LEASES

12 Months Ended

Dec. 31, 2020

LEASES

LEASES

NOTE 2 – LEASES

Lessee

The Company has operating and finance leases for various real estate including corporate offices, trucking facilities and terminals, warehouses, and tractor parking as well as various types of equipment including tractors, trailers, forklifts, and office equipment. New real estate lease agreements will typically have initial terms between 3 to 15 years and new equipment lease agreements will typically have initial terms of 3 to 9 years.

The Company follows ASC 360, Impairment or Disposal of Long-Lived Assets, to determine whether right-of-use assets relating to operating and finance leases are impaired. The Company recorded impairment charges of $3.2 million to right-of-use assets relating to Aveda operating leases for the year ended December 31, 2020.  The fair value of the right-of-use assets were determined utilizing a market participant discount rate and the estimated market rent, in connection with the divestiture of Aveda in the Specialized Solutions segment.   The Company recorded impairment charges of $10.0 million to right-of-use assets relating to operating leases and $0.8 million to right-of-use assets relating to finance leases for the year ended December 31, 2019.

The following table reflects the Company’s components of lease expenses for the year ended December 31, 2020 and 2019 (in millions):

		Year Ended December 31,
	Classification	2020		2019
Operating lease cost
Revenue equipment	Operations and maintenance	$	24.3	$	22.2
Real estate	Administrative expense		8.7		13.8
Total operating lease cost		$	33.0	$	36.0
Finance lease cost
Amortization of right-of-use assets	Depreciation and amortization	$	5.1	$	5.4
Interest on lease liabilities	Interest expense		1.2		0.9
Total finance lease cost		$	6.3	$	6.3
Total lease cost(a)		$	39.3	$	42.3

(a) Short-term lease expense and variable lease expense are immaterial.

The components of assets and liabilities for operating and finance leases are as follows as of December 31, 2020 and 2019 (in millions):

		December 31,
	Classification	2020		2019
Assets
Operating lease right-of-use assets	Right-of-use assets	$	121.1	$	95.9
Finance lease right-of-use assets	Property and equipment, net		30.6		25.3
Total lease assets		$	151.7	$	121.2
Liabilities
Operating lease liabilities:
Current	Current operating lease liabilities	$	30.9	$	27.3
Non-current	Non-current operating lease liabilities		96.0		77.8
Total operating lease liabilities		$	126.9	$	105.1
Finance lease liabilities:
Current	Current portion of long-term debt	$	8.5	$	6.2
Non-current	Long-term debt, net of current portion		22.7		19.3
Total finance lease liabilities		$	31.2	$	25.5
Total lease liabilities		$	158.1	$	130.6

The following table is a summary of supplemental cash flows related to leases for the year ended December 31, 2020 and 2019 (in millions):

	Year Ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(37.8)	$	(35.6)
Operating cash flows from finance leases		(1.1)		(0.9)
Financing cash flows from finance leases		(6.6)		(5.9)
Right-of-use assets obtained in exchange for lease obligations:
Operating lease right-of-use assets	$	54.6	$	39.2
Finance lease right-of-use assets		11.6		13.1

The following table is the future payments on leases as of December 31, 2020 (in millions):

	Operating		Finance
Year ending December 31,	leases		leases		Total
2021	$	36.2	$	9.6	$	45.8
2022		32.1		7.5		39.6
2023		26.3		8.1		34.4
2024		15.1		5.4		20.5
2025		8.9		2.5		11.4
Thereafter		27.1		—		27.1
Total lease payments		145.7		33.1		178.8
Less: interest		(18.8)		(1.9)		(20.7)
Present value of lease liabilities	$	126.9	$	31.2	$	158.1

The following table is a summary of weighted average lease terms and discount rates for leases as of December 31, 2020 and 2019:

	December 31,
	2020			2019
Weighted-average remaining lease term (years)
Operating leases		5.59			5.01
Finance leases		3.57			3.83
Weighted-average discount rate
Operating leases		5.04	%		5.54	%
Finance leases		4.40	%		4.51	%

Lessor

The Company leases tractors and trailers to certain of its owner-operators and accounts for these transactions as operating leases. These leases typically have terms of 30 to 72 months and are collateralized by a security interest in the related revenue equipment. The Company recognizes income for these leases as payments are received over the lease term, which are reported in purchased freight on the consolidated statements of operations and comprehensive income (loss). The Company's equipment leases may include options for the lessee to purchase the equipment at the end of the lease term or terminate the lease prior to the end of the lease term. When an asset reaches the end of its useful economic life, the Company disposes of the asset.

The Company recorded depreciation expense of $18.7 million and $20.5 million on its assets leased under operating leases for the year ended December 31, 2020 and 2019, respectively. Lease income from lease payments related to the Company's operating leases for the years ended December 31, 2020 and 2019, was $25.0 million and $24.2 million, respectively.

The following table is the future minimum receipts on leases as of December 31, 2020 (in millions):

Year ending December 31,	Amount
2021	$	24.1
2022		18.7
2023		12.0
2024		6.7
2025		3.1
Thereafter		0.4
Total minimum lease receipts	$	65.0