2020 operating ratio (operating expenses divided by operating revenue) was 91.5 percent compared to 89.0 percent for the same period in 2019.

Salaries, wages and benefits decreased $13.4 million in the second quarter of 2020 compared to the second quarter of 2019 largely due to lower headcount in the second quarter of 2020 in response to impacts from the COVID-19 pandemic.

Fuel, operating expenses and supplies decreased $19.4 million in the second quarter of 2020 compared to the prior year quarter largely due to decreases in fuel expense during the quarter, partially offset by an increase in building rent expense.

During the second quarter of 2020, claims and insurance expense was $5.1 million higher than the second quarter of 2019 primarily due to increased severity of claims, an increase in total claims and higher cost of insurance, partially offset by the benefit from the commutation of the bodily injury and property damage liability policy.

Purchased transportation decreased $7.7 million in the second quarter of 2020 compared to the second quarter of 2019 primarily due to overall volume decreases during the second quarter of 2020 as a result of the economic impact of COVID-19.

For the six months ended June 30, 2020 , consolidated operating income was $74.5 million, down 6.7 percent compared to $79.8 million for the six months ended June 30, 2019.

This decrease was largely due to the economic impact of COVID-19 in the second quarter of 2020.

Salaries, wages and benefits increased $4.9 million during the first six months of 2020 compared to the same period last year largely due to higher wages in the first six months of 2020 , a wage increase in July 2019 and higher healthcare benefit costs.

Fuel, operating expenses and supplies decreased $20.1 million during the first six months of 2020 compared to the same period last year largely due to decreases in fuel expenses and other operating expenses and supplies, partially offset by an increase in building rent expense compared to the first six months of 2019 .

During the first six months of 2020 , claims and insurance expense was $6.0 million higher than the same period last year primarily due to increased severity of claims, an increase in total claims and higher cost of insurance, partially offset by the benefit from the commutation of the bodily injury and property damage liability policy.

Purchased transportation decreased $6.1 million for the first six months of 2020 compared to the same period last year primarily due to overall volume decreases during the first six months of 2020 as a result of the economic impact of COVID-19.

Consolidated operating income was $55.2 million in the third quarter of 2020 compared to $45.4 million in the prior year quarter.

Overall, the operations were favorably impacted in the third quarter of 2020 by pricing actions and higher shipments, combined with continued focus on cost controls and operational efficiencies.

The third quarter of 2020 operating ratio (operating expenses divided by operating revenue) was 88.5 percent compared to 90.3 percent for the same period in 2019.

Salaries, wages and benefits increased $1.9 million in the third quarter of 2020 compared to the third quarter of 2019 due to an increase in benefit and self insurance costs in the third quarter of 2020.

Fuel, operating expenses and supplies decreased $10.2 million in the third quarter of 2020 compared to the prior year quarter largely due to decreases in fuel expense during the quarter, partially offset by an increase in building rent expense.

During the third quarter of 2020, claims and insurance expense was $4.1 million higher than the third quarter of 2019 primarily due to increased severity of claims, an increase in total claims and higher cost of insurance.

Purchased transportation increased $4.2 million in the third quarter of 2020 compared to the third quarter of 2019 primarily due to surges in demand and capacity constraints in the internal network during the third quarter of 2020.

For the nine months ended September 30, 2020 , consolidated operating income was $129.7 million, up 3.6 percent compared to $125.2 million for the nine months ended September 30, 2019.

This increase was largely due to an expanded terminal network compared to the prior year along with strategic adjustments made to the operating model earlier in 2020.

Salaries, wages and benefits increased $6.8 million during the first nine months of 2020 compared to the same period last year largely due to higher benefit and self insurance costs in the first nine months of 2020 .

Fuel, operating expenses and supplies decreased $30.2 million during the first nine months of 2020 compared to the same period last year largely due to decreases in fuel expenses and other operating expenses and supplies, partially offset by an increase in building rent expense compared to the first nine months of 2019 .

During the first nine months of 2020 , claims and insurance expense was $10.1 million higher than the same period last year primarily due to increased severity of claims, an increase in total claims and higher cost of insurance.

Purchased transportation decreased $1.9 million for the first nine months of 2020 compared to the same period last year primarily due to overall volume decreases during the first nine months of 2020 as a result of the economic impact of COVID-19.

Substantially all non-operating expenses represent interest expense.

Interest expense in the second quarter of 2020 was lower than the second quarter of 2019 due to decreased average interest rates and decreased borrowings in the second quarter of 2020.

Interest expense in the first six months of 2020 was $0.3 million lower than the first six months of 2019 due to decreased average interest rates and decreased average borrowings in the first six months of 2020 .

