What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-19 compared with 2020-02-19 · 428 added, 470 removed, 678 unchanged (57% of the section changed)

31 unchanged sentences

At December 31, 2020 and 2019, the Company had an accrual of $144.2 million and $143.5 million, respectively, for estimated claims net of reinsurance receivables.

The subjectivity of estimating the claim accruals for pending claims and incurred but not reported claims, requires a high degree of auditor judgment and an increased extent of effort.

The subjectivity of estimating the claim accruals for pending claims and incurred but not reported claims, requires a high degree of auditor judgement and an increased extent of effort.

This includes the need to involve our actuarial specialists when performing audit procedures to evaluate whether claims accruals are appropriately stated as of December 31, 2020.

16 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 19, 2020, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 19, 2021, expressed an unqualified opinion on those financial statements.

Basis for Opinion

21 unchanged sentences

Year Ended December 31,

2020 2019 2018

Operating revenues $ 4,552.8 $ 4,747.0 $ 4,977.0

8 unchanged sentences

Goodwill impairment charge — 34.6 2.0

Restructuring charges

Restructuring—net 1.0 63.7 —

Total operating expenses 4,266.1 4,539.2 4,601.2

6 unchanged sentences

Income before income taxes 282.9 198.1 364.6

Provision for (benefit from) income taxes

Provision for income taxes 71.2 51.1 95.7

Net income 211.7 147.0 268.9

Other comprehensive income (loss):

Foreign currency translation adjustments

Foreign currency translation gain (loss) 0.6 — ( 1.0 )

Net unrealized gains on marketable securities—net of tax 0.1 1.1 —

10 unchanged sentences

(in millions, except share data)

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Current Assets:

4 unchanged sentences

Current portion of lease receivables—net of allowance of $ 0.8 million and $ 0.6 million, respectively

Inventories 44.9 71.9

Prepaid expenses and other current assets 77.9 117.7

6 unchanged sentences

Total property and equipment 3,249.3 3,152.1

Accumulated depreciation

Less accumulated depreciation 1,417.4 1,300.5

Net property and equipment 1,831.9 1,851.6

1 unchanged sentence

Capitalized software and other noncurrent assets 204.2 165.9

Goodwill 128.1 127.5

Total noncurrent assets 2,295.5 2,254.4

Total Assets $ 3,516.2 $ 3,660.1

Liabilities and Shareholders’ Equity

4 unchanged sentences

Current maturities of debt and finance lease obligations 40.4 55.5

Dividends payable

Dividends payable—current 12.2 10.8

Other current liabilities 89.2 85.4

13 unchanged sentences

Retained earnings 502.5 693.6

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income 0.8 0.1

Total Shareholders’ Equity

2,055.5 2,236.4

Total Liabilities and Shareholders’ Equity

$ 3,516.2 $ 3,660.1

See notes to consolidated financial statements.

3 unchanged sentences

Year Ended December 31,

2020 2019 2018

Operating Activities:

Net income $ 211.7 $ 147.0 $ 268.9

Adjustments to reconcile net income to net cash flows from operating activities:

1 unchanged sentence

Goodwill impairment — 34.6 2.0

Gains on sales of property and equipment—net

Losses (gains) on sales of property and equipment—net 6.2 ( 3.3 ) ( 8.4 )

Impairment on assets held for sale 4.3 14.3 0.3

1 unchanged sentence

Deferred income taxes 1.7 ( 0.2 ) 62.2

WSL contingent consideration adjustment

Long-term incentive and share-based compensation (benefit) expense

Noncash restructuring charges

Long-term incentive and share-based compensation expense (benefit) 8.9 ( 3.6 ) 22.8

Noncash restructuring—net 1.1 50.0 —

Other noncash items ( 5.7 ) 3.4 ( 3.5 )

Changes in operating assets and liabilities:

Receivables ( 65.4 ) 119.9 ( 62.8 )

Other assets ( 15.3 ) ( 3.3 ) ( 9.0 )

Payables 56.5 ( 35.3 ) 3.0

Claims reserves and other receivables—net 3.8 ( 12.6 ) 8.8

10 unchanged sentences

Purchases of marketable securities ( 23.6 ) ( 17.4 ) ( 20.1 )

Investment in equity securities ( 10.4 ) — —

Net cash used in investing activities ( 318.7 ) ( 350.2 ) ( 337.6 )

Financing Activities:

Payments under revolving credit agreements

Payments of debt and finance lease obligations ( 55.6 ) ( 52.0 ) ( 28.7 )

Payment of deferred consideration related to acquisition — ( 18.7 ) ( 19.3 )

Proceeds from IPO—net of issuance costs

Dividends paid ( 400.0 ) ( 42.5 ) ( 40.7 )

Redemptions of redeemable common shares

Net cash provided by (used in) financing activities

Net increase in cash and cash equivalents

Net cash used in financing activities ( 455.6 ) ( 113.2 ) ( 88.7 )

Net (decrease) increase in cash and cash equivalents ( 156.1 ) 172.9 140.2

Cash and Cash Equivalents:

5 unchanged sentences

Dividends declared but not yet paid 13.6 10.8 10.6

Increase in redemption value of redeemable common shares

Ownership interest in Platform Science, Inc.

Cash paid (refunded) during the year for:

Cash paid during the year for:

Interest 12.8 14.5 15.5

Income taxes—net of refunds 61.6 51.6 39.0

3 unchanged sentences

(in millions, except per share data)

Additional Paid-In Capital

Retained Earnings

Accumulated Other Comprehensive Income

Balance—December 31, 2016

Repurchases and retirements of stock related to pre-IPO share-based awards

Share issuances related to pre-IPO share-based awards

Share issuances — IPO

Transfer from temporary equity to permanent equity

(See Note 10, Temporary Equity)

Net income — post-IPO

Other comprehensive loss — post-IPO

Share-based compensation expense

Post-IPO dividends declared at $0.15 per share

Post-IPO issuance of stock

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Total

Balance—December 31, 2017 $ — $ 1,534.6 $ 355.6 $ — $ 1,890.2

Net income — — 268.9 — 268.9

Other comprehensive loss — — — ( 1.0 ) ( 1.0 )

Share-based compensation expense — 10.9 — — 10.9

Dividends declared at $0.24 per share

Dividends declared at $ 0.24 per share of Class A and Class B common shares — — ( 42.5 ) — ( 42.5 )

Share issuances — 0.5 — — 0.5

1 unchanged sentence

Shares withheld for employee taxes — ( 2.3 ) — — ( 2.3 )

Cumulative–effect adjustment of ASU 2014-09 adoption

(See Note 2, Revenue Recognition)

Cumulative–effect adjustment of ASU 2014-09

adoption (See Note 3, Revenue Recognition)

— — 7.3 — 7.3

Other — 0.1 — — 0.1

Balance—December 31, 2018 — 1,544.0 589.3 ( 1.0 ) 2,132.3

Net income — — 147.0 — 147.0

Other comprehensive income — — — 1.1 1.1

Share-based compensation benefit — ( 0.4 ) — — ( 0.4 )

Dividends declared at $ 0.24 per share of Class A and Class B common shares — — ( 42.7 ) — ( 42.7 )

Share issuances — 0.3 — — 0.3

Shares withheld for employee taxes — ( 1.2 ) — — ( 1.2 )

Balance—December 31, 2019 — 1,542.7 693.6 0.1 2,236.4

Net income — — 211.7 — 211.7

Other comprehensive income — — — 0.7 0.7

Share-based compensation expense — 8.6 — — 8.6

Dividends declared at $0.24 per share

Dividends declared at $ 2.26 per share of Class A and B common shares — — ( 402.8 ) — ( 402.8 )

Share issuances — 0.2 — — 0.2

Exercise of employee stock options — 1.6 — — 1.6

Shares withheld for employee taxes — ( 0.9 ) — — ( 0.9 )

5 unchanged sentences

Nature of Operations

We are a leading transportation and logistics services company providing a broad portfolio of premier truckload, intermodal, and logistics solutions and operating one of the largest for-hire trucking fleets in North America.

We are one of the largest providers of surface transportation and logistics solutions in North America that, together with our wholly owned subsidiaries, provides safe, reliable, and innovative truckload, intermodal, and logistics services to a diverse group of customers throughout the continental United States, Canada, and Mexico.

Principles of Consolidation and Basis of Presentation

1 unchanged sentence

All intercompany balances and transactions have been eliminated in consolidation.

In response to COVID-19 being declared a pandemic in March 2020, the Company has taken steps to mitigate the potential risks it poses.

We have taken additional measures to keep our associates safe and minimize unnecessary risk of exposure to COVID-19 including taking precautions for our associates and owner-operators, implementing work from home policies, and imposing travel limitations on employees where appropriate as we continue to provide an essential service.

Management makes estimates and assumptions that affect reported amounts and disclosures included in its financial statements and accompanying notes and assesses certain accounting matters that require consideration of forecasted financial information.

Uncertainty remains regarding the ongoi ng impact of COVID-19 on our financial condition and future results of operations, as well as on the significant estimates and assumptions used in reporting certain assets and liabilities such as the Company’s goodwill, long-lived and held for sale asset valuations, current expected credit losses, and healthcare reserves.

Use of Estimates

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We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Receivables and Allowance for Doubtful Accounts

Our trade accounts receivable and lease receivables are recorded net of an allowance for uncollectible accounts and revenue adjustments.

The allowance is based on historical experience and an aging analysis, as well as any known trends or uncertainties related to customer billing and account collectability.

The adequacy of our allowance is reviewed at least quarterly.

Receivables are reserved when it is probable that amounts related to the receivable will not be collected.

In circumstances where we are aware of a specific customer's inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the net receivable to the amount reasonably expected to be collected.

Receivables and Allowance

Our trade accounts receivable is recorded net of an allowance for doubtful accounts and revenue adjustments.

The allowance is based on an aging analysis using historical experience, as well as any current and forecasted trends or uncertainties related to customer billing and account collectability.

The adequacy of our allowance is reviewed at least quarterly, and reserves for receivables not expected to be collected are established.

In circumstances where we are aware of a customer’s inability to meet its financial obligations, a specific reserve is recorded to reduce the net receivable to the amount we reasonably expect to collect.

Bad debt expense is included in other general expenses in the consolidated statements of comprehensive income.

Our inventories consist of tractors and trailing equipment owned by our equipment leasing company to be sold or leased to independent contractors, as well as parts, tires, supplies, and fuel.

We record our lease receivables net of an allowance for doubtful accounts based on an aging analysis to reserve amounts expected to be uncollectible.

The terms of the lease agreements generally give us the ability to take possession of the underlying asset in the event of default.

