Schneider National, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Schneider National, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Schneider National, Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income, cash flows, and shareholders’ equity, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. 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. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Claims Accruals — Refer to Note 1 to the financial statements Critical Audit Matter Description 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. 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. 35 Table of Contents 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. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the claims accruals included the following, among others: • We tested the effectiveness of internal controls related to claims accruals, including those over the projected development of known claims and incurred but not reported claims. • We evaluated the methods and assumptions used by management to estimate claims accruals by: ◦ Testing the underlying data that served as the basis for the actuarial analysis, including reconciling the claims data to the Company’s actuarial analysis, testing the annual exposure data, and testing current year claims and payment data. ◦ Comparing management’s selected claims accrual estimates to the range provided by their third-party actuary and to historical trends. ◦ With the assistance of our actuarial specialists, we developed an independent range of estimates of the claims accruals, utilizing loss development factors from the Company’s historical data and industry claim development factors, and compared our estimated range to management’s recorded reserve. /s/ Deloitte & Touche LLP Milwaukee, Wisconsin February 18, 2022 We have served as the Company’s auditor since 2002. 36 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Schneider National, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Schneider National, Inc. and subsidiaries (the “Company”) 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 (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 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 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Milwaukee, Wisconsin February 18, 2022 37 Table of Contents SCHNEIDER NATIONAL, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions, except per share data) Year Ended December 31, 2021 2020 2019 Operating revenues $ 5,608.7 $ 4,552.8 $ 4,747.0 Operating expenses: Purchased transportation 2,657.7 1,997.8 1,996.4 Salaries, wages, and benefits 1,149.5 1,046.5 1,106.0 Fuel and fuel taxes 281.4 204.4 289.7 Depreciation and amortization 296.2 290.5 292.9 Operating supplies and expenses 462.4 533.0 530.2 Insurance and related expenses 82.4 86.1 109.6 Other general expenses 134.8 106.8 116.1 Goodwill impairment charge 10.6 — 34.6 Restructuring—net — 1.0 63.7 Total operating expenses 5,075.0 4,266.1 4,539.2 Income from operations 533.7 286.7 207.8 Other expenses (income): Interest income ( 2.1 ) ( 3.3 ) ( 8.5 ) Interest expense 12.5 13.6 16.6 Other expense (income)—net ( 18.7 ) ( 6.5 ) 1.6 Total other expenses (income)—net ( 8.3 ) 3.8 9.7 Income before income taxes 542.0 282.9 198.1 Provision for income taxes 136.6 71.2 51.1 Net income 405.4 211.7 147.0 Other comprehensive income (loss): 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 shares outstanding 177.6 177.3 177.1 Basic earnings per share $ 2.28 $ 1.19 $ 0.83 Weighted average diluted shares outstanding 178.1 177.6 177.3 Diluted earnings per share $ 2.28 $ 1.19 $ 0.83 Dividends per share of common stock $ 0.28 $ 2.26 $ 0.24 See notes to consolidated financial statements. 38 Table of Contents SCHNEIDER NATIONAL, INC. CONSOLIDATED BALANCE SHEETS (in millions, except share data) December 31, 2021 December 31, 2020 Assets Current Assets: Cash and cash equivalents $ 244.8 $ 395.5 Marketable securities 49.3 47.1 Trade accounts receivable—net of allowance of $ 5.2 million and $ 3.7 million, respectively 705.4 537.7 Other receivables 35.9 20.8 Current portion of lease receivables—net of allowance of $ 1.1 million and $ 0.8 million, respectively 110.6 96.8 Inventories 27.4 44.9 Prepaid expenses and other current assets 75.1 77.9 Total current assets 1,248.5 1,220.7 Noncurrent Assets: Property and equipment: Transportation equipment 3,056.2 2,880.2 Land, buildings, and improvements 215.7 202.3 Other property and equipment 175.1 166.8 Total property and equipment 3,447.0 3,249.3 Less accumulated depreciation 1,396.0 1,417.4 Net property and equipment 2,051.0 1,831.9 Lease receivables 160.1 131.3 Internal use software and other noncurrent assets 237.2 204.2 Goodwill 240.5 128.1 Total noncurrent assets 2,688.8 2,295.5 Total Assets $ 3,937.3 $ 3,516.2 Liabilities and Shareholders’ Equity Current Liabilities: Trade accounts payable $ 331.7 $ 245.7 Accrued salaries, wages, and benefits 104.5 110.7 Claims accruals—current 83.9 36.4 Current maturities of debt and finance lease obligations 61.4 40.4 Other current liabilities 108.7 101.4 Total current liabilities 690.2 534.6 Noncurrent Liabilities: Long-term debt and finance lease obligations 208.9 266.4 Claims accruals—noncurrent 88.5 129.9 Deferred income taxes 451.0 450.4 Other noncurrent liabilities 74.9 79.4 Total noncurrent liabilities 823.3 926.1 Total Liabilities 1,513.5 1,460.7 Commitments and Contingencies (Note 14) 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 — — Class B common shares, no par value, 750,000,000 shares authorized, 95,701,868 and 95,159,635 shares issued, and 94,626,740 and 94,311,653 shares outstanding, respectively — — Additional paid-in capital 1,566.0 1,552.2 Retained earnings 857.8 502.5 Accumulated other comprehensive income — 0.8 Total Shareholders’ Equity 2,423.8 2,055.5 Total Liabilities and Shareholders’ Equity $ 3,937.3 $ 3,516.2 See notes to consolidated financial statements. 