SECURITIES AND EXCHANGE COMMISSION



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~(State or Other Jurisdiction of~~

~~Incorporation or Organization)~~

~~(I.R.S. Employer~~

~~Identification Number)~~

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the ~~Exchange~~ Act:

Title of each class

Trading ~~Symbol~~symbol

Name of each exchange on which registered

Class B common stock, no par value

SNDR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

~~Large accelerated filer~~

☒

~~Accelerated filer~~

☐

Non-accelerated filer

☐ (Do not check if a smaller reporting company)

Smaller reporting company

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Emerging growth company

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of ~~October 25, 2019,~~July 24, 2020, the registrant had 83,029,500 shares of Class A ~~Common Stock,~~common stock, no par value, outstanding and ~~94,088,025~~94,309,795 shares of Class B ~~Common Stock,~~common stock, no par value, outstanding.

SCHNEIDER NATIONAL, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended ~~September~~June 30, ~~2019~~2020

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GLOSSARY OF TERMS



3PL			Provider of outsourced logistics services. In logistics and supply chain management, it means a company’s use of third-party businesses, the 3PL(s), to outsource elements of the company’s distribution, fulfillment, and supply chain management services.
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
~~CODM~~CARES			Coronavirus Aid, Relief, and Economic Security
CODM			Chief Operating Decision Maker
~~FASB~~COVID-19			Coronavirus pandemic
FASB			Financial Accounting Standards Board
FTFM			First to Final Mile operating segment
GAAP			United States Generally Accepted Accounting Principles
~~LIBOR~~KPI			Key Performance Indicator
LIBOR			London InterBank Offered Rate
PSI			Platform Science, Inc.
~~SEC~~SaaS			Software as a Service
SEC			United States Securities and Exchange Commission
~~VTL~~U.S.			~~Van Truckload operating segment~~United States
WSL			Watkins and Shepard Trucking, Inc. and Lodeso, Inc. These businesses were acquired simultaneously in June 2016.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's current expectations, beliefs, plans, or forecasts with respect to, among other things, future events and financial performance and trends in the business and industry. The words “may,” “will,” “could,” “should,” “would,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “prospects,” “potential,” “budget,” “forecast,” “continue,” “predict,” “seek,” “objective,” “goal,” “guidance,” “outlook,” “effort,” “target,” and similar words, expressions, terms, and phrases among others, generally identify forward-looking statements, which speak only as of the date the statements were made. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks, and uncertainties. Readers are cautioned that a forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement.

Risks, uncertainties, and other factors that could cause or contribute to actual results differing materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following:

•Economic and business risks inherent in the truckload and transportation industry, including competitive pressures pertaining to pricing, capacity, and service;

•Our ability to successfully manage the demand, supply, and operational challenges and disruptions (including the impact of reduced freight volumes) associated with the ongoing COVID-19 pandemic and the associated responses of federal, state and local governments and businesses;

•Our ability to maintain key customer and supply arrangements (including Dedicated arrangements) and to manage disruption of our business due to factors outside of our control, such as natural disasters, acts of war or terrorism, disease outbreaks, or pandemics;

•Our ability to manage and implement effectively our growth and diversification strategies and cost saving initiatives;

•Our dependence on our reputation and the Schneider brand and the potential for adverse publicity, damage to our reputation, and the loss of brand equity;

•Risks related to demand for our service offerings;

•Risks associated with the loss of a significant customer or customers;

•Capital investments that fail to match customer demand or for which we cannot obtain adequate funding;

•Fluctuations in the price or availability of fuel, the volume and terms of diesel fuel purchase commitments, and our ability to recover fuel costs through our fuel surcharge programs;

•Our ability to attract and retain qualified drivers and owner-operators;

•Our reliance on owner-operators to provide a portion of our truck fleet;

•Our dependence on railroads in the operation of our intermodal business;

•Service instability from third-party capacity providers used by our ~~logistics brokerage~~ business;

•Changes in the outsourcing practices of our third-party logistics customers;

•Difficulty in obtaining material, equipment, goods, and services from our vendors and suppliers;

•Variability in insurance and claims expenses and the risks of insuring claims through our captive insurance company;

•The impact of laws and regulations that apply to our business, including those that relate to the environment, taxes, ~~employees,~~associates, owner-operators, and our captive insurance company; changes to those laws and regulations; and the increased costs of compliance with existing or future federal, state, and local regulations;

•Political, economic, and other risks from cross-border operations and operations in multiple countries;

•Risks associated with financial, credit, and equity markets, including our ability to service indebtedness and fund capital expenditures and strategic initiatives;

•Negative seasonal patterns generally experienced in the trucking industry during traditionally slower shipping periods and winter months;

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•Risks associated with severe weather and similar events;

•Significant systems disruptions, including those caused by cybersecurity events;

•The potential that we will not successfully identify, negotiate, consummate, or integrate acquisitions;

•Exposure to claims and lawsuits in the ordinary course of business;

•Our ability to adapt to new technologies and new participants in the truckload and transportation industry; and

~~Table of Contents~~•

Those risks and uncertainties discussed in Part I, Item 1A, “Risk Factors,” of our most recently filed Annual Report on Form 10-K, as such may be amended or supplemented in Part II, Item 1A, “Risk Factors,” of this report or other Quarterly Reports on Form 10-Q filed after such Annual Report on Form 10-K, as well as those discussed in our consolidated financial statements, related notes, and the other information appearing elsewhere in this report and our other filings with the SEC.

The Company disclaims any intention and undertakes no obligation to update or revise any of its forward-looking statements after the date of this report to reflect actual results or future events or circumstances whether as a result of new information, future events, or otherwise, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

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PART I. FINANCIAL INFORMATION

~~Item~~ITEM 1. ~~Financial Statements~~FINANCIAL STATEMENTS

SCHNEIDER NATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in millions, except per share data)



	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018				2020		2019		2020		2019
Operating revenues	$	1,183.9		$	1,280.1		$	3,590.7		$	3,655.4		Operating revenues	$	1,032.8	$	1,212.7	$	2,151.9	$	2,406.8
Operating expenses:													Operating expenses:
Purchased transportation	511.7			521.1			1,488.8			1,431.8			Purchased transportation	437.1		503.8		916.7		977.1
Salaries, wages, and benefits	257.3			317.2			856.6			943.2			Salaries, wages, and benefits	247.8		286.3		512.2		599.3
Fuel and fuel taxes	70.6			87.4			221.6			260.3			Fuel and fuel taxes	42.1		76.2		103.0		151.0
Depreciation and amortization	74.1			73.3			222.4			216.9			Depreciation and amortization	72.3		74.9		142.1		148.3
Operating supplies and expenses	139.1			123.5			418.3			364.2			Operating supplies and expenses	119.1		134.1		251.1		279.2
Insurance and related expenses	24.4			24.1			78.0			69.4			Insurance and related expenses	28.3		25.4		57.5		53.6
Other general expenses	27.3			35.6			90.3			112.4			Other general expenses	22.5		28.2		52.0		63.0
Goodwill impairment charge	—			—			34.6			—			Goodwill impairment charge	—		34.6		—		34.6
Restructuring charges	50.4			—			50.4			—
Restructuring—net													Restructuring—net	0.2		—		(1.0)		—
Total operating expenses	1,154.9			1,182.2			3,461.0			3,398.2			Total operating expenses	969.4		1,163.5		2,033.6		2,306.1
Income from operations	29.0			97.9			129.7			257.2			Income from operations	63.4		49.2		118.3		100.7
Other expenses (income):													Other expenses (income):
Interest income	(2.0		)	(1.5		)	(6.6		)	(2.9		)	Interest income	(0.5)		(2.4)		(2.3)		(4.6)
Interest expense	3.8			4.2			13.1			13.0			Interest expense	3.3		5.4		7.1		9.3
Other expenses (income)—net	0.5			(0.1		)	1.2			(1.0		)	Other expenses (income)—net	(2.1)		0.3		(7.5)		0.7
Total other expense	2.3			2.6			7.7			9.1
Total other expenses (income)													Total other expenses (income)	0.7		3.3		(2.7)		5.4
Income before income taxes	26.7			95.3			122.0			248.1			Income before income taxes	62.7		45.9		121.0		95.3
Provision for income taxes	7.0			24.6			30.9			64.0			Provision for income taxes	16.2		11.4		30.7		23.9
Net income	19.7			70.7			91.1			184.1			Net income	46.5		34.5		90.3		71.4
Other comprehensive income (loss):													Other comprehensive income (loss):
Foreign currency translation adjustments	(0.3		)	(0.9		)	(0.2		)	(0.8		)
Unrealized income (loss) on marketable securities—net of tax	—			—			0.7			(0.3		)
Foreign currency translation gain (loss)													Foreign currency translation gain (loss)	0.1		(0.2)		(0.7)		0.1
Net unrealized gain on marketable securities—net of tax													Net unrealized gain on marketable securities—net of tax	0.5		0.3		0.2		0.7
Total other comprehensive income (loss)	(0.3		)	(0.9		)	0.5			(1.1		)	Total other comprehensive income (loss)	0.6		0.1		(0.5)		0.8
Comprehensive income	$	19.4		$	69.8		$	91.6		$	183.0		Comprehensive income	$	47.1	$	34.6	$	89.8	$	72.2

Weighted average common shares outstanding	177.1			177.0			177.1			177.0			Weighted average common shares outstanding	177.2		177.1		177.2		177.1
Basic earnings per share	$	0.11		$	0.40		$	0.51		$	1.04		Basic earnings per share	$	0.26	$	0.19	$	0.51	$	0.40

Weighted average diluted shares outstanding	177.3			177.2			177.3			177.2			Weighted average diluted shares outstanding	177.5		177.4		177.4		177.4
Diluted earnings per share	$	0.11		$	0.40		$	0.51		$	1.04		Diluted earnings per share	$	0.26	$	0.19	$	0.51	$	0.40

See notes to consolidated financial statements (unaudited).

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SCHNEIDER NATIONAL, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except share data)


	September 30,			December 31,				June 30,		December 31,
	2019			2018				2020		2019
Assets							Assets
Current Assets:							Current Assets:
Cash and cash equivalents	$	437.1		$	378.7		Cash and cash equivalents	$	713.8	$	551.6
Marketable securities	47.4			51.3			Marketable securities	46.8		48.3
Trade accounts receivable—net of allowance of $8.5 million and $6.8 million, respectively	498.8			593.1
Trade accounts receivable—net of allowance of $3.7 million and $3.4 million, respectively							Trade accounts receivable—net of allowance of $3.7 million and $3.4 million, respectively	434.9		465.8
Other receivables	160.2			31.8			Other receivables	31.6		28.9
Current portion of lease receivables—net of allowance of $0.6 million and $0.5 million, respectively	125.5			129.1
Current portion of lease receivables—net of allowance of $0.8 million and $0.6 million, respectively							Current portion of lease receivables—net of allowance of $0.8 million and $0.6 million, respectively	109.5		121.5
Inventories	57.7			60.8			Inventories	56.5		71.9
Prepaid expenses and other current assets	200.9			79.5			Prepaid expenses and other current assets	125.1		117.7
Total current assets	1,527.6			1,324.3			Total current assets	1,518.2		1,405.7
Noncurrent Assets:							Noncurrent Assets:
Property and equipment:							Property and equipment:
Transportation equipment	2,814.1			2,900.2			Transportation equipment	2,841.2		2,790.1
Land, buildings, and improvements	189.5			177.2			Land, buildings, and improvements	201.4		199.3
Other property and equipment	161.9			157.6			Other property and equipment	165.0		162.7
Total property and equipment	3,165.5			3,235.0			Total property and equipment	3,207.6		3,152.1
Accumulated depreciation	1,270.7			1,312.8			Accumulated depreciation	1,382.1		1,300.5
Net property and equipment	1,894.8			1,922.2			Net property and equipment	1,825.5		1,851.6
Lease receivables	126.3			133.2			Lease receivables	109.5		109.4
Capitalized software and other noncurrent assets	155.0			82.6			Capitalized software and other noncurrent assets	197.2		165.9
Goodwill	127.3			162.2			Goodwill	127.3		127.5
Total noncurrent assets	2,303.4			2,300.2			Total noncurrent assets	2,259.5		2,254.4
Total Assets	$	3,831.0		$	3,624.5		Total Assets	$	3,777.7	$	3,660.1
Liabilities and Shareholders' Equity							Liabilities and Shareholders' Equity
Current Liabilities:							Current Liabilities:
Trade accounts payable	$	239.8		$	226.0		Trade accounts payable	$	221.6	$	207.7
Accrued salaries, wages, and benefits	60.2			94.8			Accrued salaries, wages, and benefits	66.7		63.8
Claims accruals—current	192.0			58.3			Claims accruals—current	42.8		42.0
Current maturities of debt and finance lease obligations	101.5			51.7			Current maturities of debt and finance lease obligations	30.4		55.5
Dividends payable	10.9			10.6			Dividends payable	11.8		10.8
Other current liabilities	94.0			81.2			Other current liabilities	108.9		85.4
Total current liabilities	698.4			522.6			Total current liabilities	482.2		465.2
Noncurrent Liabilities:							Noncurrent Liabilities:
Long-term debt and finance lease obligations	304.6			359.6			Long-term debt and finance lease obligations	306.4		305.8
Claims accruals—noncurrent	103.6			113.3			Claims accruals—noncurrent	138.0		118.7
Deferred income taxes	446.5			450.6			Deferred income taxes	451.8		449.0
Other noncurrent liabilities	85.7			46.1			Other noncurrent liabilities	93.5		85.0
Total noncurrent liabilities	940.4			969.6			Total noncurrent liabilities	989.7		958.5
Total Liabilities	1,638.8			1,492.2			Total Liabilities	1,471.9		1,423.7
Commitments and Contingencies (Note 11)
Commitments and Contingencies (Note 12)							Commitments and Contingencies (Note 12)
Shareholders' Equity:							Shareholders' Equity:
Class A common shares, no par value, 250,000,000 shares authorized, 83,029,500 shares issued and 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, 94,834,653 and 94,593,588 shares issued, and 94,085,005 and 93,969,268 shares outstanding, respectively	—			—
Class B common shares, no par value, 750,000,000 shares authorized, 95,090,677 and 94,837,673 shares issued, and 94,242,695 and 94,088,025 shares outstanding, respectively							Class B common shares, no par value, 750,000,000 shares authorized, 95,090,677 and 94,837,673 shares issued, and 94,242,695 and 94,088,025 shares outstanding, respectively	—		—
Additional paid-in capital	1,544.5			1,544.0			Additional paid-in capital	1,545.4		1,542.7
Retained earnings	648.2			589.3			Retained earnings	760.8		693.6
Accumulated other comprehensive loss	(0.5		)	(1.0		)
Accumulated other comprehensive income (loss)							Accumulated other comprehensive income (loss)	(0.4)		0.1
Total Shareholders' Equity	2,192.2			2,132.3			Total Shareholders' Equity	2,305.8		2,236.4
Total Liabilities and Shareholders' Equity	$	3,831.0		$	3,624.5		Total Liabilities and Shareholders' Equity	$	3,777.7	$	3,660.1

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SCHNEIDER NATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)


	Nine Months Ended September 30,							Six Months Ended June 30,
	2019			2018				2020		2019
Operating Activities:							Operating Activities:
Net income	$	91.1		$	184.1		Net income	$	90.3	$	71.4
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	222.4			216.9			Depreciation and amortization	142.1		148.3
Goodwill impairment	34.6			—			Goodwill impairment	—		34.6
Gains on sales of property and equipment	(2.6		)	(4.5		)
Losses (gains) on sales of property and equipment—net							Losses (gains) on sales of property and equipment—net	3.8		(3.0)
Impairment on assets held for sale	11.8			0.3			Impairment on assets held for sale	3.9		0.3
Proceeds from lease receipts	59.6			—			Proceeds from lease receipts	35.7		40.1
Deferred income taxes	(4.3		)	34.4			Deferred income taxes	2.8		(1.9)
Long-term incentive and share-based compensation expense	3.4			15.3			Long-term incentive and share-based compensation expense	3.4		6.0
Non-cash restructuring charges	43.3			—
Noncash restructuring—net							Noncash restructuring—net	(0.8)		—
Other noncash items	2.9			(3.1		)	Other noncash items	(7.0)		1.8
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Receivables	82.2			(67.3		)	Receivables	34.7		66.2
Other assets	(31.1		)	(15.9		)	Other assets	(36.5)		(38.7)
Payables	0.3			35.6			Payables	12.1		(2.5)
Claims reserves and other receivables—net	(1.1		)	13.7			Claims reserves and other receivables—net	8.6		3.9
Other liabilities	(42.2		)	0.6			Other liabilities	26.7		(24.5)
Net cash provided by operating activities	470.3			410.1			Net cash provided by operating activities	319.8		302.0
Investing Activities:							Investing Activities:
Purchases of transportation equipment	(308.6		)	(268.1		)	Purchases of transportation equipment	(83.3)		(231.4)
Purchases of other property and equipment	(42.8		)	(22.3		)	Purchases of other property and equipment	(25.0)		(25.7)
Proceeds from sale of property and equipment	38.8			74.6			Proceeds from sale of property and equipment	29.6		26.0
Proceeds from lease receipts	—			56.2
Proceeds from sale of off-lease inventory	15.0			—			Proceeds from sale of off-lease inventory	9.0		10.0
Purchases of lease equipment	(62.7		)	(58.4		)	Purchases of lease equipment	(41.7)		(42.9)
Sales of marketable securities	13.2			3.9
Proceeds from marketable securities							Proceeds from marketable securities	10.2		11.0
Purchases of marketable securities	(8.5		)	(8.0		)	Purchases of marketable securities	(8.9)		(6.4)
Net cash used in investing activities	(355.6		)	(222.1		)	Net cash used in investing activities	(110.1)		(259.4)
Financing Activities:							Financing Activities:
Payments of debt and finance lease obligations	(5.7		)	(17.3		)	Payments of debt and finance lease obligations	(25.3)		(3.6)
Payments of deferred consideration related to acquisition	(18.7		)	(19.3		)	Payments of deferred consideration related to acquisition	—		(18.7)
Dividends paid	(31.9		)	(30.1		)	Dividends paid	(22.2)		(21.3)
Net cash used in financing activities	(56.3		)	(66.7		)	Net cash used in financing activities	(47.5)		(43.6)
Net increase in cash and cash equivalents	58.4			121.3
Net increase (decrease) in cash and cash equivalents							Net increase (decrease) in cash and cash equivalents	162.2		(1.0)
Cash and Cash Equivalents:							Cash and Cash Equivalents:
Beginning of period	378.7			238.5			Beginning of period	551.6		378.7
End of period	$	437.1		$	359.8		End of period	$	713.8	$	377.7
Additional Cash Flow Information:							Additional Cash Flow Information:
Noncash investing and financing activity:							Noncash investing and financing activity:
Equipment purchases in accounts payable	$	15.5		$	36.5
Equipment and inventory purchases in accounts payable							Equipment and inventory purchases in accounts payable	$	20.9	$	46.7
Dividends declared but not yet paid	10.9			10.7			Dividends declared but not yet paid	11.8		11.0
Ownership interest in Platform Science, Inc.	—			2.5
Cash paid during the period for:

Cash Paid During the Period For:							Cash Paid During the Period For:
Interest	12.4			13.2			Interest	6.6		7.3
Income taxes—net of refunds	42.6			25.5			Income taxes—net of refunds	2.6		20.5

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SCHNEIDER NATIONAL, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

(in millions, except per share data)