We may incur credit losses in excess of recorded allowances if the full amount of anticipated proceeds from the sale or re-lease of the asset supporting the third party’s financial obligation, which can be impacted by economic conditions, is not realized.

Our inventories consist of tractors and trailing equipment owned by our equipment leasing company to be sold or leased to owner-operators, as well as parts, tires, supplies, and fuel.

These inventories are valued at the lower of cost or market using specific identification or average cost.

The following table shows the components of our inventory balances as of December 31:

(in millions)

The following table shows the components of our inventory balances as of the dates shown.

(in millions) December 31, 2020 December 31, 2019

Tractors and trailing equipment for sale or lease $ 33.3 $ 59.3

1 unchanged sentence

Tires and other 0.9 1.3

Total $ 44.9 $ 71.9

Investments in Marketable Securities

Our marketable securities are classified as available-for-sale and carried at fair value in current assets on the consolidated balance sheets.

Our portfolio of securities has maturities ranging from 3 months to 82 months .

While our intent is to hold our securities to maturity, sudden changes in the market or to our liquidity needs may cause us to sell certain securities in advance of their maturity date.

Any unrealized gains and losses, net of tax, are included as a component of accumulated other comprehensive income on our consolidated balance sheets, unless we determine that an unrealized loss is other-than-temporary.

If we determine that an

unrealized loss is other-than-temporary, we recognize the loss in earnings.

With the adoption of ASU 2016-13, as discussed further within Accounting Standards Recently Adopted below, the guidance on reporting credit losses for available-for-sale debt securities was amended.

Under this new guidance, credit losses are to be recorded through an allowance for credit losses rather than as a direct write-down to the security.

As a result, any unrealized gains and losses, net of tax, are included as a component of accumulated other comprehensive income on the consolidated balance sheets, unless we determine that the amortized cost basis is not recoverable.

If we determine that the amortized cost basis of the impaired security is not recoverable, we recognize the credit loss by increasing the allowance for those losses.

Cost basis is determined using the specific identification method.

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.

When adopting this standard, we elected to continue to present the accrued interest receivable balance associated with our investments in marketable securities separate from the marketable securities line in the consolidated balance sheets.

As of December 31, 2020, accrued interest receivable associated with our investments in marketable securities was not material and is included within other receivables on the consolidated balance sheets.

We have elected the practical expedient provided under the guidance to exclude the applicable accrued interest from the amortized cost basis disclosure of our marketable securities.

We have also elected not to measure an allowance for credit losses on our accrued interest receivable and to write off accrued interest receivable by reversing interest income when it is not considered collectible.

Fair value is 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:

7 unchanged sentences

Generally, the estimated useful lives are as follows:

Trailing equipment

Other transportation equipment

Buildings and improvements

Other property

Salvage values, when applicable, generally don't exceed 25 % of original cost for tractors and trailing equipment and reflect any agreements with tractor suppliers for residual or trade-in values for certain new equipment.

Tractors 3 - 8 years

Trailing equipment 6 - 20 years

Other transportation equipment 4 - 5 years

Buildings and improvements 5 - 25 years

Other property 3 - 10 years

Salvage values, when applicable, generally don’t exceed 30 % or 25 % of the original cost for tractors and trailing equipment, respectively, and reflect any agreements with tractor suppliers for residual or trade-in values for certain new equipment.

Long-lived assets require an impairment review when events or circumstances indicate that the carrying amount may not be recoverable.

10 unchanged sentences

An impairment loss is recorded for the excess of the asset’s carrying amount over the fair value less estimated costs to sell.

Impairment losses are recorded in operating supplies and expenses in the consolidated statements of

comprehensive income.

For the year ended December 31, 2019 , total impairment losses were $ 42.4 million , which included a $ 28.1 million impairment related to the shutdown of our FTFM service offering and an $ 11.5 million impairment related to a bulk sale of tractors.

Impairment losses for the years ended December 31, 2018 and 2017 were $ 0.3 million and $ 1.4 million , respectively.

As of December 31, 2019 and 2018 , assets held for sale, net of impairment, by segment were as follows:

Impairment losses are recorded in operating supplies and expenses in the consolidated statements of comprehensive income.

For the years ended December 31, 2020, 2019, and 2018, total impairment losses were $ 4.7 million, $ 42.4 million, and $ 0.3 million, respectively.

Impairment losses for the year ended December 31, 2019 included a $ 28.1 million impairment related to the shutdown of our FTFM service offering and an $ 11.5 million impairment related to a bulk sale of tractors.

Impairment losses related to the shutdown of our FTFM service offering were not material for the year ended December 31, 2020.

As of December 31, 2020 and 2019, assets held for sale by segment were as follows:

(in millions) 2020 2019

Truckload (1)

As of December 31, 2019 , $ 33.4 million related to the shutdown of our FTFM service offering.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets with indefinite lives are tested for impairment annually in October, or more frequently if impairment indicators exist.

Intangible assets with definite lives are reviewed for impairment if impairment indicators are present and at least annually.

$ 16.9 $ 63.5

Intermodal 1.9 3.9

Total $ 18.8 $ 67.4

(1) As of December 31, 2020 and 2019, $ 1.6 million and $ 33.4 million related to the shutdown of our FTFM service offering, respectively.

Goodwill is tested for impairment annually in October, or more frequently if impairment indicators exist.

The carrying amount of a reporting unit’s goodwill is considered not recoverable, and an impairment loss is recorded if the carrying amount of the reporting unit exceeds the reporting unit’s fair value, as determined based on the combination of an income approach and a market approach.

See Note 6 , Goodwill and Other Intangible Assets , for more information on our goodwill and other intangible assets.

See Note 6, Goodwill , for more information on our goodwill.

Revenue Recognition

Through December 31, 2017 , we recorded transportation revenue at the time of delivery.

Beginning in 2018, we implemented ASU 2014-09, Revenue from Contracts with Customers, which is codified as ASC 606 and replaces ASC 605, Revenue Recognition .

With the adoption of ASC 606, we began recognizing revenue during the delivery period based on relative transit time in each reporting period, with expenses recognized as incurred.

We recognize revenue during the delivery period based on relative transit time in each reporting period, in accordance with ASC 606, with expenses recognized as incurred.

Accordingly, a portion of the total revenue that will be billed to the customer once a load is delivered is recognized in each reporting period based on the percentage of the freight pickup and delivery service that has been completed at the end of the reporting period.

See Note 2 , Revenue Recognition , for more information on the adoption of ASC 606.

See Note 3, Revenue Recognition , for more information on ASC 606.

When we use third-party carriers, we generally record revenues on the gross basis at amounts charged to our customers because we are the primary obligor, we are a principal in the transaction, we invoice our customers and retain all credit risks, and we maintain discretion over pricing.

2 unchanged sentences

For the years ended December 31, 2020, 2019, and 2018, no customer accounted for more than 10% of our consolidated revenues.

We had one customer who accounted for slightly more than 10% of our consolidated revenues in 2017.

Income taxes are accounted for under the liability method.

7 unchanged sentences

We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the reporting period.

Diluted earnings per share reflect the potential dilution that could occur if holders of unvested restricted and performance share units or options exercised or converted their holdings into common stock.

Awards that would have an antidilutive impact are excluded from the calculation and have been deemed immaterial.

As disclosed in Note 3 , IPO , our IPO of shares of Class B Common Stock was effective in April 2017.

In connection with the offering, we subsequently sold additional shares of common stock.

Diluted earnings per share reflects the potential dilution that could occur if holders of unvested restricted and performance share units or options exercised or converted their holdings into common stock.

Awards that would have an anti-dilutive impact are excluded from the calculation.

Share-based Compensation

1 unchanged sentence

We account for share-based compensation using the fair value recognition provisions of current accounting standards for share-based payments.

We grant restricted share units, restricted shares, performance share units, performance shares, and nonqualified stock options.

We grant restricted stock units, restricted shares, performance-based restricted stock units, performance-based restricted shares, and nonqualified stock options.

We recognize compensation expense over the requisite service periods within each award.

9 unchanged sentences

Accordingly, we use an actuarial method to develop current claim information to derive an estimate of our ultimate claim liability.

This process involves the use of loss-development factors based on our historical claims experience and includes a contractual premium adjustment factor, if applicable.

This process involves the use of loss-development factors based on our

historical claims experience and includes a contractual premium adjustment factor, if applicable.

In doing so, the recorded liability considers future claims growth and provides an allowance for incurred but not reported claims.

3 unchanged sentences

At December 31, 2020 and 2019, we had an aggregate prepaid insurance asset of $ 10.6 million and $ 8.1 million, respectively, which represented prefunded premiums and deposits.

Accounting Standards Issued but Not Yet Adopted

In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligned the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software.

ASU 2018-15 was effective for us as of January 1, 2020.

We adopted this standard on a prospective basis, and it did not have a material impact on our consolidated financial statements or disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments , which required 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 required additional disclosures related to credit quality of trade and other receivables, including information related to management’s estimate of credit allowances.

In November 2018, this was further updated with the issuance of ASU 2018-19, which excluded receivables from operating leases from the scope.

We adopted this standard on January 1, 2020 for our available-for-sale debt securities, net investment in leases, contract assets, trade accounts receivable, and reinsurance receivables and it did not have a material impact on our consolidated financial statements.

Accounting Standards Recently Adopted

We adopted ASU 2019-12, Simplifying the Accounting for Income Taxes, which reduces complexity in accounting for income taxes by eliminating certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance to improve consistent application among reporting entities, as of January 1, 2021.

The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures.

We adopted ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which was effective as of March 12, 2020 through December 31, 2022, when the reference rate replacement activity is expected to be complete.

This guidance offers optional expedients and exceptions for applying GAAP to transactions, including contract modifications, hedging relationships, and the sale or transfer of debt securities classified as held-to-maturity affected by reference rate reform, if certain criteria are met.

The adoption of this ASU did not have a material impact on our consolidated financial statements and related disclosures.

We adopted ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350, as of January 1, 2020 on a prospective basis.

This standard aligned the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software.

The adoption did not have a material impact on our consolidated financial statements or disclosures.

We adopted ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments , which is codified in ASC 326, as of January 1, 2020.

The guidance replaced the incurred loss model with a methodology that reflects expected credit losses over the life of the financial assets held at the reporting date based on historical experience, as well as considerations of current conditions and reasonable and supportable forecasts.

This new model for estimating our expected credit losses was implemented for our trade accounts receivable (Note 2, Trade Accounts Receivable and Allowance ), available-for-sale debt securities (Note 5, Investments ), and net investment in leases (Note 8, Leases ) and did not result in a material impact to our consolidated financial statements or disclosures upon adoption.