39 Table of Contents SCHNEIDER NATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2021 2020 2019 Operating Activities: Net income $ 405.4 $ 211.7 $ 147.0 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 (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 Proceeds from lease receipts 75.8 69.0 78.7 Deferred income taxes 2.0 1.7 ( 0.2 ) 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 Other noncash items ( 4.4 ) 3.1 3.4 Changes in operating assets and liabilities: Receivables ( 162.0 ) ( 65.4 ) 119.9 Other assets ( 46.0 ) ( 15.3 ) ( 3.3 ) Payables 70.2 56.5 ( 35.3 ) Claims reserves and other receivables—net 6.8 3.8 ( 12.6 ) Other liabilities ( 17.4 ) 50.9 ( 46.2 ) Net cash provided by operating activities 566.1 618.2 636.3 Investing Activities: Purchases of transportation equipment ( 399.4 ) ( 274.8 ) ( 335.3 ) Purchases of other property and equipment ( 49.5 ) ( 49.7 ) ( 61.7 ) Proceeds from sale of property and equipment 177.8 87.4 90.1 Proceeds from sale of off-lease inventory 17.0 22.7 20.7 Purchases of lease equipment ( 91.7 ) ( 94.5 ) ( 68.7 ) Proceeds from marketable securities 14.6 24.2 22.1 Purchases of marketable securities ( 18.7 ) ( 23.6 ) ( 17.4 ) 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 ) Financing Activities: Payments of debt and finance lease obligations ( 40.8 ) ( 55.6 ) ( 52.0 ) Payment of deferred consideration related to acquisition — — ( 18.7 ) Dividends paid ( 49.6 ) ( 400.0 ) ( 42.5 ) Net cash used in financing activities ( 90.4 ) ( 455.6 ) ( 113.2 ) Net (decrease) increase in cash and cash equivalents ( 150.7 ) ( 156.1 ) 172.9 Cash and Cash Equivalents: Beginning of period 395.5 551.6 378.7 End of period $ 244.8 $ 395.5 $ 551.6 Additional Cash Flow Information: Noncash investing and financing activity: 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 Cash paid during the period for: Interest 11.6 12.8 14.5 Income taxes—net of refunds 145.9 61.6 51.6 See notes to consolidated financial statements. 40 Table of Contents SCHNEIDER NATIONAL, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in millions, except per share data) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Total Balance—December 31, 2018 $ — $ 1,544.0 $ 589.3 $ ( 1.0 ) $ 2,132.3 Net income — — 147.0 — 147.0 Other comprehensive income — — — 1.1 1.1 Share-based compensation benefit — ( 0.4 ) — — ( 0.4 ) Dividends declared at $ 0.24 per share of Class A and B common shares — — ( 42.7 ) — ( 42.7 ) Share issuances — 0.3 — — 0.3 Shares withheld for employee taxes — ( 1.2 ) — — ( 1.2 ) Balance—December 31, 2019 — 1,542.7 693.6 0.1 2,236.4 Net income — — 211.7 — 211.7 Other comprehensive income — — — 0.7 0.7 Share-based compensation expense — 8.6 — — 8.6 Dividends declared at $ 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 ) Balance—December 31, 2020 — 1,552.2 502.5 0.8 2,055.5 Net income — — 405.4 — 405.4 Other comprehensive loss — — — ( 0.8 ) ( 0.8 ) Share-based compensation expense — 14.6 — — 14.6 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 Exercise of employee stock options — 0.7 — — 0.7 Shares withheld for employee taxes — ( 2.4 ) — — ( 2.4 ) Balance—December 31, 2021 $ — $ 1,566.0 $ 857.8 $ — $ 2,423.8 See notes to consolidated financial statements. 41 Table of Contents SCHNEIDER NATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations 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 transactions have been eliminated in consolidation. Use of Estimates We make estimates and assumptions that affect assets, liabilities, the disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. Cash and Cash Equivalents Cash in excess of current operating requirements is invested in short-term, highly liquid investments. We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. 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. The allowance is based on an aging analysis using historical experience, as well as any current and forecasted trends or uncertainties related to customer billing and account collectability. The adequacy of our allowance is reviewed at least quarterly, and reserves for receivables not expected to be collected are established. In circumstances where we are aware of a customer’s inability to meet its financial obligations, a specific reserve is recorded to reduce the net receivable to the amount we reasonably expect to collect. Bad debt expense is included in other general expenses in the consolidated statements of comprehensive income. We record our lease receivables net of an allowance for doubtful accounts based on an aging analysis to reserve amounts expected to be uncollectible. The terms of the lease agreements generally give us the ability to take possession of the underlying asset in the event of default. We may incur credit losses in excess of recorded allowances if the full amount of anticipated proceeds from the sale or re-lease of the asset supporting the third party’s financial obligation, which can be impacted by economic conditions, is not realized. Inventory 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. The following table shows the components of our inventory balances as of the dates shown. (in millions) December 31, 2021 December 31, 2020 Tractors and trailing equipment for sale or lease $ 13.3 $ 33.3 Replacement parts 13.2 10.7 Tires and other 0.9 0.9 Total $ 27.4 $ 44.9 42 Table of Contents Investments in Marketable Securities Our marketable securities are classified as available-for-sale and carried at fair value in current assets on the consolidated balance sheets. 