The effective tax rate was 18.3 percent and 25.0 percent for the quarters ended June 30, 2020 and 2019, respectively.

The decrease in the second quarter tax rate in 2020 is primarily a result of increased excess tax benefits related to stock activity.

For the six months ended June 30, 2020 and June 30, 2019, the effective tax rates were 21.1 percent and 22.9 percent, respectively.

Net income was $28.5 million, or $1.07 per diluted share, in the second quarter of 2020 compared to net income of $37.1 million, or $1.40 per diluted share, in the second quarter of 2019.

Net income was $56.6 million, or $2.13 per diluted share, for the first six months of 2020 compared to net income of $59.3 million, or $2.25 per diluted share, for the first six months of 2019 .

Interest expense in the third quarter of 2020 was lower than the third quarter of 2019 due to decreased average interest rates and decreased borrowings in the third quarter of 2020.

Interest expense in the first nine months of 2020 was $1.0 million lower than the first nine months of 2019 due to decreased average interest rates and decreased average borrowings in the first nine months of 2020 .

The effective tax rate was 23.7 percent and 24.2 percent for the quarters ended September 30, 2020 and 2019, respectively.

The decrease in the third quarter tax rate in 2020 is primarily a result of increased excess tax benefits related to stock activity.

For the nine months ended September 30, 2020 and September 30, 2019, the effective tax rates were 22.2 percent and 23.4 percent, respectively.

Net income was $41.5 million, or $1.56 per diluted share, in the third quarter of 2020 compared to net income of $33.0 million, or $1.25 per diluted share, in the third quarter of 2019.

Net income was $98.1 million, or $3.69 per diluted share, for the first nine months of 2020 compared to net income of $92.3 million, or $3.49 per diluted share, for the first nine months of 2019 .

Working capital/capital expenditures

Working capital at June 30, 2020 was $21.5 million, which decreased from working capital at June 30, 2019 of $24.2 million.

Current assets at June 30, 2020 increased by $8.3 million as compared to June 30, 2019 and includes a decrease in accounts receivable of $21.9 million, and an increase of cash and cash equivalents of $28.8 million.

Current liabilities increased by $10.9 million at June 30, 2020 compared to June 30, 2019 largely due to an increase in wages, vacation and employees’ benefits.

Cash flows provided by operating activities were $148.2 million for the six months ended June 30, 2020 versus $113.6 million for the six months ended June 30, 2019.

Working capital at September 30, 2020 was $4.4 million, which decreased from working capital at September 30, 2019 of $5.6 million.

Current assets at September 30, 2020 increased by $30.4 million as compared to September 30, 2019 and includes an increase in accounts receivable of $8.7 million, and an increase of cash and cash equivalents of $25.5 million.

Current liabilities increased by $31.6 million at September 30, 2020 compared to September 30, 2019 largely due to an increase in accounts payable, and claims and insurance liabilities.

Cash flows provided by operating activities were $239.0 million for the nine months ended September 30, 2020 versus $207.3 million for the nine months ended September 30, 2019.

The increase is primarily due to a change in working capital compared to the same period last year.

For the six months ended June 30, 2020, net cash used in investing activities was $142.7 million versus $166.1 million in the same period last year, a $23.4 million decrease.

For the nine months ended September 30, 2020, net cash used in investing activities was $197.5 million versus $244.5 million in the same period last year, a $47.0 million decrease.

This decrease resulted primarily from decreased capital expenditures for revenue equipment and real estate.

The Company currently expects that net capital expenditures in 2020 will be less than the $250 million previously planned as a result of management continuing to evaluate the impact of COVID-19.

For the six months ended June 30, 2020, net cash provided by financing activities was $23.5 million compared to $50.8 million net cash provided by financing activities during the same period last year, as a result of reduced borrowings (net of repayments) to fund capital expenditures .

The Company currently expects that capital expenditures in 2020 will be approximately $225 million.

For the nine months ended September 30, 2020, net cash used in financing activities was $16.2 million compared to $35.0 million net cash provided by financing activities during the same period last year, as a result of improved net borrowings .

Our business remains highly correlated to non-service sectors of the general economy and competitive pricing pressures, as well as the success of Company-specific improvement initiatives.

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On February 3, 2020, Saia implemented a 5.9 percent general rate increase for customers comprising approximately 20 to 25 percent of Saia’s operating revenue.

The Company anticipates there will be no salary or wage increases in 2020.

Effective in April 2020, the Company temporarily suspended its 401(k) match and temporarily furloughed certain employees in response to COVID-19’s impact on the Company’s operations.