TRADE ACCOUNTS RECEIVABLE AND ALLOWANCE

The following table shows changes to our allowance for doubtful accounts for the year ended December 31, 2020.

Excluded from the amounts below is the portion of the allowance recorded for revenue adjustments, as that portion is not credit-related nor due to a customer’s inability to meet its financial obligations.

Year Ended December 31,

(in millions) 2020

Balance at beginning of period $ 0.9

Charges to expense 1.1

Write-offs ( 1.4 )

Recoveries 0.3

Balance at end of period $ 0.9

REVENUE RECOGNITION

3 unchanged sentences

The adjustment related only to contracts that were not completed as of January 1, 2018.

The following tables show the amount by which financial statement lines were affected by the adoption of the new standard.

The changes relate to the recognition of transportation revenue over time rather than at delivery, as explained below under the Transportation heading.

Year Ended December 31, 2018

Financial Statement Line Item (in millions)

Under ASC 605

Consolidated Statement of Comprehensive Income

Operating revenues

Purchased transportation

Salaries, wages, and benefits

Total operating expenses

Income from operations

Income before income taxes

Comprehensive income

December 31, 2018

Financial Statement Line Item (in millions)

Under ASC 605

Consolidated Balance Sheet

Prepaid expenses and other current assets

Total current assets

Other current liabilities

Total current liabilities

Deferred income taxes

Total noncurrent liabilities

Retained earnings

Total shareholders' equity

Total liabilities and shareholders' equity

Year Ended December 31, 2018

Financial Statement Line Item (in millions)

Under ASC 605

Consolidated Statement of Cash Flows

Operating Cash Flows

Other liabilities

Disaggregated Revenues

3 unchanged sentences

Disaggregated Revenues ( in millions )

2020 2019 2018

Transportation $ 4,170.0 $ 4,376.6 $ 4,589.7

Logistics Management 149.7 153.8 228.3

Other 233.1 216.6 159.0

Total operating revenues $ 4,552.8 $ 4,747.0 $ 4,977.0

Transportation

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

Transportation revenues are generated from our Truckload and Intermodal segments, as well as from our brokerage business, which is included in the Logistics segment.

In the Transportation portfolio, our service obligation to customers is satisfied over time.

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In our Supply Chain Management business, we subcontract third parties to perform a portion of the services.

We are responsible for ensuring the services are performed and that they are acceptable to the customer, and we are, therefore, considered to be the principal in these arrangements.

We are responsible for ensuring the services are performed and that they are acceptable to the customer, and, therefore, we are considered to be the principal in these arrangements.

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

Quantitative Disclosure

The following table provides information related to transactions and expected timing of revenue recognition related to performance obligations that are fixed in nature and relate to contracts with terms greater than one year as of date shown:

Remaining Performance Obligations (in millions)

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This disclosure does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less.

In addition, this disclosure does not include expected consideration related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice (e.g., usage-based pricing terms).

In addition, this disclosure does not include expected consideration related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice (e.g.

usage-based pricing terms).

The following table provides information related to contract balances associated with our contracts with customers as of the dates shown.

Contract Balances ( in millions )

December 31, 2019

December 31, 2018

January 1, 2018

December 31, 2020 December 31, 2019 January 1, 2019

Other current assets - Contract assets $ 21.5 $ 17.6 $ 21.7

4 unchanged sentences

For certain of our contracts, we incur upfront costs to fulfill the master agreement, including driver recruiting and equipment relocation, that are capitalized and amortized straight-line over the master contract term, which has been deemed to be the period of benefit.

These costs usually relate to dedicated transportation arrangements.

These costs primarily relate to dedicated transportation arrangements.

The following table presents the amounts capitalized for contract fulfillment costs as of the dates shown.

(in millions)

December 31, 2019

December 31, 2018

(in millions) December 31, 2020 December 31, 2019

Capitalized contract fulfillment costs $ 4.1 $ 4.2

Amortization of capitalized contract fulfillment costs was as shown:

Amortization of capitalized contract fulfillment costs was as follows:

Year Ended December 31,

1 unchanged sentence

Amortization of contract fulfillment costs $ 2.6 $ 3.2 $ 2.5

Impairment losses on capitalized contract fulfillment costs for the periods ended December 31, 2019 and December 31, 2018 were immaterial.

There were no impairment losses on capitalized contract fulfillment costs for the period ended December 31, 2020.

Impairment losses on capitalized contract fulfillment costs were immaterial for the periods ended December 31, 2019 and 2018.

Practical Expedients

We elected to use the following practical expedients that are available under ASC 606:

(i) not to adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised service to a customer and when the customer pays for that service will be one year or less;

(ii) to apply the new revenue standard to a portfolio of contracts (or performance obligations) with similar characteristics, as we reasonably expect that the effects on the consolidated financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio;

and (iii) to recognize revenue in the Logistics Management portfolio in the amount of consideration to which we have a right to invoice, that corresponds directly with the value to the customer of the service completed to date.

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 Class B common stock at $ 19 per share and received proceeds of $ 382.7 million.

Expenses related to the offering totaled approximately $ 42.1 million, resulting in net proceeds of $ 340.6 million.

The Company early adopted ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosures Framework - Changes to the Disclosure Requirements for Fair Value Measurement in the fourth quarter of 2019.

This ASU removes, modifies, and adds to existing fair value measurement disclosure requirements.

As a result, the Company removed its disclosures surrounding transfers between Level 1 and Level 2 fair value instruments and added additional disclosures of the range and weighted average of significant unobservable inputs used to determine the fair value of Level 3 measurements.

(1) not to adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised service to a customer and when the customer pays for that service will be one year or less;

(2) to apply ASC 606 to a portfolio of contracts (or performance obligations) with similar characteristics, as we reasonably expect that the effects on the consolidated financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio;

and (3) to recognize revenue in the Logistics Management portfolio in the amount of consideration to which we have a right to invoice, that corresponds directly with the value to the customer of the service completed to date.

The table below sets forth the Company’s financial assets and liabilities that are measured at fair value on a recurring basis in accordance with ASC 820.

December 31, 2019

December 31, 2018

(in millions)

Level in Fair

Value Hierarchy

December 31, 2020 December 31, 2019

(in millions) Level in Fair

Value Hierarchy Fair Value Fair Value

Marketable securities (1)

WSL contingent consideration (2)

2 $ 47.1 $ 48.3

(1) Marketable securities are 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 and are, therefore, classified as Level 2 in the fair value hierarchy.

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See Note 5, Investments , for additional information on the fair value of our marketable securities.

In connection with the June 1, 2016 acquisition of WSL, a contingent payment arrangement based on the achievement of specified earnings targets was in place for three consecutive 12-month periods after the closing, with the aggregate payment total not to exceed $ 40.0 million .

No payments were made under the agreement which expired June 30, 2019.

This valuation was based on a probability-adjusted level of earnings before interest, taxes, depreciation, and amortization, or Level 3 inputs.

The fair value of the Company's debt was $ 368.5 million and $ 398.4 million as of December 31, 2019 and December 31, 2018 , respectively.

The carrying value of the Company's debt was $ 360.0 million and $ 405.0 million as of December 31, 2019 and December 31, 2018 , respectively.

The fair value of the Company’s debt was $ 316.9 million and $ 368.5 million as of December 31, 2020 and 2019, respectively.

The carrying value of the Company’s debt was $ 305.0 million and $ 360.0 million as of December 31, 2020 and 2019, respectively.

The fair value of our debt was calculated using a fixed rate debt portfolio with similar terms and maturities, which is based on the borrowing rates available to us in the applicable year.

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

We measure non-financial assets such as goodwill, intangible assets, assets held for sale, and other long-lived assets at fair value when there is an indicator of impairment and only when we recognize an impairment loss.

The table below sets forth the Company’s financial assets that were measured at fair value on a non-recurring basis during 2019 .

(in millions)

Level in Fair

Value Hierarchy

We measure non-financial assets such as goodwill, assets held for sale, and other long-lived assets at fair value when there is an indicator of impairment and only when we recognize an impairment loss.

The tables below set forth the Company’s non-financial assets that were measured at fair value on a non-recurring basis during 2020 and 2019.

(in millions) Level in Fair

Value Hierarchy Fair Value at December 31, 2020

Assets held for sale

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Restructuring (2)

(1) Our held for sale revenue equipment is evaluated for impairment using market data upon classification as held for sale or as impairment indicators are present.

If the carrying value of the assets held for sale exceeds the fair value, an impairment is

Of the $ 17.2 million of assets held for sale not related to the FTFM shutdown as of December 31, 2020, $ 1.8 million are recorded at fair value.

Refer to Note 1, Summary of Significant Accounting Policies for further details on impairment charges.

(2) We recognized impairment charges and recorded certain assets held for sale and right-of-use lease assets associated with the shutdown of the FTFM service offering at fair value as of December 31, 2020.

Transportation equipment was measured using market data, while right-of-use lease assets were measured using discounted cash flow analyses.

Of the $ 1.6 million of assets held for sale related to the FTFM shutdown, $ 1.4 million were recorded at fair value.

The discounted cash flow analyses for right-of-use lease assets used a range of discount rates from 3.6 % to 4.0 %, with a weighted average rate of 4.0 %.

(3) During the fourth quarter of 2020, we recognized an impairment on one of our right-of-use lease assets.

The discounted cash flow analysis performed used a discount rate of 4.1 %.

(in millions) Level in Fair

Value Hierarchy Fair Value at December 31, 2019

Assets held for sale

Non restructuring (1)

Restructuring (2)

Right-of-use lease assets

Non restructuring (3)

Restructuring (2)

WSL acquisition internal-use software and intangible assets (4)

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If the carrying value of the assets held for sale exceeds the fair value, an impairment is recorded.

Of the $ 34.0 million of assets held for sale not related to the FTFM shutdown as of December 31, 2019 , $ 8.1 million are recorded at fair value.

Of the $ 34.0 million of assets held for sale not related to the FTFM shutdown as of December 31, 2019, $ 8.1 million were recorded at fair value.

Refer to Note 1, Summary of Significant Accounting Policies, for further details on impairment charges.

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Transportation equipment was measured using market data, while right-of-use lease assets were measured using discounted cash flow analyses.

Of the $ 33.4 million of assets held for sale related to the FTFM shutdown, $ 18.5 million are recorded at fair value.

Of the $ 33.4 million of assets held for sale related to the FTFM shutdown, $ 18.5 million were recorded at fair value.

