What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-18 compared with 2021-02-19 · 303 added, 344 removed, 762 unchanged (46% of the section changed)

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 8 to the financial statements, the Company changed its method of accounting for leases in the year ended December 31, 2019 due to the adoption of Accounting Standards Update No.

2016-02, Leases (Topic 842), using the modified retrospective method.

Basis for Opinion

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The Company is self-insured for various claims, which primarily relate to accident-related claims for personal injury, collision, and comprehensive compensation, along with workers’ compensation.

Claims accruals represent accruals for

pending claims, including adverse development of known claims, as well as incurred but not reported claims.

Claims accruals represent accruals for pending claims, including adverse development of known claims, as well as incurred but not reported claims.

The claims accruals are based on estimated or expected losses for claims considering the nature and severity of each claim, historical trends, advice from third-party administrators and insurers, consultation with actuarial experts, the specific facts of individual cases, the jurisdictions involved for each case, estimates of future claims development, the fluctuations in the number and severity of claims, and the legal and other costs to settle or defend the claims.

At December 31, 2021 and 2020, the Company had an accrual of $158.3 million and $144.2 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 judgement and an increased extent of effort.

The subjectivity of estimating the claims 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, 2021.

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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, 2021, of the Company and our report dated February 18, 2022, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Midwest Logistics Systems, Ltd., which was acquired on December 31, 2021, and whose financial statements constitute approximately 7.4% of total assets of the Company’s consolidated total assets as of December 31, 2021.

Accordingly, our audit did not include the internal control over financial reporting at Midwest Logistics Systems, Ltd.

Basis for Opinion

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Other expense (income)—net ( 18.7 ) ( 6.5 ) 1.6

Total other expenses 3.8 9.7 11.2

Total other expenses (income)—net ( 8.3 ) 3.8 9.7

Income before income taxes 542.0 282.9 198.1

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Other comprehensive income (loss):

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

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

Total other comprehensive income (loss) 0.7 1.1 ( 1.0 )

Foreign currency translation adjustment—net 0.1 0.6 —

Net unrealized gains (losses) on marketable securities—net of tax ( 0.9 ) 0.1 1.1

Total other comprehensive income (loss)—net ( 0.8 ) 0.7 1.1

Comprehensive income $ 404.6 $ 212.4 $ 148.1

Weighted average common shares outstanding 177.3 177.1 177.0

Weighted average shares outstanding 177.6 177.3 177.1

Basic earnings per share $ 2.28 $ 1.19 $ 0.83

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Lease receivables 160.1 131.3

Capitalized software and other noncurrent assets 204.2 165.9

Internal use software and other noncurrent assets 237.2 204.2

Goodwill 240.5 128.1

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Current maturities of debt and finance lease obligations 61.4 40.4

Dividends payable—current 12.2 10.8

Other current liabilities 108.7 101.4

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Shareholders’ Equity:

Preferred shares, no par value, 50,000,000 shares authorized, no shares issued or outstanding

Class A common shares, no par value, 250,000,000 shares authorized, 83,029,500 shares issued and outstanding

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Net income $ 405.4 $ 211.7 $ 147.0

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

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 296.2 290.5 292.9

Goodwill impairment 10.6 — 34.6

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

(Gains) losses on sales of property and equipment—net ( 63.9 ) 6.2 ( 3.3 )

Impairment on assets held for sale — 4.3 14.3

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Long-term incentive and share-based compensation expense (benefit) 14.4 8.9 ( 3.6 )

Gain on investments in equity securities—net ( 21.6 ) ( 8.8 ) —

Noncash restructuring—net — 1.1 50.0

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Proceeds from sale of property and equipment 177.8 87.4 90.1

Proceeds from lease receipts — — 72.7

Proceeds from sale of off-lease inventory 17.0 22.7 20.7

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Purchases of marketable securities ( 18.7 ) ( 23.6 ) ( 17.4 )

Investment in equity securities ( 10.4 ) — —

Investments in equity securities ( 5.2 ) ( 10.4 ) —

Acquisition of business ( 271.3 ) — —

Net cash used in investing activities ( 626.4 ) ( 318.7 ) ( 350.2 )

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Noncash investing and financing activity:

Equipment and inventory purchases in accounts payable $ 0.6 $ 19.1 $ 2.1

Transportation and lease equipment purchases in accounts payable $ 14.6 $ 0.6 $ 19.1

Dividends declared but not yet paid 14.1 13.6 10.8

Ownership interest in Platform Science, Inc.

Cash paid during the year for:

Cash paid during the period for:

Interest 11.6 12.8 14.5

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Net income — — 147.0 — 147.0

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

Share-based compensation expense — 10.9 — — 10.9

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

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 B common shares — — ( 42.7 ) — ( 42.7 )

Share issuances — 0.3 — — 0.3

Exercise of employee stock options — 0.2 — — 0.2

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

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, 2019 — 1,542.7 693.6 0.1 2,236.4

1 unchanged sentence

Other comprehensive income — — — 0.7 0.7

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-based compensation expense — 8.6 — — 8.6

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 )

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Net income — — 405.4 — 405.4

Other comprehensive income — — — 0.7 0.7

Other comprehensive loss — — — ( 0.8 ) ( 0.8 )

Share-based compensation expense — 14.6 — — 14.6

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

Dividends declared at $ 0.28 per share of Class A and Class B common shares — — ( 50.1 ) — ( 50.1 )

Share issuances — 0.9 — — 0.9

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Nature of Operations

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.

We are one of the largest providers of surface transportation and logistics solutions in North America that, through 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

Our consolidated financial statements have been prepared in conformity with GAAP and include all of our wholly owned subsidiaries.

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.

All intercompany transactions have been eliminated in consolidation.

Use of Estimates

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Receivables and Allowance

As of January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments , which is codified in ASC 326, for our trade account receivable and allowance, as well as our leases.

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

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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.

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 for use in our Company operations.

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

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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.