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. 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. 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 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: Level 1 —Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that we have the ability to access at the measurement date. Level 2 —Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Level 3 —Unobservable inputs reflecting the reporting entity’s estimates of the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Property and Equipment Property and equipment are recorded at cost. Depreciation is calculated using the straight-line method based on the estimated useful lives and residual values. Generally, the estimated useful lives are as follows: 2021 Tractors 3 - 8 years Trailing equipment 6 - 20 years Other transportation equipment 4 - 5 years Buildings and improvements 5 - 25 years Other property 3 - 10 years Salvage values, when applicable, generally don’t exceed 30 % or 25 % of the original cost for tractors and trailing equipment, respectively, and reflect any agreements with tractor suppliers for residual or trade-in values for certain new equipment. Long-lived assets require an impairment review when events or circumstances indicate that the carrying amount may not be recoverable. We base our evaluation of other long-lived assets on the presence of impairment indicators such as the future economic benefit of the assets, any historical or future profitability measurements, and other external market conditions or factors. The carrying amount of tangible long-lived assets held and used is considered not recoverable if the carrying amount exceeds the undiscounted sum of cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount is not recoverable, the impairment loss is measured as the excess of the asset’s carrying amount over its fair value. 43 Table of Contents 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 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 Assets held for sale consist of revenue equipment and are included in prepaid expenses and other current assets in the consolidated balance sheets. Reclassification to assets held for sale occurs when the required criteria, as defined by ASC 360, Property, Plant and Equipment , are satisfied. Assets held for sale are evaluated for impairment when transferred to held for sale status or as impairment indicators are present. The carrying amount of assets held for sale is not recoverable if the carrying amount exceeds the fair value less estimated costs to sell the asset. An impairment loss is recorded for the excess of the asset’s carrying amount over the fair value less estimated costs to sell. Impairment losses are recorded in operating supplies and expenses in the consolidated statements of comprehensive income. 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. Assets held for sale by segment as of December 31, 2021 and 2020 were as follows: (in millions) 2021 2020 Truckload (1) $ 0.5 $ 16.9 Intermodal 0.2 1.9 Total $ 0.7 $ 18.8 (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. 44 Table of Contents 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) $ 9.3 $ 7.3 (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 Goodwill is tested for impairment annually in October, or more frequently if impairment indicators exist. The carrying amount of a reporting unit’s goodwill is considered not recoverable, and an impairment loss is recorded if the carrying amount of the reporting unit exceeds the reporting unit’s fair value, as determined based on the combination of an income approach and a market approach. See Note 6, Goodwill , for more information on our goodwill. Revenue Recognition 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 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 they are used to satisfy customer freight requirements. We record revenues net of pass-through taxes in our consolidated statements of comprehensive income. For the years ended December 31, 2021, 2020, and 2019, no customer accounted for more than 10% of our consolidated revenues. Income Taxes Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. 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 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. Interest and penalties related to uncertain tax positions are classified as income tax expense in the consolidated statements of comprehensive income. 45 Table of Contents Earnings Per Share 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 were to exercise or convert their holdings into common stock. Awards that would have an anti-dilutive impact are excluded from the calculation. Share-based Compensation We have share-based compensation plans covering certain employees, including officers and directors. 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 non-qualified stock options. We recognize compensation expense over the requisite service periods within each award. See Note 12, Share-Based Compensation , for more information about our plans. Claims Accruals We are self-insured for loss of and damage to our owned and leased revenue equipment. We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular accidents, and cargo damage. Certain insurance arrangements include a level of self-insurance (deductible) coverage applicable to each claim. We have excess policies to limit our exposure to catastrophic claim costs. The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates, and claim type. Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as well as legal, economic, and regulatory factors. The ultimate cost of a claim develops over time as additional information regarding the nature, timing, and extent of damages claimed becomes available. 