The discounted cash flow analyses for right-of-use lease assets used a range of discount rates from 2.9 % to 4.5 %, with a weighted average rate of 4.0 %.

For further details on the impairment charges recorded refer to Note 18 , Restructuring Charges .

For further details on the impairment charges recorded refer to Note 16, Restructuring .

(3) During the fourth quarter of 2019, we recognized an impairment on one of our right-of-use lease assets.

The discounted cash flow analysis performed used a discount rate of 4.0 %.

As part of the shutdown of the FTFM service offering in the third quarter of 2019 , we recognized impairment charges and recorded internal-use software and finite lived intangible assets at fair value.

(4) As part of the shutdown of the FTFM service offering in 2019, we recognized impairment charges and recorded internal-use software and finite lived intangible assets at fair value.

The WSL acquisition internal-use software and intangible assets, which were previously valued using the replacement cost method and discounted cash flow analyses, respectively, were written off as part of the shutdown of the FTFM service offering.

For further details on the impairment charges recorded refer to Note 18 , Restructuring Charges .

(5) During the second quarter of 2019, a triggering event occurred within our FTFM reporting unit which resulted in an impairment test being performed and full impairment of its goodwill.

For further details on the valuation process used and the goodwill impairment charge recorded refer to Note 6 , Goodwill and Other Intangible Assets .

Our ownership interest in PSI discussed in Note 5 , Investments , does not have a readily determinable fair value and is accounted for using the measurement alternative in ASC 321-10-35-2.

Our interest was last revalued in the period ending December 31, 2018 using Level 3 inputs, as there were no observable price changes during 2019 .

Our ownership interests in PSI and MLSI discussed in Note 5, Investments , do not have readily determinable fair values and are accounted for using the measurement alternative in ASC 321-10-35-2.

Marketable Securities

The following table presents the values of our marketable securities as of the dates shown:

December 31, 2019

December 31, 2018

(in millions)

Amortized Cost

treasury and government agencies

The following table presents the maturities and values of our marketable securities as of the dates shown.

December 31, 2020 December 31, 2019

(in millions, except maturities in months) Maturities Amortized Cost Fair Value Amortized Cost Fair Value

treasury and government agencies 3 to 101 $ 12.6 $ 12.7 $ 16.5 $ 17.0

Asset-backed securities — — — 0.1 0.1

Corporate debt securities

State and municipal bonds

Corporate debt securities 8 to 81 21.4 22.2 15.1 15.4

State and municipal bonds 3 to 63 11.9 12.2 11.6 11.8

government bonds — — — 4.0 4.0

Total marketable securities $ 45.9 $ 47.1 $ 47.3 $ 48.3

Gross realized gains and losses on marketable securities were not material for the years ended December 31, 2019 , 2018 , and 2017 .

Net unrealized gains on marketable securities, net of tax, were $ 1.1 million for the year ended December 31, 2019 .

Net unrealized losses and gains were not material for the years ended December 31, 2018 , and 2017 , respectively.

We did not have any other-than-temporary impairments for the years ended December 31, 2019 , 2018 , and 2017 .

Gross realized gains and losses on our marketable securities were not material for the years ended December 31, 2020, 2019, and 2018.

Net unrealized gains on our marketable securities, net of tax, were $ 0.1 million and $ 1.1 million for the years ended December 31, 2020 and 2019, respectively, and net unrealized losses on our marketable securities, net of tax, were not material for the year ended December 31, 2018.

Additionally, we did not have an allowance for credit losses on our marketable securities as of December 31, 2020 or any other-than-temporary impairments as of December 31, 2019, and our total unrealized gains and losses were not material as of December 31, 2020 and 2019.

Ownership Interest in Platform Science, Inc.

In 2018, we acquired a 30 % ownership interest in PSI in exchange for granting PSI a non-exclusive license to our proprietary telematics mobile software that was developed to enable driver productivity and ensure regulatory compliance.

Our ownership interest in PSI is being accounted for under ASC 321, Investments - Equity Securities using the measurement alternative and is recorded in other noncurrent assets on the consolidated balance sheets.

The fair value of the ownership interest as of December 31, 2018 was determined to be $ 3.5 million through an independent valuation and is recorded in other income in the consolidated statements of comprehensive income.

As of December 31, 2019 , there have been no transactions that would indicate that the value of our ownership interest in PSI changed.

GOODWILL AND OTHER INTANGIBLE ASSETS

In 2018, the Company made a strategic decision to invest in PSI and acquired an ownership interest in exchange for granting them a non-exclusive license to our proprietary telematics mobile software that was developed to enhance driver productivity and ensure regulatory compliance.

Our ownership interest is being accounted for under ASC 321, Investments - Equity Securities using the measurement alternative and is recorded in other noncurrent assets on the consolidated balance sheets.

During the first half of 2020, remeasurement events occurred which required the Company to revalue its interest in PSI.

In the year ended December 31, 2020, the Company recognized pre-tax gains of $ 8.8 million on its investment in PSI, which were recorded within other income on the consolidated statements of comprehensive income.

The value of our ownership interest as of December 31, 2020 and 2019 was $ 12.3 million and $ 3.5 million, respectively, and our ownership percentage was 12.6 % as of December 31, 2020.

There have been no events since the remeasurement performed in the first half of 2020 that would indicate that the value of our investment in PSI has changed as of December 31, 2020.

Ownership Interest in Mastery Logistics Systems, Inc.

On July 2, 2020, Schneider entered into a strategic partnership with MLSI, a transportation technology development company, which included an agreement that allows the Company to purchase a non-controlling interest in MLSI in two tranches.

Schneider and MLSI are collaborating to develop a Transportation Management System using MLSI’s SaaS technology which Schneider has also agreed to license.

In the year ended December 31, 2020, we paid MLSI $ 10.0 million, completing both tranches of the agreement, and, in return, received shares of preferred stock of MLSI which represents a 10.1 % ownership interest.

This investment is being accounted for under ASC 321, Investments - Equity Securities using the measurement alternative and is recorded in other noncurrent assets on the consolidated balance sheet.

As of December 31, 2020, no events have occurred that would indicate that the value of our investment in MLSI has changed.

Subsequent Event - Investment in TuSimple (Cayman) Limited

On January 12, 2021, the Company contributed $ 5.0 million for a non-controlling interest in TuSimple (Cayman) Limited, a global self-driving technology company.

The investment will be accounted for under ASC 321, Investments - Equity Securities .

Goodwill represents the excess of the purchase price of our acquisitions over the fair value of the identifiable net assets acquired.

The following table shows changes to our goodwill balances by segment during the years ended December 31, 2019 and December 31, 2018 .

(in millions)

The following table shows changes to our goodwill balances by segment during the years ended December 31, 2020 and 2019 .

(in millions) Truckload Logistics Other Total

Balance at December 31, 2018 $ 138.2 $ 14.2 $ 9.8 $ 162.2

Goodwill impairment charge ( 34.6 ) — — ( 34.6 )

Foreign currency translation

Foreign currency translation loss — — ( 0.1 ) ( 0.1 )

Balance at December 31, 2019 103.6 14.2 9.7 127.5

Goodwill impairment charge

Foreign currency translation

Foreign currency translation gain — — 0.6 0.6

Balance at December 31, 2020 $ 103.6 $ 14.2 $ 10.3 $ 128.1

At December 31, 2019 and 2018 , we had accumulated goodwill impairment charges of $ 42.6 million and $ 8.0 million, respectively.

At December 31, 2020 and 2019, we had accumulated goodwill impairment charges of $ 42.6 million.

Goodwill is tested for impairment at least annually using the discounted cash flow, guideline public company, and guideline merged and acquired company methods to calculate the fair values of our reporting units.

Key inputs used in the discounted cash flow approach include growth rates for sales and operating profit, perpetuity growth assumptions, and discount rates.

As interest rates rise, the calculated fair values of our reporting units will decrease, which could impact the results of our goodwill impairment tests.

In the fourth quarter of 2018, annual impairment tests were performed on all four of our reporting units with goodwill.

As a result of the testing performed, an impairment loss of $ 2.0 million was recorded for our Asia reporting unit as the discounted cash flows expected to be generated by this reporting unit were not sufficient to recover its carrying value.

If interest rates rise, the calculated fair values of our reporting units will decrease, which could impact the results of our goodwill impairment tests.

During the second quarter of 2019, a triggering event occurred as results from our FTFM reporting unit continued to be less than projected, despite sustained investments and operational changes designed to improve efficiencies.

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This represented all of the goodwill related to the FTFM reporting unit.

In the fourth quarter of 2019, annual impairment tests were performed on all three of our remaining reporting units with goodwill.

In the fourth quarter of 2020 and 2019, annual impairment tests were performed on all three of our remaining reporting units with goodwill.

No impairments resulted from these tests.

The identifiable intangible assets other than goodwill listed below are included in capitalized software and other noncurrent assets on the consolidated balance sheets.

December 31, 2019

December 31, 2018

(in millions)

Customer lists

Total intangible assets

As part of the shutdown of our FTFM service offering in 2019, we wrote-off the gross carrying amount of the customer lists and trade name obtained through the WSL acquisition.

An impairment charge of $ 6.5 million was recorded for the unamortized value of the customer lists within the Truckload segment.

The impairment charge is included in the consolidated statements of comprehensive income within restructuring charges.

Refer to Note 18 , Restructuring Charges , for additional details.

Amortization expense for intangible assets was $ 0.7 million, $ 1.4 million and $ 1.5 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively.

Accumulated amortization in the table above includes foreign currency translation related to a customer list.

DEBT AND CREDIT FACILITIES

As of December 31, 2020 and 2019, debt included the following:

(in millions)

December 31, 2019

December 31, 2018

(in millions) December 31, 2020 December 31, 2019

Unsecured senior notes:

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weighted-average interest rate of 3.64 % and 3.42 % for 2020 and 2019, respectively

Equipment financing notes:

paid in full during 2019;

weighted average interest rate of 3.61% and 3.72% for 2019 and 2018, respectively

Total principal outstanding

$ 305.0 $ 360.0

Current maturities ( 40.0 ) ( 55.0 )

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Scheduled principal payments of debt subsequent to December 31, 2020 are as follows:

(in millions)

December 31, 2019

(in millions) December 31, 2020

2026 and thereafter

Total $ 305.0

Our Credit Agreement (the “2018 Credit Facility”) provides borrowing capacity of $ 250.0 million and allows us to request an increase in total commitment by up to $ 150.0 million, for a total potential commitment of $ 400.0 million through August 2023.

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We had no outstanding borrowings under this facility at December 31, 2020 or 2019.