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.

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.

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

We did no t have an allowance for credit losses on our marketable securities as of December 31, 2021 and 2020.

Cost basis is determined using the specific identification method.

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.

In addition, we 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.

Fair value is the estimated price that would be received to sell an asset or paid to transfer a liability.

Inputs to valuation techniques used to measure fair value fall into three broad levels (Levels 1, 2, and 3) as follows:

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Gains and losses on the sale or other disposition of equipment are based on the difference between the proceeds received less costs to sell and the net book value of the assets disposed.

Gains and losses are recognized at the time of the sale or disposition and are classified in operating supplies and expenses in the consolidated statements of comprehensive income.

Gains and losses are recognized at the time of sale or disposition and are classified in operating supplies and expenses in the consolidated statements of comprehensive income.

For the years ending December 31, 2021, 2020, and 2019, we recognized $ 63.9 million of net gains, $ 6.7 million of net losses, and $ 1.8 million of net gains on the sale of property and equipment, respectively.

Included in gains and losses on the sale of property and equipment for the years ended December 31, 2020 and 2019 were net losses of $ 0.5 million and $ 1.5 million related to the shutdown of our FTFM service offering, respectively.

Assets Held for Sale

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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.

No impairment losses were recorded for the year ended December 31, 2021.

For the years ended December 31, 2020 and 2019, total impairment losses were $ 4.7 million and $ 42.4 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:

Assets held for sale by segment as of December 31, 2021 and 2020 were as follows:

(in millions) 2021 2020

Truckload (1)

$ 16.9 $ 63.5

Intermodal 0.2 1.9

Total $ 0.7 $ 18.8

(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.

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

Internal Use Software and Cloud Computing Arrangements

We capitalize certain costs incurred to acquire, develop, or modify software to meet the company’s internal needs.

Only costs incurred during the application development stage are capitalized once the preliminary project stage is complete and management has committed to funding the project.

Internal use software costs are amortized on a straight-line basis primarily over five years, or the expected useful life if different, with amortization expense recorded within depreciation and amortization on the consolidated statements of comprehensive income.

We recorded $ 20.2 million, $ 15.4 million, and $ 16.1 million of amortization expense related to internal use software during the years ended December 31, 2021, 2020, and 2019, respectively.

Additionally, with the adoption of ASU 2018-15 on January 1, 2020, we capitalize certain implementation costs for internal use software incurred in a CCA that is a service contract.

CCA implementation costs are amortized on a straight-line basis over the term of the related hosting agreement, taking into consideration renewal options, if any.

The renewal period is included in the amortization period if determined that the option is reasonably certain to be exercised.

Amortization expense is recorded within operating supplies and expenses on the consolidated statements of comprehensive income, similar to the related hosting fees.

We recorded $ 1.0 million of amortization expense related to CCA implementation costs during the year ended December 31, 2021.

There was no amortization expense related to CCA implementation costs during the year ended December 31, 2020.

The following table provides information related to our internal use software and CCA implementation costs as of the dates shown.

(in millions) December 31, 2021 December 31, 2020

Internal use software $ 319.4 $ 290.7

Less accumulated amortization 225.5 207.6

Net internal use software $ 93.9 $ 83.1

CCA implementation costs $ 10.3 $ 7.3

Less accumulated amortization 1.0 —

Net CCA implementation costs (1)

(1) On the consolidated balance sheets, the current portion of CCA implementation costs are included within prepaid expenses and other current assets and amounted to $ 1.2 million and $ 0.1 million for the years ended December 31, 2021 and 2020, respectively, and the noncurrent portion is included in internal use software and other noncurrent assets and amounted to $ 8.1 million and $ 7.2 million for the years ended December 31, 2021 and 2020, respectively.

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

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

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 delivery service that has been completed at the end of the reporting period.

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.

Additionally, we are responsible for selection of third-party transportation providers to the extent used to satisfy customer freight requirements.

Additionally, we are responsible for selection of third-party transportation providers to the extent they are used to satisfy customer freight requirements.

We record revenues net of pass-through taxes in our consolidated statements of comprehensive income.

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The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

We record valuation allowances for deferred tax assets to the extent we believe these assets are not more likely than not to be realized through the reversal of existing taxable temporary differences, projected future taxable income, or tax-planning strategies.

We record valuation allowances for deferred tax assets to the extent we do not believe these assets are more-likely-than-not to be realized through the reversal of existing taxable temporary differences, projected future taxable income, or tax-planning strategies.

We record a liability for unrecognized tax benefits when the benefits of tax positions taken on a tax return are not more-likely-than-not to be sustained upon audit.

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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 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.

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

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

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

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

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

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

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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.

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At December 31, 2021 and 2020, we had an aggregate prepaid insurance asset of $ 11.0 million and $ 10.6 million, respectively, which represented prefunded premiums and deposits.

Accounting Standards Issued but Not Yet Adopted

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance, to increase the transparency of government assistance.

This standard requires business entities to disclose information about transactions with a government that are accounted for by applying a grant or contribution model by analogy (for example, IFRS guidance in IAS 20 or guidance on contributions for not-for-profit entities in ASC 958-605), including information about the nature of the transaction, including significant terms and conditions, as well as the amounts and specific financial statement line items affected by the transaction.

ASU 2021-10 is effective for us beginning with our December 31, 2022 financial statements, with early adoption permitted.

We do not believe the adoption of this standard will have a material impact on our consolidated financial statements or disclosures.

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.

We used the modified retrospective or prospective approach, which was based on the specific amendment implemented, when adopting this standard.

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

We entered into a Securities Purchase Agreement, dated December 31, 2021 (“Acquisition Date”), to acquire 100 % of the outstanding equity of MLS, a dedicated trucking company based in Celina, OH, and certain affiliated entities holding assets comprising substantially all of MLS’s business (the “Acquisition”).

MLS is a premier dedicated carrier in the central U.S.

that we believe complements our growing dedicated operations.

