17.

LEASES

Right-of-Use Leases

During

2019,

the Company entered into operating leases which include initial terms of approximately

five

years and which do

not

include an option for early cancellation. In accordance with the provisions of ASC Topic

842,

these leases resulted in the recognition of right-of-use assets and corresponding operating lease liabilities, respectively, valued at

2.1

million as of

December 31, 2019.

These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using the Company’s incremental borrowing rate as of the respective dates of lease inception, as the rate implicit in each lease is

not

readily determinable. The right-of-use assets are recorded in other assets, and the lease liability is recorded in accrued expenses and other liabilities and in other long-term liabilities on our consolidated balance sheet. Lease expense is recorded on a straight-line basis over the lease term and is recorded in rent and purchased transportation in our consolidated statements of operations. While the lease agreements contain provisions to extend after the initial term for an additional

five

years, the Company is

not

reasonably certain these extension options will be exercised. Therefore, potential lease payments that might occur under this extension period are

not

included in amounts recorded in our consolidated balance sheets as of

December 31, 2019.

Scheduled amounts and timing of cash flows arising from operating lease payments at

December 31, 2019,

are:

	(in thousands)
Maturity of Lease Liabilities
2020	$	616
2021		627
2022		544
2023		340
2024		114
Thereafter		0
Total undiscounted operating lease payments	$	2,241
Less: Imputed interest		(143	)
Present value of operating lease liabilities	$	2,098

Balance Sheet Classification
Right-of-use assets (recorded in other non-current assets)	$	2,098

Current lease liabilities (recorded in other current liabilities)	$	616
Long-term lease liabilities (recorded in other long-term liabilities)		1,482
Total operating lease liabilities	$	2,098

Other Information
Weighted-average remaining lease term for operating leases (in years)		3.74
Weighted-average discount rate for operating leases		3.59	%

Cash Flows

Right-of-use assets of

$2.4

million were recognized as non-cash asset additions that resulted from new operating lease liabilities during the year ended

December 31, 2019.

Cash paid for amounts included in the present value of right-of-use lease liabilities was

$0.3

million during the year ended

December 31, 2019

and is included in operating cash flows.

Cash Paid for Operating Leases

		Twelve Months Ended
		December 3 1 ,
		2019		2018
	(in thousands)

Right-of-Use leases		$	255	$	-
Short-term leases (1)			2,214		2,174
Total		$	2,469	$	2,174

(

) Short-term lease cost includes leases with a term of

twelve

months or less and leases with options for early cancellation.

Lease Revenue

The Company has a lease-purchase program whereby we offer independent contractors the opportunity to lease a Company-owned truck. The terms associated with these leases require weekly lease payments over the term of the leases which range from

months. The cost and carrying amount of Company-owned trucks in this program at

December 31, 2019

were approximately

$60,130,000

and

$33,757,000,

respectively.

Leases in our lease-purchase program expire at various dates through

2024.

Payments received under this program are classified in the Company’s financial statements under the consolidated statements of operations category Revenue. Future minimum lease receipts related to these leases at

December 31, 2019

and

2018

were approximately

$18,792,000

and

$22,319,000,

respectively. Depreciation is calculated on a straight-line basis over the estimated useful life of the equipment, down to an estimated salvage value. In most cases, the Company has agreements in place with certain manufacturers whereby salvage values are guaranteed by the manufacturer. In other cases, where salvage values are

not

guaranteed, estimates of salvage value are based on the expected market values of equipment at the time of disposal. During the year ended

December 31, 2019,

the Company incurred

$6.7

million of depreciation expense for these assets.

The Company leases office and shop facilities to a related party at our Laredo, Texas terminal. At

December 31, 2019,

the cost and carrying amount of the facilities leased were approximately

$1,697,000

and

$1,080,000,

respectively. Future minimum lease receipts related to this lease at

December 31, 2019

are approximately

$12,000.

See Note

– Related Party Transactions for additional information regarding the Company’s transactions with related persons.

The Company's operating lease revenue is disclosed in the table below.

		Twelve Months E nded
		December 3 1 ,
		2019		2018
	(in thousands)

Leased truck revenue (recorded in revenue, before fuel surcharge)		$	9,220	$	8,101
Leased dock space revenue (recorded in non-operating income)			155		155
Total lease revenue		$	9,375	$	8,256

Lease Receivable

Future minimum operating lease payments receivable at

December 31, 2019:

	(in thousands)
2020	$	7,811
2021		3,847
2022		3,404
2023		2,728
2024		1,002
Thereafter		-
Total future minimum lease payments receivable	$	18,792

Lease Payments to Related Parties

Payments to related parties of

$813,756

were made for real estate leases during

2019

which include maintenance facilities in

one

state and trailer drop yards in

eleven

states. The leases are generally month-to-month leases with automatic renewal provisions.

ASC Topic

840

disclosures

The ASC Topic

840

Comparative Approach for adopting ASC Topic

842

requires companies to provide disclosures for all periods that continue to be in accordance with ASC Topic

840.

The Company has a lease-purchase program whereby we offer independent contractors the opportunity to lease a Company-owned truck. The cost and carrying amount of the Company-owned trucks in this program at

December 31, 2018

were approximately

$61,061,000

and

$34,299,000,

respectively. Payments under this program are classified in the Company's financial statements under the consolidated statement of operations category Revenue.

Future minimum operating lease payments receivable as of

December 31, 2018:

	(in thousands)
2019	$	9,649
2020		6,497
2021		2,417
2022		2,025
2023		1,731
Thereafter		-
Total future minimum lease payments	$	22,319

The Company leases office and shop facilities to a related party. At

December 31, 2018,

the cost and carrying amount of the facilities leased were approximately

$1,697,000

and

$1,138,000,

respectively. Future minimum lease receipts related to this lease at

December 31, 2018

were approximately

$12,000.

During

2018

the Company leased office, shop and parking spaces from various lessors, including a related party. The initial term for the majority of these leases is

one

year, with an option for early cancellation and an option to renew for subsequent

one

-month periods. These leases can be terminated by either party by providing notice to the other party of the intent to cancel or to

not

extend. Relatively short lease durations for these properties are intended to provide flexibility to the Company as changing operational needs and shifting opportunities often result in cancellation or non-renewal of these leases by the Company or the lessor. The minimum operating lease payable under these arrangements was approximately

$284,000

as of

December 31, 2018.