Microsoft Word 10.0.2627;SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 2005 Commission File No. 0-15087
HEARTLAND EXPRESS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 93-0926999
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2777 Heartland Drive, Coralville, Iowa 52241
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (319)545-2728
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
At September 30, 2005, there were 73,821,500 shares of the Company's $.01 par
value common stock outstanding.
PART I
FINANCIAL INFORMATION
Page
Number
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
September 30, 2005 and
December 31, 2004 1-2
Consolidated Statements of Operations
for the Three and Nine Months
Ended September 30, 2005 and 2004 3
Consolidated Statement of Stockholders' Equity
for the Nine Months
Ended September 30, 2005 4
Consolidated Statements of Cash Flows
for the Nine Months Ended
September 30, 2005 and 2004 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
Item 4. Controls and Procedures 15
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of 16
Security Holders
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16-17
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS September 30, December 31,
2005 2004
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents ......................... $ 3,656,609 $ 1,610,543
Short-term investments ............................ 272,854,676 256,727,782
Trade receivables, net of allowance of
$775,000 in 2005 and 2004 ....................... 44,983,188 37,102,813
Prepaid tires and tubes ........................... 3,407,570 2,692,090
Deferred income taxes ............................. 27,496,000 24,964,000
Other prepaid expenses ............................ 2,773,510 158,267
------------ ------------
Total current assets ............................ 355,171,553 323,255,495
------------ ------------
PROPERTY AND EQUIPMENT
Land and land improvements ........................ 10,779,812 9,543,953
Buildings ......................................... 17,494,255 17,494,255
Furniture and fixtures ............................ 1,042,131 1,210,424
Shop and service equipment ........................ 2,605,219 2,557,654
Revenue equipment ................................. 239,645,668 222,842,499
------------ ------------
271,567,085 253,648,785
Less accumulated depreciation ..................... 81,818,608 68,973,751
------------ ------------
Property and equipment, net ....................... 189,748,477 184,675,034
------------ ------------
GOODWILL ............................................... 4,814,597 4,814,597
OTHER ASSETS ........................................... 4,145,256 4,266,725
------------ ------------
$553,879,883 $517,011,851
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
1
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2005 2004
------------- -------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable and accrued liabilities .......... $ 15,513,402 $ 9,722,099
Compensation and benefits ......................... 13,602,834 11,151,523
Income taxes payable .............................. 8,868,330 7,918,914
Insurance accruals ................................ 50,653,644 45,995,442
Other accruals .................................... 7,409,904 5,995,943
------------- -------------
Total current liabilities ...................... 96,048,114 80,783,921
------------- -------------
DEFERRED INCOME TAXES .................................. 44,834,000 46,885,000
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01; authorized
5,000,000 share; none issued .................... -- --
Common stock, par value $.01; authorized
395,000,000 shares; issued and
outstanding 73,821,500 shares in
2005 and 75,000,000 in 2004 ..................... 738,215 750,000
Additional paid-in capital ........................ -- 8,510,305
Retained earnings ................................. 412,793,508 380,906,884
------------ ------------
413,531,723 390,167,189
Less unearned compensation ........................ (533,954) (824,259)
------------ ------------
412,997,769 389,342,930
------------ ------------
$553,879,883 $517,011,851
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
2
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
OPERATING REVENUE ................................... $136,209,698 $117,299,278 $383,738,516 $337,647,731
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Salaries, wages, and benefits .................... $ 45,028,528 $ 40,305,667 $131,192,465 $119,163,588
Rent and purchased transportation ................ 7,462,499 8,578,807 23,004,432 28,620,347
Operations and maintenance ....................... 38,055,562 25,297,575 98,465,534 68,954,053
Taxes and licenses ............................... 2,249,347 2,143,218 6,505,283 6,638,458
Insurance and claims ............................. 5,015,569 2,562,377 11,817,266 10,454,595
Communications and utilities ..................... 969,344 886,416 2,596,260 2,828,948
Depreciation ..................................... 9,819,033 7,842,781 27,260,730 21,214,242
Other operating expenses, net .................... 2,277,868 4,022,516 10,217,239 10,836,071
------------ ------------ ------------ ------------
110,877,750 91,639,357 311,059,209 268,710,302
------------ ------------ ------------ ------------
Operating income .................. 25,331,948 25,659,921 72,679,307 68,937,429
Interest income .................................. 1,865,656 805,135 5,252,948 2,024,522
------------ ------------ ------------ ------------
Income before income taxes .................... 27,197,604 26,465,056 77,932,255 70,961,951
Income taxes ..................................... 9,655,150 9,395,071 27,665,951 25,070,700
------------ ------------ ------------ ------------
Net income .................................... $ 17,542,454 $ 17,069,985 $ 50,266,304 $ 45,891,251
============ ============ ============ ============
Earnings per common share:
Earnings per share ........................... $ 0.24 $ 0.23 $ 0.67 $ 0.61
============ ============ ============ ============
Weighted average shares outstanding .............. 73,821,609 75,000,000 74,520,040 75,000,000
============ ============ ============ ============
Dividends declared per share ..................... $ 0.020 $ 0.020 $ 0.060 $ 0.047
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
3
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
Additional Unearned
Common Paid-In Retained Compen-
Stock Capital Earnings sation Total
--------- ------------- ------------- ------------- -------------
Balance, December 31, 2004 .................. $ 750,000 $ 8,510,305 $ 380,906,884 $ (824,259) $ 389,342,930
Net income .................................. -- -- 50,266,304 -- 50,266,304
Dividends on common stock, $0.06 per share .. -- -- (4,465,028) -- (4,465,028)
Stock repurchase ............................ (11,785) (8,492,713) (13,914,652) -- (22,419,150)
Forfeiture of stock awards .................. -- (17,592) -- 17,592 --
Amortization of unearned compensation ....... -- -- -- 272,713 272,713
--------- ------------- ------------- ------------- -------------
Balance, September 30, 2005 ................. $ 738,215 $ -- $ 412,793,508 $ (533,954) $ 412,997,769
========= ============= ============= ============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
4
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
2005 2004
------------- -------------
OPERATING ACTIVITIES
Net income .............................................. $ 50,266,304 $ 45,891,251
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization ........................ 27,275,733 21,229,245
Deferred income taxes ................................ (4,583,000) 2,047,000
Unearned compensation ................................ 272,713 285,321
Gain on disposal of fixed assets ..................... (2,262,664) (99,804)
Changes in certain working capital items:
Trade receivables ................................. (7,880,375) (2,715,700)
Other current assets .............................. (2,615,243) (1,012,625)
Prepaid expenses .................................. 494,120 (477,930)
Accounts payable and accrued expenses ............. 10,870,748 9,712,699
Accrued income taxes .............................. 949,416 (1,973,192)
------------- -------------
Net cash provided by operating activities ............ 72,787,752 72,886,265
------------- -------------
INVESTING ACTIVITIES
Proceeds from sale of property and equipment ............ 754,386 166,955
Purchases of property and equipment, net of trades ...... (28,572,507) (32,885,937)
Net purchases of municipal bonds ........................ (16,126,894) (69,097,789)
Change in other assets .................................. 106,466 (103,272)
------------- -------------
Net cash used in investing activities ................... (43,838,549) (101,920,043)
------------- -------------
FINANCING ACTIVITIES
Cash dividend ........................................... (4,483,987) (2,997,473)
Stock repurchase ........................................ (22,419,150) --
------------- -------------
Net cash used in financing actitvities ............ (26,903,137) (2,997,473)
------------- -------------
Net increase (decrease) in cash and cash equivalents .... 2,046,066 (32,031,251)
CASH AND CASH EQUIVALENTS
Beginning of period ..................................... 1,610,543 38,618,430
------------- -------------
End of period ........................................... $ 3,656,609 $ 6,587,179
============= =============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes, net .................................... $ 31,299,435 $ 24,996,892
Noncash investing activities:
Book value of revenue equipment traded ............... $ 15,909,603 $ 16,295,082
The accompanying notes are an integral part of these consolidated financial
statements.
5
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Heartland
Express, Inc. and subsidiaries (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all normal, recurring adjustments considered
necessary for a fair presentation have been included. The financial statements
should be read in conjunction with the audited consolidated financial statements
for the year ended December 31, 2004 included in the Annual Report on Form 10-K
of the Company filed with the Securities and Exchange Commission. Interim
results of operations are not necessarily indicative of the results to be
expected for the full year or any other interim periods.
Note 2. Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Note 3. Segment Information
The Company has ten operating divisions; however, it has determined that it
has one reportable segment. All of the divisions are managed based on similar
economic characteristics. Each of the regional operating divisions provides
short-to-medium haul truckload carrier services of general commodities to a
similar class of customers. In addition, each division exhibits similar
financial performance, including average revenue per mile and operating ratio.
As a result of the foregoing, the Company has determined that it is appropriate
to aggregate its operating divisions into one reportable segment consistent with
the guidance in Statement of Financial Accounting Standard ("SFAS") No. 131,
Disclosures About Segments of an Enterprise and Related Information.
Accordingly, the Company has not presented separate financial information for
each of its operating divisions as the Company's consolidated financial
statements present its one reportable segment.
Note 4. Cash and Cash Equivalents
Cash equivalents are short-term, highly liquid investments with
insignificant interest rate risk and original maturities of three months or
less. Restricted and designated cash and short-term investments totaling $4.1
million and $4.2 million at September 30, 2005 and December 31, 2004,
respectively, are classified as other assets. The restricted funds represent
those required for self-insurance purposes and designated funds that are
earmarked for a specific purpose not for general business use.
Note 5. Short-term Investments
Short-term investments primarily include municipal bonds with interest
reset provisions and short-term municipal bonds. The cost approximates the fair
value due to the nature of the investments. Therefore, accumulated other
comprehensive income (loss) has not been recognized as a separate component of
stockholders' equity.
6
Note 6. Property, Equipment, and Depreciation
Property and equipment are stated at cost, while maintenance and repairs
are charged to operations as incurred.
The Financial Accounting Standards Board ("FASB") issued SFAS No. 153,
"Exchanges of Non-monetary Assets--an amendment of APB Opinion No. 29,
Accounting for Non-monetary Transactions". This statement requires non-monetary
exchanges to be accounted for at fair value, recognizing any gain or loss, if
the transactions meet a commercial substance criterion and fair value is
determinable. This Statement is effective for non-monetary transactions
occurring in fiscal periods beginning after June 15, 2005. Accordingly, the
Company implemented SFAS No. 153 for trade-ins of revenue equipment beginning on
July 1, 2005 resulting in an increased depreciable basis for revenue equipment
acquired through non-monetary exchanges. Gains from the trade-in of revenue
equipment were previously deferred as a reduction of the depreciable basis of
the new asset and are now presented as a reduction of other operating expenses,
net. For the quarter ended September 30, 2005, implementation of SFAS No. 153
resulted in approximately $70,500 of additional depreciation and gains from the
trade-in of revenue equipment of $1.9 million.
For the three months ended September 30, 2005 and 2004, other operating
expenses, net include a gain on disposal of all property and equipment of $2.0
million and a loss of $2,085, respectively. For the nine months ended September
30, 2005 and 2004, other operating expenses, net include gains on the disposal
of all property and equipment of $2.3 million and $99,804, respectively.
Note 7. Stock Repurchase
In September 2001, the Board of Directors approved a repurchase of up to
5.0 million shares of Heartland Express, Inc. common stock. During the quarter
ended September 30, 2005, the Company purchased 44,500 shares for approximately
$900,000 at approximately $19.50 per share and the shares were retired. For the
nine months ended September 30, 2005, approximately 1.2 million shares have been
repurchased for $22.4 million at approximately $19.00 per share. The cost of
such shares purchased and retired in excess of their par value was charged first
to additional paid-in capital to the extent of the balance thereof, with the
remainder to retained earnings.
Note 8. Earnings Per Share
Basic earnings per share are based upon the weighted average common shares
outstanding during each year. Diluted earnings per share are based upon the
weighted average common and common equivalent shares outstanding during each
year. Heartland Express has no common stock equivalents; therefore, diluted
earnings per share are equal to basic earnings per share.