As of December 31, 2021, MLS had approximately 1,000 associates and operated 900 tractors and 3,600 trailers across 30 owned or leased locations in the U.S.

The aggregate purchase price of the Acquisition was approximately $ 274.5 million inclusive of certain cash and net working capital adjustments and a deferred payment of $ 3.2 million made in January 2022.

Proceeds from the total purchase consideration were used to settle $ 26.9 million of MLS’s outstanding debt as of the Acquisition Date.

The following table summarizes the purchase price:

Purchase Consideration (in millions)

December 31, 2021

Cash consideration $ 271.3

Deferred cash consideration 3.2

Fair value of total consideration transferred $ 274.5

The acquisition of MLS was accounted for under the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized on the consolidated balance sheets at their fair values as of the Acquisition Date.

These inputs represent Level 3 measurements in the fair value hierarchy and required significant judgments and estimates at the time of valuation.

Fair value estimates of acquired property and equipment were based on an independent appraisal, giving consideration to the highest and best use of the assets.

Key assumptions used in the transportation equipment appraisals were based on the market approach, while key assumptions used in the land, buildings, and improvements and other property and equipment appraisals were based on a combination of the income (direct capitalization) and sales comparison approaches, as appropriate.

The excess of the purchase price over the estimated fair values of assets acquired and liabilities assumed was recorded as goodwill within the Truckload reporting segment.

The goodwill is attributable to expected synergies and growth opportunities within our dedicated business and is expected to be deductible for tax purposes.

Acquisition-related costs, which consisted of fees incurred for advisory, legal, and accounting services, were $ 1.9 million and were included in other general expenses in the Company’s consolidated statements of comprehensive income for the period ended December 31, 2021.

Certain amounts recorded in connection with the Acquisition are still considered preliminary as we continue to gather the necessary information to finalize our fair value estimates and provisional amounts.

Provisional amounts include items related to working capital adjustments, intangibles, indemnification assets and liabilities, and leases.

During the measurement period, which is up to one year from the Acquisition Date, we may adjust provisional amounts that were recognized at the Acquisition Date to reflect new information obtained about facts and circumstances that existed as of the Acquisition Date.

We anticipate finalizing the determination of fair value by December 31, 2022.

The preliminary purchase price allocation for MLS, which may be adjusted by material amounts as we finalize our fair value estimates and provisional amounts, was as follows:

Recognized amounts of identifiable assets acquired and liabilities assumed (in millions)

December 31, 2021

Trade accounts receivable—net of allowance $ 18.6

Other receivables 0.9

Prepaid expenses and other current assets 1.6

Transportation equipment 140.8

Land, buildings, and improvements 7.7

Other property and equipment 0.4

Goodwill 122.7

Total assets acquired 292.7

Trade accounts payable 1.8

Accrued salaries, wages, and benefits 1.7

Claims accruals—current 7.5

Other current liabilities 7.2

Total liabilities assumed 18.2

Net assets acquired $ 274.5

Combined unaudited pro forma operating revenues of the Company and MLS would have been approximately $ 5,816.0 million and $ 4,748.0 million for the years ended December 31, 2021 and 2020, respectively, and our earnings for such periods would not have been materially different.

REVENUE RECOGNITION

We implemented ASU 2014-09, Revenue from Contracts with Customers, which is codified as ASC 606 as of January 1, 2018 and replaced ASC 605, Revenue Recognition.

We used the modified retrospective approach for adoption, which required us to record the cumulative effect of the transition through retained earnings as of January 1, 2018.

Retained earnings increased by $ 7.3 million upon adoption.

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

Disaggregated Revenues

The majority of our revenues are related to transportation and have similar characteristics.

The following table summarizes our revenues by type of service, and each type of service is further described below.

The following table summarizes our revenues by type of service, which are explained in greater detail below.

Year Ended December 31,

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Some consideration is variable in that a final transaction price is uncertain and is susceptible to factors outside of the Company’s influence, such as the weather or the accumulation of accessorial charges.

Pricing information is supplied by the rate schedules that accompany negotiated contracts.

Transportation orders are short-term in nature and generally have terms of significantly less than one year.

Pricing information is supplied by rate schedules that accompany negotiated contracts.

Occasionally we provide freight movements to customers in exchange for non-monetary services.

The fair value of non-monetary consideration on these freight movements is included in operating revenues on the consolidated statements of comprehensive income.

The amount of operating revenues recorded for these services was $ 6.3 million in 2021.

There was no revenue recorded in 2020 or 2019 for freight movements in exchange for non-monetary consideration.

Transportation orders are short-term in nature generally having terms of significantly less than one year.

They do not include significant financing components.

A small portion of revenues in our transportation business relate to fixed payments in our Truckload segment.

These payments are due regardless of volumes, and in these arrangements, the master agreement rather than the individual order may be considered the “contract.” See the Remaining Performance Obligations table below for more information on fixed payments.

Prior to the adoption of ASC 606, we recognized revenue from transportation services when we completed our obligation to the customer, upon delivery.

In accordance with ASC 606, we now recognize revenue over the period transportation services are provided to the customer, including service performed as of the end of the reporting period for loads currently in transit, in order to recognize the value that is transferred to a customer over the course of the transportation service.

We determine revenue in transit using the input method, under which revenue is recognized based on time lapsed from the departure date (start of transportation services) to the arrival date (completion of transportation services).

These payments are due regardless of volumes, and in these arrangements, the master agreement rather than the individual order may be considered the “contract.” Refer to the Remaining Performance Obligations table below for more information on these fixed payments.

Under ASC 606, we recognize revenue over the period transportation services are provided to the customer, including service performed as of the end of the reporting period for loads currently in transit, in order to recognize the value transferred to a customer over the course of the transportation service.

We determine revenue in transit using the input method, under which revenue is recognized based on time lapsed from the departure date to the arrival date.

Measurement of revenue in transit requires the application of significant judgment.