On April 1, 2020, we offered all hourly full-time workers an additional five days of paid time off and offered one additional paid day off for our part-time workers in light of COVID-19.

This action was an effort to provide employees time off for health issues or those of family and friends.

We believe this action will result in approximately $10 million of additional benefit costs for the year.

In July 2020, the Company paid virtually all employees a $250 bonus to compensate for working through the difficult conditions created by the pandemic, which costs approximately $2.6 million and is included in the second quarter 2020 results.

Effective July 2019, the Company implemented a market competitive salary and wage increase for all of its employees.

The cost of the compensation increase is expected to be approximately $32 million annually, and the Company anticipates the impact will be partially offset by productivity and efficiency gains.

We believe this action will result in approximately $10 million of additional benefit costs across the last nine months of the year.

In September 2020, the 401(k) match for employees was retroactively reinstated from July 1, 2020 going forward.

If the Company continues to build market share, including through its geographic expansion, it expects numerous operating leverage cost benefits.

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The amendment increased the amount of the revolver from $250 million to $300 million and extended the term until February 2024.

The Amended Credit Agreement also has an accordion feature that allows for an

additional $100 million availability, subject to certain conditions and availability of lender commitments .

The Amended Credit Agreement also has an accordion feature that allows for an additional $100 million availability, subject to certain conditions and availability of lender commitments.

The amendment reduced the interest rate pricing grid compared to the prior agreement.

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Under the Amended Credit Agreement, the Company must maintain a minimum debt service coverage ratio set at 1.25 to 1.00 and a maximum leverage ratio set at 3.25 to 1.00.

The Amended Credit Agreement provides for a pledge by the Company of certain land and structures, accounts receivable and other assets to secure indebtedness under this agreement.

The Amended Credit Agreement provides for a pledge by the Company of certain land and

structures, accounts receivable and other assets to secure indebtedness under this agreement.

The Amended Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default.

Under the Amended Credit Agreement, if an event of default occurs, the banks will be entitled to take various actions, including the acceleration of amounts due.

At June 30, 2020, the Company had borrowings of $80.0 million and outstanding letters of credit of $28.0 million under the Amended Credit Agreement.

At September 30, 2020, the Company had borrowings of $45.0 million and outstanding letters of credit of $28.0 million under the Amended Credit Agreement.

At December 31, 2019, the Company had borrowings of $45.9 million and outstanding letters of credit of $26.1 million under the Amended Credit Agreement.

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Finance Leases

The Company is obligated under finance leases with seven-year terms covering revenue equipment totaling $80.8 million and $90.5 million as of June 30, 2020 and December 31, 2019, respectively.

The Company is obligated under finance leases with seven-year terms covering revenue equipment totaling $75.9 million and $90.5 million as of September 30, 2020 and December 31, 2019, respectively.

Amortization of assets held under the finance leases is included in depreciation and amortization expense.

The weighted average interest rates for the finance leases at June 30, 2020 and December 31, 2019 were 3.5 percent.

The weighted average interest rates for the finance leases at September 30, 2020 and December 31, 2019 were 3.5 percent and 3.4 percent, respectively.

The Company has historically generated cash flows from operations to fund a large portion of its capital expenditure requirements.

Cash flows from operating activities were $272.9 million for the year ended December 31, 2019, while net cash used in investing activities was $281.0 million.

Cash flows provided by operating activities were $148.2 million for the six months ended June 30, 2020, $34.6 million higher than the first six months of the prior year.

Cash flows provided by operating activities were $239.0 million for the nine months ended September 30, 2020, $31.7 million higher than the first nine months of the prior year.

The increase is primarily due to a change in working capital compared to the prior year.

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The Company believes it has significant sources of capital to meet short-term liquidity needs through its operating cash flows and availability under the Amended Credit Agreement.

At June 30, 2020, the Company had $192.0 million in availability under the Amended Credit Agreement, subject to the Company’s satisfaction of existing debt covenants.

At September 30, 2020, the Company had $227.0 million in availability under the Amended Credit Agreement, subject to the Company’s satisfaction of existing debt covenants.

Future operating cash flows are primarily dependent upon the Company’s profitability and its ability to manage its working capital requirements, primarily accounts receivable, accounts payable and wage and benefit accruals.

The Company was in compliance with its debt covenants at June 30, 2020.

The Company was in compliance with its debt covenants at September 30, 2020.

Effective March 1, 2018, the Company entered into a new bodily injury and property damage liability policy with a three-year term.

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The Company is now self-insured for the first $10 million per occurrence with respect to such 12-month period and the policy has been extended for one additional year to March 1, 2022.