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. In doing so, the recorded liability considers future claims growth and provides an allowance for incurred but not reported claims. We do not discount our estimated losses. At December 31, 2021 and 2020, we had an accrual of $ 158.3 million and $ 144.2 million, respectively, for estimated claims net of reinsurance receivables. In addition, we are required to pay certain advanced deposits and monthly premiums. 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. 46 Table of Contents 2. ACQUISITION 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. 47 Table of Contents 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. 3. REVENUE RECOGNITION 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, which are explained in greater detail below. Year Ended December 31, Disaggregated Revenues ( in millions ) 2021 2020 2019 Transportation $ 5,166.7 $ 4,170.0 $ 4,376.6 Logistics Management 219.0 149.7 153.8 Other 223.0 233.1 216.6 Total operating revenues $ 5,608.7 $ 4,552.8 $ 4,747.0 Transportation Transportation revenues are generated from our Truckload and Intermodal segments, as well as from our brokerage business, which is included in the Logistics segment. In the Transportation portfolio, our service obligation to customers is satisfied over time. We do not believe there is a significant impact on the nature, amount, timing, and uncertainty of revenue or cash flows based on the mode of transportation. The economic factors that impact our transportation revenue are generally consistent across these modes given the relatively short-term nature of each contract. For the majority of our transportation business, the “contract with a customer” is identified as an individual order under a negotiated agreement. 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 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. 48 Table of Contents 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.” 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. We calculate the estimated percentage of an order’s transit time that is complete at period end, and we apply that percentage of completion to the order’s estimated revenue. In certain transportation arrangements, an unrelated party contributes a specified service to our customer. For example, we contract with third-party carriers to perform transportation services on behalf of our customers in our brokerage business, and we use third-party rail carriers in our Intermodal segment. In situations that include the contributions of third parties, we act as principal in the arrangement, and, accordingly, we recognize gross revenues from these transactions. Logistics Management 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. 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 are acceptable to the customer; therefore, we are considered the principal in these arrangements. Other 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 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) December 31, 2021 Expected to be recognized within one year Transportation $ 16.1 Logistics Management 13.1 Expected to be recognized after one year Transportation 38.9 Logistics Management 6.9 Total $ 75.0 49 Table of Contents 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, 2021 December 31, 2020 December 31, 2019 Other current assets—Contract assets $ 33.8 $ 21.5 $ 17.6 Other current liabilities—Contract liabilities 3.2 0.7 — We generally receive payment within 40 days of completion of performance obligations. Contract assets in the table above relate to revenue in transit at the end of the reporting period. Contract liabilities relate to amounts that customers paid in advance of the associated service. Practical Expedients 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 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. 4. FAIR VALUE 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 December 31, 2021 December 31, 2020 Equity investment in TuSimple (1) 1 $ 12.7 $ — Marketable securities (2) 2 49.3 47.1 (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. The carrying value of the Company’s debt was $ 265.0 million and $ 305.0 million as of December 31, 2021 and 2020, respectively. The fair value of our debt was calculated using a fixed rate debt portfolio with similar terms and maturities, which is based on the borrowing rates available to us in the applicable year. This valuation used Level 2 inputs. The recorded value of cash, trade accounts receivable, lease receivables, and trade accounts payable approximates fair value. 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. 50 Table of Contents (in millions) Level in Fair Value Hierarchy Fair Value at December 31, 2020 Assets held for sale Non restructuring (1) 2 $ 1.8 Restructuring (2) 2 1.4 Right-of-use lease assets Non restructuring (3) 3 1.0 Restructuring (2) 3 — (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 recorded. Of the $ 17.2 million of assets held for sale not related to the FTFM shutdown as of December 31, 2020, $ 1.8 million were 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 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 %. 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. 5. INVESTMENTS Marketable Securities The following table presents the maturities and values of our marketable securities as of the dates shown. December 31, 2021 December 31, 2020 (in millions, except maturities in months) Maturities Amortized Cost Fair Value Amortized Cost Fair Value U.S. treasury and government agencies 23 to 110 $ 19.9 $ 19.6 $ 12.6 $ 12.7 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 Total marketable securities $ 49.3 $ 49.3 $ 45.9 $ 47.1 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. 