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

Balance—December 31, 2017 $ —
$ 1,534.6
$ 355.6
$ —
$ 1,890.2
Net income —
—
47.6
—
47.6
Other comprehensive loss —
—
—
(0.6 ) (0.6 )
Share-based compensation expense —
2.0
—
—
2.0
Dividends declared at $0.06 per share of Class A and Class B common shares —
—
(10.7 ) —
(10.7 )
Share issuances —
0.2
—
—
0.2
Shares withheld for employee taxes —
(1.8 ) —
—
(1.8 )
Cumulative-effect adjustment of ASU 2014-09 adoption —
—
7.3
—
7.3
Other —
0.2
—
—
0.2
Balance—March 31, 2018 —
1,535.2
399.8
(0.6 ) 1,934.4
Net income —
—
65.8
—
65.8
Other comprehensive gain —
—
—
0.4
0.4
Share-based compensation expense —
2.1
—
—
2.1
Dividends declared at $0.06 per share of Class A and Class B common shares —
—
(10.5 ) —
(10.5 )
Share issuances —
0.3
—
—
0.3
Shares withheld for employee taxes —
(0.1 ) —
—
(0.1 )
Exercise of employee stock options —
0.2
—
—
0.2
Other —
(0.1 ) —
—
(0.1 )
Balance—June 30, 2018 —
1,537.6
455.1
(0.2 ) 1,992.5
Net income —
—
70.7
—
70.7
Other comprehensive loss —
—
—
(0.9 ) (0.9 )
Share-based compensation expense —
2.1
—
—
2.1
Dividends declared at $0.06 per share of Class A and Class B common shares —
—
(10.8 ) —
(10.8 )
Shares withheld for employee taxes —
(0.4 ) —
—
(0.4 )
Balance—September 30, 2018 $ —
$ 1,539.3
$ 515.0
$ (1.1 ) $ 2,053.2

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~~SCHNEIDER NATIONAL, INC.~~

~~CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)~~

~~(in millions, except per share data)~~

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

Balance—December 31, 2018 $ —
$ 1,544.0
$ 589.3
$ (1.0 ) $ 2,132.3
Net income —
—
36.9
—
36.9
Other comprehensive gain —
—
—
0.7
0.7
Share-based compensation expense —
2.0
—
—
2.0
Dividends declared at $0.06 per share of Class A and Class B common shares —
—
(10.7 ) —
(10.7 )
Shares withheld for employee taxes —
(1.2 ) —
—
(1.2 )
Balance—March 31, 2019 —
1,544.8
615.5
(0.3 ) 2,160.0
Net income —
—
34.5
—
34.5
Other comprehensive gain —
—
—
0.1
0.1
Share-based compensation expense —
1.6
—
—
1.6
Dividends declared at $0.06 per share of Class A and Class B common shares
—
—
(11.0 ) —
(11.0 )
Share issuances —
0.2
—
—
0.2
Balance—June 30, 2019 —
1,546.6
639.0
(0.2 ) 2,185.4
Net income —
—
19.7
—
19.7
Other comprehensive loss —
—
—
(0.3 ) (0.3 )
Share-based compensation expense —
(2.2 ) —
—
(2.2 )
Dividends declared at $0.06 per share of Class A and Class B common shares
—
—
(10.5 ) —
(10.5 )
Share issuances —
0.1
—
—
0.1
Balance—September 30, 2019 $ —
$ 1,544.5
$ 648.2
$ (0.5 ) $ 2,192.2


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

Balance—December 31, 2018	$	—	$	1,544.0	$	589.3	$	(1.0)	$	2,132.3
Net income	—		—		36.9		—		36.9
Other comprehensive income	—		—		—		0.7		0.7
Share-based compensation expense	—		2.0		—		—		2.0
Dividends declared at $0.06 per share of Class A and Class B common shares	—		—		(10.7)		—		(10.7)

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

Balance—March 31, 2019	—		1,544.8		615.5		(0.3)		2,160.0
Net income	—		—		34.5		—		34.5
Other comprehensive income	—		—		—		0.1		0.1
Share-based compensation expense	—		1.6		—		—		1.6
Dividends declared at $0.06 per share of Class A and Class B common shares	—		—		(11.0)		—		(11.0)
Share issuances	—		0.2		—		—		0.2
Balance—June 30, 2019	$	—	$	1,546.6	$	639.0	$	(0.2)	$	2,185.4

Balance—December 31, 2019	$	—	$	1,542.7	$	693.6	$	0.1	$	2,236.4
Net income	—		—		43.8		—		43.8
Other comprehensive loss	—		—		—		(1.1)		(1.1)
Share-based compensation expense	—		1.9		—		—		1.9
Dividends declared at $0.065 per share of Class A and Class B common shares	—		—		(11.7)		—		(11.7)
Share issuances	—		0.1		—		—		0.1
Shares withheld for employee taxes	—		(0.9)		—		—		(0.9)
Balance—March 31, 2020	—		1,543.8		725.7		(1.0)		2,268.5
Net income	—		—		46.5		—		46.5
Other comprehensive income	—		—		—		0.6		0.6
Share-based compensation expense	—		1.1		—		—		1.1
Dividends declared at $0.065 per share of Class A and Class B common shares	—		—		(11.4)		—		(11.4)
Share issuances	—		0.1		—		—		0.1
Exercise of employee stock options	—		0.4		—		—		0.4
Balance—June 30, 2020	$	—	$	1,545.4	$	760.8	$	(0.4)	$	2,305.8

See notes to consolidated financial statements (unaudited).

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SCHNEIDER NATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~September 30, 2019~~

1. GENERAL

~~Description~~Nature of ~~Business~~Operations

In this report, when we refer to “the Company,” “us,” “we,” “our,” “ours,” or “Schneider,” we are referring to Schneider National, Inc. and its subsidiaries. ~~We are~~Schneider is a ~~leading~~ transportation ~~services~~service organization headquartered in Green Bay, ~~Wisconsin. We provide a broad portfolio of premier~~Wisconsin and has three reportable segments focused on providing truckload, intermodal, and logistics ~~solutions~~solutions.

Principles of Consolidation and ~~operate one of the largest trucking fleets in North America.~~

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in ~~accordance~~conformity with GAAP and the rules and regulations of the SEC applicable to quarterly reports on Form 10-Q. Therefore, these consolidated financial statements and footnotes do not include all disclosures required by GAAP for annual financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. Financial results for an interim period are not necessarily indicative of the results for a full year.

All intercompany transactions have been eliminated in consolidation.

In the opinion of management, these statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for the fair presentation of our financial results for the interim periods presented.

COVID-19

With the uncertainties of COVID-19, the Company continues to monitor the impact of the pandemic on all aspects of its business, including the impact to its customers, associates, owner-operators, and business partners. The Company's operational and financial performance was negatively impacted by a reduction in volumes across our Truckload and Intermodal segments beginning in April 2020, however there was improvement as the second quarter progressed. A number of cost reduction initiatives implemented by the Company helped lessen the impact of reduced volumes, however those initiatives were unable to fully offset the loss of revenue. Due to our limited visibility into freight demand in the months to come, we are unable to predict the impact COVID-19 will have on our future financial position and operating results due to ongoing uncertainties.

Accounting Standards Issued but Not Yet Adopted

In ~~August 2018,~~December 2019, the FASB issued 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. ASU 2019-12 is effective for us as of January 1, 2021 with early adoption permitted. We do not believe the adoption of this ASU will have a material impact on our consolidated financial statements and related disclosures and plan to adopt as of January 1, 2021.

Accounting Standards Recently Adopted

We adopted ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which was effective as of March 12, 2020 through December 31, 2022, when the reference rate replacement activity is expected to be complete. This guidance offers optional expedients and exceptions for applying GAAP to transactions, including contract modifications, hedging relationships, and the sale or transfer of debt securities classified as held-to-maturity affected by reference rate reform, if certain criteria are met. The adoption of this ASU did not have a material impact on our consolidated financial statements and related disclosures.

We adopted ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,which ~~aligns~~amends ASC 350, as of January 1, 2020 on a prospective basis. This standard aligned the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software. ~~ASU 2018-15 is effective for us as of January 1, 2020 with early~~The adoption ~~permitted. We are currently evaluating the impact the adoption of this ASU will have on our consolidated financial statements and do~~did not ~~believe the impact will be material. We expect to adopt this standard on a prospective basis.~~

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement - Disclosure Requirements,~~ which removes, modifies, and adds certain disclosure requirements for fair value measurements. These changes include removing the disclosure requirements related to the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and adding disclosure requirements about the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements. Additionally, the amendments remove the phrase “at a minimum” from the codification clarifying that materiality should be considered when evaluating disclosure requirements. ASU 2018-13 is effective for us January 1, 2020 with early adoption permitted. We do not believe the adoption of this ASU will have a material impact on our ~~disclosures and plan to early adopt this standard during the fourth quarter of 2019.~~consolidated financial statements or disclosures.

~~In June 2016, the FASB issued~~We adopted ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which ~~requires companies to use a forward-looking, expected loss model to estimate credit losses on various types~~is codified in ASC 326, as of financial assets and net investments in leases. It also requires additional disclosures related to credit quality of trade and other receivables, including information related to management’s estimate of credit allowances. In November 2018, this was further updated with the issuance of ASU 2018-19, which excludes receivables from operating leases from the scope. ASU 2016-13 is effective for us January 1, 2020. ~~We expect~~The guidance replaced the ~~standard will have an impact~~incurred loss model with a methodology that reflects expected credit losses over the life of the financial assets held at the reporting date based on historical experience, as

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well as considerations of current conditions and reasonable and supportable forecasts. This new model for estimating our ~~available-for-sale debt securities,~~expected credit losses was implemented for our trade accounts receivable (Note 2, Trade Accounts Receivable and Allowance), net investment in leases ~~contract assets, trade accounts receivable,~~(Note 3, Leases), and ~~reinsurance receivables. Based on our initial assessment, we do~~available-for-sale debt securities (Note 6, Investments) and did not ~~believe the standard will have~~result in a material impact onto our consolidated financial statements ~~however~~or disclosures upon adoption.

2. TRADE ACCOUNTS RECEIVABLE AND ALLOWANCE

Our trade accounts receivable is recorded net of an allowance for doubtful accounts and revenue adjustments. The allowance is based on an aging analysis using historical experience, as well as any known and expected 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 ~~still assessing~~aware of a customer's inability to meet its financial obligations, a specific reserve is recorded to reduce the ~~financial impacts.~~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.

~~2. LEASES~~

~~We adopted ASU 2016-02,~~ ~~Leases,~~ ~~which~~The following table shows changes to our allowance for doubtful accounts for the three and six months ended June 30, 2020. Excluded from the amounts below is ~~codified in ASC 842, as of January 1, 2019 using~~ the ~~optional transition method. The FASB’s authoritative guidance provided companies with the option to apply this ASU to new and existing leases within the scope~~portion of the ~~guidance~~allowance recorded for revenue adjustments, as ~~of the beginning of the period of adoption. We elected this transition method of applying the new lease~~that portion is not credit-related nor due to a customer’s inability to meet its financial obligations.


	Three Months Ended		Six Months Ended
(in millions)	June 30, 2020
Balance at beginning of period	$	1.0	$	0.9
Charges to expense	0.8		1.1
Write-offs	(0.4)		(0.7)
Recoveries	—		0.1
Balance at end of period	$	1.4	$	1.4

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standard and have recognized right-of-use assets and lease liabilities as of January 1, 2019. Prior period amounts were not adjusted and will continue to be reported under the accounting standards in effect for those periods.

Adoption of the new standard resulted in the initial recording of right-of-use lease assets and related lease liabilities of $80.6 million and $85.2 million, respectively. As of September 30, 2019, right-of-use lease assets and related lease liabilities were $73.5 million and $80.9 million, respectively. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term. Schneider's incremental borrowing rates are used as the discount rates for leases and are determined based on U. S. Treasury rates plus an applicable margin to arrive at all-in rates. Schneider uses multiple discount rates based on lease terms and other economic factors. The operating lease right-of-use asset also includes accrued lease expense resulting from the straight-line accounting under prior accounting methods, which is now being amortized over the remaining life of the lease.

3. LEASES

In addition, we elected the package of practical expedients provided under the guidance. The practical expedient package applies to leases that commenced prior to adoption of the new standard and permits companies not to reassess whether existing or expired contracts are or contain a lease, the lease classification, and any initial direct costs for any existing leases. We also elected the practical expedient related to land easements, allowing us to carry forward the accounting treatment of our existing agreements for land easements, none of which were material as of January 1, 2019.

As ~~lessee~~Lessee

We lease real estate, transportation equipment, and office equipment under operating and finance leases. Our real estate operating leases include operating centers, distribution warehouses, offices, and drop yards. Our finance leases ~~relate almost entirely to transportation equipment. A~~include office equipment and truck washes. The majority of our leases include an option to extend the lease, and a small number of our leases include an option to ~~early~~ terminate the lease early, which may include a termination payment. ~~If we are reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right-of-use asset and lease liability.~~

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

~~A small number of our leased real estate assets contains subleases. The lease income related to subleases is shown in the lease cost table below.~~

Certain equipment leases contain residual value guarantees. These are guarantees made to the lessor that the value of the underlying asset returned to the lessor at the end of the lease will be at least a specified amount.

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

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~~The following table presents our net lease costs for the three and nine months ended September 30, 2019:~~

Financial Statement Classification Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2019 2019
Operating lease cost
Operating lease cost Operating supplies and expenses
$ 8.7
$ 26.5
Short-term lease cost⁽¹⁾
Operating supplies and expenses
2.0
5.5
Finance lease cost
Amortization of right-of-use assets Depreciation and amortization
0.9
2.5
Interest on lease liabilities Interest expense
—
0.2
Variable lease cost Operating supplies and expenses
0.7
2.1
Sublease income Operating revenues
(1.5 ) (4.1 )
Total net lease cost $ 10.8
$ 32.7

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

~~As of September 30, 2019, remaining lease terms and discount rates under operating and finance leases were as follows:~~



	~~September 30, 2019~~
~~Weighted-average remaining lease term~~
~~Operating leases~~	~~4.4 years~~
~~Finance leases~~	~~0.3 years~~

~~Weighted-average discount rate~~
~~Operating leases~~	~~4.2~~	%
~~Finance leases~~	~~4.7~~	%

~~Other~~Additional information related to our leases is as follows:


	Nine Months Ended September 30,			Six Months Ended June 30,
(in millions)	2019		(in millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities			Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	26.7	Operating cash flows from operating leases	$	17.3	$	17.7
Operating cash flows from finance leases	0.2		Operating cash flows from finance leases	—		0.1
Financing cash flows from finance leases	2.0		Financing cash flows from finance leases	0.3		1.3

Right-of-use assets obtained in exchange for new lease liabilities			Right-of-use assets obtained in exchange for new lease liabilities
Operating leases	$	20.6	Operating leases	$	21.6	$	28.7
Finance leases	—		Finance leases	0.7		—

As Lessor

Operating lease right-of-use assets, current operating lease liabilities, and noncurrent operating lease liabilities are included in capitalized software and other noncurrent assets, other current liabilities, and other noncurrent liabilities, respectively, in the consolidated balance sheet as of September 30, 2019.

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~~At September 30, 2019, future lease payments under operating and finance leases were as follows:~~

(in millions) Operating Leases Finance Leases
Remaining 2019 $ 8.5
$ 4.9
2020 27.2
0.4
2021 17.1
—
2022 11.1
—
2023 8.8
—
2024 and thereafter 15.9
—
Total 88.6
5.3
Amount representing interest (7.7 ) —
Present value of lease payments 80.9
5.3
Current maturities (27.1 ) (5.3 )
Long-term lease obligations $ 53.8
$ —

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 September 30, 2019 include $10.6 million related to options to extend lease terms that we are reasonably certain to exercise. Options related to our FTFM service offering that were previously considered reasonably certain to be exercised have been removed from the future operating lease payments at September 30, 2019.

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

(in millions) Operating Leases Capital Leases
2019 $ 35.8
$ 6.9
2020 25.7
0.2
2021 14.9
—
2022 8.4
—
2023 6.8
—
2024 and thereafter 12.7
—
Total $ 104.3
7.1
Amount representing interest (0.2 )
Present value of minimum lease payments 6.9
Current maturities (6.7 )
Long-term capital lease obligations $ 0.2

As of September 30, 2019, we had additional leases that had not yet commenced of $3.5 million. These leases will commence during the remainder of 2019 and have lease terms of four months to five years.

~~The consolidated balance sheets include right-of-use assets acquired under finance leases as components of property and equipment as of September 30, 2019 and January 1, 2019, as follows:~~

(in millions) September 30, 2019 January 1, 2019
Transportation equipment $ 19.9
$ 19.9
Real property 0.8
0.8
Other property 1.5
0.6
Accumulated amortization (13.1 ) (11.2 )
Total $ 9.1
$ 10.1

Transportation equipment is being amortized to the estimated residual value by the end of the lease. Real and other property under finance leases are being amortized to a zero net book value over the initial lease term.

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~~As lessor~~

We finance various types of transportation-related equipment for independent third parties under lease contracts which are generally for one year to five years and ~~are~~ accounted for as sales-type leases with fully guaranteed residual values. AtOur leases contain an option for the ~~inception~~lessee to return, extend, or purchase the equipment at the end of the ~~contracts, we determine if~~lease term for the guaranteed

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contract residual amount. This contract residual amount is ~~or contains a lease. A contract is or contains~~estimated to approximate the fair value of the equipment. Lease payments primarily include base rentals and guaranteed residual values.

As of June 30, 2020 and December 31, 2019, the investments in lease receivables were as follows:


(in millions)	June 30, 2020		December 31, 2019
Future minimum payments to be received on leases	$	138.4	$	135.0
Guaranteed residual lease values	113.6		126.6
Total minimum lease payments to be received	252.0		261.6
Unearned income	(33.0)		(30.7)
Net investment in leases	219.0		230.9

Current maturities of lease receivables	110.3		122.1
Allowance for doubtful accounts	(0.8)		(0.6)
Current portion of lease receivables—net of allowance	109.5		121.5

Lease receivables—noncurrent	$	109.5	$	109.4

Before entering into a lease ~~if it conveys~~contract, we assess the ~~right to control~~credit quality of the potential lessee through the use of ~~an identified asset for~~credit checks and other relevant factors, ensuring that their inherent credit risk is consistent with our existing lease portfolio. We monitor the credit quality of our lease portfolio weekly by tracking amounts past due, days past due, and outstanding maintenance account balances, including running subsequent credit checks as needed. The following table presents our net investment in leases, which includes both current and future lease payments, as of June 30, 2020 by amounts past due, our primary ongoing credit quality indicator, and lease origination year.


