Note 9 - Leases

12 Months Ended

Dec. 31, 2021

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, 2021 terminate in  January 2022 through  November 2023 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, 2021 and 2020 are as follows:

(dollars in thousands)	Twelve Months Ended			Twelve Months Ended
	December 31, 2021			December 31, 2020
Finance lease cost:
Amortization of right-of-use assets	$	3,620		$	4,080
Interest on lease liabilities		637			1,003
Operating lease cost		24,002			21,212
Variable lease cost		89			414
Total lease cost	$	28,348		$	26,709
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	637		$	1,003
Operating cash flows from operating leases	$	18,996		$	24,325
Financing cash flows from finance leases	$	5,626		$	20,083
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	$	15,795		$	1,730
Weighted-average remaining lease term—finance leases	1.0 years			1.8 years
Weighted-average remaining lease term—operating leases	4.9 years			2.3 years
Weighted-average discount rate—finance leases		4.7	%		2.3	%
Weighted-average discount rate—operating leases		6.4	%		5.3	%

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, 2021 and 2020, right-of-use assets of $35.7 million and $37.4 million for operating leases, respectively, and $23.2 million and $29.4 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, 2021, summarized as follows by lease category:

(in thousands)	Operating			Finance
2022	$	17,644		$	6,922
2023		9,036			3,712
2024		2,206			-
2025		2,112			-
2026		2,170			-
Thereafter		11,499			-
Total minimum lease payments	$	44,667		$	10,634
Less: amount representing interest		(7,302	)		183
Present value of minimum lease payments	$	37,365		$	10,817
Less: current portion		(15,811	)		(6,848	)
Lease obligations, long-term	$	21,554		$	3,969

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 two years ended December 31:

(in thousands)	2021		2020
Revenue equipment rentals	$	20,114	$	22,505
Building and lot rentals		3,651		2,982
Other equipment rentals		326		478
Total rental expense	$	24,091	$	25,965