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Logistics Management

Logistics Management revenues relate to our Supply Chain Management and Import/Export Services operating segments, both of which are included in our Logistics reportable segment.

Within this portfolio, the key service we provide to the customer is management of freight shipping and/or storage.

The “contracts” in our Logistics Management portfolio are the negotiated agreements, which contain both fixed and variable components.

Logistics Management revenues relate to our SCDM operating segment, which is included in our Logistics segment.

Within this portfolio, the key service we provide to customers is management of freight shipping and/or storage.

The “contracts” in our Logistics Management portfolio are negotiated agreements, which contain both fixed and variable components.

The variability of revenues is driven by volumes and transactions, which are known as of an invoice date.

See the Remaining Performance Obligations table below for additional information.

Supply Chain Management and Import/Export Services contracts typically have terms that extend beyond one year, and they do not include financing components.

Prior to the adoption of ASC 606, we recognized revenue under these contracts over time, based on pricing terms within the arrangements.

Our recognition model remains the same under the new standard, as we have elected to use the right to invoice practical expedient, which reflects the fact that a customer obtains the benefit associated with logistics services as they are provided (output method).

Refer to the Remaining Performance Obligations table below for additional information.

SCDM contracts typically have terms that extend beyond one year and do not include financing components.

Under ASC 606 we have elected to use the right to invoice practical expedient, which reflects the fact that a customer obtains the benefit associated with logistics services as they are provided (output method), and therefore we recognize revenue under these contracts over time.

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, therefore, we are considered to be the principal in these arrangements.

We are responsible for ensuring the services are performed and are acceptable to the customer;

therefore, we are considered 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 the date shown.

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

Remaining Performance Obligations (in millions)

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Logistics Management 6.9

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).

This disclosure does not include revenue related to performance obligations that are part of a contract with an original expected duration of one year or less, nor does it 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, 2020 December 31, 2019 January 1, 2019

December 31, 2021 December 31, 2020 December 31, 2019

Other current assets—Contract assets $ 33.8 $ 21.5 $ 17.6

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Contract liabilities relate to amounts that customers paid in advance of the associated service.

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 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, 2020 December 31, 2019

Capitalized contract fulfillment costs $ 4.1 $ 4.2

Amortization of capitalized contract fulfillment costs was as follows:

Year Ended December 31,

(in millions) 2020 2019 2018

Amortization of contract fulfillment costs $ 2.6 $ 3.2 $ 2.5

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:

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

(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, 2020 December 31, 2019

and (3) to recognize revenue in the Logistics Management portfolio as 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 that are measured at fair value on a recurring, monthly basis in accordance with ASC 820.

Fair Value at

(in millions) Level in Fair

Value Hierarchy Fair Value Fair Value

Value Hierarchy December 31, 2021 December 31, 2020

Equity investment in TuSimple (1)

Marketable securities (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.

We measure our marketable securities on a recurring, monthly basis.

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

(1) Our equity investment in TuSimple is classified as Level 1 in the fair value hierarchy as shares of TuSimple’s Class A common stock are traded on the NASDAQ.

See Note 5, Investments, for additional information .

(2) Marketable securities are classified as Level 2 in the fair value hierarchy as they 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.

See Note 5, Investments , for additional information.

The fair value of the Company’s debt was $ 276.7 million and $ 316.9 million as of December 31, 2021 and 2020, respectively.

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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, 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

Non restructuring (1)

Restructuring (2)

Right-of-use lease assets

Non restructuring (3)

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 %.

We measure non-financial assets such as 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.

During 2021 we did not measure any non-financial assets at fair value.

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

(in millions) Level in Fair

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Restructuring (2)

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

FTFM reporting unit goodwill (5)

(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.

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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 2.9 % to 4.5 %, with a weighted average rate of 4.0 %.

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

(3) During 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 %.

(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.

(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.

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.

As part of the acquisition of MLS on December 31, 2021, certain assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date.

Refer to Note 2, Acquisition, for further details.

Marketable Securities

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treasury and government agencies 23 to 110 $ 19.9 $ 19.6 $ 12.6 $ 12.7

Asset-backed securities — — — 0.1 0.1

Corporate debt securities 3 to 69 20.3 20.4 21.4 22.2

State and municipal bonds 13 to 96 9.1 9.3 11.9 12.2

government bonds — — — 4.0 4.0

Total marketable securities $ 49.3 $ 49.3 $ 45.9 $ 47.1

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, 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.

Equity Investments without Readily Determinable Fair Values

The Company’s strategic equity investments without readily determinable fair values include PSI, a provider of telematics and fleet management tools, and MLSI, a transportation technology development company.

These investments are being accounted for under ASC 321, Investments - Equity Securities, using the measurement alternative, and their combined values as of December 31, 2021 and 2020 were $ 36.2 million and $ 22.3 million, respectively.

If the Company identifies observable price changes for identical or similar securities of the same issuer, the equity security is measured at fair value as of the date the observable transaction occurred using Level 3 inputs.

The following table summarizes the activity related to these equity investments during the periods presented.

Year Ended December 31,

(in millions) 2021 2020 2019

Investment in equity securities $ — $ 10.0 $ —

Upward adjustments (1)

Cumulative upward adjustments 26.2

(1) Our updated investment value in 2021 was determined using the backsolve method, a valuation approach that uses an option pricing model to value shares based on the price paid for recently issued shares.

Equity Investments with Readily Determinable Fair Values

On January 12, 2021, the Company purchased a $ 5.0 million non-controlling interest in TuSimple, a global self-driving technology company.

Upon completion of its initial public offering in April 2021, our investment in TuSimple was converted into Class A common shares and is now being accounted for under ASC 321, Investments - Equity Securities .

In the year ended December 31, 2021, the Company recognized a pre-tax net gain of $ 7.7 million on its investment in TuSimple.

See Note 4, Fair Value , for additional information on the fair value of our investment in TuSimple.