	Net Investment in Leases by Lease Origination Year (in millions)
Amounts Past Due (in ones)	2020		2019		2018		2017		2016		Prior		Total
Greater than $3,000	$	4.5	$	4.6	$	1.6	$	2.3	$	0.1	$	0.1	$	13.2
Between $2,999 and $1,500	6.9		4.0		1.9		0.1		0.2		—		13.1
Less than $1,499	11.1		10.9		5.9		1.7		0.5		—		30.1
Total	$	22.5	$	19.5	$	9.4	$	4.1	$	0.8	$	0.1	$	56.4

Lease payments are generally due on a ~~period of time in exchange for consideration.~~

~~With the adoption of ASC 842, all leases for which we are the lessor meet the definition of sales-type leases. In addition, as required under ASC 842, all cash flows from lease receipts~~weekly basis and are classified as ~~operating activities on the consolidated statement of cash flows beginning January 1, 2019. We previously presented all cash flows from lease receipts as investing activities.~~

~~As of September 30, 2019 and January 1, 2019, the investment in lease receivables was as follows:~~

September 30, 2019 January 1, 2019
Future minimum payments to be received on leases $ 146.9
$ 140.0
Guaranteed residual lease values 138.2
151.0
Total minimum lease payments to be received 285.1
291.0
Unearned income (33.3 ) (28.7 )
Net investment in leases 251.8
262.3

Current maturities of lease receivables 126.1
129.6
Less—allowance for doubtful accounts (0.6 ) (0.5 )
Current portion of lease receivables—net of allowance 125.5
129.1

Lease receivables—noncurrent $ 126.3
$ 133.2

~~The amounts to be received on lease receivables as of September 30, 2019 were as follows:~~

(in millions) September 30, 2019
Remaining 2019 $ 35.8
2020 142.8
2021 75.7
2022 30.6
2023 0.2
2024 and thereafter —
Total undiscounted lease cash flows 285.1
Amount representing interest (33.3 )
Present value of lease receivables 251.8
Current lease receivables, net of allowance (125.5 )
Long-term lease receivable $ 126.3

~~Leases are generally placed on nonaccrual status (nonaccrual of interest and other fees) when a payment becomes 90 days~~ past due ~~or upon receipt of notification of bankruptcy, upon the death of a customer, or in other instances in which management concludes collectability~~when payment is not ~~reasonably assured.~~received by the due date. The ~~accrual of interest and other fees is resumed when all payments are less than 60 days past due. At September 30, 2019, there were $0.3 million~~following table presents an aging analysis of lease payments ~~greater than 90 days~~owed to us and classified as past ~~due.~~due as of June 30, 2020.


(in millions)	June 30, 2020
1-29 days	$	1.7
30-59 days	0.6
60-89 days	0.4
90 days or greater	0.4
Total past due	$	3.1

Our lease receivables are recorded 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 ~~any~~ 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. ~~Repossession and estimated reconditioning costs are recorded in~~

Accrued interest on leases is included within lease receivables on the consolidated ~~statements~~balance sheets and was not material as of ~~comprehensive income~~June 30, 2020 and December 31, 2019. Leases are generally placed on nonaccrual status (nonaccrual of interest and other fees) when a payment becomes 90 days past due or upon notification of bankruptcy, death, or other instances management concludes collectability is not reasonably assured. The accrual of interest and other fees resumes when all payments are less than 60 days past due. At both June 30, 2020 and December 31, 2019, our net investment in ~~the period incurred.~~

~~Our lease payments primarily include base rentals and guaranteed residual values. In addition, we also collect one-time administrative fees and heavy vehicle use tax~~leases on ~~our leases. We have elected to not separate the different components within the contract as the administrative fees~~nonaccrual status were not ~~material for the three and nine months ended September 30, 2019. We have also~~

material.

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elected to exclude all taxes assessed by a governmental authority from the consideration (e.g., heavy vehicle use tax). All of our leases require fixed payments, therefore we have no variable payment provisions.

Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount. This is estimated to approximate the fair value of the equipment. Equipment is leased under sales-type leases where the lessees guarantee the residual value of the equipment. The table below provides additional information on our sales-type leases.


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Revenue	$	44.7	$	52.7	$	99.4	$	108.9
Cost of goods sold	(40.8)		(47.3)		(89.7)		(97.2)
Operating profit	$	3.9	$	5.4	$	9.7	$	11.7

Interest income on lease receivable	$	6.7	$	6.8	$	13.2	$	13.4

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2019 2019
Revenue $ 50.9
$ 159.8
Cost of goods sold (46.8 ) (144.0 )
Operating profit $ 4.1
$ 15.8

Interest income on lease receivable $ 7.0
$ 20.4
Initial direct cost incurred —
—

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

(in millions) December 31, 2018
2019 $ 149.0
2020 112.7
2021 29.0
2022 0.3
2023 —
2024 and thereafter —
Total $ 291.0

3.4. 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, and each type of service is further described below.~~service.

Disaggregated Revenues (in millions)

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

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 Schneider's influence, such as the weather or the accumulation of accessorial charges. Pricing information is supplied by rate schedules that accompany negotiated contracts.

~~Logistics Management~~

Logistics Management revenues relate to our Supply Chain Management and Import/Export Services operating segments, both of which are included in our Logistics reportable segment. Within this portfolio, the key service we provide to the customer is management of freight shipping and/or storage.

~~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~~for transactions and expected timing of revenue recognition related to performance obligations that are fixed in nature and ~~relate~~pertain to contracts with terms greater than one year as of date ~~shown:~~shown.

Remaining Performance Obligations (in millions)
September 30, 2019
Expected to be recognized within one year
Transportation $ 10.5
Logistics Management 8.6
Expected to be recognized after one year
Transportation 1.3
Logistics Management 6.9
Total $ 27.3


Remaining Performance Obligations (in millions)	June 30, 2020
Expected to be recognized within one year
Transportation	$	1.3
Logistics management	11.9
Expected to be recognized after one year
Transportation	0.3
Logistics management	14.6
Total	$	28.1

~~This disclosure~~The information provided in the above table does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less. In addition, this disclosure does not include expected consideration related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice (e.g., usage-based pricing terms).

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

Contract Balances (in millions)

We generally receive payment within 40 days of ~~completion of~~completing our performance obligations. Contract assets in the table above relate to revenue ~~in-transit~~in transit at the end of the reporting period. Contract liabilities relate to amounts that customers paid in advance of the associated service.

Fair value ~~focuses on~~is the estimated price that would be received to sell an asset or paid to transfer a liability, which is referred to as the exit price. Inputs to valuation techniques used to measure fair value fall into three broad levels (Levels 1, 2, and 3) as follows:

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. ~~All marketable~~

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


		Fair Value
(in millions)	Level in Fair Value Hierarchy	June 30, 2020		December 31, 2019
Marketable securities ⁽¹⁾	2	$	46.8	$	48.3

(1) Marketable securities ~~were~~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 ~~(Level~~and are, therefore, classified as Level 2 in the fair value ~~hierarchy).~~hierarchy. We measure our marketable securities on a recurring, monthly basis. See Note 5,6, Investments, for additional information on the fair value of our marketable securities.

~~In connection~~The fair value of the Company's debt was $345.3 million and $368.5 million as of June 30, 2020 and December 31, 2019, respectively. The carrying value of the Company's debt was $335.0 million and $360.0 million as of June 30, 2020 and December 31, 2019, respectively. The fair value of our debt was calculated using a fixed-rate debt portfolio with ~~the June 1, 2016 acquisition of WSL, a contingent payment arrangement~~similar terms and maturities, which is based on the ~~achievement of specified earnings targets was~~borrowing rates available to us in ~~place for three consecutive 12-month periods after~~ the ~~closing, with the aggregate payment total not to exceed $40.0 million. NaN payments were made under the agreement which expired June 30, 2019, and the balance as of December 31, 2018 was zero.~~

applicable year. This valuation used Level 2 inputs.

~~Our ownership interest in PSI discussed in Note 5,~~
~~Investments, was valued based on Level 3 inputs.~~

~~There were 0 transfers between levels for the periods shown.~~

~~Fair Value of Other Financial Instruments~~

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

~~The table below presents the carrying value of our debt portfolio along with the~~Our ownership interest in PSI discussed in Note 6, Investments, does not have a readily determinable fair value ~~of a fixed-rate debt portfolio with similar terms~~ and ~~maturities, which~~ is ~~based on borrowing rates available to us~~accounted for using the measurement alternative in ~~the applicable year. This valuation used Level 2 inputs.~~ASC 321-10-35-2.

September 30, 2019 December 31, 2018
(in millions) Carrying Value Fair Value Carrying Value Fair Value
Fixed-rate debt portfolio $ 401.3
$ 408.9
$ 405.0
$ 398.4

Marketable Securities

Our marketable securities are classified as ~~available for sale~~available-for-sale and carried at fair value in current assets on the consolidated balance sheets. ~~Our portfolio of securities has maturities ranging from 3 to 81 months.~~ While our intent is to hold our securities to maturity, sudden changes in the market or to our liquidity needs may cause us to sell certain securities in advance of their maturity date.

~~Any~~With the adoption of ASU 2016-13, the guidance on reporting credit losses for available-for-sale debt securities was amended. Under this new guidance, credit losses are to be recorded through an allowance for credit losses rather than as a direct write-down to the security. As a result, any unrealized gains and losses, net of tax, are included as a component of accumulated other comprehensive ~~loss~~income on the consolidated balance sheets, unless we determine that ~~an unrealized loss~~the amortized cost basis is ~~other-than-temporary.~~not recoverable. If we determine that ~~an unrealized loss~~the amortized cost basis of the impaired security is ~~other-than-temporary,~~not recoverable, we recognize the credit loss ~~in earnings. We did not have any other-than-temporary impairments~~by increasing the allowance for ~~either of the periods ended September 30, 2019 and 2018.~~those losses. Cost basis is determined using the specific identification method.

When adopting this standard, we elected to continue to present the accrued interest receivable balance associated with our investments in marketable securities separate from the marketable securities line in the consolidated balance sheets. As of June 30, 2020, accrued interest receivable associated with our investments in marketable securities was not material and is included within other receivables on the consolidated balance sheets. We have elected the practical expedient provided under the guidance to exclude the applicable accrued interest from the amortized cost basis disclosure of our marketable securities. We have also elected not to measure an allowance for credit losses on our accrued interest receivable and to write off accrued interest receivable by reversing interest income when it is not considered collectible.

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


	June 30, 2020									December 31, 2019
(in millions, except maturities in months)	Maturities	Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. treasury and government agencies	9 to 76	$	12.7	$	12.8	$	16.5	$	17.0
Asset-backed securities	7	—		—		0.1		0.1
Corporate debt securities	13 to 64	17.3		18.1		15.1		15.4
State and municipal bonds	1 to 69	11.5		11.9		11.6		11.8
Other U.S. and non-U.S. government bonds	1 to 51	4.0		4.0		4.0		4.0
Total marketable securities		$	45.5	$	46.8	$	47.3	$	48.3

September 30, 2019 December 31, 2018
(in millions) Amortized Cost Fair Value Amortized Cost Fair Value
Zero coupon bonds $ 2.0
$ 2.0
$ 3.9
$ 3.9
U.S. treasury and government agencies 19.0
19.0
20.0
19.8
Asset-backed securities 0.1
0.1
0.1
0.1
Corporate debt securities 14.1
14.5
15.1
15.0
State and municipal bonds 11.6
11.8
12.5
12.5
Total marketable securities $ 46.8
$ 47.4
$ 51.6
$ 51.3

Gross realized gains and losses and net unrealized gains and losses, net of tax, on marketable securities were not material for the three and ~~nine~~six months ended ~~September~~June 30, 2020 and 2019. Additionally, we did not have an allowance for credit losses on our marketable securities as of June 30, 2020 or any other-than-temporary impairments as of December 31, 2019, and ~~2018. Gross~~our total unrealized gains and losses ~~on marketable securities~~ were not material ~~for the periods ended September~~as of June 30, ~~2019,~~2020 and December 31, ~~2018.~~2019.

Ownership Interest in Platform Science, Inc.

In 2018, wethe Company made a strategic decision to invest in PSI and acquired ~~a 30%~~an ownership interest ~~in PSI~~ in exchange for granting ~~PSI~~them a non-exclusive license to our proprietary telematics mobile software that was developed to enable enhanced driver productivity and ensure regulatory compliance. Our ownership interest ~~in PSI~~ is being accounted for under ASC 321, Investments - Equity Securities using the measurement alternative and is recorded ~~at fair value~~ in other noncurrent assets on the consolidated balance sheets. During 2020, remeasurement events occurred which required the Company to revalue its interest in PSI. In the three and six months ended June 30, 2020, the Company recognized pre-tax gains of $2.7 million and $8.8 million, respectively, on its investment in PSI, which were recorded within other income on the consolidated statements of comprehensive income. The fair value of the ownership interest as of December 31, 2018 was determined to be $3.5 million through an independent valuation. As of September 30, 2019, there have been no transactions that would indicate that the value of our ownership interest ~~in PSI changed.~~as of June 30, 2020 and December 31, 2019 was $12.3 million and $3.5 million, respectively, and our ownership percentage was 12.6% as of June 30, 2020.

Subsequent Event - Investment in Mastery Logistics Systems, Inc.

On July 2, 2020, Schneider entered into a strategic partnership with Mastery Logistics Systems, Inc. ("Mastery"), a transportation technology development company. We paid Mastery $5.0 million for a non-controlling interest and will collaborate with Mastery to develop a Transportation Management System using Mastery's SaaS technology which Schneider has agreed to license. The investment will be accounted for under ASC 321, Investments - Equity Securities.

7. GOODWILL ~~AND OTHER INTANGIBLE ASSETS~~

Goodwill represents the excess of the purchase price of ~~our~~ acquisitions over the fair value of the identifiable net assets acquired. ~~Changes in~~The following table shows changes to our goodwill balances by reportable segment during the ~~carrying amount of goodwill were as follows:~~period ended June 30, 2020.


(in millions)	Truckload		Logistics		Other		Total
Balance at December 31, 2019	$	103.6	$	14.2	$	9.7	$	127.5

Foreign currency translation loss	—		—		(0.2)		(0.2)
Balance at June 30, 2020	$	103.6	$	14.2	$	9.5	$	127.3

(in millions) Truckload Logistics Other Total
Balance at December 31, 2018 $ 138.2
$ 14.2
$ 9.8
$ 162.2
Goodwill impairment charge (34.6 ) —
—
(34.6 )
Foreign currency translation —
—
(0.3 ) (0.3 )
Balance at September 30, 2019 $ 103.6
$ 14.2
$ 9.5
$ 127.3

At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had accumulated goodwill impairment charges of $42.6 ~~million and $8.0 million, respectively.~~million.

Goodwill is tested for impairment at least annually using both the discounted cash flow method and the guideline public company method in calculating the fair values of our reporting units. Key inputs used in the discounted cash flow approach include growth rates for sales and operating profit, perpetuity growth assumptions, and discount rates. As interest rates rise, the calculated fair values of our reporting units will decrease, which could impact the results of our goodwill impairment tests.

A triggering event occurred during the second quarter of 2019 as results from our FTFM reporting unit continued to be less than projected, despite sustained investments and operational changes designed to improve efficiencies. Because of this triggering event, an impairment test was performed for the FTFM reporting unit. As a result of the testing performed, an impairment loss of $34.6 million was recorded for our FTFM reporting unit as the discounted cash flows expected to be generated by this reporting unit were not sufficient to recover its carrying value. This represents all of the goodwill related to the FTFM reporting unit.

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

(in millions) Gross Carrying Amount Accumulated Amortization
Net Carrying
Amount
Balance at September 30, 2019
Customer lists $ 1.1
$ 1.1
$ —
Trade name —
—
—
Total intangible assets 1.1
1.1
—

Balance at December 31, 2018
Customer lists 10.5
3.5
7.0
Trade name 1.4
1.2
0.2
Total intangible assets $ 11.9
$ 4.7
$ 7.2

As part of the shutdown of our FTFM service offering in the third quarter of 2019, we wrote-off the gross carrying amount of the customer lists and trade name obtained through the WSL acquisition. An impairment charge of $6.5 million was recorded for the unamortized value of the customer lists in the three months ended September 30, 2019. The impairment charge is included in the consolidated statements of comprehensive income within restructuring charges. Refer to Note 13, ~~Restructuring Charges,~~ ~~for additional details.~~

Amortization expense for intangible assets was $0.1 million and $0.3 million for the three months ended September 30, 2019 and September 30, 2018, respectively, and $0.7 million and $1.1 million for the nine months ended September 30, 2019 and 2018, respectively. Accumulated amortization in the table above includes foreign currency translation related to a customer list.

7.8. DEBT AND CREDIT FACILITIES

As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, debt included the following:


(in millions)	June 30, 2020		December 31, 2019
Unsecured senior notes: principal payable at maturities ranging from 2020 through 2025; interest payable in semiannual installments through the same timeframe; weighted-average interest rate of 3.54% and 3.42% for 2020 and 2019, respectively.	$	335.0	$	360.0


Current maturities	(30.0)		(55.0)
Debt issuance costs	(0.3)		(0.4)
Long-term debt	$	304.7	$	304.6

(in millions) September 30, 2019 December 31, 2018
Unsecured senior notes: principal payable at maturities ranging from 2019 through 2025; interest payable in semiannual installments through the same timeframe; weighted-average interest rate of 3.36% for both 2019 and 2018 $ 400.0
$ 400.0
Equipment financing notes: principal and interest payable in monthly installments through 2019; weighted average interest rate of 3.98% and 3.72% for 2019 and 2018, respectively 1.3
5.0
Total principal outstanding 401.3
405.0
Current maturities (96.2 ) (45.0 )
Debt issuance costs (0.5 ) (0.6 )
Long-term debt $ 304.6
$ 359.4

Our Credit Agreement (the “2018 Credit Facility”) provides borrowing capacity of $250.0 million and allows us to request an increase in total commitment byof 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 ~~September~~June 30, ~~2019~~2020 or December 31, ~~2018.~~2019. Standby letters of credit under this agreement amounted to $3.9 million and $3.8 million at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019, respectively, and were primarily related to the requirements of certain of our real estate leases.

We also have a Receivables Purchase Agreement (the “2018 Receivables Purchase Agreement”) that allows us to borrow funds against qualifying trade receivables at rates based on one-month LIBOR up to $200.0 million and provides for the issuance of standby letters of credit through September 2021. We had no outstanding borrowings under this facility at ~~September~~June 30, ~~2019~~2020 or December 31, ~~2018.~~2019. At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, standby letters of credit under this agreement amounted to $70.3 million ~~and $65.3 million, respectively,~~ and were primarily related to the requirements of certain of our insurance obligations.

Our effective income tax rate was ~~26.2%~~25.8% and ~~25.8%~~24.8% for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~25.3%~~25.4% and ~~25.8%~~25.1% for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, and best ~~estimate~~estimates of nontaxable and nondeductible items of income and expense.

On March 27, 2020, President Trump signed into U.S. federal law the CARES Act aimed at providing emergency assistance and health care for individuals, families, and businesses affected by COVID-19 and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions related to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The Company is currently taking advantage of the cash deferral programs available for payment of employer social security taxes and federal and state income taxes.

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9.10. COMMON EQUITY

Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018:~~2019.


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share data)	2020		2019		2020		2019
Numerator:
Net income available to common shareholders	$	46.5	$	34.5	$	90.3	$	71.4

Denominator:
Weighted average common shares outstanding	177.2		177.1		177.2		177.1
Effect of dilutive restricted share units	0.2		0.3		0.2		0.3
Weighted average diluted common shares outstanding ⁽¹⁾	177.5		177.4		177.4		177.4

Basic earnings per common share	$	0.26	$	0.19	$	0.51	$	0.40
Diluted earnings per common share	0.26		0.19		0.51		0.40

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions, except per share data) 2019 2018 2019 2018
Numerator:
Net income available to common shareholders $ 19.7
$ 70.7
$ 91.1
$ 184.1

Denominator:
Weighted average common shares outstanding 177.1
177.0
177.1
177.0
Effect of dilutive restricted share units 0.2
0.2
0.2
0.2
Weighted average diluted common shares outstanding 177.3
177.2
177.3
177.2

Basic earnings per common share $ 0.11
$ 0.40
$ 0.51
$ 1.04
Diluted earnings per common share 0.11
0.40
0.51
1.04
(1) Weighted average diluted common shares outstanding may not sum due to rounding.

The calculation of diluted earnings per share for the three and ~~nine~~six months ended ~~September~~June 30, 2020 and 2019 excluded an immaterial amount of share-based compensation awards that had an anti-dilutive effect.

Subsequent Event - Dividends Declared

In ~~October~~July of ~~2019,~~2020, our Board of Directors declared a quarterly cash dividend for the ~~fourth~~third fiscal quarter of ~~2019~~2020 in the amount of ~~$0.06~~$0.065 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 ~~December 13, 2019~~September 11, 2020 and is expected to be paid on ~~January 9,~~October 8, 2020.

~~10.~~11. SHARE-BASED COMPENSATION

We grant various equity-based awards relating to Class B Common Stock under our 2017 Omnibus Incentive Plan (“the Plan”). These awards consist of the following: restricted shares, restricted stock units (“RSUs”), performance-based restricted shares (“Performance Shares”), performance-based restricted stock units (“PSUs”), and non-qualified stock options. Performance shares and PSUs are earned based on attainment of threshold performance of return on capital and earnings targets.

~~During~~Share-based compensation expense was $0.8 million and $0.3 million for the three months ended ~~September~~June 30, 2020 and 2019, ~~we recognized a net benefit of~~respectively, and $2.5 million and $2.4 million for ~~our share based compensation plans due to~~ the ~~reduction in the anticipated payout of performance-based awards. There was no share-based compensation expense for the nine~~six months ended ~~September~~June 30, ~~2019. Share-based compensation expense was $2.1 million~~2020 and ~~$6.3 million for the three and nine months ended September 30, 2018,~~2019, respectively. We recognize share-based compensation expense over the awards' vesting period. As of ~~September~~June 30, ~~2019,~~2020, we had ~~$11.3~~$17.2 million of pre-tax unrecognized compensation cost related to outstanding share-based compensation awards expected to be recognized over a weighted-average period of ~~2.7~~2.8 years.

The Black-Scholes valuation model is used by the Company to determine the grant date fair value of option awards. The Company uses its stock price on the grant date as the fair value assigned to the restricted shares, RSUs, performance shares, and PSUs. Performance shares and PSUs are earned based on attainment of threshold performance of return on capital and earnings or net income targets.

~~11.~~12. 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.

~~Table of Contents~~

We record liabilities for claims ~~accruals~~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 ~~cargo liability~~wage and benefit claims. We maintain excess liability insurance with licensed insurance carriers ~~above~~for liability in excess of amounts we self-

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insure which serves to largely offset the ~~amounts in~~Company’s liability associated with these claims, with the exception of wage and benefit claims for which we self-insure. We review our accruals periodically to ensure that the aggregate amounts of our accruals are appropriate at any period after consideration of available insurance coverage. Although ~~it is possible~~we expect that our claims accruals will ~~change~~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 ~~believe these changes~~anticipate that such accruals will, ~~be material to~~in any period, materially impact our results of ~~operations considering our insurance coverage and other factors.~~operations.

At ~~September~~June 30, ~~2019,~~2020, our firm commitments to purchase transportation equipment totaled ~~approximately $278.1~~$209.5 million.

~~The~~In October 2017, the representative of the former owners of WSL ~~has~~ filed a lawsuit in the Delaware Court of Chancery which alleges that we have not fulfilled certain obligations under the purchase and sale agreement relating to the post-closing operations of the business, and as a result, the former owners claim they are entitled to an additional payment of $40.0 million. ~~For additional information on this contingent payment see Note 4,~~ ~~Fair Value~~. A trial date has been set for ~~April~~September 2020. We believe that we have strong defenses to this claim. A judgment by the Court against us could have a material adverse effect on our results of operations.

~~12.~~13. SEGMENT REPORTING

We have 3 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 of Directors approved a structured shutdown of our FTFM service offering, which was included within our FTFM operating segment. Once the shutdown of the FTFM service offering is complete, there will be two operating segments within the Truckload reportable segment, VTL and Bulk.

The CODM reviews revenues for each ~~operating~~ segment ~~without the inclusion~~exclusive of fuel surcharge revenues. For segment purposes, any fuel surcharge revenues earned are recorded as a reduction of the segment’s fuel expenses. Income from operations at athe segment level reflects the ~~measures~~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 ~~reporting~~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. Intersegment revenues were immaterial for all segments, with the exception of Other, which includes revenues from insurance premiums charged to other segments for workers’ compensation, auto, and other types of insurance. Intersegment revenues included in Other revenues below were ~~$20.8~~$22.5 million and ~~$20.7~~$22.4 million for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$66.8~~$47.2 million and ~~$62.0~~$46.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.


Revenues by Segment	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Truckload	$	451.1	$	534.9	$	920.5	$	1,066.7
Intermodal	219.0		259.8		457.0		497.4
Logistics	230.9		227.0		470.5		470.9
Other	89.8		95.8		189.2		195.7
Fuel surcharge	68.7		124.2		171.7		236.0
Inter-segment eliminations	(26.7)		(29.0)		(57.0)		(59.9)
Operating revenues	$	1,032.8	$	1,212.7	$	2,151.9	$	2,406.8

Revenues by Segment Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2019 2018 2019 2018
Truckload $ 515.6
$ 566.9
$ 1,582.3
$ 1,685.0
Intermodal 249.2
254.4
746.6
688.0
Logistics 236.1
271.8
707.0
743.7
Other 94.3
83.9
290.0
237.0
Fuel surcharge 114.2
134.9
350.2
385.8
Inter-segment eliminations (25.5 ) (31.8 ) (85.4 ) (84.1 )
Operating revenues $ 1,183.9
$ 1,280.1
$ 3,590.7
$ 3,655.4


Income (Loss) from Operations by Segment	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Truckload	$	40.5	$	7.9	$	77.1	$	31.1
Intermodal	11.0		30.5		27.3		50.4
Logistics	8.2		9.2		12.4		19.5
Other	3.7		1.6		1.5		(0.3)
Income from operations	$	63.4	$	49.2	$	118.3	$	100.7

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Depreciation and Amortization Expense by Segment	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Truckload	$	52.5	$	54.9	$	103.5	$	108.3
Intermodal	11.7		11.0		22.5		21.9
Logistics	—		0.2		—		0.3
Other	8.1		8.8		16.1		17.8
Depreciation and amortization expense	$	72.3	$	74.9	$	142.1	$	148.3

Income (Loss) from Operations by Segment Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2019 2018 2019 2018
Truckload ⁽¹⁾
$ (12.5 ) $ 54.4
$ 18.6
$ 162.2
Intermodal 25.1
36.1
75.5
90.7
Logistics 9.9
13.0
29.4
31.2
Other 6.5
(5.6 ) 6.2
(26.9 )
Income from operations $ 29.0
$ 97.9
$ 129.7
$ 257.2

(1) Included within Truckload (loss) income from operations for the three and nine months ended September 30, 2019 were $50.4 million of restructuring charges associated with the shutdown of the FTFM service offering and an $11.5 million impairment on assets held for sale related to an agreement the Company signed in the third quarter of 2019 to sell tractors in the fourth quarter. The impairment on assets held for sale was recorded within operating supplies and expenses in the consolidated statements of comprehensive income. An additional $34.6 million goodwill impairment charge related to the FTFM reporting unit was recorded within Truckload income from operations for the nine months ended September 30, 2019.

Depreciation and Amortization Expense by Segment Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2019 2018 2019 2018
Truckload $ 53.2
$ 52.6
$ 161.5
$ 157.3
Intermodal 11.3
10.3
33.2
29.0
Logistics 0.2
0.1
0.5
0.3
Other 9.4
10.3
27.2
30.3
Depreciation and amortization expense $ 74.1
$ 73.3
$ 222.4
$ 216.9

~~Substantially all of our revenues and assets were generated or located within the United States.~~

14. RESTRUCTURING

In 2019, we began recognizing in-transit revenues and related expenses at the reporting segment level for all operating segments to better align revenues and costs within our reporting segments. Prior to 2019, revenues at the operating segment level reflected revenue recognized upon delivery, and in-transit revenue was recorded within Other, except for FTFM. For consistency, we have restated the 2018 revenue and income (loss) from operations by segment in the tables above to reflect this new measure of revenue and segment profit. The tables below reflect the impact of this change by reporting segment on revenues (excluding fuel surcharge) and income (loss) from operations.

Increase (Decrease) in Revenues (excluding fuel surcharge) by Segment Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2018 2018
Truckload $ 1.9
$ —
Intermodal 2.3
7.0
Logistics 3.1
4.5
Other (7.3 ) (11.5 )
Total $ —
$ —

Increase (Decrease) in Income (Loss) from Operations by Segment Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2018 2018
Truckload $ 1.3
$ (0.6 )
Intermodal —
2.0
Logistics 0.5
0.8
Other (1.8 ) (2.2 )
Total $ —
$ —

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~~13. RESTRUCTURING CHARGES~~

On July 29, 2019, the Company’s Board of Directors approved a structured shutdown of its FTFM service offering within its Truckload ~~reporting~~reportable segment which was substantially complete as of August 31, ~~2019. As part of the shutdown, $50.4 million of~~2019. The restructuring charges were incurred during the third quarter of 2019. Combined with anticipated future shutdown costs, the Company will be at the lower end of its estimated range of $50.0 million to $75.0 million. All of the restructuring charges wereactivity was recorded within our Truckload ~~reporting~~reportable segment. Pre-tax losses of our FTFM service offering were ~~$8.9 million and $9.7~~$13.1 million for the three months ended ~~September~~June 30, 2019 and ~~2018, respectively and $34.2 million and $19.3~~$25.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019 and 2018, respectively.~~2019.

The ~~costs~~activity associated with the shutdown ~~are~~is presented separately on the consolidated statements of comprehensive income within ~~restructuring charges~~restructuring—net and ~~are~~is summarized ~~in the following table~~below on a cumulative basis since July 29, 2019. Restructuring activity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019:~~2020 was not material.


(in millions)	Cumulative
Impairment charges and losses on asset disposals—net	$	45.3
Receivable write-downs—net	3.1
Other costs	14.3
Total restructuring—net	$	62.7

(in millions) September 30, 2019
Impairment charges $ 35.7
Receivables write-down 7.6
Other costs 7.1
Total restructuring charges $ 50.4

As part of our assessment of impairment charges during the quarter ended September 30, 2019, we recorded at fair value $50.6 million of transportation equipment using market data and $13.6 million of right-of-use lease assets using discounted cash flow analyses. As a result of the above, we utilized level 3 inputs in calculating the fair value. These assets, less the cost to sell, are recorded within prepaid expenses and other current assets and other noncurrent assets, respectively, on the consolidated balance sheets as of September 30, 2019.

As of June 30, 2020 and December 31, ~~2018 and September 30,~~ 2019, FTFM restructuring liabilities ~~are~~were classified as current liabilities on the consolidated balance sheets ~~and balances are~~ as follows:


(in millions)	Restructuring Liabilities
Balance at December 31, 2018	$	—
Restructuring—net	13.7
Cash payments	(8.6)
Balance at December 31, 2019	5.1
Restructuring—net	0.6
Cash payments	(1.2)
Balance at June 30, 2020	$	4.5

(in millions) Restructuring Liabilities
Balance at December 31, 2018 $ —
Restructuring charges 7.1
Cash payments (5.2 )
Balance at September 30, 2019 $ 1.9

The required criteria, as defined by ASC 360, Property, Plant and Equipment, was satisfied as part of the shutdown of our FTFM service offering for reclassification of related transportation equipment into assets held for sale. ~~The following table presents information on~~As of June 30, 2020 and December 31, 2019, assets held for sale, asnet of ~~December 31, 2018 and September 30, 2019~~impairment, within our Truckload ~~segment. As~~segment were $40.2 million and $63.5 million, respectively, of ~~September 30, 2019, $50.6~~which $23.0 million ~~of the assets held for sale balance relates~~and $33.4 million related to the shutdown of our FTFM service ~~offering.~~offering, respectively. Assets held for sale, net of impairment, are included in prepaid expenses and other current assets in the consolidated balance sheets.

(in millions) September 30, 2019 December 31, 2018
Truckload $ 119.2
$ 19.5

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~~Item~~ITEM 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and related notes and our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

INTRODUCTION

Recent Events

COVID-19 Pandemic

COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the President of the U.S. The extent the impact of COVID-19 will have on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, the efforts of governments at the national, state, and local levels to combat the outbreak, and the impact of the pandemic and these governmental actions on our customers, which are uncertain and cannot be fully predicted at this time.

The Company’s operational and financial performance was impacted by a decrease in demand during the second quarter of 2020 resulting in part from imposed stay-at-home orders and the related closure of certain customers as a result of COVID-19. The impact was primarily within our truckload and intermodal operations during the month of April, however sequential volume improvements were experienced during the second quarter. Many drivers were redeployed to areas within our portfolio where there was need, but we saw an overall reduction in revenues in the second quarter. We currently estimate the largest impacts of COVID-19 on our business have been incurred to date and that we will experience continued improvement in the third and fourth quarters; however, we are unable to predict with any certainty the impact that COVID-19 may continue to have on our operational and financial performance.

We have implemented cost reduction efforts to help mitigate the impact reduced revenues have had, and may continue to have, on our full-year 2020 income from operations; however, these reductions have not, and are not expected to, fully offset the decline in revenues. We are reducing expenses through decreased discretionary spending including travel and entertainment, hiring and headcount, and various other expenses. While we are working diligently to manage costs throughout the organization, we have incurred additional expenses related to the safe onboarding of company drivers, the purchase of personal protective equipment, emergency sick leave benefits, and additional cleaning services. We anticipate these additional costs will continue to be incurred as the year progresses in order to ensure the safety of our associates, owner-operators, and customers.

We continue to actively monitor the situation and take further actions that alter our business operations as may be required by federal, state, or local governmental authorities, or that we determine are in the best interests of our associates, customers, and shareholders. In this time of uncertainty resulting from COVID-19, we are continuing to serve our customers while taking precautions to provide a safe work environment for our associates, owner-operators, and customers.

Business Overview

We are a leading transportation and logistics services company providing a broad portfolio of premier truckload, intermodal, and logistics solutions and operating one of the largest for-hire trucking fleets in North America. Our highly flexible and balanced business combines asset-based truckload services with asset-light intermodal and non-asset logistics offerings, enabling us to serve our customers’ diverse transportation needs. Our broad portfolio of services provides us with a greater opportunity to allocate capital within our portfolio of services in a manner designed to maximize returns across all market cycles and economic conditions. We continually monitor our performance and market conditions to ensure appropriate allocation of capital and resources to grow our businesses and to optimize returns across reportable segments. Our strong balance sheet enables us to carry out an acquisition strategy that strengthens our overall portfolio. We are positioned to leverage our scalable platform and experienced operations team to acquire high-quality businesses that meet our disciplined selection criteria to broaden our service offerings and customer base.

Our truckload services include standard long-haul and regional shipping services primarily using dry van, ~~equipment,~~ bulk, temperature-controlled, and flat-bed equipment, as well as customized solutions for high-value and time-sensitive ~~loads.~~loads to offer vast coverage through North America, including Mexico and Canada. These services are executed through either ~~for-hire~~dedicated or ~~dedicated~~network contracts. FTFM residential and retail store delivery services were ~~also~~ provided into the third quarter of 2019, when that service offering was shut down.

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Our intermodal service consists of door-to-door container on flat car (“COFC”) service by a combination of rail and over-the-road transportation, in association with our rail carrier partners. Our intermodal service uses company-owned containers, chassis, and trucks ~~using~~with primarily company dray drivers, augmented by third-party dray capacity to offer vast coverage throughout North America, including cross border.

Our logistics offerings consist of non-asset freight brokerage, ~~services,~~ supply chain ~~services~~ (including 3PL), and import/export services. Our logistics business typically provides value-added services using third-party capacity, augmented by our trailing assets, to manage and move our customers’ freight.

Our success depends on our ability to balance our transportation network and efficiently and effectively manage our resources in the delivery of truckload, intermodal, and logistics services to our customers. Resource requirements vary with customer demand, which may be subject to seasonal or general economic conditions. We believe that our ability to properly select freight and adapt to changes in customer transportation needs allows us to efficiently deploy resources and make capital investments in trucks, trailers, containers, and chassis or obtain qualified third-party capacity at a reasonable price for our logistics segment.

Consistent with the transportation industry, our results of operations generally show a seasonal pattern. The strongest volumes are typically in the late third and fourth quarters. Operating expenses tend to be higher in the winter months primarily due to colder weather, which causes higher maintenance expense and higher fuel consumption from increased idle time.

RESULTS OF OPERATIONS

Non-GAAP Financial Measures

In this section of our report, we present the following non-GAAP financial measures: (1) revenues (excluding fuel surcharge), (2) adjusted income from operations, (3) adjusted operating ratio, and (4) adjusted net income. We also provide reconciliations of these measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Management believes the use of each of these non-GAAP measures assists investors in understanding our business by ~~(a)~~(1) removing the impact of items from our operating results that, in our opinion, do not reflect our core operating performance, ~~(b)~~(2) providing investors with the same information our management uses internally to assess our core operating performance, and ~~(c)~~(3) presenting comparable financial results between periods. In addition, in the case of revenues (excluding fuel surcharge), we believe the measure is useful to investors because it isolates volume, price, and cost changes directly related to industry demand and the way we operate our business from the external factor of fluctuating fuel prices and the programs we have in place to manage fuel price fluctuations. Fuel-related costs and their impact on our industry are important to our results of operations, but they are often independent of other, more relevant factors affecting our results of operations and our industry.

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Although we believe these non-GAAP measures are useful to investors, they have limitations as analytical tools and may not be comparable to similar measures disclosed by other companies. You should not consider the non-GAAP measures in this report in isolation or as substitutes for, or alternatives to, analysis of our results as reported under GAAP. The exclusion of unusual or infrequent items or other adjustments reflected in the non-GAAP measures should not be construed as an inference that our future results will not be affected by unusual or infrequent items or by other items similar to such adjustments. Our management compensates for these limitations by relying primarily on our GAAP results in addition to using the non-GAAP measures.

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Enterprise Summary

The following table includes key GAAP and non-GAAP financial measures for the consolidated enterprise. Adjustments to arrive at non-GAAP measures are made at the enterprise level, with the exception of fuel surcharge revenues, which are not included in segment revenues.


	Three Months Ended June 30,									Six Months Ended June 30,
(in millions, except ratios)	2020			2019			2020			2019
Operating revenues	$	1,032.8		$	1,212.7		$	2,151.9		$	2,406.8
Revenues (excluding fuel surcharge) ⁽¹⁾	964.1			1,088.5			1,980.2			2,170.8
Income from operations	63.4			49.2			118.3			100.7
Adjusted income from operations ⁽²⁾	63.6			83.8			117.3			135.3
Operating ratio	93.9		%	95.9		%	94.5		%	95.8		%
Adjusted operating ratio ⁽³⁾	93.4		%	92.3		%	94.1		%	93.8		%
Net income	$	46.5		$	34.5		$	90.3		$	71.4
Adjusted net income ⁽⁴⁾	46.7			60.3			89.6			97.2

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions, except ratios) 2019 2018 2019 2018
Operating revenues $ 1,183.9
$ 1,280.1
$ 3,590.7
$ 3,655.4
Revenues (excluding fuel surcharge) ⁽¹⁾
1,069.7
1,145.2
3,240.5
3,269.6
Income from operations 29.0
97.9
129.7
257.2
Adjusted income from operations ⁽²⁾
79.4
97.9
214.7
263.0
Operating ratio 97.6 % 92.4 % 96.4 % 93.0 %
Adjusted operating ratio ⁽³⁾
92.6 % 91.5 % 93.4 % 92.0 %
Net income $ 19.7
$ 70.7
$ 91.1
$ 184.1
Adjusted net income ⁽⁴⁾
57.2
70.7
154.4
188.4
(1) We define “revenues (excluding fuel surcharge)” as operating revenues less fuel surcharge revenues, which are excluded from revenues at the segment level. Included below is a reconciliation of operating revenues, the most closely comparable GAAP financial measure, to revenues (excluding fuel surcharge).


~~(1)~~	We define “revenues (excluding fuel surcharge)” as operating revenues less fuel surcharge revenues, which are excluded from revenues at the segment level. Included below is a reconciliation of operating revenues, the most closely comparable GAAP financial measure, to revenues (excluding fuel surcharge).


~~(2)~~	We define “adjusted income from operations” as income from operations, adjusted to exclude material items that do not reflect our core operating performance. Included below is a reconciliation of income from operations, which is the most directly comparable GAAP measure, to adjusted income from operations. Excluded items for the periods shown are explained in the table and notes below.

~~(3)~~

We define “adjusted operating ratio” as operating expenses, adjusted to exclude material items that do not reflect our core operating performance, divided by revenues (excluding fuel surcharge). Included below is a reconciliation of operating ratio, which is the most directly comparable GAAP measure, to adjusted operating ratio. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”


~~(4)~~	We define “adjusted net income” as net income, adjusted to exclude material items that do not reflect our core operating performance. Included below is a reconciliation of net income, which is the most directly comparable GAAP measure, to adjusted net income. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”

(2) We define “adjusted income from operations” as income from operations, adjusted to exclude material items that do not reflect our core operating performance. Included below is a reconciliation of income from operations, which is the most directly comparable GAAP measure, to adjusted income from operations. Excluded items for the periods shown are explained in the table and notes below.

(3) We define “adjusted operating ratio” as operating expenses, adjusted to exclude material items that do not reflect our core operating performance, divided by revenues (excluding fuel surcharge). Included below is a reconciliation of operating ratio, which is the most directly comparable GAAP measure, to adjusted operating ratio. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”

(4) We define “adjusted net income” as net income, adjusted to exclude material items that do not reflect our core operating performance. Included below is a reconciliation of net income, which is the most directly comparable GAAP measure, to adjusted net income. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”

Revenues (excluding fuel surcharge)


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Operating revenues	$	1,032.8	$	1,212.7	$	2,151.9	$	2,406.8
Less: Fuel surcharge revenues	68.7		124.2		171.7		236.0
Revenues (excluding fuel surcharge)	$	964.1	$	1,088.5	$	1,980.2	$	2,170.8

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2019 2018 2019 2018
Operating revenues $ 1,183.9
$ 1,280.1
$ 3,590.7
$ 3,655.4
Less: Fuel surcharge revenues 114.2
134.9
350.2
385.8
Revenues (excluding fuel surcharge) $ 1,069.7
$ 1,145.2
$ 3,240.5
$ 3,269.6

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Adjusted income from operations


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Income from operations	$	63.4	$	49.2	$	118.3	$	100.7
Goodwill impairment ⁽¹⁾	—		34.6		—		34.6
Restructuring—net ⁽²⁾	0.2		—		(1.0)		—
Adjusted income from operations	$	63.6	$	83.8	$	117.3	$	135.3

(1)A triggering event occurred during the second quarter of 2019, as results from our FTFM reporting unit were considerably less than projected, resulting in full impairment of FTFM's goodwill.

(2)Activity associated with the shutdown of the FTFM service offering. Refer to Note 14, Restructuring, for additional details.

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2019 2018 2019 2018
Income from operations $ 29.0
$ 97.9
$ 129.7
$ 257.2
Litigation ⁽¹⁾
—
—
—
5.8
Goodwill impairment ⁽²⁾
—
—
34.6
—
Restructuring charges ⁽³⁾
50.4
—
50.4
—
Adjusted income from operations $ 79.4
$ 97.9
$ 214.7
$ 263.0


~~(1)~~	~~Costs associated with the settlement of a lawsuit that challenged Washington State labor law compliance during 2018.~~


~~(2)~~	~~A full impairment of FTFM's goodwill was recorded in the second quarter of 2019.~~


~~(3)~~	~~Costs associated with the shutdown of the FTFM service offering. Refer to Note 13,~~ ~~Restructuring Charges, for additional details.~~ Table of Contents

Adjusted operating ratio


	Three Months Ended June 30,									Six Months Ended June 30,
(in millions, except ratios)	2020			2019			2020			2019
Total operating expenses	$	969.4		$	1,163.5		$	2,033.6		$	2,306.1
Divide by: Operating revenues	1,032.8			1,212.7			2,151.9			2,406.8
Operating ratio	93.9		%	95.9		%	94.5		%	95.8		%

Total operating expenses	$	969.4		$	1,163.5		$	2,033.6		$	2,306.1
Adjusted for:
Fuel surcharge revenues	(68.7)			(124.2)			(171.7)			(236.0)
Goodwill impairment	—			(34.6)			—			(34.6)
Restructuring—net	(0.2)			—			1.0			—
Adjusted total operating expenses	$	900.5		$	1,004.7		$	1,862.9		$	2,035.5

Operating revenues	$	1,032.8		$	1,212.7		$	2,151.9		$	2,406.8
Less: Fuel surcharge revenues	68.7			124.2			171.7			236.0
Revenues (excluding fuel surcharge)	$	964.1		$	1,088.5		$	1,980.2		$	2,170.8

Adjusted operating ratio	93.4		%	92.3		%	94.1		%	93.8		%

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions, except ratios) 2019 2018 2019 2018
Total operating expenses $ 1,154.9
$ 1,182.2
$ 3,461.0
$ 3,398.2
Divide by: Operating revenues 1,183.9
1,280.1
3,590.7
3,655.4
Operating ratio 97.6 % 92.4 % 96.4 % 93.0 %

Total operating expenses $ 1,154.9
$ 1,182.2
$ 3,461.0
$ 3,398.2
Adjusted for:
Fuel surcharge revenues (114.2 ) (134.9 ) (350.2 ) (385.8 )
Litigation —
—
—
(5.8 )
Goodwill impairment —
—
(34.6 ) —
Restructuring charges (50.4 ) —
(50.4 ) —
Adjusted total operating expenses $ 990.3
$ 1,047.3
$ 3,025.8
$ 3,006.6

Operating revenues $ 1,183.9
$ 1,280.1
$ 3,590.7
$ 3,655.4
Less: Fuel surcharge revenues 114.2
134.9
350.2
385.8
Revenues (excluding fuel surcharge) $ 1,069.7
$ 1,145.2
$ 3,240.5
$ 3,269.6

Adjusted operating ratio 92.6 % 91.5 % 93.4 % 92.0 %

Adjusted net income


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Net income	$	46.5	$	34.5	$	90.3	$	71.4
Goodwill impairment	—		34.6		—		34.6
Restructuring—net	0.2		—		(1.0)		—
Income tax effect of non-GAAP adjustments ⁽¹⁾	—		(8.8)		0.3		(8.8)
Adjusted net income	$	46.7	$	60.3	$	89.6	$	97.2

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2019 2018 2019 2018
Net income $ 19.7
$ 70.7
$ 91.1
$ 184.1
Litigation —
—
—
5.8
Goodwill impairment —
—
34.6
—
Restructuring charges 50.4
—
50.4
—
Income tax effect of non-GAAP adjustments⁽¹⁾
(12.9 ) —
(21.7 ) (1.5 )
Adjusted net income $ 57.2
$ 70.7
$ 154.4
$ 188.4


~~(1)~~	~~Tax impacts are calculated~~(1) Our estimated tax rate on non-GAAP items is determined annually using the applicable consolidated federal and state effective tax rate, modified to remove the impact ~~of discrete tax adjustments.~~

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tax credits and adjustments that are not applicable to the specific items. Due to differences in the tax treatment of items excluded from non-GAAP income, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP items may differ from our GAAP tax rate and from our actual tax liabilities.

Three Months Ended ~~September~~June 30, ~~2019~~2020 Compared to Three Months Ended ~~September~~June 30, ~~2018~~2019

Enterprise Results Summary

~~Net Income~~

~~Net~~Enterprise net income ~~decreased $51.0~~increased $12.0 million, approximately ~~72%~~35%, in the ~~third~~second quarter of ~~2019~~2020 compared to the same quarter in ~~2018,~~2019, primarily due to ~~pretax charges of $50.4~~the $34.6 million ~~for restructuring~~FTFM goodwill impairment recorded in 2019; the benefit associated with the FTFM shutdown, ~~of the Company's FTFM service offering and an $11.5 million pretax impairment of held for sale assets related to an agreement signed~~as FTFM's loss from operations in the ~~third~~second quarter of 2019 ~~to sell tractors~~was $13.1 million; and a $2.7 million gain on our ownership interest in ~~the fourth quarter. In addition,~~PSI. This was partially offset by a decline in Intermodal and Truckload freight volumes, ~~declined~~primarily a result of COVID-19 market disruptions; a reduction in ~~2019 due~~price across all of our service offerings; and an increase in income taxes related to ~~lower demand.~~ higher taxable income.

Adjusted net income decreased ~~$13.5~~$13.6 million, approximately ~~19%~~23%.

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Components of Enterprise Net Income

Enterprise Revenues

Enterprise operating revenues decreased ~~$96.2~~$179.9 million, approximately 8%15%, in the ~~third~~second quarter of ~~2019~~2020 compared to the same quarter in ~~2018.~~2019.

Factors contributing to the decrease were as follows:

~~a $51.3~~•an $83.8 million decrease in ~~our~~ Truckload segment revenues (excluding fuel surcharge) resulting from ~~reduced Truckload volume largely due to lower demand and a decrease of approximately $22.0 million related to~~ the shutdown of ~~the~~our FTFM service offering ~~(which was substantially complete~~in August 2019 which generated $31.8 million of revenues in the second quarter of 2019, as ~~of the end of August 2019), that will continue for the remainder of 2019;~~

~~a $35.7 million~~well as an overall decrease in ~~our Logistics segment revenues (excluding fuel surcharge) primarily due~~Truckload volume and price largely attributed to ~~one~~the impact of ~~the Company's import/export customers insourcing their warehouse management function in April 2019 combined with lower revenue per order within brokerage due to~~ COVID-19;

•a ~~compression in rates, partially offset by an 11% increase in brokerage volumes;~~

~~a $20.7~~$55.5 million decrease in fuel surcharge revenues primarily resulting from a 22% decline in average diesel price per gallon in the U.S. as reported by the Department of Energy, a decline in Intermodal and Truckload volumes, and a $5.5 million reduction related to ~~decreased volumes;~~the FTFM shutdown; and

•a ~~$5.2~~$40.8 million decrease in ~~our~~ Intermodal segment revenues (excluding fuel surcharge) due to a decrease in ~~order~~both volume ~~partially offset by improved revenue per order.~~and price resulting primarily from COVID-19 induced network disruptions, shorter length of haul, and freight mix.

~~The above factors were partially offset by a $9.6 million increase in revenues from equipment sales by our leasing business under sales-type leases.~~

Enterprise revenues (excluding fuel surcharge) decreased ~~$75.5~~$124.4 million, approximately 7%11%.

Enterprise Income from Operations and Operating Ratio

Enterprise income from operations ~~decreased $68.9~~increased $14.2 million, approximately ~~70%~~29%, in the ~~third~~second quarter of ~~2019~~2020 compared to the same quarter in ~~2018,~~2019 primarily due to ~~$50.4~~the $34.6 million ~~of restructuring charges~~FTFM goodwill impairment recorded in 2019 and the benefit associated with the FTFM shutdown, as FTFM's loss from operations in the second quarter of 2019 was $13.1 million. A decrease in fuel costs, continued cost savings attributable to a reduction in headcount, lower healthcare costs, and favorable driver onboarding expenses also contributed to the ~~FTFM service offering and an $11.5 million impairment of assets held for sale. Lower demand also negatively impacted profitability, but decreases~~increase in income from operations. Those increases were partially offset by ~~reduced performance-based incentive compensation, driver related~~a reduction in Intermodal and Truckload freight volumes primarily due to COVID-19 market disruptions, lower price across all of our service offerings, incremental costs associated with facility deep cleaning, personal protective equipment purchases, and other ~~variable costs.~~ proactive measures taken as a result of COVID-19, and $2.8 million from the combination of equipment dispositions and impairments due to used equipment market conditions.

Adjusted income from operations decreased ~~$18.5~~$20.2 million, approximately ~~19%~~24%.

Enterprise operating ratio ~~weakened~~improved on ~~both~~ a GAAP ~~and~~basis but weakened on an adjusted basis. Among other factors, our operating ratio can be negatively impacted by changes in portfolio mix when our higher operating ratio, less asset-focused Logistics segment grows faster than our lower operating ratio, capital-intensive Truckload segment.

Enterprise Operating Expenses

Key operating expense fluctuations are described below.

•Purchased transportation costs decreased ~~$9.4~~$66.7 million, or 2%13%, quarter over quarter, ~~driven by lower rates in our Logistics segment,~~primarily due to a ~~reduction of FTFM costs given the mid-quarter shutdown of the service offering, and a 4% decline~~decrease in Intermodal ~~order volume. This was partially offset by~~and Truckload volumes, reduced owner-operator pay and third party carrier costs within Truckload resulting from business mix and rate compression due to market conditions, as well as an ~~increase~~$11.6 million reduction in ~~various Intermodal third-party~~purchased transportation costs ~~including rail, and increased order volume of 11% within our brokerage business.~~attributable to the FTFM shutdown.

•Salaries, wages, and benefits decreased ~~$59.9~~$38.5 million, or ~~19%~~13%, quarter over quarter, largely due to the ~~elimination of~~benefit associated with the FTFM shutdown, as FTFM's salaries, wages, and benefits ~~associated with warehouse management operations insourced by an import/export customer~~were $16.3 million in ~~April~~the second quarter of 2019, and headcount reductions across the ~~shutdown of the FTFM service offering,~~organization. A $7.0 million reduction in healthcare costs primarily resulting from favorable claims experience and other cost savings initiatives. We expect to see continued favorability year over year in salaries, wages, and benefits as a result of these changes. Lower performance-based incentive compensation, driver pay, and Company benefit costsfewer plan participants also contributed to the decrease. ~~Salaries, wages, and benefits decreased 3% quarter over quarter on a percentage of revenues basis.~~

~~Table of Contents~~•

Fuel and fuel taxes for ~~our~~ company trucks decreased ~~$16.8~~$34.1 million, or ~~19%~~45%, quarter over quarter, driven by a ~~5% decrease in company driver miles and a~~ decrease in cost per ~~gallon. A portion of the decline in~~gallon, less company driver miles iswithin our Truckload segment, and a $4.3 million reduction in fuel and fuel taxes attributable to the ~~shutdown of the~~ FTFM ~~service offering. Decreased company driver miles were partially offset by increased owner-operator miles, which do not impact company fuel costs.~~shutdown. A significant portion of fuel costs are recovered through our fuel surcharge programs.

•Depreciation and amortization decreased $2.6 million, or 3%, quarter over quarter, primarily related to the FTFM shutdown.

•Operating supplies and expenses ~~increased $15.6~~decreased $15.0 million, or ~~13%~~11%, quarter over quarter, driven by ~~an $11.5~~a $6.6 million ~~impairment charge recorded on assets held for sale related~~decline in cost of goods sold due to ~~an agreement signed in the third quarter of 2019 to sell tractors in the fourth quarter and growth in~~fewer equipment sales under sales-type leases by our leasing business and a $4.3 million reduction in facility, utility, and other costs resulting from temporary facility closures associated with COVID-19 and other cost savings initiatives. We experienced a reduction in ~~higher cost~~a variety of ~~goods sold~~other operating-related

Table of ~~$10.4 million. Increases in equipment losses~~Contents

expenses, including facility rents related to the FTFM shutdown and software subscription costs, that were individually immaterial. These decreases were partially offset by incremental cleaning and equipment costs related to COVID-19, along with a $1.6 million increase in impairment on assets held for sale and a $1.2 million change in equipment dispositions resulting from used equipment market conditions in 2020. In the second quarter of 2020, we recorded $1.0 million of net equipment losses compared to $0.2 million of net equipment gains in the second quarter of 2019.

•Insurance and related expenses increased $2.9 million, or 11%, quarter over quarter, primarily due to an increase in insurance premiums, partially offset by a reduction in cargo and collision costs.

•Other general expenses decreased $5.7 million, or 20%, quarter over quarter, primarily due to a reduction in travel expenses resulting from Company enforced travel bans related to COVID-19 and a decrease in driver recruiting and training costs due to lower company driver turnover and cost savings initiatives. Additional costs were incurred in the driver recruiting and training space to safely onboard new drivers during COVID-19; however, these costs were more than offset by savings from lower company driver turnover and fewer hires. We expect our travel expenses to continue to be incurred at a reduced level for the remainder of 2020 as a result of COVID-19.

•Goodwill impairment charges decreased $34.6 million, quarter over quarter, due to the FTFM goodwill impairment charge of $34.6 million in the second quarter of 2019.

•Restructuring—net was $0.2 million unfavorable quarter over quarter, due primarily to net losses on equipment sales. Refer to Note 14, Restructuring, for additional details.

Total Other Expenses (Income)

Other expense decreased $2.6 million, approximately 79%, in the second quarter of 2020 compared to the same quarter in 2019 due primarily to the recognition of a $2.7 million pre-tax gain on our ownership interest in PSI and a $2.1 million decrease in interest expense. See Note 6, Investments, for more information on PSI. These items were partially offset by a ~~combined $11.4~~$1.9 million decrease in ~~temporary worker pay~~interest income as interest rates have declined quarter over quarter.

Income Tax Expense

Our provision for income taxes increased $4.8 million, approximately 42%, in the second quarter of 2020 compared to the same quarter in 2019 due to ~~insourcing~~higher taxable income. The effective income tax rate was 25.8% for the three months ended June 30, 2020 compared to 24.8% for the same quarter last year.

Revenues and Income from Operations by ~~one of our import/export customers in April 2019 and reduced maintenance and parts spend attributable to less company driver miles, cost savings initiatives, and younger age of fleet.~~Segment

~~Other general expenses decreased $8.3 million, or 23%, quarter over quarter primarily as a result of reduced driver recruiting and training costs associated with cost savings initiatives.~~


•	Restructuring charges increased $50.4 million quarter over quarter due to the recording of impairment charges, write-down of receivables, and other costs associated with the shutdown of the FTFM service offering. Refer to Note 13, ~~Restructuring Charges, for additional details.~~

~~Segment Contributions to Results of Operations~~

The following tables summarize revenue and income ~~(loss)~~ from operations by segment:


	Three Months Ended June 30,
Revenues by Segment (in millions)	2020		2019
Truckload	$	451.1	$	534.9
Intermodal	219.0		259.8
Logistics	230.9		227.0
Other	89.8		95.8
Fuel surcharge	68.7		124.2
Inter-segment eliminations	(26.7)		(29.0)
Operating revenues	$	1,032.8	$	1,212.7

Three Months Ended
September 30,
Revenues by Segment (in millions)
2019 2018
Truckload $ 515.6
$ 566.9
Intermodal 249.2
254.4
Logistics 236.1
271.8
Other 94.3
83.9
Fuel surcharge 114.2
134.9
Inter-segment eliminations (25.5 ) (31.8 )
Operating revenues $ 1,183.9
$ 1,280.1

Three Months Ended
September 30,
Income (Loss) from Operations by Segment (in millions)
2019 2018
Truckload $ (12.5 ) $ 54.4
Intermodal 25.1
36.1
Logistics 9.9
13.0
Other 6.5
(5.6 )
Income from operations 29.0
97.9
Adjustments:
Restructuring charges 50.4
—
Adjusted income from operations $ 79.4
$ 97.9

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	Three Months Ended June 30,
Income from Operations by Segment (in millions)	2020		2019
Truckload	$	40.5	$	7.9
Intermodal	11.0		30.5
Logistics	8.2		9.2
Other	3.7		1.6
Income from operations	63.4		49.2
Adjustments:
Goodwill impairment	—		34.6
Restructuring—net	0.2		—
Adjusted income from operations	$	63.6	$	83.8

We monitor and analyze a number of KPIs in order to manage our business and evaluate our financial and operating performance. Below are our KPIs by segment.

Truckload

The following table presents ~~our key performance indicators~~the KPIs for our Truckload segment for the periods indicated, consistent with how revenues and expenses are reported internally for segment purposes. Prior to 2020, we reported KPIs within our Truckload segment by quadrant. Going forward, KPIs will be reported for our dedicated and network operations only. This presentation change does not impact KPIs at the segment level. Descriptions of the ~~four quadrants~~two operations that make up our Truckload segment are as follows:


•	~~Dedicated standard~~ •Dedicated - Transportation services with equipment devoted to customers under long-term contracts. •Network ~~- Transportation services with equipment devoted to customers under long-term contracts utilizing standard dry van trailing equipment.~~


•	~~Dedicated specialty~~ ~~- Transportation services with equipment devoted to customers under long-term contracts utilizing bulk, temperature controlled, flatbed, straight truck, and other specialty equipment.~~


•	~~For-hire standard~~ ~~- Transportation services of one-way shipments utilizing standard dry van trailing equipment.~~


•	~~For-hire specialty~~ ~~- Transportation services of one-way shipments utilizing bulk, temperature controlled, flatbed, straight truck, and other specialty equipment.~~

Three Months Ended
September 30,
2019 2018
Dedicated standard
      Revenues (excluding fuel surcharge) ⁽¹⁾
$ 82.3
$ 81.2
      Average trucks ^{(2) (3)}
1,807
1,671
      Revenue per truck per week ⁽⁴⁾
$ 3,515
$ 3,792
Dedicated specialty
      Revenues (excluding fuel surcharge) ⁽¹⁾
$ 93.4
$ 95.9
      Average trucks ^{(2) (3)}
2,100
2,107
      Revenue per truck per week ⁽⁴⁾
$ 3,433
$ 3,551
For-hire standard
      Revenues (excluding fuel surcharge) ⁽¹⁾
$ 291.4
$ 306.3
      Average trucks ^{(2) (3)}
6,003
6,094
      Revenue per truck per week ⁽⁴⁾
$ 3,746
$ 3,921
For-hire specialty
      Revenues (excluding fuel surcharge) ⁽¹⁾
$ 48.9
$ 81.6
      Average trucks ^{(2) (3)}
1,009
1,521
      Revenue per truck per week ⁽⁴⁾
$ 3,746
$ 4,180
Total Truckload
      Revenues (excluding fuel surcharge) ⁽⁶⁾
$ 515.6
$ 566.9
      Average trucks ^{(2) (3)}
10,919
11,393
      Revenue per truck per week ⁽⁴⁾
$ 3,648
$ 3,868
      Average company trucks ⁽³⁾
7,998
8,634
      Average owner-operator trucks⁽³⁾
2,921
2,759
      Trailers 35,612
38,026
      Operating ratio ⁽⁵⁾
102.4 % 90.4 %

- Transportation services of one-way shipments, formerly called for-hire.


~~(1)~~	~~Revenues (excluding fuel surcharge), in millions, exclude revenue in-transit.~~


~~(2)~~	~~Includes company trucks and owner-operator trucks.~~


~~(3)~~	~~Calculated based on beginning and end of month counts and represents the average number of trucks available to haul freight over the specified timeframe.~~


~~(4)~~	~~Calculated excluding fuel surcharge and revenue in-transit, consistent with how revenue is reported internally for segment purposes, using weighted workdays.~~


~~(5)~~	~~Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in-transit and related expenses at the operating segment level.~~


~~(6)~~	~~Revenues (excluding fuel surcharge), in millions, include revenue in-transit at the operating segment level, and therefore does not sum with amounts presented above.~~


	Three Months Ended June 30,
	2020			2019
Dedicated
Revenues (excluding fuel surcharge) ⁽¹⁾	$	172.2		$	177.7
Average trucks ^{(2) (3)}	3,891			3,991
Revenue per truck per week ⁽⁴⁾	$	3,448		$	3,467
Network
Revenues (excluding fuel surcharge) ⁽¹⁾	$	279.3		$	357.3
Average trucks ^{(2) (3)}	6,350			7,615
Revenue per truck per week ⁽⁴⁾	$	3,426		$	3,654
Total Truckload
Revenues (excluding fuel surcharge) ⁽⁵⁾	$	451.1		$	534.9
Average trucks ^{(2) (3)}	10,241			11,606
Revenue per truck per week ⁽⁴⁾	$	3,434		$	3,590
Average company trucks ⁽³⁾	7,366			8,728
Average owner-operator trucks ⁽³⁾	2,875			2,878
Trailers	36,141			37,409
Operating ratio ⁽⁶⁾	91.0		%	98.5		%

(1)Revenues (excluding fuel surcharge), in millions, exclude revenue in transit.

(2)Includes company trucks and owner-operator trucks.

(3)Calculated based on beginning and end of month counts and represents the average number of trucks available to haul freight over the specified timeframe.

(4)Calculated excluding fuel surcharge and revenue in transit, consistent with how revenue is reported internally for segment purposes, using weighted workdays.

(5)Revenues (excluding fuel surcharge), in millions, include revenue in transit at the operating segment level, and therefore does not sum with amounts presented above.

(6)Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in transit and related expenses at the operating segment level.

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Truckload revenues (excluding fuel surcharge) decreased ~~$51.3~~$83.8 million, approximately 9%16%, in the ~~third~~second quarter of ~~2019~~2020 compared to the same quarter in ~~2018. Both volume and price declined quarter over quarter with the decrease in volume having the largest impact. Decreased volume of 9% was the~~2019 primarily a result of ~~lower demand compared to the third quarter of 2018 and~~ the shutdown of our FTFM service offering in August 2019 which generated $31.8 million of revenues in the ~~third~~second quarter of ~~2019. Fewer premium~~2019, as well as a decline in both volume and ~~promotional revenue opportunities contributed~~price in the remaining dedicated and network business. The decline in volume of 7% compared to the second quarter of 2019 was driven by degradation in market conditions at the beginning of the quarter as non-essential retail customers shut down but improved as the quarter progressed. A softer freight market compared to the second quarter of 2019 drove a decline in ~~price. Revenue~~price of 3% which also was the main contributor of the $156, or 4%, decrease in revenue per truck per week ~~decreased $220, or 6%,~~ quarter over ~~quarter as a result of lower productivity.~~quarter.

Truckload income from operations ~~decreased $66.9~~increased $32.6 million ~~approximately 123%,~~ in the ~~third~~second quarter of ~~2019~~2020 compared to the same quarter in ~~2018~~2019, due mainly to ~~$50.4~~the $34.6 million FTFM goodwill impairment recorded in 2019 and the benefit associated with the FTFM shutdown, as FTFM's loss from operations in the second quarter of 2019 was $13.1 million. While revenue decreased period over period as cited above, the decrease was more than offset by lower fuel and purchased transportation costs, in addition to improved cost management related to driver recruiting and maintenance.

Intermodal

The following table presents the KPIs for our Intermodal segment for the periods indicated.

In support of a few key customers, we provide dray-only service utilizing our drivers and chassis. The length of haul and revenue characteristics of dray-only service are much different than rail. Prior to 2020, we reported orders and revenue per order inclusive of dray-only activity. Due to increased dray-only activity, orders and revenue per order presented below for both 2020 and 2019 exclude dray-only shipments to not distort period over period comparisons in our core-rail KPIs.


	Three Months Ended June 30,
	2020			2019
Orders ⁽¹⁾	98,362			113,007
Containers	21,172			22,788
Trucks ⁽²⁾	1,508			1,539
Revenue per order ⁽³⁾	$	2,145		$	2,288
Operating ratio ⁽⁴⁾	95.0		%	88.2		%

(1)Based on delivered rail orders.

(2)Includes company trucks and owner-operator trucks at the end of the period.

(3)Calculated using rail revenues excluding fuel surcharge and revenue in transit, consistent with how revenue is reported internally for segment purposes.

(4)Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in transit and related expenses at the operating segment level.

Intermodal revenues (excluding fuel surcharge) decreased $40.8 million, approximately 16%, in the second quarter of 2020 compared to the same quarter in 2019. Network demand disruption, due to weakened Asia import volumes, combined with the prolonged shutdown of non-essential retail customers impacted both orders and revenue per order within our Intermodal segment. Orders decreased 13% while revenue per order decreased $143, or 6%, due to lower trans-continental volume and higher mix of shorter length of haul volumes within the East, as well as a decline in price.

Intermodal income from operations decreased $19.5 million, approximately 64%, in the second quarter of 2020 compared to the same quarter in 2019. Contributing to this decrease was the revenue reduction, as explained above, as well as increased rail costs and higher equipment dispositions and impairments due to used equipment market conditions.

Logistics

The following table presents the KPI for our Logistics segment for the periods indicated.


	Three Months Ended June 30,
	2020		2019
Operating ratio ⁽¹⁾	96.4	%	96.0	%

(1)Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in transit and related expenses at the operating segment level.

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Logistics revenues (excluding fuel surcharge) increased $3.9 million, approximately 2%, in the second quarter of 2020 compared to the same quarter in 2019, primarily as a result of volume growth, partially offset by a decrease in revenue per order related to rate compression.

Logistics income from operations decreased $1.0 million, approximately 11%, in the second quarter of 2020 compared to the same quarter in 2019, primarily due to compressed net revenue.

Other

Income from operations within Other was $3.7 million in the second quarter of 2020, compared to income of $1.6 million in the same quarter in 2019. The $2.1 million increase resulted primarily from a $2.3 million reduction in healthcare costs, partially offset by a decrease in income from operations from our leasing business driven by lower lease activity.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Enterprise Results Summary

Enterprise net income increased $18.9 million, approximately 26%, in the six months ended June 30, 2020 compared to the same period in 2019, primarily due to the $34.6 million FTFM goodwill impairment recorded in 2019; the benefit associated with the FTFM shutdown, as FTFM's loss from operations in the first half of 2019 was $25.2 million; and an $8.8 million gain on our ownership interest in PSI. This was partially offset by a decline in Intermodal and Truckload freight volumes, primarily a result of COVID-19 market disruptions; a reduction in price across all of our service offerings; $10.4 million related to equipment dispositions and impairments due to used equipment market conditions; and an increase in income taxes related to higher taxable income. In the first half of 2020, we recognized $7.7 million of ~~restructuring~~net equipment losses and impairment charges ~~related~~compared to $2.7 million of net equipment gains and impairment charges in the first half of 2019.

Adjusted net income decreased $7.6 million, approximately 8%.

Components of Enterprise Net Income

Enterprise Revenues

Enterprise operating revenues decreased $254.9 million, approximately 11%, in the six months ended June 30, 2020 compared to the same period in 2019.

Factors contributing to the decrease were as follows:

•a $146.2 million decrease in Truckload segment revenues (excluding fuel surcharge) resulting from the shutdown of our FTFM service offering ~~and an $11.5~~in August 2019 which generated $63.4 million ~~non-cash charge resulting from the impairment~~ of assets held for sale. The decline in Truckload volume noted above also contributed to the decrease in income from operations but was partially offset by a reduction in driver and maintenance costs due to less company driver miles, cost savings initiatives, and younger age of fleet compared to the third quarter of 2018.

~~Intermodal~~

~~The following table presents our key performance indicators for our Intermodal segment for the periods indicated:~~

Three Months Ended
September 30,
2019 2018
Orders ⁽¹⁾
110,721
115,936
Containers 23,014
21,288
Trucks ⁽²⁾
1,544
1,482
Revenue per order ⁽³⁾
$ 2,259
$ 2,175
Operating ratio ⁽⁴⁾
89.9 % 85.8 %


~~(1)~~	~~Based on delivered orders.~~


~~(2)~~	~~Includes company trucks and owner-operator trucks at the end of the period.~~


~~(3)~~	~~Calculated excluding fuel surcharge and revenue in-transit, consistent with how revenue is reported internally for segment purposes.~~


~~(4)~~	~~Calculated as segment operating expenses divided by segment~~ revenues ~~(excluding fuel surcharge) including revenue in-transit and related expenses at the operating segment level.~~

~~Intermodal revenues (excluding fuel surcharge) decreased $5.2 million, approximately 2%,~~ in the ~~third quarter~~first half of 2019, ~~compared to the same quarter in 2018. Revenue per order increased 4% due in part to 2018 contract carry-over, 2019 contract renewals and increased length of haul, but was offset by~~as well as a decrease in ~~orders of 4%. The decrease in orders was~~both Truckload volume and price largely ~~the result of lower volumes in the overall domestic intermodal freight market.~~

~~Intermodal income from operations decreased $11.0 million, approximately 30%, in the third quarter of 2019 compared~~attributed to the ~~same quarter in 2018 primarily due to reduced volume and increases in purchased transportation costs.~~

~~Logistics~~

~~The following table presents our key performance indicators for our Logistics segment for the periods indicated:~~

Three Months Ended
September 30,
2019 2018
Operating ratio ⁽¹⁾
95.8 % 95.2 %
Brokerage revenues as a percentage of Logistics revenues ⁽²⁾
86.9 % 79.1 %


~~(1)~~	~~Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in-transit and related expenses at the operating segment level.~~


~~(2)~~	~~Revenues (excluding fuel surcharge), in millions, including revenue in-transit.~~

~~Logistics revenues (excluding fuel surcharge) decreased $35.7 million, approximately 13%, in the third quarter~~impact of 2019 compared to the same quarter in 2018. This decrease was primarily the result of warehouse management functions being insourced by one of the Company's import/export customers in April 2019. In addition, reduced revenue per order was partially offset by brokerage volume growth of 11% compared to the same quarter in 2018.

~~Table of Contents~~COVID-19 on market conditions;

~~Logistics income from operations decreased $3.1 million, approximately 24%, in the third quarter of 2019 compared to the same quarter in 2018, primarily due to compressed net revenue in brokerage.~~

~~Other~~

Included in Other was income from operations of $6.5 million in the third quarter of 2019, compared to a loss of $5.6 million in the same quarter in 2018. The $12.1 million change was driven by a decrease in performance-based incentive compensation due to a decline in Enterprise results.

~~Other Income (Expense)~~

Other expense decreased $0.3 million, approximately 12%, in the third quarter of 2019 compared to the same quarter in 2018 due primarily to a $0.5 million increase in interest income and a $0.4 million decrease in interest expense partially offset by a $0.6 million decrease in net foreign currency gains.

~~Income Tax Expense~~

Our provision for income taxes decreased $17.6 million, approximately 72%, in the third quarter of 2019 compared to the same quarter in 2018 due to lower taxable income. The effective income tax rate was 26.2% for the three months ended September 30, 2019 compared to 25.8% for the same period last year.

~~Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018~~•

~~Net Income~~

Net income decreased $93.0 million, approximately 51%, in the nine months ended September 30, 2019 compared to the same period in 2018, primarily due to pretax restructuring and goodwill impairment charges associated with the FTFM service offering of $50.4 million and $34.6 million, respectively, and an $11.5 million pretax impairment of held for sale assets. In addition, Truckload freight volume declined in 2019 due to lower demand. Adjusted net income decreased $34.0 million, approximately 18%.

~~Revenues~~

~~Enterprise operating revenues decreased $64.7 million, approximately 2%, in the nine months ended September 30, 2019 compared to the same period in 2018.~~

~~Factors contributing to the decreases in revenues were as follows:~~

a $102.7 million decrease in Truckload revenues (excluding fuel surcharge) resulting from reduced Truckload volume due to lower market demand and the shutdown of the FTFM service offering (which was substantially complete as of the end of August 2019), that will continue for the remainder of 2019;

~~a $35.6~~$64.3 million decrease in fuel surcharge revenues primarily resulting from a 13% decline in average diesel price per gallon in the U.S. as reported by the Department of Energy, a decline in Intermodal and Truckload volumes, and a $10.5 million reduction related to ~~decreased Truckload volumes;~~the FTFM shutdown; and

•a ~~$36.7~~$40.4 million decrease in Logistics revenues (excluding fuel surcharge) primarily due to one of the Company's import/export customers insourcing their warehouse management function in April 2019 combined with lower revenue per order within brokerage due to a compression in revenue per order, partially offset by a 15% increase in brokerage volumes.

~~The above factors were partially offset by:~~

~~a $58.6 million increase in our~~ Intermodal segment revenues (excluding fuel surcharge) primarily due to ~~improved revenue per order~~a decrease in both volume and ~~an increase in order volume;~~price resulting primarily from COVID-19 induced network disruptions, shorter length of haul, and freight mix.

~~a $48.5 million increase in revenues from equipment sales by our leasing business under sales-type leases.~~

Enterprise revenues (excluding fuel surcharge) decreased ~~$29.1~~$190.6 million, approximately 1%9%.

Enterprise Income from Operations and Operating Ratio

Enterprise income from operations ~~decreased $127.5~~increased $17.6 million, approximately ~~50%~~17%, in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018,~~2019, primarily due to ~~$50.4 million of restructuring charges associated with~~ the ~~shutdown of the FTFM service offering, a~~ $34.6 million FTFM goodwill impairment recorded in 2019 and anthe benefit associated with the FTFM shutdown, as FTFM's loss from operations in the first half of 2019 was $25.2 million. A decrease in fuel costs and continued cost savings attributable to a reduction in headcount, lower healthcare costs, and favorable driver onboarding and maintenance expenses also contributed to the increase in FTFM operating losses, as operating losses exceeded prior year by $14.5 million. Additionally, an $11.5 million impairment of held for sale assets and lower demand negatively impacted profitability butincome from operations. Those increases were partially offset by ~~reduced performance-based incentive compensation~~a reduction in Intermodal and ~~Company benefits, driver related~~Truckload freight volumes primarily due to COVID-19 market disruptions, lower price across all of our service offerings, $10.4 million from the combination of equipment dispositions and impairments

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due to used equipment market conditions, and incremental costs associated with facility deep cleaning, personal protective equipment purchases, and other ~~variable costs.~~proactive measures taken as a result of COVID-19.

~~Table of Contents~~

Adjusted income from operations decreased ~~$48.3~~$18.0 million, approximately ~~18%~~13%.

Enterprise operating ratio ~~weakened~~improved on ~~both~~ a GAAP basis ~~and~~but weakened on an adjusted basis. Our operating ratio can be negatively impacted when our higher operating ratio, less asset-focused Logistics segment grows faster than our lower operating ratio, capital-intensive Truckload segment.

Enterprise Operating Expenses

Key operating expense fluctuations are described below.

•Purchased transportation costs ~~increased $57.0~~decreased $60.4 million, or 4%6%, period over ~~period. An increase~~period, primarily due to a decrease in ~~various~~ Intermodal ~~third-party~~and Truckload volumes, reduced owner-operator pay and third party carrier costs ~~including rail, combined with order volume growth~~within Truckload resulting from business mix and rate compression due to market conditions, and a $19.4 million reduction in ~~our Logistics segment of 15% resulted in higher~~ purchased ~~transportation.~~transportation costs related to the FTFM shutdown. This was partially offset by ~~a decrease~~an increase in ~~purchased transportation cost per order~~third party carrier costs within our Logistics segment ~~based on additional carrier capacity in 2019 which led~~due to ~~the compression of carrier rates. The shutdown of the FTFM service offering, which was substantially complete as of August 2019, also contributed to the reduction of purchased transportation.~~volume growth.

•Salaries, wages, and benefits decreased ~~$86.6~~$87.1 million, or 9%15%, period over period, largely due to the ~~elimination of salaries, wages, and benefits~~benefit associated with the FTFM shutdown and warehouse management operations insourced by an import/export customer in April 2019, as well as headcount reductions across the ~~shutdown of the FTFM service offering,~~organization. An $8.3 million reduction in healthcare costs primarily due to favorable claims experience and ~~other cost savings initiatives. We expect to see continued favorability year over year in salaries, wages, and benefits~~fewer plan participants, as well as a ~~result~~decrease in workers' compensation expense of ~~these changes. Lower performance-based incentive compensation, Company benefit costs, and driver pay~~$2.8 million, also contributed to the decrease. ~~Salaries, wages, and benefits decreased 2% period over period on a percentage of revenues basis.~~

•Fuel and fuel taxes for ~~our~~ company trucks decreased ~~$38.7~~$48.0 million, or ~~15%~~32%, period over period, driven by a ~~7% decrease in company driver miles and a~~ decrease in cost per ~~gallon. A portion of the decline in~~gallon, less company driver miles iswithin our Truckload segment, and an $8.8 million reduction in fuel and fuel taxes attributable to the ~~shutdown of the~~ FTFM ~~service offering. Decreased company driver miles were partially offset by increased owner-operator miles, which do not impact company fuel costs.~~shutdown. A significant portion of fuel costs are recovered through our fuel surcharge programs.

•Depreciation and amortization ~~increased $5.5~~decreased $6.2 million, or 3%4%, period over period, primarily due to replacement tractors to achieve a younger age of fleet and prior year's investment in chassis and containers to support our Intermodal segment. Continuing to invest in replacement tractors is an important part of our strategic plan as it contributes to reduced maintenance and fuel costs and improvesdriven by the ~~overall driver experience.~~FTFM shutdown.

•Operating supplies and expenses ~~increased $54.1~~decreased $28.1 million, or ~~15%~~10%, period over ~~period. The increase was mainly~~period, driven by a $7.7 million decrease in facility, utility, and other costs primarily due to ~~an increase~~temporary facility closures associated with COVID-19 and other cost savings initiatives, a $6.5 million reduction in temporary worker pay due to insourcing by one of our import/export customers, a $6.2 million decline in cost of goods sold due to a decrease in equipment sales under sales-type leases by our leasing business, ~~resulting in higher cost of goods sold of $44.3 million,~~ and an $11.5 million impairment charge recorded on assets held for sale related to an agreement signed in the third quarter of 2019 to sell tractors in the fourth quarter. Software subscription costs and Intermodal rail yard ramp storage expenses also increased compared to 2018. Increases in the above costs were offset by a combined $16.2 million decrease in temporary worker pay due to insourcing of one of our import/export customers in April 2019 and reducedlower maintenance and parts spend attributable to ~~less~~milder weather conditions, fewer company driver miles, and better cost ~~savings initiatives,~~management. We experienced a reduction in a variety of other operating-related expenses, including equipment rentals, facility expenses, and ~~younger age~~operating taxes and licenses, that were individually immaterial. These decreases were partially offset by a $6.8 million change in equipment dispositions and a $3.6 million increase in impairment on assets held for sale due to used equipment market conditions. In the first half of ~~fleet.~~2020, we recorded $3.8 million of net equipment losses compared to $3.0 million of net equipment gains in the first half of 2019.

•Insurance and related expenses increased ~~$8.6~~$3.9 million, or ~~12%~~7%, period over period. The increase was predominately due to an increase in ~~the severity of auto losses~~insurance premiums, partially offset by a reduction in cargo and ~~related insurance premiums.~~collision losses.

•Other general expenses decreased ~~$22.1~~$11.0 million, or ~~20%~~17%, period over period, as a result of ~~decreased~~reduced driver recruiting and training costs ~~associated with~~due to lower company driver turnover and cost savings initiatives, as well as a ~~$5.8~~reduction in travel expenses resulting from Company enforced travel bans related to COVID-19. Additional costs were incurred in the driver recruiting and training space to safely onboard new drivers during COVID-19; however, these costs were more than offset by savings from lower company driver turnover and fewer hires. We expect our travel expenses to continue to be incurred at a reduced level for the remainder of 2020 as a result of COVID-19.

•Goodwill impairment charges decreased $34.6 million, period over period, due to the FTFM goodwill impairment charge of $34.6 million in the second quarter of 2019.

•Restructuring—net was $1.0 million favorable, period over period, due to net gains on equipment sales and bad debt recoveries, partially offset by impairment charges associated with the FTFM shutdown in 2019. Refer to Note 14, Restructuring, for additional details.

Total Other Expenses (Income)

Other income increased $8.1 million, approximately 150%, in the six months ended June 30, 2020 compared to the same period in 2019, primarily from a $8.8 million pre-tax gain recognized on our ownership interest in PSI. See Note 6, Investments, for more information on PSI. Interest activity remained fairly constant period over period as a $2.3 million decrease in ~~litigation costs, and lower professional service fees of $3.1 million.~~

•

Restructuring charges increased $50.4 million period over period due to the recording of impairment charges, write-down of receivables, and other costs associated with the shutdown of the FTFM service offering. Refer to Note 13, interest income, attributed to a decline in interest rates, was partially offset by a $2.2 million decrease in interest expense.~~Restructuring Charges, for additional details.~~

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Income Tax Expense

~~Segment Contributions~~

Our provision for income taxes increased $6.8 million, approximately 28%, in the six months ended June 30, 2020 compared to ~~Results of~~the same period in 2019 due to higher taxable income. The effective income tax rate was 25.4% for the six months ended June 30, 2020 compared to 25.1% for the same period last year.

Revenues and Income (Loss) from Operations by Segment

The following tables summarize revenue and income (loss) from operations by ~~segment:~~segment.


	Six Months Ended June 30,
Revenues by Segment (in millions)	2020		2019
Truckload	$	920.5	$	1,066.7
Intermodal	457.0		497.4
Logistics	470.5		470.9
Other	189.2		195.7
Fuel surcharge	171.7		236.0
Inter-segment eliminations	(57.0)		(59.9)
Operating revenues	$	2,151.9	$	2,406.8


	Six Months Ended June 30,
Income (Loss) from Operations by Segment (in millions)	2020		2019
Truckload	$	77.1	$	31.1
Intermodal	27.3		50.4
Logistics	12.4		19.5
Other	1.5		(0.3)
Income from operations	118.3		100.7
Adjustments:
Goodwill impairment	—		34.6
Restructuring—net	(1.0)		—
Adjusted income from operations	$	117.3	$	135.3

Nine Months Ended
September 30,
Revenues by Segment (in millions)
2019 2018
Truckload $ 1,582.3
$ 1,685.0
Intermodal 746.6
688.0
Logistics 707.0
743.7
Other 290.0
237.0
Fuel surcharge 350.2
385.8
Inter-segment eliminations (85.4 ) (84.1 )
Operating revenues $ 3,590.7
$ 3,655.4

Nine Months Ended
September 30,
Income (Loss) from Operations by Segment (in millions)
2019 2018
Truckload $ 18.6
$ 162.2
Intermodal 75.5
90.7
Logistics 29.4
31.2
Other 6.2
(26.9 )
Income from operations 129.7
257.2
Adjustments:
Litigation —
5.8
Goodwill impairment 34.6
—
Restructuring charges 50.4
—
Adjusted income from operations $ 214.7
$ 263.0

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We monitor and analyze a number of KPIs in order to manage our business and evaluate our financial and operating performance. Below are our KPIs by segment.

Truckload


•	~~Dedicated standard~~ •Dedicated - Transportation services with equipment devoted to customers under long-term contracts. •Network ~~- Transportation services with equipment devoted to customers under long-term contracts utilizing standard dry van trailing equipment.~~


•	~~Dedicated specialty~~ ~~- Transportation services with equipment devoted to customers under long-term contracts utilizing bulk, temperature controlled, flatbed, straight truck, and other specialty equipment.~~


•	~~For-hire standard~~ ~~- Transportation services of one-way shipments utilizing standard dry van trailing equipment.~~


•	~~For-hire specialty~~ ~~- Transportation services of one-way shipments utilizing bulk, temperature controlled, flatbed, straight truck, and other specialty equipment.~~

Nine Months Ended
September 30,
2019 2018
Dedicated standard
      Revenues (excluding fuel surcharge) ⁽¹⁾
$ 250.8
$ 237.7
      Average trucks ^{(2) (3)}
1,806
1,637
      Revenue per truck per week ⁽⁴⁾
$ 3,607
$ 3,780
Dedicated specialty
      Revenues (excluding fuel surcharge) ⁽¹⁾
$ 281.9
$ 304.5
      Average trucks ^{(2) (3)}
2,132
2,279
      Revenue per truck per week ⁽⁴⁾
$ 3,435
$ 3,478
For-hire standard
      Revenues (excluding fuel surcharge) ⁽¹⁾
$ 859.9
$ 901.2
      Average trucks ^{(2) (3)}
6,079
6,096
      Revenue per truck per week ⁽⁴⁾
$ 3,674
$ 3,848
For-hire specialty
      Revenues (excluding fuel surcharge) ⁽¹⁾
$ 188.4
$ 241.6
      Average trucks ^{(2) (3)}
1,304
1,551
      Revenue per truck per week ⁽⁴⁾
$ 3,752
$ 4,052
Total Truckload
      Revenues (excluding fuel surcharge) ⁽⁶⁾
$ 1,582.3
$ 1,685.0
      Average trucks ^{(2) (3)}
11,321
11,563
      Revenue per truck per week ⁽⁴⁾
$ 3,628
$ 3,793
      Average company trucks ⁽³⁾
8,433
8,833
      Average owner-operator trucks⁽³⁾
2,888
2,730
      Trailers 35,612
38,026
      Operating ratio ⁽⁵⁾
98.8 % 90.4 %

- Transportation services of one-way shipments, formerly called for-hire.


~~(1)~~	~~Revenues (excluding fuel surcharge), in millions, exclude revenue in-transit.~~


~~(2)~~	~~Includes company trucks and owner-operator trucks.~~


~~(3)~~	~~Calculated based on beginning and end of month counts and represents the average number of trucks available to haul freight over the specified timeframe.~~


~~(4)~~	~~Calculated excluding fuel surcharge and revenue in-transit, consistent with how revenue is reported internally for segment purposes, using weighted workdays.~~


~~(5)~~	~~Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in-transit and related expenses at the operating segment level.~~


~~(6)~~	~~Revenues (excluding fuel surcharge), in millions, include revenue in-transit at the operating segment level, and therefore does not sum with amounts presented above.~~


	Six Months Ended June 30,
	2020			2019
Dedicated
Revenues (excluding fuel surcharge) ⁽¹⁾	$	348.3		$	357.0
Average trucks ^{(2) (3)}	3,898			3,960
Revenue per truck per week ⁽⁴⁾	$	3,475		$	3,529
Network
Revenues (excluding fuel surcharge) ⁽¹⁾	$	571.1		$	708.0
Average trucks ^{(2) (3)}	6,325			7,613
Revenue per truck per week ⁽⁴⁾	$	3,511		$	3,641
Total Truckload
Revenues (excluding fuel surcharge) ⁽⁵⁾	$	920.5		$	1,066.7
Average trucks ^{(2) (3)}	10,223			11,573
Revenue per truck per week ⁽⁴⁾	$	3,497		$	3,603
Average company trucks ⁽³⁾	7,339			8,706
Average owner-operator trucks⁽³⁾	2,884			2,867
Trailers	36,141			37,409
Operating ratio ⁽⁶⁾	91.6		%	97.1		%

32(1)Revenues (excluding fuel surcharge), in millions, exclude revenue in transit.

(2)Includes company trucks and owner-operator trucks.

~~Table~~(3)Calculated based on beginning and end of ~~Contents~~month counts and represents the average number of trucks available to haul freight over the specified timeframe.

(4)Calculated excluding fuel surcharge and revenue in transit, consistent with how revenue is reported internally for segment purposes, using weighted workdays.

(5)Revenues (excluding fuel surcharge), in millions, include revenue in transit at the operating segment level, and therefore does not sum with amounts presented above.

(6)Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in transit and related expenses at the operating segment level.

Truckload revenues (excluding fuel surcharge) decreased ~~$102.7~~$146.2 million, approximately 6%14%, in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018. A decline in volume of 8% was partially offset by a 2% increase in price. Decreased volume was the result of a decrease in demand which drove lower productivity, as well as~~2019, primarily due to the shutdown of our FTFM service offering in August 2019 which generated $63.4 million of revenues in the ~~third quarter~~first half of 2019. ~~Price increased~~Both volume and price declined 4% from the same period ~~over period due~~in 2019 as a result of early 2020 soft market conditions being compounded by the shutdown of non-essential businesses in response to ~~contract carry-over and 2019 rate renewals, despite fewer promotional and premium revenue opportunities.~~COVID-19. Revenue per truck per week decreased ~~$165,~~$106, or 4%3%, period over period as ~~a result of~~ lower price was partially offset by productivity ~~driven primarily by lower freight volumes.~~improvements.

Truckload income from operations ~~decreased $143.6~~increased $46.0 million, approximately ~~89%~~148%, in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018. This decrease was primarily~~2019, due mainly to ~~$50.4 million of restructuring charges related to the shutdown of our FTFM service offering,~~ the $34.6 million FTFM goodwill impairment ~~an additional $14.5 million~~recorded in ~~operating losses within~~2019 and the benefit associated with the FTFM ~~through~~shutdown, as FTFM's loss from operations in the ~~third quarter~~first half of 2019 ~~compared~~was $25.2 million. Also contributing to the ~~same period~~increase in ~~2018,~~income from operations were lower fuel costs and improved cost management related to driver recruiting, maintenance, and safety, which more than offset the ~~$11.5 million non-cash charge resulting from the impairment~~revenue decrease noted above.

Table of ~~assets held for sale. Lower volumes, as discussed above, also contributed to the decrease but were partially offset by a reduction in driver and maintenance related costs.~~Contents

Intermodal

The following table presents ~~our key performance indicators~~the KPIs for our Intermodal segment for the periods ~~indicated:~~indicated.

Nine Months Ended
September 30,
2019 2018
Orders ⁽¹⁾
329,505
329,014
Containers 23,014
21,288
Trucks ⁽²⁾
1,544
1,482
Revenue per order ⁽³⁾
$ 2,258
$ 2,070
Operating ratio ⁽⁴⁾
89.9 % 86.8 %


~~(1)~~	~~Based on delivered orders.~~


~~(2)~~	~~Includes company trucks and owner-operator trucks at the end of the period.~~


~~(3)~~	~~Calculated excluding fuel surcharge and revenue in-transit, consistent with how revenue is reported internally for segment purposes.~~


~~(4)~~	~~Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in-transit and related expenses at the operating segment level.~~

In support of a few key customers, we provide dray-only service utilizing our drivers and chassis. The length of haul and revenue characteristics of dray-only service are much different than rail. Prior to 2020, we reported orders and revenue per order inclusive of dray-only activity. Due to an increase in dray-only activity, orders and revenue per order presented below for both 2020 and 2019 exclude dray-only shipments to not distort period over period comparisons in our core-rail KPIs.


	Six Months Ended June 30,
	2020			2019
Orders ⁽¹⁾	204,949			216,283
Containers	21,172			22,788
Trucks ⁽²⁾	1,508			1,539
Revenue per order ⁽³⁾	$	2,160		$	2,280
Operating ratio ⁽⁴⁾	94.0		%	89.9		%

(1)Based on delivered rail orders.

(2)Includes company trucks and owner-operator trucks at the end of the period.

(3)Calculated using rail revenues excluding fuel surcharge and revenue in transit, consistent with how revenue is reported internally for segment purposes.

(4)Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in transit and related expenses at the operating segment level.

Intermodal revenues (excluding fuel surcharge) ~~increased $58.6~~decreased $40.4 million, approximately 9%8%, in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018.~~2019. The ~~increase~~decrease was driven by a ~~9% increase~~5% decrease in ~~revenue~~orders due to network demand disruptions related to COVID-19, partially offset by growth in the East and Mexico. Revenue per order decreased 5% driven primarily ~~resulting from 2018 contract carry-over, 2019 contract renewals and increased~~by a decline in length of ~~haul, while orders remained flat period over period.~~haul.

Intermodal income from operations decreased ~~$15.2~~$23.1 million, approximately ~~17%~~46%, in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018.~~2019. Revenue ~~growth,~~declines coupled with increased rail costs and higher equipment dispositions and impairments due to used equipment market conditions, drove the ~~increase~~decline in revenue per order noted above, was more than offset by higher purchased transportation, equipment depreciation, and rail ramp storage costs. Asset utilization was also unfavorable compared to the same period of 2018.income from operations.

Logistics

The following table presents ~~our key performance indicators~~the KPI for our Logistics segment for the periods ~~indicated:~~indicated.


	Six Months Ended June 30,
	2020		2019
Operating ratio ⁽¹⁾	97.4	%	95.9	%

Nine Months Ended
September 30,
2019 2018
Operating ratio ⁽¹⁾
95.8 % 95.8 %
Brokerage revenues as a percentage of Logistics revenues ⁽²⁾
83.6 % 78.3 %

(1)Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in transit and related expenses at the operating segment level.


~~(1)~~	~~Calculated as segment operating expenses divided by segment revenues (excluding fuel surcharge) including revenue in-transit and related expenses at the operating segment level.~~


~~(2)~~	~~Revenues (excluding fuel surcharge), in millions, including revenue in-transit.~~

Logistics revenues (excluding fuel surcharge) decreased ~~$36.7~~$0.4 million ~~approximately 5%,~~ in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018,~~2019, primarily due to compression in rates, which was partially offset by an increase in volume despite one of the Company's import/export customers

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insourcing their warehouse management function in April 2019. ~~In addition, reduced revenue per order was partially offset by brokerage volume growth of 15%.~~

Logistics income from operations decreased ~~$1.8~~$7.1 million, approximately 6%36%, in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the same period in ~~2018, primarily due to compressed~~2019. Compressed net revenue in our brokerage ~~and reduced volumes within our import/export business.~~business, in addition to the customer insourcing noted above, both contributed to the decline in income from operations.

Other

~~Our~~

Included in Other ~~segment recorded~~was income from operations of ~~$6.2~~$1.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to a loss of ~~$26.9~~$0.3 million in the same period in ~~2018.~~2019. Factors contributing to ~~increased income~~the change include lower workers' compensation expense and a reduction in performance-based incentive compensation, ~~the $5.8~~partially offset by a $2.6 million ~~settlement of a lawsuit that challenged Washington State labor law compliance in 2018, and a $4.6 million increase~~decrease in income from operations from our leasing business driven by ~~increased~~decreased lease activity.

