Guarantees (Notes)

3 Months Ended

Mar. 31, 2016

Guarantees [Abstract]

Guarantees

9. Guarantees

The Company provides a guarantee for a portion of the value of certain independent contractors' (“IC”) leased tractors.  The guarantees expire at various dates through 2020.  The potential maximum exposure under these lease guarantees was approximately $15.5 million as of March 31, 2016.  Upon an IC default, the Company has the option to purchase the tractor or return the tractor to the leasing company if the residual value is greater than the Company’s guarantee. Alternatively, the Company can contract another IC to assume the lease.  The Company estimated the fair value of its liability under this on-going guarantee to be $4.0 million and $4.7 million as of March 31, 2016 and December 31, 2015, respectively.

During the third quarter of 2015 the Company experienced an acceleration of its IC recruiting costs, guarantee payments, and reseating and reconditioning costs associated with these lease purchase programs. Accordingly, the Company decided to terminate certain lease purchase guarantee programs in favor of new lease purchase programs that do not involve a guarantee from the Company and utilize newer equipment under warranty. As of December 31, 2015, the Company recorded a loss reserve of $1.3 million in accrued expenses and other current liabilities. There was no loss reserve recorded as of March 31, 2016. The Company paid $2.9 million and $1.0 million for its guarantee during the first quarter of 2016 and 2015, respectively.