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Note M - Leases | 9 Months Ended
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Sep. 30, 2022
Notes to Financial Statements |
Lessor, Operating Leases [Text Block] | NOTE M: LEASES The Company currently leases shop, office and parking spaces in various locations in the United States and Mexico. The initial term for the majority of these leases is one year or less, 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 initial lease term for certain shop and office locations is for periods ranging from one to five years with early cancellation options. The Company prefers that leases include early cancellation provisions to prevent becoming locked into long-term leases that become operationally unjustified and to allow the flexibility to pursue more cost-effective options for similar properties if they become available. These leases often include the option to extend for additional periods, which may or may not be exercised. Based on historical experience, the Company does not always extend these leases, sometimes exercises the option to cancel leases early and sometimes lessors choose to cancel leases or not extend. The Company leases trucks to owner-operators under our lease-to-own program. We also lease dock space to a related party at our Laredo, Texas terminal. Right-of-Use Leases The Company is party to operating leases which include initial terms ranging from three to 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 $0.5 million as of September 30, 2022. 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 condensed 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 condensed consolidated statements of operations. While these lease agreements may 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 condensed consolidated balance sheets as of September 30, 2022. Scheduled amounts and timing of cash flows arising from future right-of-use operating lease payments at September 30, 2022, are:
Maturity of Lease Liabilities |  | (in thousands) |
2022 (remaining) |  | $ | 84 |
2023 |  |  | 340 |
2024 |  |  | 114 |
2025 and thereafter |  |  | - |
Total undiscounted operating lease payments |  | $ | 538 |
Less: Imputed interest |  |  | (14 | )
Present value of operating lease liabilities |  | $ | 524 |
Balance Sheet Classification |  |  |  |
Right-of-use assets (recorded in other non-current assets) |  | $ | 524 |
Current lease liabilities (recorded in other current liabilities) |  | $ | 339 |
Long-term lease liabilities (recorded in other long-term liabilities) |  |  | 185 |
Total operating lease liabilities |  | $ | 524 |
Other Information |  |  |  |
Weighted-average remaining lease term for operating leases (years) |  |  | 1.58 |
Weighted-average discount rate for operating leases |  |  | 3.74 | %
Cash Flows No new right-of-use assets were recognized as a non-cash asset addition that resulted from new operating lease liabilities during the three and nine months ended September 30, 2022. Cash paid for amounts included in the present value of operating lease liabilities was $0.1 million during the three months ended September 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows. Cash paid for amounts included in the present value of operating lease liabilities was $0.4 million during the nine months ended September 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows. Operating Lease Costs
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
|  | (in thousands) |
Long-term |  | $ | 125 |  |  | $ | 147 |  |  | $ | 435 |  |  | $ | 441 |
Short-term |  |  | 627 |  |  |  | 572 |  |  |  | 1,732 |  |  |  | 1,632 |
Total |  | $ | 752 |  |  | $ | 719 |  |  | $ | 2,167 |  |  | $ | 2,073 |
Lease Revenue The Company's operating lease revenue is disclosed in the table below.
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
|  | (in thousands) |
Leased truck revenue (recorded in revenue, before fuel surcharge) |  | $ | 2,228 |  |  | $ | 2,039 |  |  | $ | 6,519 |  |  | $ | 5,444 |
Leased building space revenue (recorded in non-operating income) |  |  | 99 |  |  |  | 169 |  |  |  | 426 |  |  |  | 506 |
Total lease revenue |  | $ | 2,327 |  |  | $ | 2,208 |  |  | $ | 6,945 |  |  | $ | 5,950 |
The Company leases trucks to owner-operators under operating leases, which generally have a term of up to five years and include options to purchase the truck at the end of the lease. In the event that an independent contractor defaults on their lease, the Company generally leases the truck to another independent contractor. As of September 30, 2022, the gross carrying value of trucks underlying these leases was $55.2 million and accumulated depreciation was $35.0 million. 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 quarter ended September 30, 2022, the Company incurred $1.6 million of depreciation expense for these assets. The Company leases dock space to a related party at our Laredo, Texas terminal. The dock space is depreciated in conjunction with the structures and improvements for the entire Laredo terminal on a straight-line basis over the estimated useful life of the assets. Lease income is recorded as a component of non-operating income in our condensed consolidated statements of operations. Lease Receivables Future minimum operating lease payments receivable at September 30, 2022:
|  | (in thousands) |
2022 (remaining) |  | $ | 2,085 |
2023 |  |  | 6,472 |
2024 |  |  | 3,207 |
2025 |  |  | 94 |
2026 and thereafter |  |  | - |
Total future minimum lease payments receivable |  | $ | 11,858 |

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- Definition The entire disclosure for lessor's operating leases. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 30 -URI https://asc.fasb.org/subtopic&trid=77888252 + Details
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