51 Table of Contents 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) 13.9 8.8 — 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. 6. GOODWILL 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. (in millions) Truckload Logistics Other Total Balance at December 31, 2019 $ 103.6 $ 14.2 $ 9.7 $ 127.5 Foreign currency translation adjustment — — 0.6 0.6 Balance at December 31, 2020 103.6 14.2 10.3 128.1 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, 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. 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. 52 Table of Contents 7. DEBT AND CREDIT FACILITIES As of December 31, 2021 and 2020, debt included the following: (in millions) December 31, 2021 December 31, 2020 Unsecured senior notes: principal payable at maturities ranging from 2022 through 2025 ; interest payable in semiannual installments through the same timeframe; weighted-average interest rate of 3.61 % and 3.64 % for 2021 and 2020, respectively $ 265.0 $ 305.0 Current maturities ( 60.0 ) ( 40.0 ) Debt issuance costs — ( 0.2 ) Long-term debt $ 205.0 $ 264.8 Scheduled principal payments of debt subsequent to December 31, 2021 are as follows: (in millions) December 31, 2021 2022 $ 60.0 2023 70.0 2024 40.0 2025 95.0 Total $ 265.0 Our Credit Agreement (the “2018 Credit Facility”) provides borrowing capacity of $ 250.0 million and allows us to request an increase in total commitment by up to $ 150.0 million, for a total potential commitment of $ 400.0 million through August 2023. The agreement also provides a sublimit of $ 100.0 million to be used for the issuance of letters of credit. 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 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 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. The credit agreements and senior notes contain change of control provisions pursuant to which a change of control is defined to mean the Schneider family no longer owns more than 50 % of the combined voting power of our capital shares. A change of control event causes an immediate termination of unused commitments under the credit agreements and requires repayment of all outstanding borrowings plus accrued interest and fees. The senior notes require us to provide notice to the note holders offering prepayment of the outstanding principal along with interest accrued to the date of prepayment. The prepayment date is required to be within 20 to 60 days from the date of notice. At December 31, 2021, the Company was in compliance with all financial covenants. 8. LEASES As Lessee 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 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. 53 Table of Contents 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. These leases will be expensed on a straight-line basis and no operating lease right-of-use asset or liability will be recorded. We have also elected to not separate the different components within the contract for our leases; therefore, all fixed costs associated with the lease are included in the right-of-use asset and the operating lease liability. 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 lease liability. At the inception of our contracts, we determine if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. 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. Financial Statement Classification Year Ended December 31, (in millions) 2021 2020 2019 Operating lease cost Operating lease cost Operating supplies and expenses $ 31.3 $ 29.5 $ 32.5 Short-term lease cost (1) Operating supplies and expenses 3.0 3.1 7.6 Finance lease cost Amortization of right-of-use assets Depreciation and amortization 0.8 0.5 3.2 Interest on lease liabilities Interest expense 0.1 0.1 0.2 Variable lease cost Operating supplies and expenses 0.9 2.2 2.6 Sublease income Operating supplies and expenses ( 4.5 ) ( 4.5 ) ( 5.4 ) Total net lease cost $ 31.6 $ 30.9 $ 40.7 (1) Includes short-term lease costs for leases twelve months or less, including those with a duration of one month or less. As of December 31, 2021 and 2020, remaining lease terms and discount rates under operating and finance leases were as follows: December 31, 2021 December 31, 2020 Weighted-average remaining lease term Operating leases 3.6 years 4.1 years Finance leases 3.8 years 4.6 years Weighted-average discount rate (1) Operating leases 3.3 % 3.8 % Finance leases 2.5 % 3.2 % (1) Determined based on a portfolio approach. 54 Table of Contents Additional information related to our leases is as follows: Year Ended December 31, (in millions) 2021 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases $ 31.4 $ 34.7 $ 35.3 Operating cash flows for finance leases 0.1 0.1 0.2 Financing cash flows for finance leases 0.8 0.6 6.9 Right-of-use assets obtained in exchange for new lease liabilities Operating leases $ 28.7 $ 23.7 $ 29.4 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 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. Refer to Note 16, Restructuring, for additional details on the impairment loss related to the FTFM service offering shutdown. At December 31, 2021, future lease payments under operating and finance leases were as follows: (in millions) Operating Leases Finance Leases 2022 $ 26.3 $ 1.5 2023 21.2 1.5 2024 14.6 1.4 2025 10.2 1.0 2026 5.1 0.1 2027 and thereafter 1.6 — Total 79.0 5.5 Amount representing interest ( 4.5 ) ( 0.2 ) Present value of lease payments 74.5 5.3 Current maturities ( 24.4 ) ( 1.4 ) Long-term lease obligations $ 50.1 $ 3.9 For certain of our real estate leases, there are options contained within the lease agreement to extend beyond the initial lease term. The Company recognizes options as right-of-use assets and lease liabilities when deemed reasonably certain to be exercised. 