At December 31, 2019 and 2018 , standby letters of credit under this agreement amounted to $ 70.3 million and $ 65.3 million , respectively, and were primarily related to the requirements of certain of our insurance obligations.

At both December 31, 2020 and 2019, standby letters of credit under this agreement amounted to $ 70.3 million and were primarily related to the requirements of certain of our insurance obligations.

The Company plans to renew the 2018 Receivables Purchase Agreement prior to its expiration date.

The credit agreements contain various financial and other covenants, including required minimum consolidated net worth, consolidated net debt, limitations on indebtedness, transactions with affiliates, shareholder debt, and restricted payments.

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At December 31, 2020, the Company was in compliance with all financial covenants.

We adopted ASU 2016-02, Leases, which is codified in ASC 842, as of January 1, 2019.

We elected the optional transition method as part of utilizing the modified retrospective approach in applying the new lease standard and have recognized right-of-use assets and lease liabilities as of January 1, 2019.

Prior period amounts were not adjusted and will continue to be reported under ASC 840.

Adoption of the new standard resulted in the initial recording of right-of-use lease assets and related lease liabilities of $ 80.6 million and $ 85.2 million , respectively.

As of December 31, 2019 , right-of-use lease assets and related lease liabilities were $ 75.5 million and $ 82.6 million , respectively.

We adopted ASU 2016-02, Leases, which is codified in ASC 842, as of January 1, 2019 and resulted in the initial recording of right-of-use lease assets and related lease liabilities of $ 80.6 million and $ 85.2 million, respectively.

Right-of-use lease assets and related lease liabilities were $ 69.4 million and $ 74.6 million as of December 31, 2020, respectively, and $ 75.5 million and $ 82.6 million as of December 31, 2019, respectively.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term.

Schneider's incremental borrowing rates are used as the discount rates for leases and are determined based on U.S.

Our incremental borrowing rates are used as the discount rates for leases and are determined based on U.S.

Treasury rates plus an applicable margin to arrive at all-in rates.

Schneider uses multiple discount rates based on lease terms, functional currency, and other economic factors.

Schneider uses multiple discount rates based on lease terms and other economic factors.

The operating lease right-of-use asset also includes accrued lease expense resulting from the straight-line accounting under prior accounting methods, which is now being amortized over the remaining life of the lease.

In addition, we elected the package of practical expedients provided under the guidance.

The practical expedient package applies to leases that commenced prior to adoption of the new standard and permits companies not to reassess whether existing or expired contracts are or contain a lease, the lease classification, and any initial direct costs for any existing leases.

We also elected the practical expedient related to land easements, allowing us to carry forward the accounting treatment of our existing agreements for land easements, none of which were material as of January 1, 2019 .

We lease real estate, transportation equipment, and office equipment under operating and finance leases.

Our real estate operating leases include operating centers, distribution warehouses, offices, and drop yards.

Our finance leases relate almost entirely to office equipment.

Our finance leases include office equipment, warehouse equipment, and truck washes.

A majority of our leases include an option to extend the lease, and a small number of our leases include an option to early terminate the lease, which may include a termination payment.

If we are reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right-of-use asset and lease liability.

For our real estate leases, we have elected to apply the recognition requirement to leases of twelve months or less, therefore, an operating lease right-of-use asset and liability will be recognized for all these leases.

For our equipment leases, we have elected to not apply the recognition requirements to leases of twelve months or less.

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

The following table presents our net lease costs for the year ended December 31, 2019 :

Financial Statement Classification

Year Ended December 31,

The following table presents our net lease costs for the years ended December 31, 2020 and 2019.

Financial Statement Classification Year Ended December 31,

(in millions) 2020 2019

Operating lease cost

Operating supplies and expenses

Operating lease cost Operating supplies and expenses $ 29.5 $ 32.5

Short-term lease cost (1)

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Finance lease cost

Amortization of right-of-use assets

Depreciation and amortization

Interest on lease liabilities

Interest expense

Variable lease cost

Operating supplies and expenses

Sublease income

Operating revenues

Amortization of right-of-use assets Depreciation and amortization 0.5 3.2

Interest on lease liabilities Interest expense 0.1 0.2

Variable lease cost Operating supplies and expenses 2.2 2.6

Sublease income Operating revenues ( 4.5 ) ( 5.4 )

Total net lease cost $ 30.9 $ 40.7

(1) Includes short-term lease costs for leases twelve months or less, including those with a duration of one month or less.

As of December 31, 2019 , remaining lease terms and discount rates under operating and finance leases were as follows:

December 31, 2019

As of December 31, 2020 and 2019, remaining lease terms and discount rates under operating and finance leases were as follows:

December 31, 2020 December 31, 2019

Weighted-average remaining lease term

Operating leases

Finance leases

Operating leases 4.1 years 4.4 years

Finance leases 4.6 years 4.3 years

Weighted-average discount rate (1)

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(1) Determined based on a portfolio approach.

Other information related to our leases is as follows:

Additional information related to our leases is as follows:

Year Ended December 31,

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Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Operating cash flows for operating leases $ 34.7 $ 35.3

Operating cash flows for finance leases 0.1 0.2

Financing cash flows for finance leases 0.6 6.9

Right-of-use assets obtained in exchange for new lease liabilities

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Finance leases 0.8 1.4

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

For the year ended December 31, 2019 , total operating lease right-of-use lease asset impairment losses were $ 4.1 million , of which $ 3.8 million related to the shutdown of our FTFM service offering.

For further details on the impairment losses recorded refer to Note 18 , Restructuring Charges .

Total operating lease right-of-use lease asset impairment losses were $ 0.8 million and $ 4.1 million for the years ended December 31, 2020 and 2019, respectively.

For the years ended December 31, 2020 and 2019, $ 0.3 million and $ 3.8 million related to the shutdown of our FTFM service offering, respectively.

Refer to Note 16, Restructuring, for additional details on the impairment loss related to the FTFM service offering shutdown.

At December 31, 2020, future lease payments under operating and finance leases were as follows:

(in millions)

Operating Leases

Finance Leases

(in millions) Operating Leases Finance Leases

2021 $ 25.8 $ 0.5

2022 17.6 0.5

2023 14.3 0.5

2024 10.4 0.4

2026 and thereafter

Total 80.7 2.1

Amount representing interest ( 6.1 ) ( 0.1 )

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Future operating lease payments at December 31, 2020 include $ 2.3 million related to options to extend lease terms that we are reasonably certain to exercise.

Under ASC 840, future minimum lease payments as of December 31, 2018 were as follows:

(in millions)

Operating Leases

Capital Leases

2024 and thereafter

Amount representing interest

Present value of minimum lease payments

Current maturities

Long-term capital lease obligations

As of December 31, 2019 , we had additional leases that had not yet commenced of $ 9.5 million .

These leases will commence in 2020 and have lease terms of one year to eight years .

The consolidated balance sheets include right-of-use assets acquired under finance leases as components of property and equipment as of December 31, 2019 and January 1, 2019 , as follows:

(in millions)

December 31, 2019

January 1, 2019

Transportation equipment

As of December 31, 2020, we had one additional lease that has been signed but not yet commenced for $ 7.0 million.

This lease will commence in 2021 and has a lease term of five years .

The consolidated balance sheets include right-of-use assets acquired under finance leases as components of property and equipment as of December 31, 2020 and 2019.

Real and other property under finance leases are being amortized to a zero net book value over the initial lease term.

(in millions) December 31, 2020 December 31, 2019

Real property $ 0.7 $ 0.8

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Accumulated amortization ( 1.6 ) ( 1.9 )

Transportation equipment is being amortized to the estimated residual value by the end of the lease.

Real and other property under finance leases are being amortized to a zero net book value over the initial lease term.

We finance various types of transportation-related equipment for independent third parties under lease contracts which are generally for one year to five years and are accounted for as sales-type leases with fully guaranteed residual values.

Total $ 1.8 $ 1.5

We finance various types of transportation-related equipment for independent third parties under lease contracts which are generally for one year to five years and accounted for as sales-type leases with fully guaranteed residual values.

At the inception of the contracts, we determine if the contract is or contains a lease.

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

With the adoption of ASC 842, all leases for which we are the lessor meet the definition of sales-type leases.

Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount.

This contract residual amount is estimated to approximate the fair value of the equipment.

Lease payments primarily include base rentals and guaranteed residual values.

In addition, we also collect one-time administrative fees and heavy vehicle use tax on our leases.

We have elected to not separate the different components within the contract as the administrative fees were not material for the years ended December 31, 2020 and 2019.

We have also elected to exclude all taxes assessed by a governmental authority from the consideration (e.g., heavy vehicle use tax).

All of our leases require fixed payments, therefore we have no variable payment provisions.

Under ASC 842, all leases for which we are the lessor meet the definition of sales-type leases.

In addition, as required under ASC 842, all cash flows from lease receipts are classified as operating activities on the consolidated statement of cash flows beginning January 1, 2019.

We previously presented all cash flows from lease receipts as investing activities.

As of December 31, 2019 and January 1, 2019 , the investment in lease receivables was as follows:

(in millions)

December 31, 2019

January 1, 2019

As of December 31, 2020 and 2019, the investments in lease receivables were as follows:

(in millions) December 31, 2020 December 31, 2019

Future minimum payments to be received on leases $ 159.0 $ 135.0

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The amounts to be received on lease receivables as of December 31, 2020 were as follows:

(in millions)

December 31, 2019

(in millions) December 31, 2020

2026 and thereafter

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Long-term lease receivable $ 131.3

Leases are generally placed on nonaccrual status (nonaccrual of interest and other fees) when a payment becomes 90 days past due or upon receipt of notification of bankruptcy, upon the death of a customer, or in other instances in which management concludes collectability is not reasonably assured.

The accrual of interest and other fees is resumed when all payments are less than 60 days past due.

At December 31, 2019 and 2018 , there were $ 0.4 million and $ 0.3 million of lease payments greater than 90 days past due, respectively.

The terms of the lease agreements generally give us the ability to take possession of the underlying asset in the event of default.

We may incur credit losses in excess of recorded allowances if the full amount of any anticipated proceeds from the sale or re-lease of the asset supporting the third party’s financial obligation is not realized.

Repossession and estimated reconditioning costs are recorded in the consolidated statements of comprehensive income in the period incurred.

Our lease payments primarily include base rentals and guaranteed residual values.

In addition, we also collect one-time administrative fees and heavy vehicle use tax on our leases.

We have elected to not separate the different components within the contract as the administrative fees were not material for the year ended December 31, 2019 .

We have also elected to exclude all taxes assessed by a governmental authority from the consideration (e.g., heavy vehicle use tax).

All of our leases require fixed payments, therefore we have no variable payment provisions.

Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount.

This is estimated to approximate the fair value of the equipment.

Equipment is leased under sales-type leases where the lessees guarantee the residual value of the equipment.

Prior to entering a lease contract, we assess the credit quality of the potential lessee through the use of credit checks and other relevant factors, ensuring that their inherent credit risk is consistent with our existing lease portfolio.

Given our leases have fully guaranteed residual values and we have the ability to take possession of the transportation-related equipment in the event of default, we do not categorize net investment in leases by different credit quality indicators upon origination.

We monitor our lease portfolio weekly by tracking amounts past due, days past due, and outstanding maintenance account balances, including running subsequent credit checks as needed.

Our net investment in leases with any portion past due as of December 31, 2020 was $ 41.5 million, which includes both current and future lease payments.

Lease payments are generally due on a weekly basis and are classified as past due when the weekly payment is not received by the due date.

The following table presents an aging analysis of past due lease payments.

(in millions) December 31, 2020

1-29 days $ 1.2

30-59 days 0.5

60-89 days 0.3

90 days or greater 0.4

Total past due $ 2.4

Accrued interest on leases is included within lease receivables on the consolidated balance sheets and was not material as of December 31, 2020 and 2019.

Leases are generally placed on nonaccrual status (nonaccrual of interest and other fees) when a payment becomes 90 days past due or upon notification of bankruptcy, death, or other instances management concludes collectability is not reasonably assured.

The accrual of interest and other fees resumes when all payments are less than 60 days past due.

At both December 31, 2020 and 2019, our net investment in leases on nonaccrual status were not material .

The table below provides additional information on our sales-type leases.

Revenue and cost of goods sold are recorded in operating revenues and operating supplies and expenses in the consolidated statements of comprehensive income, respectively.

Year Ended December 31,

(in millions) 2020 2019

Revenue $ 206.3 $ 196.0

Cost of goods sold ( 185.6 ) ( 177.1 )

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Interest income on lease receivable $ 26.5 $ 27.3

The amounts to be received on lease receivables as of December 31, 2018 under ASC 840 were as follows:

(in millions)

December 31, 2018

2024 and thereafter

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law.

In accordance with GAAP, the effects of this legislation were recognized in 2017 upon enactment.

The primary impact of the Act for us related to the reduction of the Federal corporate income tax rate from 35% to 21% beginning in 2018.

At December 31, 2017, our previously recorded deferred tax assets and liabilities were remeasured to reflect the 21% rate at which these assets and liabilities would be realized in future periods.

The net change in deferred taxes was recorded through our provision for income taxes.

The components of the provision for (benefit from) income taxes for the years ended December 31, 2019 , 2018 , and 2017 , were as follows:

On March 27, 2020, President Trump signed into U.S.

federal law the CARES Act aimed at providing emergency assistance and health care for individuals, families, and businesses affected by COVID-19 and generally supporting the U.S.

The CARES Act, among other things, includes provisions related to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The Company took advantage of the cash deferral prog ram available for payment of federal and state income taxes through the second quarter of 2020 and the cash deferral program available for payment of employer social security taxes through December 31, 2020.

The deferred income tax payments were paid to the respective tax authorities in the third quarter of 2020 and we anticipate paying the deferred employer social security taxes in 2021 which were $ 30.7 million as of December 31, 2020.

On August 8, 2020, President Trump signed an executive order, “Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster,” which gives employers the option to defer the employee portion of social security payments for certain individuals.

Schneider did not elect to use the deferral option under this executive order.

The components of the provision for income taxes for the years ended December 31, 2020, 2019, and 2018 were as follows:

(in millions) 2020 2019 2018

Federal $ 60.4 $ 43.0 $ 21.7

State and other 9.1 8.3 11.8

69.5 51.3 33.5

Federal ( 1.4 ) ( 1.3 ) 54.2

State and other 3.1 1.1 6.7

Impact of the Tax Cuts and Jobs Act (1)

Total provision for (benefit from) income taxes

1.7 ( 0.2 ) 62.2

Total provision for income taxes $ 71.2 $ 51.1 $ 95.7

(1) On December 22, 2017, the Tax Cuts and Jobs Act (the “ Act ” ) was signed into law.

The primary impact of the Act for us related to the reduction of the Federal corporate income tax rate from 35% to 21% beginning in 2018.

Previously recorded deferred tax assets and liabilities were remeasured to reflect the 21% rate at which these assets and liabilities would be realized in future periods.

Foreign operations of the Company are insignificant in relation to our overall operating results.

The provision for income taxes for the years ended December 31, 2019 , 2018 , and 2017 differed from the amounts computed using the federal statutory rates in effect of 21% for December 31, 2019 and 2018 and 35% for December 31, 2017 , as follows:

(in millions, except percentages)

Dollar Impact

The provision for income taxes for the years ended December 31, 2020, 2019, and 2018 differed from the amounts computed using the federal statutory rate in effect as follows:

2020 2019 2018

(in millions, except percentages) Dollar Impact Rate Dollar Impact Rate Dollar Impact Rate

Income tax at federal statutory rate $ 59.4 21.0 % $ 41.6 21.0 % $ 76.6 21.0 %

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Impact of the Tax Cuts and Jobs Act — — — — 1.3 0.3

Total provision for (benefit from) income taxes

Other—net 0.2 0.1 ( 0.7 ) ( 0.3 ) 0.3 0.1

Total provision for income taxes $ 71.2 25.2 % $ 51.1 25.8 % $ 95.7 26.2 %

The components of the net deferred tax liability included in deferred income taxes in the consolidated balance sheets as of December 31, 2020 and 2019, were as follows:

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State net operating losses and credit carryforwards 11.5 12.7

Other 5.2 4.8

Total gross deferred tax assets 48.8 50.1

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Operating lease right-of-use assets 16.6 18.0

Other 7.2 3.5

Total gross deferred tax liabilities 496.6 497.1

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Gross increases—tax positions related to current year 0.3 0.6 0.8

Gross increases—tax positions taken in prior years

Gross increases (decreases)—tax positions taken in prior years ( 0.3 ) 0.4 —

Lapse of statutes — — ( 0.3 )

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We also file returns in foreign jurisdictions.

The years 2016, 2017, and 2018 are open for examination by the Internal Revenue Service (“IRS”), and various years are open for examination by state and foreign tax authorities.

The years 2017 , 2018 , and 2019 are open for examination by the IRS, and various years are open for examination by state and foreign tax authorities.

In September 2020, the statute for 2016 expired.

State and foreign jurisdictional statutes of limitations generally range from three to four years.

State and for eign jurisdictional statutes of limitations generally range from three to four years.

Carryforwards

As of December 31, 2020, we had $ 203.8 million of state net operating loss carryforwards which are subject to expiration from 2021 to 2041.

We also had state credit carryforwards of $ 0.1 million , which are subject to expiration from 2020 to 2027 , and no capital loss carryforwards.

The deferred tax assets related to carryforwards at December 31, 2019 were $ 12.6 million for state net operating loss carryforwards and $ 0.1 million for state credit carryforwards.

Our state credit carryforwards were not material and are subject to expiration from 2021 to 2029.

We also had no capital loss carryforwards.

The deferred tax assets related to carryforwards at December 31, 2020 were $ 11.8 million for state net operating loss carryforwards and not material for state credit carryforwards.

Carryforwards are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax-planning strategies, and projections of future taxable income.

At December 31, 2019 , we carried a total valuation allowance of $ 2.0 million against state deferred tax assets.

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 changes to temporary equity during the year ended December 31, 2017 .

Redeemable Common

Accumulated Earnings

Accumulated Other Comprehensive Income

(in millions)

Balance—December 31, 2016

Other comprehensive income

Dividends declared at $0.05 per share

Change in redemption value of redeemable common shares

Transfer from temporary equity to common equity

Balance—December 31, 2017

At December 31, 2020, we carried a total valuation allowance o f $ 2.6 million against state deferred tax assets.

COMMON EQUITY

On March 21, 2017, the Board declared pro rata share dividends entitling each holder of our Class A and Class B common stock outstanding as of March 21, 2017 to receive 29 shares of Class A or Class B common stock for each share of Class A or Class B common stock held by the shareholder.

The share dividend was accounted for as a 30 -for-1 stock split and is retroactively reflected in these consolidated financial statements.

All share redemption provisions mentioned in Note 10 , 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 3 , IPO , 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.

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2020, 2019, and 2018, respectively.

Year Ended December 31,

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Weighted average common shares outstanding 177.3 177.1 177.0

Effect of dilutive restricted share units

Dilutive effect of share-based awards and options

outstanding 0.3 0.2 0.2

Weighted average diluted common shares outstanding 177.6 177.3 177.2

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Diluted earnings per common share 1.19 0.83 1.52

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

The calculation of diluted earnings per share for the years ended December 31, 2020, 2019, and 2018 excluded an immaterial amount of share-based awards and options that had an anti-dilutive effect.

Dividends Declared

During 2020, 2019, and 2018, the Company declared cash dividends totaling $ 2.26 , $ 0.24 , and $ 0.24 per share, respectively.

Included in the 2020 amount is a special cash dividend of $ 2.00 per share, totaling $ 354.7 million.

Subsequent Event - Dividends Declared

In January 2020, our Board of Directors declared a quarterly cash dividend for the first fiscal quarter of 2020 in the amount of $ 0.065 per share to holders of our Class A and Class B common stock.

In January 2021, our Board declared a quarterly cash dividend for the first fiscal quarter of 2021 in the amount of $ 0.07 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 March 12, 2021 and is expected to be paid on April 8, 2021 .

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SHARE-BASED COMPENSATION

We grant various equity-based awards relating to Class B Common Stock under our 2017 Omnibus Incentive Plan (“the Plan”).

We grant various equity-based awards relating to Class B common stock to employees under our 2017 Omnibus Incentive Plan (“the Plan”).

These awards consist of the following:

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These standards require that the cost of the awards be recognized in our consolidated financial statements based on the grant date fair value of those awards.

This cost is recognized over the period for which an employee is required to provide service in exchange for the award, subject to the attainment of performance metrics established for performance-based restricted shares and PSUs.

Share-based compensation expense is recorded in salaries, wages, and benefits in our consolidated statements of comprehensive income, along with other compensation expenses to employees.

The following table summarizes the components of our share-based compensation program expense:

The following table summarizes the components of our employee share-based compensation expense.

Year Ended December 31,

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Share-based compensation expense (benefit) $ 7.3 $ ( 2.3 ) $ 10.9

Related tax (expense) benefit

Related tax benefit (expense) $ 1.8 $ ( 0.6 ) $ 2.8

As of December 31, 2020, we had $ 13.5 million of pre-tax unrecognized compensation cost related to outstanding share-based compensation awards that is expected to be recognized over a weighted-average period of 2.4 years.