All of our equity investments are included in other noncurrent assets on the consolidated balance sheets with subsequent gains or losses recognized within other expense (income)—net on the consolidated statements of comprehensive income.

Goodwill represents the excess of the purchase price of 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, 2021 and 2020.

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Balance at December 31, 2019 $ 103.6 $ 14.2 $ 9.7 $ 127.5

Goodwill impairment charge ( 34.6 ) — — ( 34.6 )

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

Foreign currency translation adjustment — — 0.6 0.6

Balance at December 31, 2020 103.6 14.2 10.3 128.1

Foreign currency translation gain — — 0.6 0.6

Acquisition (see Note 2) 122.7 — — 122.7

Goodwill impairment charge — — ( 10.6 ) ( 10.6 )

Foreign currency translation adjustment — — 0.3 0.3

Balance at December 31, 2021 $ 226.3 $ 14.2 $ — $ 240.5

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.

At December 31, 2021 and 2020, we had accumulated goodwill impairment charges of $ 53.2 million and $ 42.6 million, respectively, which consisted of $ 34.6 million and $ 18.6 million in our Truckload reporting segment and Other, as of December 31, 2021, and $ 34.6 million and $ 8.0 million in our Truckload reporting segment and Other, as of December 31, 2020.

Goodwill is tested for impairment at least annually using the discounted cash flow and guideline public 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.

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.

Because of this triggering event, an impairment test was performed for the FTFM reporting unit.

As a result of the testing performed, an impairment loss of $ 34.6 million was recorded for our FTFM reporting unit as the discounted cash flows expected to be generated by this reporting unit were not sufficient to recover its carrying value.

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

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.

In the fourth quarter of 2021, annual impairment tests were performed on all three of our reporting units with goodwill as of October 31, 2021, our assessment date.

An impairment loss of $ 10.6 million was recorded for our Asia reporting unit as the discounted cash flows expected to be generated by the reporting unit were not sufficient to recover its carrying value.

This represented all of the remaining goodwill related to the Asia reporting unit.

No impairments resulted for our remaining reporting units.

DEBT AND CREDIT FACILITIES

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(in millions) December 31, 2021

2026 and thereafter

Total $ 265.0

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We had no outstanding borrowings under this agreement as of December 31, 2021 or 2020.

Standby letters of credit under this agreement amounted to $ 3.9 million and $ 3.8 million at December 31, 2020 and 2019, respectively, and were primarily related to the requirements of certain of our real estate leases.

We also have a Receivables Purchase Agreement (the “2018 Receivables Purchase Agreement”) that allows us to borrow funds against qualifying trade receivables at rates based on one-month LIBOR up to $ 200.0 million and provides for the issuance of standby letters of credit through September 2021.

Standby letters of credit under this agreement amounted to $ 3.9 million at both December 31, 2021 and 2020, and were primarily related to the requirements of certain of our real estate leases.

On July 30, 2021, we entered into Amendment No.

3 to our Amended and Restated Receivables Purchase Agreement (the “2021 Receivables Purchase Agreement”), which allows us to borrow funds against qualifying trade receivables at rates based on one-month LIBOR up to $ 150.0 million and provides for the issuance of standby letters of credit through July 2024.

We had no outstanding borrowings under this facility at December 31, 2021 or 2020.

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.

At December 31, 2021 and 2020, 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 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, 2021, 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 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.

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 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.

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

We lease real estate and equipment under operating and finance leases.

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

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.

Our non-real estate operating leases and finance leases include transportation, office, yard, and warehouse equipment, in addition to truck washes.

The majority of our leases include an option to extend the lease, and a small number include an option to terminate the lease early, 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 of these leases.

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 of 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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This often relates to the requirement for us to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other operating costs in addition to a base or fixed rent.

Some of our leases have variable payment amounts, and the variable portions of those payments are excluded from the right-of-use asset and the lease liability.

Some of our leases have variable payment amounts, and the variable portions of those payments are excluded from the right-of-use asset and lease liability.

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

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

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.

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.

Schneider uses multiple discount rates based on lease terms.

The following table presents our net lease costs for the years ended December 31, 2021, 2020, and 2019.

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Variable lease cost Operating supplies and expenses 0.9 2.2 2.6

Sublease income Operating revenues ( 4.5 ) ( 5.4 )

Sublease income Operating supplies and expenses ( 4.5 ) ( 4.5 ) ( 5.4 )

Total net lease cost $ 31.6 $ 30.9 $ 40.7

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Finance leases 4.1 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 sheets.

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.

Operating lease right-of-use assets, current operating lease liabilities, and noncurrent operating lease liabilities are included in internal use software and other noncurrent assets, other current liabilities, and other noncurrent liabilities, respectively, in the consolidated balance sheets.

Operating lease right-of-use assets were $ 68.6 million and $ 69.4 million as of December 31, 2021 and 2020, respectively.

No impairment losses were recorded on our operating lease right-of-use assets for the year ended December 31, 2021.

Total impairment losses on our operating lease right-of-use assets 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.

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Future operating lease payments at December 31, 2021 include $ 4.0 million related to options to extend lease terms that we are reasonably certain to exercise.

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 .

As of December 31, 2021, we had several leases that were signed but had not yet commenced totaling $ 5.5 million.

These leases will commence in 2022 and have lease terms of one to four years .

The consolidated balance sheets include right-of-use assets acquired under finance leases as components of property and equipment as of December 31, 2021 and 2020.

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(in millions) December 31, 2021 December 31, 2020

Transportation equipment $ 1.2 $ —

Real property 0.7 0.7

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Total $ 5.1 $ 1.8

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.

We finance various types of transportation-related equipment for independent third parties under lease contracts which are generally for one to three 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.