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, 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 . 55 Table of Contents 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. Real and other property under finance leases are being amortized to a zero net book value over the initial lease term. (in millions) December 31, 2021 December 31, 2020 Transportation equipment $ 1.2 $ — Real property 0.7 0.7 Other property 5.5 2.7 Accumulated amortization ( 2.3 ) ( 1.6 ) Total $ 5.1 $ 1.8 As Lessor 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. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount. This contract residual amount is estimated to approximate the fair value of the equipment. Lease payments primarily include base rentals and guaranteed residual values. In addition, we also collect one-time administrative fees and heavy vehicle use tax on our leases. We have elected to not separate the different components within the contract as the administrative fees were not material for the years ended December 31, 2021, 2020, and 2019. We have also elected to exclude all taxes assessed by a governmental authority from the consideration (e.g., heavy vehicle use tax). All of our leases require fixed payments, therefore we have no variable payment provisions. As of December 31, 2021 and 2020, investments in lease receivables were as follows: (in millions) December 31, 2021 December 31, 2020 Future minimum payments to be received on leases $ 193.9 $ 159.0 Guaranteed residual lease values 123.3 107.6 Total minimum lease payments to be received 317.2 266.6 Unearned income ( 46.5 ) ( 38.5 ) Net investment in leases $ 270.7 $ 228.1 The amounts to be received on lease receivables as of December 31, 2021 were as follows: (in millions) December 31, 2021 2022 $ 138.1 2023 102.0 2024 76.4 2025 0.7 Total undiscounted lease cash flows 317.2 Amount representing interest ( 46.5 ) Present value of lease receivables 270.7 Current lease receivables—net of allowance ( 110.6 ) Long-term lease receivable $ 160.1 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. 56 Table of Contents 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. The table below provides additional information on our sales-type leases. Revenue and cost of goods sold are recorded in operating revenues and operating supplies and expenses in the consolidated statements of comprehensive income, respectively. Year Ended December 31, (in millions) 2021 2020 2019 Revenue $ 206.1 $ 206.3 $ 196.0 Cost of goods sold ( 177.6 ) ( 185.6 ) ( 177.1 ) Operating profit $ 28.5 $ 20.7 $ 18.9 Interest income on lease receivable $ 32.4 $ 26.5 $ 27.3 9. INCOME TAXES 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. economy. 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: (in millions) 2021 2020 2019 Current: Federal $ 112.5 $ 60.4 $ 43.0 State and other 22.1 9.1 8.3 134.6 69.5 51.3 Deferred: Federal 0.8 ( 1.4 ) ( 1.3 ) State and other 1.2 3.1 1.1 2.0 1.7 ( 0.2 ) Total provision for income taxes $ 136.6 $ 71.2 $ 51.1 Foreign operations of the Company are insignificant in relation to our overall operating results. The provision for income taxes for the years ended December 31, 2021, 2020, and 2019 differed from the amounts computed using the federal statutory rate in effect as follows: 2021 2020 2019 (in millions, except percentages) Dollar Impact Rate Dollar Impact Rate Dollar Impact Rate Income tax at federal statutory rate $ 113.8 21.0 % $ 59.4 21.0 % $ 41.6 21.0 % State tax—net of federal effect 18.9 3.5 9.7 3.4 8.1 4.1 Other—net 3.9 0.7 2.1 0.8 1.4 0.7 Total provision for income taxes $ 136.6 25.2 % $ 71.2 25.2 % $ 51.1 25.8 % 57 Table of Contents The components of the net deferred tax liability included in deferred income taxes in the consolidated balance sheets as of December 31, 2021 and 2020, were as follows: (in millions) 2021 2020 Deferred tax assets: Compensation and employee benefits $ 10.1 $ 10.2 Operating lease liabilities 17.8 18.5 State net operating losses and credit carryforwards 9.3 11.5 Other 10.5 8.6 Total gross deferred tax assets 47.7 48.8 Valuation allowance ( 2.5 ) ( 2.6 ) Total deferred tax assets—net of valuation allowance 45.2 46.2 Deferred tax liabilities: Property and equipment 456.5 462.6 Prepaid expenses 5.5 4.3 Intangible assets 7.9 5.9 Operating lease right-of-use assets 16.5 16.6 Other 9.8 7.2 Total gross deferred tax liabilities 496.2 496.6 Net deferred tax liability $ 451.0 $ 450.4 Unrecognized Tax Benefits Our unrecognized tax benefits as of December 31, 2021 would reduce the provision for income taxes if subsequently recognized. Potential interest and penalties related to unrecognized tax benefits are recorded in income tax expense. 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, 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 Gross unrecognized tax benefits—beginning of year $ 4.3 $ 4.3 $ 3.3 Gross increases—tax positions related to current year 0.9 0.3 0.6 Gross increases (decreases)—tax positions taken in prior years — ( 0.3 ) 0.4 Gross unrecognized tax benefits—end of year $ 5.2 $ 4.3 $ 4.3 Tax Examinations We file a U.S. federal income tax return, as well as income tax returns in a majority of state tax jurisdictions. We also file returns in foreign jurisdictions. 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 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. 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, 2021, we carried a total valuation allowance of $ 2.5 million against state deferred tax assets. 