As a result of the return premium and policy extension, the Company recognized a $0.4 million reduction in insurance premium expense in the second quarter of 2020.

As a result of the return premium and policy extension, the Company recognized a $0.5 million reduction in insurance premium expense in the third quarter of 2020.

The Company will continue to recognize the remainder of the return premium as a reduction in insurance premium expense ratably over the remainder of the policy period now ending March 1, 2022.

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Additionally, the Company may be required to pay an additional premium of up to $11.0 million if losses paid by the insurer are greater than $15.6 million over the three-year policy period ending March 1, 2022.

Based on claims experience since inception of the policy, no such additional premium was accrued at June 30, 2020.

Based on claims experience since inception of the policy, no such additional premium was accrued at September 30, 2020.

Net capital expenditures pertain primarily to investments in tractors and trailers and other revenue equipment, information technology, land and structures.

Projected net capital expenditures for 2020 are expected to be less than the $250 million previously planned as a result of management continuing to evaluate the impact of COVID-19.

This would represent a de crease from 2019 net capital expenditures of $2 87 million for property and equipment, inclusive of equipment acquired using finance leases , information technology , and land and structures .

Projected capital expenditures for 2020 are expected to be approximately $225 million.

This would represent a decrease from 2019 net capital expenditures of $287 million for property and equipment, inclusive of equipment acquired using finance leases, information technology, and land and structures.

Projected 2020 capital expenditures include a normal replacement cycle of revenue equipment and technology investment for our operations.

Net capital expenditures were $ 142.7 million in the first six months of 2020 .

Approximately $ 40.9 million of the 2020 remaining capital budget was committed as of June 30, 2020 .

In addition to the principal amounts disclosed in the tables below, the Company has interest obligations of approximately $4.3 million for the remainder of 2020 and decreasing for each year thereafter based on borrowings and commitments outstanding at June 30, 2020.

Net capital expenditures were $197.5 million in the first nine months of 2020.

Approximately $4.0 million of the 2020 remaining capital budget was committed as of September 30, 2020.

In addition to the principal amounts disclosed in the tables below, the Company has interest obligations of approximately $ 3.7 million for the remainder of 2020 and decreasing for each year thereafter based on borrowings and commitments outstanding at September 30, 2020 .

Contractual Obligations

The following tables set forth a summary of our contractual cash obligations and other commercial commitments as of June 30, 2020 (in millions):

The following tables set forth a summary of our contractual cash obligations and other commercial commitments as of September 30, 2020 (in millions):

Payments due by year

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Subject to the satisfaction of existing debt covenants.

The Company has accrued approximately $1.1 million for uncertain tax positions and $0.1 million for interest and penalties related to the uncertain tax positions as of June 30, 2020.

The Company has accrued approximately $1.1 million for uncertain tax positions and $0.1 million for interest and penalties related to the uncertain tax positions as of September 30, 2020.

The Company cannot reasonably estimate the timing of cash settlements with respective taxing authorities beyond one year and accordingly has not included the amounts within the above contractual cash obligations and other commercial commitment tables.

At June 30, 2020, the Company has $88.3 million in claims and insurance liabilities.

At September 30, 2020, the Company has $92.0 million in claims and insurance liabilities.

The Company cannot reasonably estimate the timing of cash settlements with respective adverse parties beyond one year and accordingly has not included the amounts within the above contractual cash obligations and other commercial commitment tables.

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Claims and Insurance Accruals .

$250,000 to $1 million per occurrence for medical, workers’ compensation, casualty and cargo claims and from $2 million to $10 million for auto liability.

As described in more detail in the Notes to Consolidated Financial Statements contained in Form 10-K for the year ended December 31, 2019, the Company has self-insured retention limits generally ranging from $250,000 to $1 million per occurrence for medical, workers’ compensation, casualty and cargo claims and from $2 million to $10 million for auto liability.

The liabilities are estimated in part based on historical experience, third-party actuarial analysis with respect to workers’ compensation claims, demographics, nature and severity, and other assumptions.

The liabilities for self-funded retention are included in claims and insurance reserves based on claims incurred with liabilities for unsettled claims and claims incurred but not yet reported being actuarially determined with respect to workers’ compensation claims and, with respect to all other liabilities, estimated based on management’s evaluation of the nature and severity of individual claims and historical experience.

However, these estimated accruals could be significantly affected if the actual costs of the Company differ from these assumptions.

However, these estimated accruals could be significantly affected if the actual costs of the Company differ from these

A significant number of these claims typically take several years to develop and even longer to ultimately settle.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis