Note 9 - Leases

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

9. LEASES

Finance lease obligations are utilized to finance a portion of our revenue equipment and are entered into with certain finance companies who are not parties to our Credit Facility. The leases in effect at December 31, 2020 terminate in  January 2021 through  November 2024 and contain guarantees of the residual value of the related equipment by us. As such, the residual guarantees are included in the related debt balance as a balloon payment at the end of the related term as well as included in the future minimum finance lease payments. These lease agreements require us to pay personal property taxes, maintenance, and operating expenses. Our operating lease obligations do not typically include residual value guarantees or material restrictive covenants.

A summary of our lease obligations for the twelve months ended  December 31, 2020 and 2019 are as follows:

(dollars in thousands)	Twelve Months Ended			Twelve Months Ended
	December 31, 2020			December 31, 2019
Finance lease cost:
Amortization of right-of-use assets	$	4,080		$	5,469
Interest on lease liabilities		1,003			1,107
Operating lease cost		21,212			24,393
Variable lease cost		414			326
Total lease cost	$	26,709		$	31,295
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	1,003		$	7,226
Operating cash flows from operating leases	$	24,325		$	24,393
Financing cash flows from finance leases	$	20,083		$	1,107
Right-of-use assets obtained in exchange for new finance lease liabilities	$	3,229		$	-
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,730		$	37,080
Weighted-average remaining lease term—finance leases	1.8 years			2.9 years
Weighted-average remaining lease term—operating leases	2.3 years			3.4 years
Weighted-average discount rate—finance leases		2.3	%		3.0	%
Weighted-average discount rate—operating leases		5.3	%		5.2	%

During the year ended December 31, 2020, we recognized $2.2 million of impairment expense related to a leased office facility in Chattanooga, TN held under an operating lease and approximately $0.8 million of additional revenue equipment and purchased transportation expense related to the abandonment of revenue equipment held under an operating lease. At  December 31, 2020 and 2019, right-of-use assets of $37.4 million and $58.8 million for operating leases, respectively, and $29.4 million and $35.6 million (for finance leases are included in net property and equipment in our consolidated balance sheets. Operating lease right-of-use asset amortization is included in revenue equipment rentals and purchased transportation, communication and utilities, and general supplies and expenses, depending on the underlying asset, in the consolidated statement of operations. Amortization of finance leased assets is included in depreciation and amortization expense in the consolidated statement of operations.

Our future minimum lease payments as of  December 31, 2020, summarized as follows by lease category:

(in thousands)	Operating			Finance
2021	$	18,543		$	6,324
2022		15,523			6,884
2023		6,762			3,616
2024		28			-
2025		9			-
Thereafter		-			-
Total minimum lease payments	$	40,865		$	16,824
Less: amount representing interest		2,402			(381	)
Present value of minimum lease payments		38,463			16,443
Less: current portion		(16,989	)		(5,687	)
Lease obligations, long-term	$	21,474		$	10,756

Certain leases contain cross-default provisions with other financing agreements and additional charges if the unit's mileage exceeds certain thresholds defined in the lease agreement.

Rental expense is summarized as follows for each of the three years ended December 31:

(in thousands)	2020		2019		2018
Revenue equipment rentals	$	22,505	$	20,989	$	14,682
Building and lot rentals		2,982		2,898		1339
Other equipment rentals		478		506		881
Total rental expense	$	25,965	$	24,393	$	16,902