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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, 2020 and 2019, the investments in lease receivables were as follows:

As of December 31, 2021 and 2020, investments in lease receivables were as follows:

(in millions) December 31, 2021 December 31, 2020

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Net investment in leases $ 270.7 $ 228.1

Current maturities of lease receivables 97.6 122.1

Allowance for doubtful accounts ( 0.8 ) ( 0.6 )

Current portion of lease receivables—net of allowance 96.8 121.5

Lease receivables—noncurrent $ 131.3 $ 109.4

The amounts to be received on lease receivables as of December 31, 2021 were as follows:

(in millions) December 31, 2021

2026 and thereafter

Total undiscounted lease cash flows 317.2

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Long-term lease receivable $ 160.1

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.

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

Given our leases have fully guaranteed residual values and we can 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 performing subsequent credit checks as needed.

Our net investment in leases with any portion past due as of December 31, 2021 was $ 47.3 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.

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

As of December 31, 2021, our lease payments past due were $ 3.6 million.

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.

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Interest income on lease receivable $ 32.4 $ 26.5 $ 27.3

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.

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

federal law 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 included a provision for the deferment of the employer portion of social security taxes through December 31, 2020, among other things, which the Company elected.

As of December 31, 2021, the deferred employer social security taxes have been paid, which totaled $ 30.7 million as of December 31, 2020.

The components of the provision for income taxes for the years ended December 31, 2021, 2020, and 2019 were as follows:

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State and other 1.2 3.1 1.1

Impact of the Tax Cuts and Jobs Act (1)

2.0 1.7 ( 0.2 )

Total provision for income taxes $ 136.6 $ 71.2 $ 51.1

(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.

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State tax—net of federal effect 18.9 3.5 9.7 3.4 8.1 4.1

Nondeductible meals and entertainment 1.9 0.7 2.1 1.0 2.1 0.6

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

Other—net 3.9 0.7 2.1 0.8 1.4 0.7

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Deferred tax assets:

Allowance for doubtful accounts $ 0.4 $ 0.4

Compensation and employee benefits $ 10.1 $ 10.2

Insurance and claims accruals 3.0 2.4

Operating lease liabilities 17.8 18.5

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Potential interest and penalties related to unrecognized tax benefits are recorded in income tax expense.

Interest and penalties recorded in income tax expense for the years ended December 31, 2020, 2019, and 2018 were immaterial.

Accrued interest and penalties for such unrecognized tax benefits as of December 31, 2021 and 2020 were $ 2.7 million and $ 2.4 million, respectively.

We expect no significant increases or decreases for unrecognized tax benefits during the twelve months immediately following the December 31, 2021 reporting date.

As of December 31, 2020, 2019, and 2018, a reconciliation of the beginning and ending amount of unrecognized tax benefits, which is recorded as other noncurrent liabilities in the consolidated balance sheets, is as follows:

As of December 31, 2021, 2020, and 2019, a reconciliation of the beginning and ending unrecognized tax benefits, which is recorded as other noncurrent liabilities in the consolidated balance sheets, is as follows:

(in millions) 2021 2020 2019

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

Lapse of statutes — — ( 0.3 )

Gross unrecognized tax benefits—end of year $ 5.2 $ 4.3 $ 4.3

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The years 2018 , 2019 , and 2020 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 for eign jurisdictional statutes of limitations generally range from three to four years.

In October 2021, the statute for 2017 expired.

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

Carryforwards

As of December 31, 2021, we had $ 162.1 million of state net operating loss carryforwards which are subject to expiration from 2022 to 2042.

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.

The deferred tax assets related to carryforwards at December 31, 2021 were $ 9.3 million for state net operating loss 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, 2020, we carried a total valuation allowance o f $ 2.6 million against state deferred tax assets.

At December 31, 2021, we carried a total valuation allowance of $ 2.5 million against state deferred tax assets.

COMMON EQUITY

Earnings Per Share

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.

The following table summarizes the computation of basic and diluted earnings per share for the years ended December 31, 2021, 2020, and 2019.

Year Ended December 31,

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Weighted average common shares outstanding 177.6 177.3 177.1

Dilutive effect of share-based awards and options

outstanding 0.3 0.2 0.2

Dilutive effect of share-based awards and options outstanding 0.5 0.3 0.2

Weighted average diluted common shares outstanding 178.1 177.6 177.3

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Diluted earnings per common share 2.28 1.19 0.83

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.

The calculation of diluted earnings per share excluded 0.8 million, 0.6 million, and 0.5 million share-based awards and options that had an anti-dilutive effect for the years ended December 31, 2021, 2020, and 2019, respectively.

Capital Stock and Rights

Our common equity consists of 750.0 million authorized shares of Class B common stock, entitled to one vote per share, and 250.0 million authorized shares of Class A common stock, entitled to 10 votes per share.

Our Class B common stock has traded on the NYSE under the symbol “SNDR” since our IPO in April 2017.

Our Class A common stock is held by the Schneider National, Inc.

Voting Trust for the benefit of members of the Schneider family.

Each share of Class A common stock is convertible into one share of Class B common stock.

Our Class B common stock is not convertible into any other shares of our capital stock.

There is no public trading market for our Class A common stock.

Our Amended and Restated Articles of Incorporation provide that holders of our Class A and Class B common stock will be treated equally and ratably on a per share basis with respect to dividends, unless disparate treatment is approved in advance by the vote of the holders of a majority of the outstanding shares of our Class A and Class B common stock, each voting as a separate group.

In the event of a dissolution, liquidation or winding up of the company, the holders of Class A and Class B common stock are entitled to share ratably in all assets and funds remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding, unless disparate treatment is approved in advance by the vote of the holders of a majority of the outstanding shares of our Class A and Class B common stock, each voting as a separate group.

Additionally, a total of 50.0 million shares of preferred stock is authorized, none of which is currently outstanding.

The Company has no present plans to issue any preferred stock.

Dividends Declared

During 2021, 2020, and 2019, the Company declared cash dividends totaling $ 0.28 , $ 2.26 , 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.

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

Subsequent Event - Dividends Declared

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Under the terms of the plan, substantially all employees may contribute a percentage of their annual compensation, as defined, to the plan.