~~Other Expense (Income)~~

Other expense decreased $1.4 million, approximately 15%, in the nine months ended September 30, 2019 compared to the same period in 2018, primarily from a $3.7 million increase in interest income and a $0.3 million decrease in net foreign currency losses, partially offset by the 2018 recognition of a $2.5 million pre-tax gain related to our ownership interest in PSI and a $0.1 million increase in interest expense. See Note 5, Investments, for more information on PSI.

~~Income Tax Expense~~

Our provision for income taxes decreased $33.1 million, approximately 52%, in the nine months ended September 30, 2019 compared to the same period in 2018 due to lower taxable income. The effective income tax rate was 25.3% for the nine months ended September 30, 2019 compared to 25.8% for the same period last year.

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LIQUIDITY AND CAPITAL RESOURCES

Our primary uses of cash are working capital requirements, capital expenditures, dividend payments, and debt service requirements. Additionally, we may use cash for acquisitions and other investing and financing activities. Working capital is required principally to ensure we are able to run the business and have sufficient funds to satisfy maturing short-term debt and operational expenses. Our capital expenditures consist primarily of transportation equipment and information technology.

Historically, our primary source of liquidity has been cash flow from operations. In addition, we have a $250.0 million revolving credit facility and a $200.0 million accounts receivable ~~facility.~~facility, for which our available capacity as of June 30, 2020 was $375.8 million. We anticipate that cash generated from operations, together with amounts available under our credit facilities, will be sufficient to meet our requirements for the foreseeable future. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, or because the COVID-19 crisis lasts longer than anticipated, and/or the revenue declines we expect to experience are more severe than predicted, we anticipate that we will obtain these funds ~~will be obtained~~ through additional indebtedness, additional equity offerings, or a combination of these potential sources of funds. Our ability to fund future operating expenses and capital expenditures, as well as our ability to meet future debt service obligations or refinance our indebtedness will depend on our future operating performance, which will be affected by general economic, financial, and other factors beyond our control.

The following table presents our cash and cash equivalents, marketable securities, and outstanding debt ~~outstanding~~ as of the dates ~~shown:~~shown.


(in millions)	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	713.8	$	551.6
Marketable securities	46.8		48.3
Total cash, cash equivalents, and marketable securities	$	760.6	$	599.9

Debt:
Senior notes	$	335.0	$	360.0

Finance leases	2.1		1.7
Total debt ⁽¹⁾	$	337.1	$	361.7

(in millions) September 30, 2019 December 31, 2018
Cash and cash equivalents $ 437.1
$ 378.7
Marketable securities 47.4
51.3
Total cash, cash equivalents, and marketable securities $ 484.5
$ 430.0

Debt:
Senior notes $ 400.0
$ 400.0
Equipment financing 1.3
5.0
Finance leases 5.3
6.9
Total debt ⁽¹⁾
$ 406.6
$ 411.9

(1)Debt on the consolidated balance sheets is presented net of deferred financing costs.


~~(1)~~	~~Debt on our consolidated balance sheets is presented net of deferred financing costs.~~

Debt

At ~~September~~June 30, ~~2019,~~2020, we were in compliance with all financial covenants and financial ratios under our credit agreements and the indentures governing our senior notes. See Note 7,8, Debt and Credit Facilities, for information about our short-term and long-term financing arrangements.

Cash Flows

The following table summarizes, for the periods indicated, the changes to our cash flows provided by (used in) operating, investing, and financing activities.

Nine Months Ended
September 30,
(in millions) 2019 2018
Net cash provided by operating activities $ 470.3
$ 410.1
Net cash used in investing activities (355.6 ) (222.1 )
Net cash used in financing activities (56.3 ) (66.7 )


	Six Months Ended June 30,
(in millions)	2020		2019
Net cash provided by operating activities	$	319.8	$	302.0
Net cash used in investing activities	(110.1)		(259.4)
Net cash used in financing activities	(47.5)		(43.6)

~~Nine~~

Six Months Ended ~~September~~June 30, ~~2019~~2020 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019

Operating Activities

Cash provided by operating activities increased ~~$60.2~~$17.8 million, approximately ~~15%~~6%, in the first ~~nine~~six months of ~~2019~~2020 compared to the same period in ~~2018,~~2019, driven ~~primarily~~ by ~~the reclassification of proceeds from lease receipts from investing activities with the adoption of ASC 842 and~~ the net change in working capital balances, partially offset by ~~the decrease~~an increase in net income as

adjusted for various noncash charges, deferred income taxes, and proceeds from lease receipts.

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adjusted for non-cash items. Non-cash restructuring charges related to the shutdown of the FTFM service offering were $43.3 million in the first nine months of 2019 and primarily included charges for the impairment of tangible and intangible assets including equipment, customer lists and other customer related assets, and software.

Investing Activities

Cash used in investing activities ~~increased $133.5~~decreased $149.3 million, approximately ~~60%~~58%, in the first ~~nine~~six months of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The ~~increase~~decrease in cash used was primarily driven by ~~the increase~~a decrease in net capital ~~expenditures and the reclassification of proceeds from lease receipts to operating activities with the adoption of ASC 842, partially offset by increased sales of marketable securities.~~expenditures.

Capital Expenditures

The following table sets forth our net capital expenditures for the periods ~~indicated, our net~~indicated.


	Six Months Ended June 30,
(in millions)	2020		2019
Transportation equipment	$	83.3	$	231.4
Other property and equipment	25.0		25.7
Proceeds from sale of property and equipment	(29.6)		(26.0)
Net capital expenditures	$	78.7	$	231.1

Net capital ~~expenditures.~~

Nine Months Ended
September 30,
(in millions) 2019 2018
Transportation equipment $ 308.6
$ 268.1
Other property and equipment 42.8
22.3
Proceeds from sale of property and equipment (38.8 ) (74.6 )
Net capital expenditures $ 312.6
$ 215.8

~~Expenditures for transportation equipment and other property and equipment increased $40.5~~expenditures decreased $152.4 million ~~and $20.5 million, respectively,~~ in the first ~~nine~~six months of ~~2019~~2020 compared to the same period in ~~2018~~2019. The decrease was driven by ~~increased~~a $148.1 million decrease in expenditures for transportation equipment resulting mainly from decreased tractor purchases ~~land, buildings, and improvements spend, and capitalized IT costs. Proceeds~~combined with a $3.6 million increase in proceeds from the sale of property and equipment ~~decreased $35.8 million~~ primarily ~~as a result~~resulting from increased tractor sales, largely related to units that were part of ~~reduced tractor sales.~~the 2019 shutdown of the FTFM service offering. See Note ~~11,~~12, Commitments and Contingencies, for information on our firm commitments to purchase transportation equipment.

Financing Activities

Cash used in financing activities ~~decreased $10.4~~increased $3.9 million, approximately ~~16%~~9%, in the first ~~nine~~six months of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The main driver of the ~~decrease~~increase in cash used was the ~~$11.6~~$25.0 million ~~decrease~~repayment of a private placement note in ~~payments on debt and finance lease obligations,~~2020, partially offset by ~~a $1.8 million increase~~the final guaranteed payment associated with the 2016 WSL acquisition in ~~dividends paid in 2019 compared to 2018.~~2019.

Other Considerations that Could Affect Our Results, Liquidity, or Capital Resources

COVID-19

We believe we are in a strong liquidity position with a cash, cash equivalents, and marketable securities balance of $760.6 million and $375.8 million of unused credit capacity. Our outstanding debt as of the end of the quarter was $337.1 million, of which $30.0 million is short-term in nature and will be at maturity in September 2020. We are compliant with all financial covenants under our credit agreements and do not anticipate the need to seek additional capital as a result of COVID-19. As part of our business continuity plan, we are maintaining our planned investments in replacement equipment and accelerating our technology spend but have canceled almost all discretionary and growth capital expenditures for the remainder of the year.

Driver Capacity and Wage Cost

Our professional driver workforce is one of our most valuable assets. Recruiting and retaining sufficient numbers of qualified drivers is challenging in an increasingly competitive driver market and has a significant impact on our operating costs and ability to serve our customers. Changes in the demographic composition of the workforce, alternative employment opportunities that become available in the economy, and individual drivers’ desire to be home more frequently can affect availability of drivers and increase the wages our drivers require.

Factors that Could Result in a Goodwill Impairment

Goodwill is tested for impairment at least annually using ~~both~~ the discounted cash flow, ~~method and the~~ guideline public company, ~~method~~and guideline merged and acquired company methods in calculating the fair values of our reporting units. Key inputs used in the discounted cash flow approach include growth rates for sales and operating profit, perpetuity growth assumptions, and discount rates. As interest rates rise, the calculated fair values of our reporting units will decrease, which could impact the results of our goodwill impairment tests.

We will perform our annual evaluation of goodwill for impairment as of October 31, ~~2019,~~2020, with such analysis expected to be finalized during the fourth quarter. As part of our annual process of updating our goodwill impairment evaluation, we will

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assess the impact of current operating results and our resulting management actions to determine whether they have an impact on the long-term valuation of reporting units and the related recoverability of our goodwill. ~~A triggering event occurred during the second quarter of 2019 that resulted in impairment of all goodwill related to our FTFM reporting unit.~~ See further discussion in Note 6,7, Goodwill ~~and Other Intangible Assets~~.

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Off-Balance Sheet Arrangements

~~We have~~As of June 30, 2020 we had no off-balance sheet arrangements that ~~meet the definition~~have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of ~~off-balance sheet arrangements.~~operations, liquidity, capital expenditures, or capital resources.

Contractual Obligations

See the disclosure under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations” in the Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for our contractual obligations as of December 31, ~~2018.~~2019. There were no material changes to our contractual obligations during the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.

CRITICAL ACCOUNTING ~~POLICIES~~ESTIMATES

We have reviewed our critical accounting policies and considered whether any new critical accounting estimates or other significant changes to our accounting policies require any additional disclosures. We have found the disclosures made in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 are still current ~~other than goodwill related to our FTFM reporting unit which has now~~and that there have been ~~fully impaired. See Note 6,~~ no significant changes.

~~Goodwill and Other Intangible Assets~~ ~~for additional discussion.~~

~~Item~~ITEM 3. ~~Quantitative and Qualitative Disclosures about Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risks have not changed significantly from the market risks reported in the disclosures discussed in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019 as filed with the SEC on February 19, 2020.

~~Item~~ITEM 4. ~~Controls and Procedures~~CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the fiscal quarter covered by this report, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

~~Item~~ITEM 1. ~~Legal Proceedings~~LEGAL PROCEEDINGS

For information relating to legal proceedings, see Note ~~11,~~12, Commitments and Contingencies, which is incorporated herein by reference.

~~Item~~ITEM 1A. ~~Risk Factors~~RISK FACTORS

There ~~have been~~are no material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019, other than the risks described below.

COVID-19 is adversely affecting, and is expected to continue to adversely affect, our operations, supply chains, and workforce, and we have experienced, and expect to continue to experience, volatility in freight volumes and demand for certain of our service offerings.

COVID-19 has spread rapidly throughout the U.S., prompting state and local governments and businesses to take unprecedented measures in response. Such measures have included restrictions on travel and business operations, temporary closures of businesses, and quarantines and shelter-in-place orders. COVID-19 has significantly curtailed global economic activity and caused significant volatility and disruption in global financial markets.

There is uncertainty around the duration, breadth, and economic impacts of COVID-19, and, as a result, the ultimate impact on our business, operations, or operating results cannot be reasonably estimated at this time. Government and public health officials have recommended and mandated precautions to mitigate the spread of COVID-19, including prohibitions on congregating in large groups, the closing of businesses and operations to the extent such businesses or operations are not considered an “essential service”, and shelter-in-place orders or similar measures. Consequently, our customers, suppliers, third-party business partners, and contractors have been and will be disrupted in multiple ways, including worker absenteeism, quarantines and other restrictions on associates’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions.

The Company is continuing to monitor the situation and take appropriate actions in accordance with the recommendations and requirements of relevant authorities. The full extent of the impact of COVID-19 on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and vaccines, the imposition of protective public safety measures, and the impact of the pandemic on the global economy and demand for consumer products. Additional future impacts on the Company may include, but are not limited to, material adverse effects on demand for the Company’s services; the Company’s supply chain and sales and distribution channels; the Company’s ability to execute its strategic plans; and the Company’s profitability and cost structure. To the extent COVID-19 adversely affects the Company’s business, results of operations, financial condition, and stock price, it may also have the effect of heightening many of the other risks described in Part I, Item 1A of the 2019 Form 10-K under the heading “Risk Factors.”

COVID-19 and the measures taken by the U.S. government, as well as state and local governments, in response to the pandemic have adversely affected and could in the future materially adversely impact the Company’s business, results of operations, financial condition, and stock price. To date, the Company has experienced a decrease in demand in varying degrees across its portfolio of services. The mandated precautions to mitigate the spread of COVID-19 and other related disruptions have had, and may continue to have, an impact on the Company’s freight volumes, adversely affecting our revenues and earnings. We have experienced declines in freight volumes in our Truckload and Intermodal segments and certain of our customers have closed portions of their operations and/or deferred decisions to award freight. Additionally, we have expanded our paid time off policy and are covering the cost of health insurance premiums to help alleviate some of the challenges our associates may be facing as a result of COVID-19. While no one can predict with any certainty the scale or length of disruption from COVID-19, it is possible that our results of operations could be negatively affected by the impact of the virus on global economic, health, or market conditions. The many unknowns regarding the impact of COVID-19 on our results of operations include the impact to the Company’s associates, customers, and suppliers of further governmental, regulatory, fiscal, and public health responses.

The COVID-19 outbreak and the resulting impact on our operating performance has also affected, and may continue to affect, the estimates and assumptions made by management. Such estimates and assumptions include among other things, the Company’s goodwill, long-lived, and held for sale asset valuations; current expected credit losses; healthcare reserves; and measurement of compensation cost for certain share-based awards and annual incentive plans. While we expect the impacts of COVID-19 to have an adverse effect on our business, financial condition, and results of operations, we are unable to predict the extent of these impacts at this time.

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We have transitioned a significant subset of our employee population to remote work environments in an effort to mitigate the spread of COVID-19 which may exacerbate the cybersecurity risks to our business, including an increased demand for information technology resources, increased risk of phishing, and other cybersecurity attacks.

In response to COVID-19, we have been temporarily allowing a significant portion of our workforce which can work from home to work from home and have provided associates with expanded remote network access options which enable them to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes the Company to additional cybersecurity risks. The United States Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (“CISA”) has warned that cybercriminals will take advantage of the uncertainty created by COVID-19 and federal and state mandated quarantines to launch attacks which will further disrupt operations. Specifically, our associates working remotely expose the Company to cybersecurity risks in the following ways: (1) unauthorized access to sensitive information as a result of increased remote access, including associates use of company-owned and personal devices and videoconferencing functions and applications to remotely handle, access, discuss, or transmit confidential financial data, (2) increased exposure to phishing and other scams as cybercriminals use the fear and uncertainty surrounding the international COVID-19 outbreak to further manipulate associates through phishing schemes to, among other things, install malicious software on Company systems and equipment and surrender sensitive information, and (3) violation of international, federal, or state-specific privacy laws. We believe that the increased number of associates working remotely as a result of the COVID-19 outbreak has incrementally increased our cyber risk profile, but we are unable to predict the extent or impacts of those risks at this time. A significant disruption of our information technology systems, unauthorized access to or loss of confidential information, or legal claims resulting from our violation of privacy laws could each have a material adverse effect on our business.

~~Item~~ITEM 2. ~~Unregistered Sales of Equity Securities and Use of Proceeds~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The ~~following table sets forth information regarding the purchases of our~~Company does not have a share repurchase program and did not repurchase any equity securities ~~made by or on behalf of us or any affiliated purchaser (as defined in Exchange Act Rule 10b-18)~~ during the three months ended ~~September~~June 30, ~~2019:~~2020.

~~Issuer Purchases of Equity Securities~~

~~2019~~

~~Total Number of Shares Purchased~~

~~Average Price Paid per Share~~

~~Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs~~

~~Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs~~

~~July 1 - July 31~~

—

~~August 1 - August 31~~

—

~~September 1 - September 30~~

—

~~Total~~

—

Limitation Upon Payment of Dividends

The 2018 Credit Facility includes covenants limiting our ability to pay dividends or make distributions on our capital stock if a default exists under the 2018 Credit Facility or would be caused by giving effect to such dividend.

~~Item~~ITEM 3. ~~Defaults Upon Senior Securities~~DEFAULTS UPON SENIOR SECURITIES

~~Not applicable.~~None.

~~Item~~ITEM 4. ~~Mine Safety Disclosures~~MINE SAFETY DISCLOSURES

Not applicable.

~~Item~~ITEM 5. ~~Other Information~~OTHER INFORMATION

None.

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~~Item~~ITEM 6. ~~Exhibits~~

EXHIBITS



Exhibit Number						Exhibit Description

31.1*						Certification pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*						Certification pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*						XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*						XBRL Taxonomy Extension Schema Document

101.CAL*						XBRL Taxonomy Calculation Linkbase Document

101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*						XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document

104*						The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2019,~~2020, formatted in Inline XBRL

* Filed herewith.

** Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, Schneider National, Inc., has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




	SCHNEIDER NATIONAL, INC.

Date:		~~October 31, 2019~~July 30, 2020	/s/ Stephen L. Bruffett
			Stephen L. Bruffett
			Executive Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Financial Statement Classification	Three Months Ended September 30,			Nine Months Ended September 30,
(in millions)	Financial Statement Classification	2019			2019
Operating lease cost
Operating lease cost	Operating supplies and expenses	$	8.7		$	26.5
Short-term lease cost⁽¹⁾	Operating supplies and expenses	2.0			5.5
Finance lease cost
Amortization of right-of-use assets	Depreciation and amortization	0.9			2.5
Interest on lease liabilities	Interest expense	—			0.2
Variable lease cost	Operating supplies and expenses	0.7			2.1
Sublease income	Operating revenues	(1.5		)	(4.1		)
Total net lease cost		$	10.8		$	32.7



(in millions)	Operating Leases		Capital Leases
2019	$	35.8	$	6.9
2020	25.7		0.2
2021	14.9		—
2022	8.4		—
2023	6.8		—
2024 and thereafter	12.7		—
Total	$	104.3	7.1
Amount representing interest			(0.2		)
Present value of minimum lease payments			6.9
Current maturities			(6.7		)
Long-term capital lease obligations			$	0.2



(in millions)	September 30, 2019			January 1, 2019
Transportation equipment	$	19.9		$	19.9
Real property	0.8			0.8
Other property	1.5			0.6
Accumulated amortization	(13.1		)	(11.2		)
Total	$	9.1		$	10.1



(in millions)	September 30, 2019
Remaining 2019	$	35.8
2020	142.8
2021	75.7
2022	30.6
2023	0.2
2024 and thereafter	—
Total undiscounted lease cash flows	285.1
Amount representing interest	(33.3		)
Present value of lease receivables	251.8
Current lease receivables, net of allowance	(125.5		)
Long-term lease receivable	$	126.3



(in millions)	December 31, 2018
2019	$	149.0
2020	112.7
2021	29.0
2022	0.3
2023	—
2024 and thereafter	—
Total	$	291.0



(in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Balance at September 30, 2019
Customer lists	$	1.1	$	1.1	$	—
Trade name	—		—		—
Total intangible assets	1.1		1.1		—

Balance at December 31, 2018
Customer lists	10.5		3.5		7.0
Trade name	1.4		1.2		0.2
Total intangible assets	$	11.9	$	4.7	$	7.2



(in millions)	September 30, 2019
Impairment charges	$	35.7
Receivables write-down	7.6
Other costs	7.1
Total restructuring charges	$	50.4