(

) Adoption of New Accounting Standard

We account for our revenue in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC,

606,

Revenue from Contracts with Customers

, which we adopted on

January 1, 2018

using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an increase of

$485,000

to the opening balance of retained earnings. The comparative information has

not

been restated and continues to be reported under the accounting standards in effect for those periods. We expect the impact of the adoption of the new revenue standard to be immaterial to our net income and financial position on an ongoing basis.

The new revenue standard requires us to recognize revenue and related expenses within each of our

four

reporting segments over time, compared with our former policy in which we recorded revenue and related expenses on the date shipment of freight was completed.

The cumulative effect of the changes made to our consolidated condensed balance sheet on

January 1, 2018

for the adoption of the new revenue standard was as follows:

(In thousands)	Balance at December 31, 2017		Adjustments Due to ASC 606			Balance at January 1, 2018
Assets:
Prepaid expenses and other	$	19,810	$	2,445	(a)	$	22,255
Liabilities:
Accounts payable and accrued liabilities		38,100		1,960			40,060
Stockholders’ equity:
Retained earnings		448,542		485			449,027

(a)

Contract assets balance at

January 1, 2018.

The impact of the adoption of the new revenue standard on our consolidated condensed statement of operations and balance sheet was as follows:

	Three Months Ended September 30, 2018
(In thousands)	Prior to Adoption of ASC 606		Adjustments Due to ASC 606		As Reported

Operating revenue	$	199,100	$	549	$	199,649
Operating expenses:
Salaries, wages and benefits		63,935		116		64,051
Purchased transportation		35,568		299		35,867
Fuel and fuel taxes		31,627		31		31,658
Supplies and maintenance		10,551		23		10,574
Income taxes expense		3,835		21		3,856
Net income		15,198		59		15,257

	Nine Months Ended September 30, 2018
(In thousands)	Prior to Adoption of ASC 606		Adjustments Due to ASC 606			As Reported

Operating revenue	$	583,268	$	365		$	583,633
Operating expenses:
Salaries, wages and benefits		185,955		168			186,123
Purchased transportation		105,497		444			105,941
Fuel and fuel taxes		92,410		34			92,444
Supplies and maintenance		31,262		(1	)		31,261
Income taxes expense		12,046		(79	)		11,967
Net income		39,491		(201	)		39,290

	Balance at September 30, 2018
(In thousands)	Prior to Adoption of ASC 606		Adjustments Due to ASC 606			As Reported
Assets:
Prepaid expenses and other	$	16,006	$	2,810	(a)	$	18,816
Liabilities:
Accounts payable and accrued liabilities		45,733		2,526			48,259
Stockholders’ equity:
Retained earnings		483,935		284			484,219

(a)

Contract assets balance at

September 30, 2018.