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The dividend equivalents are forfeitable and are distributed to participants in cash consistent with the date the awards vest.

A portion of the restricted shares relate to a one-time 2018 grant, which vests 50 % after a period of five years , with the remaining 50 % vesting after a period of six years after the grant date, subject to continued employment through the vesting date.

Dividend equivalents equal to dividends paid on our common shares during the vesting period are tracked and accumulated for each restricted share.

The dividend equivalents are distributed to participants in cash consistent with the date the awards vest.

Restricted Shares and RSUs

Number of Awards

Weighted Average Grant Date Fair Value

Restricted Shares and RSUs Number of Awards Weighted Average Grant Date Fair Value

Unvested at December 31, 2017 240,016 $ 19.00

Granted 229,272 26.82

Vested ( 74,828 ) 19.00

Forfeited ( 24,983 ) 21.26

Unvested at December 31, 2018 369,477 23.70

Granted 259,812 22.76

Vested ( 96,630 ) 23.30

Forfeited ( 47,851 ) 23.05

Unvested at December 31, 2019 484,808 23.34

Granted 259,992 22.04

Vested ( 141,556 ) 22.56

Forfeited ( 13,657 ) 23.00

Unvested at December 31, 2020 589,587 $ 22.96

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Cash dividends were not paid on the unvested pre-IPO restricted shares, nor did they accumulate during the vesting period.

Pre-IPO Restricted Shares

Number of Awards

Weighted Average Grant Date Fair Value

Pre-IPO Restricted Shares Number of Awards Weighted Average Grant Date Fair Value

Unvested at December 31, 2017 152,199 $ 19.00

Vested ( 101,643 ) 19.00

Forfeited ( 6,225 ) 19.00

Unvested at December 31, 2018 44,331 19.00

Unvested at December 31, 2018

Vested ( 44,331 ) 19.00

Forfeited — —

Unvested at December 31, 2019 — $ —

In April 2017, unvested restricted shares were adjusted to the IPO share price of $ 19.00 .

Performance Shares and PSUs

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The dividend equivalents are forfeitable and are distributed to participants in cash consistent with the date the awards vest.

Performance Shares and PSUs

Number of Awards

Weighted Average Grant Date Fair Value

Performance Shares and PSUs Number of Awards Weighted Average Grant Date Fair Value

Unvested at December 31, 2017 391,541 $ 19.00

Granted 303,228 26.78

Forfeited ( 56,390 ) 19.65

Unvested at December 31, 2018 638,379 22.64

Granted 449,771 22.49

Forfeited ( 568,429 ) 21.18

Unvested at December 31, 2019 519,721 24.11

Granted 350,525 22.04

Vested ( 44,802 ) 26.80

Forfeited ( 170,422 ) 26.68

Unvested at December 31, 2020 655,022 $ 22.15

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The options expire ten years from the date of grant.

Nonqualified Stock Options Outstanding

Number of Awards

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term

Aggregate Intrinsic Value (1)

Nonqualified Stock Options Outstanding Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term

(in years) Aggregate Intrinsic Value (1)

(in thousands)

Outstanding at December 31, 2017 229,620 $ 19.00 9.3 $ 2,195

Granted 173,024 26.74

Exercised (2)

( 8,410 ) 19.00 67

Forfeited ( 25,230 ) 19.00

Outstanding at December 31, 2018 369,004 22.63 8.7 —

Granted 303,044 22.12

Exercised (2)

Forfeited ( 134,800 ) 22.87

Outstanding at December 31, 2019 537,248 22.28 8.3 641

Granted 233,636 22.04

Exercised (2)

( 84,984 ) 19.00 440

Forfeited — —

Outstanding at December 31, 2020 (3)

685,900 $ 20.60 7.1 $ 735

Exercisable as of:

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(1) The aggregate intrinsic value was computed using the closing share price on December 31, 2020 of $ 20.70 , December 31, 2019 of $ 21.82 , and December 31, 2018 of $ 18.67 , as applicable.

Cash received upon exercise of stock options was $ 0 in 2019, $ 0.2 million in 2018, and $ 0 in 2017.

Unvested Nonqualified Stock Options

Number of Awards

Weighted Average Grant Date Fair Value

(2) Cash received upon exercise of stock options was $ 1.6 million in 2020, $ 0 in 2019, and $ 0.2 million in 2018.

(3) In November 2020, the exercise price of all outstanding options was adjusted downward by $2.00 to equitably adjust for the special dividend paid by the Company on November 19, 2020.

Unvested Nonqualified Stock Options Number of Awards Weighted Average Grant Date Fair Value

Unvested at December 31, 2017 229,620 $ 6.37

Granted 173,024 8.96

Vested ( 57,405 ) 6.37

Forfeited ( 25,230 ) 6.37

Unvested at December 31, 2018 320,009 7.77

Granted 303,044 7.08

Vested ( 92,251 ) 7.59

Forfeited ( 124,117 ) 7.63

Unvested at December 31, 2019 406,685 7.34

Granted 233,636 6.34

Vested ( 134,314 ) 7.30

Forfeited — —

Unvested at December 31, 2020 506,007 $ 6.89

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Year Ended December 31,

2020 2019 2018

Weighted-average Black-Scholes value $ 6.34 $ 7.08 $ 8.96

Black-Scholes assumptions:

Expected term

Expected term 6.25 years 6.25 years 6.25 years

Expected volatility 31.0 % 32.0 % 32.2 %

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We account for the annual director share awards as equity based in accordance with applicable accounting standards for these types of share-based payments.

Expense related to our director equity based awards was $ 1.3 million in 2020 and immaterial in 2019 and 2018.

We also grant equity retainer awards, or shares in lieu of cash, on a quarterly basis to our non-employee directors.

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We account for the quarterly director share awards and DSUs as liability based in accordance with the applicable accounting standards for these types of share-based payments and remeasure the DSUs at the end of each reporting period through settlement.

Expense related to our director equity and liability based awards was immaterial in 2019 , 2018 , and 2017 .

Expense related to our director liability based awards was $ 0.9 million in 2020 and immaterial in 2019 and 2018.

OTHER LONG-TERM INCENTIVE COMPENSATION

We maintain legacy long-term cash incentive compensation plans.

The total (benefit) expense recognized for the plans that include executives was $( 2.0 ) million in 2019 , $ 11.2 million in 2018 , and $ 10.8 million in 2017 .

Under the 2011 Omnibus Long-term Incentive Plan (the “LTIP”), performance-based Long-Term Cash Awards (“Cash Plan Awards”) and service-based Stock Appreciation Rights (“SARs”) were granted to eligible employees, including our executive officers.

Our Board of Directors originally adopted and approved the LTIP on February 7, 2011 and approved an amended and restated LTIP on November 8, 2011 and December 31, 2012.

Payout on our Cash Plan Awards, which were granted annually from 2013-2016, is contingent on attainment of two pre-established performance metrics, measured over a period of five years :

compounded net income growth (determined on the basis of GAAP with adjustments for significant, nonrecurring items approved by the Compensation Committee of the Board of Directors) and return on capital (“ROC”).

While each grant is expressed as a fixed dollar amount, the actual amount earned may range from 0 % to 250 % of target for superior performance.

The awards cliff-vest after three years , with payout occurring after completion of the performance period of five years , subject to compliance with certain restrictive covenants.

Vested awards are paid out 90 days following completion of the performance period, or on a subsequent deferral date elected by the executive pursuant to our 2005 Supplemental Savings Plan.

The total expense (benefit) recognized for plans that include executives was $ 1.6 million in 2020, $( 2.0 ) million in 2019, and $ 11.2 million in 2018.

Under the 2011 Omnibus Long-term Incentive Plan (the “LTIP”), performance-based Long-Term Cash Awards (“Cash Plan Awards”) and service-based Stock Appreciation Rights (“SARs”) were granted annually to eligible employees, including our executive officers, from 2013-2016 and 2011-2012, respectively.

Payout of our Cash Plan Awards is contingent on attainment of two pre-established performance metrics measured over a period of five years :

compounded net income growth (determined on the basis of GAAP with adjustments for significant, nonrecurring items approved by the Compensation Committee of the Board) and return on capital (“ROC”).

Grants are expressed as fixed dollar amounts, but actual amounts earned may range from 0 % to 250 % of target based on performance.

The awards are fully vested and will be paid 90 days after completion of the performance period of five years or on a subsequent deferral date elected by the executive pursuant to our 2005 Supplemental Savings Plan, subject to compliance with certain restrictive covenants.

The liability for the Cash Plan Awards was $ 2.9 million and $ 6.3 million at December 31, 2020 and 2019, respectively.

SARs awards, which were granted in 2011 and 2012, became 100 % vested on the date provided in the applicable award agreement (a vesting period of three years ).

Vested SARs were to be paid on March 1 of the fifth year following the year of such grant (or as soon as practicable thereafter, but in no event later than June 1) or will be paid out on a subsequent deferral date elected by the participant (or within 90 days following a termination of employment or change in control, if earlier, subject to Internal Revenue Code Section 409A).

Until payment, SARs will continue to appreciate (or depreciate) with changes in book value of outstanding common shares of company stock.

The value of the SARs upon payment will equal the excess, if any, of the book value of a common share on the date of payment over the grant price set forth in the applicable award agreement, multiplied by the number of vested SARs, subject to the discretion of the Compensation Committee.

As of December 31, 2019 ,

1.0 million SARs units were outstanding.

SARs awards became 100 % vested after their vesting period of three years .

Vested SARs were to be paid on March 1 of the fifth year following the year of such grant, however, all participants elected to be paid out on a subsequent deferral date (or within 90 days following a termination of employment or change in control, if earlier, subject to Internal Revenue Code Section 409A).

SARs will continue to appreciate (or depreciate) with changes in book value of outstanding common shares of company stock until paid, subject to the discretion of the Compensation Committee.

As of December 31, 2020, approximately 1.0 million SARs units were outstanding.

The liability for the SARs awards was $ 5.3 million and $ 4.8 million at December 31, 2020 and 2019, respectively.

Under the 2005 Schneider National, Inc.

Long-Term Incentive Plan (the “2005 LTIP”), awards of cash-settled retention credits were granted to eligible employees, including certain of our named executive officers.

Our Board of Directors adopted and approved the 2005 LTIP effective January 1, 2005.

The retention credits are mandatorily deferred time-based cash credits which typically vest in 20 % increments over a period of five years based on continued employment.