We make contributions to the plan, up to a maximum amount per employee, based upon a percentage of employee contributions.

We make contributions to the plan, up to a maximum amount per employee, based on a percentage of employee contributions.

Our net expense under this plan was $ 12.9 million, $ 11.3 million, and $ 11.8 million in 2021, 2020, and 2019, respectively.

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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:

restricted shares, restricted stock units (“RSUs”), performance-based restricted shares (“performance shares”), performance-based restricted stock units (“PSUs”), and non-qualified stock options.

Prior to our IPO, we granted restricted shares of Class B common stock.

The pre-IPO restricted shares were accounted for as equity awards and paid out in shares.

These awards consist of restricted shares, restricted stock units (“RSUs”), performance-based restricted shares (“performance shares”), performance-based restricted stock units (“PSUs”), and non-qualified stock options.

Performance shares and PSUs granted prior to 2021 are earned based on attainment of threshold performance of earnings and return on capital targets.

Beginning with grants in 2021, in addition to achievement of earnings and return on capital targets, a multiplier will be applied to performance share and PSU achievement based on relative total shareholder return (“rTSR”) against a selected peer group over the performance period.

We account for our restricted shares, RSUs, performance shares, PSUs, and non-qualified stock options granted as equity awards in accordance with the applicable accounting standards for these types of share-based payments.

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Restricted Shares and RSUs $ 5.8 $ 4.5 $ 3.2

Pre-IPO Restricted Shares — — 0.9

Performance Shares and PSUs 6.1 1.9 ( 6.0 )

Nonqualified Stock Options 0.9 0.5 1.4

Non-qualified Stock Options 1.4 0.9 0.5

Share-based compensation expense (benefit) $ 13.3 $ 7.3 $ ( 2.3 )

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Restricted Shares and RSUs

Under the Plan, the majority of the restricted shares and RSUs granted from 2017 to 2020 vest ratably over a period of four years , with the first 25 % of the grant vesting approximately one year after the date of grant, subject to continued employment through the vesting date or retirement eligibility.

Under the Plan, the majority of the restricted shares and RSUs granted vest ratably over a period of four years beginning approximately one year after the date of grant and are subject to continued employment through the vesting date or retirement eligibility.

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

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Unvested at December 31, 2021 679,259 $ 22.84

Prior to our IPO, we granted restricted shares of Class B common stock.

Shares included in the pre-IPO restricted share grants vested ratably over a period of three years , with the final tranche vesting in January of 2019.

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

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

Vested ( 44,331 ) 19.00

Forfeited — —

Unvested at December 31, 2019 — $ —

Performance Shares and PSUs

Performance shares and PSUs include a performance period of three years with vesting based on attainment of threshold performance of earnings and return on capital targets.

These awards cliff-vest after a performance period of three years , subject to continued employment through the vesting date or retirement eligibility, and payout ranges from 0 %- 200 % for PSUs and from 0 %- 100 % for performance shares.

These awards cliff-vest after a performance period of three years , subject to continued employment through the vesting date or retirement eligibility, with payout ranging from 0 %- 200 % of the target number of shares for both PSUs and performance shares.

The 2021 awards include an additional rTSR component that allows for payout ranging from 0 %- 250 % of the target number of shares.

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

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

The dividend equivalents are forfeitable consistent with the date the awards vest and are distributed to participants in cash at the same time as the underlying shares.

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

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Granted 350,525 22.04

Vested ( 44,802 ) 26.80

Forfeited ( 170,422 ) 26.68

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Granted 439,620 24.44

Vested ( 44,802 ) 26.80

Forfeited ( 313,362 ) 22.27

Unvested at December 31, 2021 781,280 $ 23.39

Nonqualified Stock Options

We estimated the grant date fair value of the 2021 performance shares and PSUs using a Monte Carlo simulation which requires assumptions for expected term, volatility, dividend yield, and risk-free interest rate.

We used the historical volatility of the peer group to derive the expected volatility of the stock.

The risk-free interest rate was based on the U.S.

Treasury yield curve in effect at the time of the grant taking into consideration the expected term of the awards.

No expected dividend yield was used as the award agreement assumes any dividends distributed during the performance period are reinvested.

Assumptions used in the Monte Carlo simulation for awards granted in 2021 were as follows:

Weighted-average Monte Carlo value $ 24.44

Monte Carlo assumptions:

Expected term 2.87 years

Expected volatility 45.8 %

Risk-free interest rate 0.2

Non-qualified Stock Options

The options granted under the Plan have an exercise price equal to the fair market value of the underlying stock at the date of grant and vest ratably over a period of four years , with the first 25 % of the grant becoming exercisable approximately one year after the date of grant.

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

Non-qualified Stock Options Outstanding Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term

(in years) Aggregate Intrinsic Value (1)

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Exercised (2)

( 8,410 ) 19.00 67

Forfeited ( 134,800 ) 22.87

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Exercised (2)

( 84,984 ) 19.00 440

Forfeited — —

Outstanding at December 31, 2020 (3)

685,900 20.60 7.1 735

Granted 305,668 22.63

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Outstanding at December 31, 2021 948,664 $ 21.42 7.3 $ 5,208

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, 2021 of $ 26.91 , December 31, 2020 of $ 20.70 , and December 31, 2019 of $ 21.82 , as applicable.

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

(2) Cash received upon exercise of stock options was $ 0.7 million in 2021, $ 1.6 million in 2020, and $ 0 in 2019.

(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 Non-qualified Stock Options Number of Awards Weighted Average Grant Date Fair Value

Unvested at December 31, 2018 320,009 $ 7.77

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Unvested at December 31, 2021 618,953 $ 6.34

We estimated the grant date fair value of option awards using the Black-Scholes option pricing model.

The Black-Scholes option valuation model uses assumptions over the expected term of the options.

We used volatility analysis of comparable companies to determine the expected volatility of the stock.