58 Table of Contents 10. COMMON EQUITY Earnings Per Share 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, (in millions, except per share data) 2021 2020 2019 Numerator: Net income available to common shareholders $ 405.4 $ 211.7 $ 147.0 Denominator: Weighted average common shares outstanding 177.6 177.3 177.1 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 Basic earnings per common share $ 2.28 $ 1.19 $ 0.83 Diluted earnings per common share 2.28 1.19 0.83 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 was a special cash dividend of $ 2.00 per share, totaling $ 354.7 million. Subsequent Event - Dividends Declared In January 2022, our Board declared a quarterly cash dividend for the first fiscal quarter of 2022 in the amount of $ 0.08 per share to holders of our Class A and Class B common stock. The dividend is payable to shareholders of record at the close of business on March 11, 2022 and is expected to be paid on April 8, 2022 . 59 Table of Contents 11. EMPLOYEE BENEFIT PLANS We sponsor defined contribution plans for certain eligible employees. Under these plans, annual contribution levels, as defined in the plan agreements, are based upon years of service. Expense under these plans totaled $ 11.3 million, $ 10.7 million, and $ 10.1 million in 2021, 2020, and 2019, respectively, and is classified in salaries, wages, and benefits in the consolidated statements of comprehensive income. We also have a savings plan, organized pursuant to Section 401(k) of the Internal Revenue Code, to provide employees with additional income upon retirement. 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 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. 12. SHARE-BASED COMPENSATION 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 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. These standards require that the cost of the awards be recognized in our consolidated financial statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award, subject to the attainment of performance metrics established for performance shares and PSUs. Share-based compensation expense is recorded in salaries, wages, and benefits in our consolidated statements of comprehensive income, along with other compensation expenses to employees. The following table summarizes the components of our employee share-based compensation expense. Year Ended December 31, (in millions) 2021 2020 2019 Restricted Shares and RSUs $ 5.8 $ 4.5 $ 3.2 Performance Shares and PSUs 6.1 1.9 ( 6.0 ) Non-qualified Stock Options 1.4 0.9 0.5 Share-based compensation expense (benefit) $ 13.3 $ 7.3 $ ( 2.3 ) Related tax benefit (expense) $ 3.3 $ 1.8 $ ( 0.6 ) As of December 31, 2021, we had $ 18.9 million of pre-tax unrecognized compensation cost related to outstanding share-based compensation awards that is expected to be recognized over a weighted average period of 2.1 years. Restricted Shares and RSUs 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. The dividend equivalents are forfeitable and are distributed to participants in cash consistent with the date the awards vest. 60 Table of Contents Restricted Shares and RSUs Number of Awards Weighted Average Grant Date Fair Value Unvested at December 31, 2018 369,477 $ 23.70 Granted 259,812 22.76 Vested ( 96,630 ) 23.30 Forfeited ( 47,851 ) 23.05 Unvested at December 31, 2019 484,808 23.34 Granted 259,992 22.04 Vested ( 141,556 ) 22.56 Forfeited ( 13,657 ) 23.00 Unvested at December 31, 2020 589,587 22.96 Granted 341,508 22.61 Vested ( 229,226 ) 22.82 Forfeited ( 22,610 ) 22.77 Unvested at December 31, 2021 679,259 $ 22.84 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, 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 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 Unvested at December 31, 2018 638,379 $ 22.64 Granted 449,771 22.49 Vested — — Forfeited ( 568,429 ) 21.18 Unvested at December 31, 2019 519,721 24.11 Granted 350,525 22.04 Vested ( 44,802 ) 26.80 Forfeited ( 170,422 ) 26.68 Unvested at December 31, 2020 655,022 22.15 Granted 439,620 24.44 Vested — — Forfeited ( 313,362 ) 22.27 Unvested at December 31, 2021 781,280 $ 23.39 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. 61 Table of Contents Assumptions used in the Monte Carlo simulation for awards granted in 2021 were as follows: 2021 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. Non-qualified Stock Options Outstanding Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) (in thousands) Outstanding at December 31, 2018 369,004 $ 22.63 8.7 $ — Granted 303,044 22.12 Exercised (2) — — — Forfeited ( 134,800 ) 22.87 Outstanding at December 31, 2019 537,248 22.28 8.3 641 Granted 233,636 22.04 Exercised (2) ( 84,984 ) 19.00 440 Forfeited — — Outstanding at December 31, 2020 (3) 685,900 20.60 7.1 735 Granted 305,668 22.63 Exercised (2) ( 42,904 ) 17.00 243 Forfeited — — Outstanding at December 31, 2021 948,664 $ 21.42 7.3 $ 5,208 Exercisable as of: December 31, 2019 130,563 $ 21.38 7.5 $ 255 December 31, 2020 179,893 21.18 5.8 244 December 31, 2021 329,711 21.15 5.7 1,898 (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 $ 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. 62 Table of Contents Unvested Non-qualified Stock Options Number of Awards Weighted Average Grant Date Fair Value Unvested at December 31, 2018 320,009 $ 7.77 Granted 303,044 7.08 Vested ( 92,251 ) 7.59 Forfeited ( 124,117 ) 7.63 Unvested at December 31, 2019 406,685 7.34 Granted 233,636 6.34 Vested ( 134,314 ) 7.30 Forfeited — — Unvested at December 31, 2020 506,007 6.89 Granted 305,668 5.86 Vested ( 192,722 ) 7.01 Forfeited — — 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 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. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Assumptions used in calculating the Black-Scholes value of options granted during 2021, 2020, and 2019 were as follows: 2021 2020 2019 Weighted-average Black-Scholes value $ 5.86 $ 6.34 $ 7.08 Black-Scholes assumptions: Expected term 6.25 years 6.25 years 6.25 years Expected volatility 30.0 % 31.0 % 32.0 % Expected dividend yield 1.2 1.2 1.0 Risk-free interest rate 0.7 1.6 2.5 Director Share Awards and Deferred Stock Units 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”). 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 $ 1.2 million in 2021, $ 0.9 million in 2020, and immaterial in 2019. 13. OTHER LONG-TERM INCENTIVE COMPENSATION 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. 63 Table of Contents 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”) 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. 14. COMMITMENTS AND CONTINGENCIES In the ordinary course of conducting our business, we become involved in certain legal matters and investigations including liability claims, taxes other than income taxes, contract disputes, employment, and other litigation matters. We accrue for anticipated costs to resolve matters that are probable and estimable. We believe the outcomes of these matters will not have a material impact on our business or our consolidated financial statements. We record liabilities for claims against the Company based on our best estimate of expected losses. The primary claims arising for the Company through its trucking, intermodal, and logistics operations consist of accident-related claims for personal injury, collision, and comprehensive compensation, in addition to workers’ compensation, property damage, cargo, and wage and benefit claims. We maintain excess liability insurance with licensed insurance carriers for 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. Although we expect that our claims accruals will continue to vary based on future developments, assuming that we are able to continue to obtain and maintain excess liability insurance coverage for such claims, we do not anticipate that such accruals will, in any period, materially impact our results of operations. At December 31, 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 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. 15 . SEGMENT REPORTING We have three reportable segments – Truckload, Intermodal, and Logistics – which are based primarily on the services each segment provides. As of December 31, 2018, our operating segments within the Truckload reportable segment were VTL, FTFM, and Bulk. On July 29, 2019 the Board approved a structured shutdown of our FTFM service offering, which was included within our FTFM operating segment. As the shutdown of the FTFM service offering is complete, there are only two remaining operating segments within the Truckload reportable segment, VTL and Bulk, that are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in ASC 280. VTL delivers truckload quantities over irregular routes using dry van trailers. Bulk transports key inputs to manufacturing processes, such as specialty chemicals, using specialty trailers. 64 Table of Contents The Intermodal reportable segment provides rail intermodal and drayage services to our customers. Company owned containers, chassis, and dray tractors are used to provide these transportation 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. In the Logistics segment, we provide additional sources of truck capacity, manage transportation-systems analysis requirements for individual customers, and provide transloading and warehousing services. 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, 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 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. Inter-segment revenues were immaterial for all segments, with the exception of Other, which included revenues from insurance premiums charged to other segments for workers’ compensation, auto, and other types of insurance. Inter-segment revenues included in Other revenues below were $ 62.4 million, $ 62.6 million, and $ 87.1 million for the years ended December 31, 2021, 2020, and 2019, respectively. Revenues by Segment Year Ended December 31, (in millions) 2021 2020 2019 Truckload $ 1,934.9 $ 1,851.0 $ 2,076.8 Intermodal 1,143.1 974.7 1,007.8 Logistics 1,808.7 1,129.3 934.8 Other 365.3 359.0 371.3 Fuel surcharge 444.8 318.3 466.0 Inter-segment eliminations ( 88.1 ) ( 79.5 ) ( 109.7 ) Operating revenues $ 5,608.7 $ 4,552.8 $ 4,747.0 Income (Loss) from Operations by Segment Year Ended December 31, (in millions) 2021 2020 2019 Truckload $ 284.7 $ 187.8 $ 59.0 Intermodal 155.2 75.0 107.7 Logistics 92.4 43.1 37.3 Other 1.4 ( 19.2 ) 3.8 Income from operations $ 533.7 $ 286.7 $ 207.8 65 Table of Contents Depreciation and Amortization by Segment Year Ended December 31, (in millions) 2021 2020 2019 Truckload $ 210.2 $ 210.7 $ 212.3 Intermodal 48.4 46.3 44.6 Logistics 0.2 0.1 0.5 Other 37.4 33.4 35.5 Depreciation and amortization $ 296.2 $ 290.5 $ 292.9 16. 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 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. 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 from July 29, 2019 through December 31, 2020. Restructuring activity for the year ended December 31, 2021 was not material. (in millions) Cumulative Impairment charges and losses on asset disposals—net $ 47.2 Receivable write-downs—net 3.0 Other costs 14.5 Total restructuring—net $ 64.7 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no disagreements with accountants on accounting or financial disclosure matters.