Vested retention credits are paid out in March following the second anniversary of the date of the employee’s termination of employment, provided the employee has not violated the terms of their restrictive covenant agreements.

The liability for the retention credits was $ 8.6 million at each of the years ended December 31, 2019 and 2018 .

The 2005 Schneider National, Inc.

Long-Term Incentive Plan (the “2005 LTIP”) was adopted and approved by our Board with an effective date of January 1, 2005.

The 2005 LTIP includes awards of cash-settled retention credits granted to eligible employees, including certain of our named executive officers.

The retention credits are mandatorily deferred time-based cash credits which are fully vested and will be paid out in March following the second anniversary of the date of the employee’s termination of employment, provided the employee has not violated the terms of their restrictive covenant agreements.

The liability for the retention credits was $ 8.8 million and $ 8.6 million at December 31, 2020 and 2019, respectively.

COMMITMENTS AND CONTINGENCIES

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We believe the outcomes of these matters will not have a material impact on our business or our consolidated financial statements.

We record liabilities for claims accruals based on our best estimate of expected losses.

The primary claims arising for the Company consist of accident-related claims for personal injury, collision, and comprehensive compensation, in addition to workers' compensation and cargo liability claims.

We maintain insurance with licensed insurance carriers above the amounts in which we self-insure.

We record liabilities for claims against the Company based on our best estimate of expected losses.

The primary claims arising for the Company through its trucking, intermodal, and logistics operations consist of accident-related claims for personal injury, collision, and comprehensive compensation, in addition to workers’ compensation, property damage, cargo, and wage and benefit claims.

We maintain excess liability insurance with licensed insurance carriers for liabilities in excess of amounts we self-insure which serves to largely offset the Company’s liability associated with these claims, with the exception of wage and benefit claims for which we self-insure.

We review our accruals periodically to ensure that the aggregate amounts of our accruals are appropriate at any period after consideration of available insurance coverage.

Although it is possible that our claims accruals will change based on future developments, we do not believe these changes will be material to our results of operations considering our insurance coverage and other factors.

At December 31, 2019 , our firm commitments to purchase transportation equipment totaled approximately $ 278.2 million.

The representative of the former owners of WSL has filed a lawsuit in the Delaware Court of Chancery which alleges that we have not fulfilled certain obligations under the purchase and sale agreement relating to the post-closing operations of the business, and as a result, the former owners claim they are entitled to an additional payment of $ 40.0 million .

A trial date has been set for September 2020.

Although we expect that our claims accruals will continue to vary based on future developments, assuming that we are able to continue to obtain and maintain excess liability insurance coverage for such claims, we do not anticipate that such accruals will, in any period, materially impact our results of operations.

At December 31, 2020, our firm commitments to purchase transportation equipment totaled $ 161.9 million.

A representative of the former owners of WSL has filed a lawsuit in the Delaware Court of Chancery which primarily alleges that we have not fulfilled certain obligations under the purchase and sa le agreement relating to the post-closing operations of the business, and as a result, the former owners claim they are entitled to damages including an additional payment of $ 40.0 million under an earn-out arrangement which was a component of the purchase price in the transaction.

The Delaware Court of Chancery conducted a remote trial in January 2021.

We believe that we have strong defenses to this claim.

A judgment by the Court against us could have a material adverse effect on our results of operations.

A judgment by the Court against us in this matter could have a material adverse effect on our results of operations.

In the year ended December 31 , 2020 , the Company recorded $ 12.8 million of expense and paid $ 13.7 million as a result of an adverse tax ruling in a dispute with the IRS over the applicability of excise taxes on certain tractors refurbished during tax years 2011 through 2013 and no longer in service.

The charge includes interest and is included within operating supplies and expenses on the consolidated statements of comprehensive income for the year ended December 31, 2020.

In December 2020, the Company filed an appeal which is currently pending with the 7 th Circuit Court of Appeals.

SEGMENT REPORTING

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

As of December 31, 2017, our operating segments within the Truckload reportable segment were VTL, Dedicated, and Bulk.

During 2018, we reorganized the structure of the Truckload reportable segment, separating FTFM into its own operating segment and moving the remaining business that was previously under the Dedicated operating segment into the VTL operating segment.

This resulted in the Truckload reportable segment consisting of three operating segments (VTL, FTFM, and Bulk) as of December 31, 2018.

On July 29, 2019 the Board of Directors approved a structured shutdown of our FTFM service offering, which was included within our FTFM operating segment.

As of December 31, 2018, our operating segments within the Truckload reportable segment were VTL, FTFM, and Bulk.

On July 29, 2019 the Board approved a structured shutdown of our FTFM service offering, which was included within our FTFM operating segment.

As the shutdown of the FTFM service offering is complete, there are only two remaining operating segments within the Truckload reportable segment, VTL and Bulk, that are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in ASC 280.

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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 a leasing business which are operated by wholly owned subsidiaries.

We generate other revenues from our leasing and captive insurance businesses which are operated by wholly owned subsidiaries.

We also have operations in Asia that meet the definition of an operating segment.

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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.

All transactions between reportable segments are eliminated in consolidation.

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 $ 87.1 million, $ 82.7 million, and $ 78.4 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively.

Revenues by Segment

Year Ended December 31,

Inter-segment 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.

Inter-segment revenues included in Other revenues below were $ 62.6 million, $ 87.1 million, and $ 82.7 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Revenues by Segment Year Ended December 31,

(in millions) 2020 2019 2018

Truckload $ 1,851.0 $ 2,076.8 $ 2,265.1

Intermodal 974.7 1,007.8 955.9

Logistics 1,129.3 934.8 1,023.9

Other 359.0 371.3 323.2

Fuel surcharge 318.3 466.0 522.8

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Operating revenues $ 4,552.8 $ 4,747.0 $ 4,977.0

Income (Loss) from Operations by Segment

Year Ended December 31,

Income (Loss) from Operations by Segment Year Ended December 31,

(in millions) 2020 2019 2018

Truckload $ 187.8 $ 59.0 $ 237.1

Intermodal 75.0 107.7 130.4

Logistics 43.1 37.3 47.3

Other ( 19.2 ) 3.8 ( 39.0 )

Income from operations $ 286.7 $ 207.8 $ 375.8

Depreciation and Amortization Expense by Segment

Year Ended December 31,

Depreciation and Amortization by Segment Year Ended December 31,

(in millions) 2020 2019 2018

Truckload $ 210.7 $ 212.3 $ 211.0

Intermodal 46.3 44.6 39.8

Logistics 0.1 0.5 0.4

Other 33.4 35.5 40.1

Depreciation and amortization expense $ 290.5 $ 292.9 $ 291.3

Substantially all of our revenues and assets were generated or located within the U.S.

In 2019, we began recognizing in transit revenues and related expenses at the reporting segment level for all operating segments to better align revenues and costs within our reporting segments.

Prior to 2019, revenues at the operating segment level reflected revenue recognized upon delivery, and in transit revenue was recorded within Other, except for FTFM.

For consistency, we have restated the 2018 revenues and income (loss) from operations by segment in the tables above to reflect this new measure of revenue and segment profit.

The tables below reflect the impact of this change by reporting segment on revenues (excluding fuel surcharge) and income (loss) from operations.

Increase (Decrease) in Revenues (excluding fuel surcharge) by Segment

(in millions)

Increase (Decrease) in Income (Loss) from Operations by Segment

(in millions)

QUARTERLY RESULTS OF OPERATIONS (Unaudited)

(in millions, except per share amounts)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Operating revenues

Income from operations (1)

Net income (1)

Basic earnings per share (1)

Diluted earnings per share (1)

Operating revenues

Income from operations

Basic earnings per share

Diluted earnings per share

Includes the following goodwill impairment and restructuring charges related to FTFM and the shutdown of the FTFM service offering, respectively:

Income from operations:

$ 34.6 million, $ 50.4 million, and $ 13.3 million for the second, third, and fourth quarter of 2019, respectively;

$ 25.7 million, $ 37.6 million, and $ 9.9 million for the second, third, and fourth quarter of 2019, respectively;

Basic earnings per share:

$ 0.15 , $ 0.21 , and $ 0.06 for the second, third, and fourth quarter of 2019, respectively;

Diluted earnings per share:

$ 0.15 , $ 0.21 , and $ 0.06 for the second, third, and fourth quarter of 2019, respectively.

R ESTRUCTURING CHARGES

On July 29, 2019 , the Company’s Board of Directors approved a structured shutdown of its FTFM service offering within its Truckload reporting segment which was substantially complete as of August 31, 2019 .

As part of the shutdown, $ 63.7 million of restructuring charges were incurred during the year ended December 31, 2019 .

All of the restructuring charges were recorded

within our Truckload reporting segment.

Pre-tax losses from our FTFM service offering were $ 34.4 million , $ 29.2 million , and $ 15.4 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively.

The costs associated with the shutdown are presented separately on the consolidated statements of comprehensive income within restructuring charges and are summarized in the following table for the year ended December 31, 2019 .

No costs were incurred for the years ended December 31, 2018 and 2017 .

Year Ended December 31,

(in millions)

Impairment charges and losses on asset disposals

Receivables write-down

Total restructuring charges

As of December 31, 2019 and 2018 , FTFM restructuring liabilities are classified as current liabilities on the consolidated balance sheets and balances are as follows:

(in millions)

Restructuring Liabilities

RESTRUCTURING

On July 29, 2019 , the Company’s Board approved a structured shutdown of its FTFM service offering within its Truckload reportable segment which was substantially complete as of August 31, 2019 .

The restructuring activity was recorded within our Truckload reportable segment.

Pre-tax losses of our FTFM service offering were $ 34.4 million and $ 29.2 million for the years ended December 31, 2019 and 2018, respectively.

The activity associated with the shutdown is presented separately on the consolidated statements of comprehensive income within restructuring—net and is summarized below on a cumulative basis since July 29, 2019.

Restructuring activity for the year ended December 31, 2020 was not material and no costs were incurred for the year ended December 31, 2018.

(in millions) Cumulative

Impairment charges and losses on asset disposals—net $ 47.2

Receivable write-downs—net 3.0

Other costs 14.5

Total restructuring—net $ 64.7

As of December 31, 2020 and 2019, FTFM restructuring liabilities were classified as current liabilities on the consolidated balance sheets as follows:

(in millions) Restructuring Liabilities

Balance at December 31, 2018 $ —

Restructuring and related costs

Restructuring—net 13.7

Cash payments ( 8.6 )

Balance at December 31, 2019 5.1

Restructuring—net 0.8

Cash payments ( 1.5 )

Balance at December 31, 2020 $ 4.4

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data