We used market data to estimate option exercise and employee termination within the valuation model.

We estimated the grant date fair value of option awards using the Black-Scholes option pricing model which uses assumptions over the expected term of the options.

We used volatility analysis of comparable companies to determine the expected volatility of the stock and market data to estimate option exercise and employee termination within the valuation model.

The expected term of options granted was based on the average of the contractual term and the weighted average of the vesting term, and it represents the average period of time that options granted are expected to be outstanding.

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Assumptions used in calculating the Black-Scholes value of options granted during 2021, 2020, and 2019 were as follows:

Year Ended December 31,

2021 2020 2019

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Director Share Awards and Deferred Stock Units

Equity awards are granted to each director annually on the date of our annual shareholder meeting, prospectively for the year of service following the annual shareholder meeting and will vest on the earlier of (1) the one-year anniversary of the grant date or (2) the following year’s shareholder meeting, subject to continued service.

Any director who joins our Board mid-year will receive a pro-rata portion of equity-based compensation for service during the balance of the director’s service year, which will vest on the date of the next annual meeting.

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.

Equity awards are granted to each director annually on the date of our annual shareholder meeting and accounted for 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 2021, $ 1.3 million in 2020, and immaterial in 2019.

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

These awards consist of fully vested shares of our Class B common stock or deferred stock units (“DSUs”) that are granted in arrears on the first business day following a quarter close.

The number of shares or DSUs granted each quarter is determined by dividing the quarterly retainer amount by the fair market value of the shares of common stock as of the grant date.

These awards consist of fully vested shares of our Class B common stock or deferred stock units (“DSUs”).

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 liability based awards was $ 0.9 million in 2020 and immaterial in 2019 and 2018.

Expense related to our director liability based awards was $ 1.2 million in 2021, $ 0.9 million in 2020, and immaterial in 2019.

OTHER LONG-TERM INCENTIVE COMPENSATION

We maintain legacy long-term cash incentive compensation plans.

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.

We maintain legacy long-term cash incentive compensation plans, and the total expense (benefit) recognized for these plans was $ 1.2 million in 2021, $ 1.6 million in 2020, and $( 2.0 ) million in 2019.

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 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.

The final year of expense for Cash Plan Awards was 2020, and as of December 31, 2021 all Cash Plan Awards were paid.

The liability for the Cash Plan Awards was $ 2.9 million as of December 31, 2020.

The 2011 SARs were paid in March of 2021, and the 2012 SARs are fully vested and will be paid on March 15, 2022.

As of December 31, 2021, approximately 0.3 million SARs were outstanding, and the liability was $ 2.1 million and $ 5.3 million at December 31, 2021 and 2020, respectively.

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.

Long-Term Incentive Plan (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 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 $ 8.7 million and $ 8.8 million at December 31, 2021 and 2020, respectively.

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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 maintain excess liability insurance with licensed insurance carriers for liability 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.

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At December 31, 2021, our firm commitments to purchase transportation equipment totaled $ 337.3 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 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.

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 sale 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 completed a remote trial in January 2021.

Post-trial briefs have been filed, and the Court’s decision is pending.

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

We believe we have presented strong defenses to this claim.

In 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.

In December 2020, the Company filed an appeal with the U.S.

Court of Appeals for the Seventh Circuit, and in August 2021, the Seventh Circuit reversed the District Court and ruled in the Company’s favor on all matters.

In November 2021, after receiving confirmation from the IRS of the refund amount, the Company concluded that recovery was probable and recorded a $ 13.5 million refund receivable for such taxes and related interest.

SEGMENT REPORTING

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Company owned containers, chassis, and dray tractors are used to provide these transportation services.

The Logistics reportable segment consists of three operating segments – Brokerage, Supply Chain Management, and Import/Export Services – that are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting.

In the Logistics segment, we provide additional sources of truck capacity, manage transportation-systems analysis requirements for individual customers, and provide trans-loading and warehousing services.

As of December 31, 2020, our operating segments within the Logistics reportable segment were Brokerage, Supply Chain Management, and Import/Export Services.

During 2021, the Company combined the Supply Chain Management and Import/Export Services operating segments into one operating segment.

As of December 31, 2021, there are only two remaining operating segments, Brokerage and SCDM, that are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting.

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.

None of these operations meet the quantitative reporting thresholds.

As a result, these operations are grouped in “Other” in the tables below.

Also included in “Other” are revenues and expenses that are incidental to our activities and not attributable to any of the reportable segments.

The CODM reviews revenue for each segment without the inclusion of fuel surcharge revenue.

None of these operations meet the quantitative reporting thresholds, and a result, are grouped in “Other” in the tables below.

Also included in “Other” are revenues and expenses that are incidental to our operations and not attributable to any of the reportable segments.

The CODM reviews revenues for each segment without the inclusion of fuel surcharge revenue.

For segment purposes, any fuel surcharge revenues earned are recorded as a reduction of the segment’s fuel expenses.

Income from operations at a segment level reflects the measure presented to the CODM for each segment.

Income from operations at the segment level reflects the measure presented to the CODM for each segment.

Separate balance sheets are not prepared by segment, and as a result, assets are not separately identifiable by segment.

All transactions between reportable segments are eliminated in consolidation.

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

The following tables summarize our segment information.

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Other 37.4 33.4 35.5

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.

Depreciation and amortization $ 296.2 $ 290.5 $ 292.9

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.

The pre-tax loss from our FTFM service offering was $ 34.4 million for the year ended December 31, 2019.

As of December 31, 2019, FTFM restructuring liabilities totaled $ 5.1 million, of which $ 1.5 million were paid during the year ended December 31, 2020.

The remaining FTFM restructuring liabilities, which totaled $ 4.4 million as of December 31, 2020, were paid during the year ended December 31, 2021.

Restructuring activity for the year ended December 31, 2021 was not material.

(in millions) Cumulative

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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—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

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data