Guarantees (Notes)

6 Months Ended

Jun. 30, 2018

Guarantees [Abstract]

Guarantees

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 2022.  The potential maximum exposure under these lease guarantees was approximately $9.4 million as of June 30, 2018.  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 $1.3 million and $1.4 million as of June 30, 2018 and December 31, 2017, respectively, which was recorded in accrued expenses and other current liabilities.

The Company began to offer a lease purchase program that did not include a guarantee, and offered newer equipment under factory warranty that was more cost effective. ICs began electing the newer lease purchase program over the legacy lease guarantee programs which led to an increase in unseated legacy tractors. In late 2016, management committed to a plan to divest these older assets and recorded a loss reserve. The loss reserve for the guarantee and reconditioning costs associated with the planned divestiture was $1.1 million and $1.8 million as of June 30, 2018 and December 31, 2017, respectively, which was recorded in accrued expenses and other current liabilities.

The Company paid $0.8 million and $3.0 million under these lease guarantees during the second quarter of 2018 and 2017, respectively, and $1.5 million and $6.9 million during the first half of 2018 and 2017, respectively.