Note 9. Stock Based Compensation
At September 30, 2005 the Company has a restricted stock award plan. The
plan shares are being amortized over a five year vesting period as compensation
expense. For the three months ended September 30, 2005 and 2004, compensation
expense of $94,227 and $95,106, respectively, was recognized. For the nine
months ended September 30, 2005 and 2004, compensation expense of $272,713 and
$285,321 respectively, was recognized. All stock based compensation is recorded
in salaries, wages, and benefits on the consolidated statements of operations.
The unamortized portion of the stock awards is recorded in stockholders' equity
as unearned compensation. All unvested shares are included in the Company's 73.8
million outstanding shares.
7
Note 10. New Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," a
revision of SFAS No. 123, which addresses the accounting for share-based payment
transactions. SFAS No. 123(R) eliminates the ability to account for employee
share-based compensation transactions using APB Opinion No. 25, "Accounting for
Stock Issued to Employees," and generally requires instead that such
transactions be accounted for and recognized in the consolidated statements of
operations based on their fair value. The Company does not anticipate that SFAS
No. 123(R) will have a significant impact on the Company. The Company does not
currently have any share-based compensation other than the restricted stock in
Note 9.
Note 11. Commitments and Contingencies
The Company is party to ordinary, routine litigation and administrative
proceedings incidental to its business. In the opinion of management, the
Company's potential exposure under pending legal proceedings is adequately
provided for in the accompanying consolidated financial statements.
The Company has commitments at September 30, 2005 to acquire revenue
equipment for approximately $20.1 million in the fourth quarter of 2005 and
$46.6 million in 2006, net of trade-ins. These commitments are expected to be
financed from existing cash, cash equivalents, and short-term investment
balances and cash flows from operations.
The Company announced on September 9, 2005 that our Board of Directors
declared a regular quarterly dividend of $.02 per common share, payable on
October 3, 2005, to stockholders of record on September 22, 2005.
The Company announced on September 22, 2005 the planned construction of a
new corporate headquarters and an adjacent shop facility. These new facilities
will be funded with the proceeds from the sale of the current corporate
headquarters. Construction is expected to be completed in the spring of 2007.
Note 12. Related Party Transactions
The Company leases two office buildings and a storage building from its
president under a lease which provides for monthly rentals of $27,618 plus the
payment of all property taxes, insurance and maintenance. The lease was renewed
for a five year term on June 1, 2005 increasing the monthly rental from $24,969
to $27,618. In the opinion of management, the rates paid are comparable to those
that could be negotiated with a third party. Rent expense paid to the Company's
president totaled $82,854 and $74,906 for the three months ended September 30,
2005 and 2004, respectively. Rent expense paid to the Company's president
totaled $235,315 and $224,719 for the nine months ended September 30, 2005 and
2004, respectively.
Note 13. Reclassifications
Certain reclassifications have been made to the prior period financial
statements to conform to the September 30, 2005 presentation.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
Except for certain historical information contained herein, this Quarterly
Report on Form 10-Q contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve risks, assumptions and uncertainties which are difficult to predict. All
statements, other than statements of historical fact, are statements that could
be deemed forward-looking statements, including any projections of earnings,
revenues, or other financial items; any statements of plans, strategies, and
objectives of management for future operations; any statements concerning
proposed new strategies or developments; any statements regarding future
economic conditions or performance; any statements of belief and any statement
of assumptions underlying any of the foregoing. Words such as "believe," "may,"
"could," "expects," "anticipates," and "likely," and variations of these words
or similar expressions, are intended to identify such forward-looking
statements. The Company's actual results could differ materially from those
discussed in the section entitled "Factors That May Affect Future Results,"
included in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" set forth in the Company's Annual report on Form 10-K,
which is by this reference incorporated herein. The Company does not assume, and
specifically disclaims, any obligation to update any forward-looking statements
contained in this Quarterly report.
Overview
Heartland Express, Inc. is a short-to-medium haul truckload carrier. The
Company transports freight for major shippers and generally earns revenue based
on the number of miles per load delivered. The Company's primary focus is on
regional operations which accounted for 74% of the Company's gross revenues in
the third quarter of 2005. These regional operations are conducted from nine
locations including the Company's corporate headquarters in Coralville, Iowa.
The Company expanded to the Western United States this past quarter with the
opening of a regional operating center in Phoenix, Arizona.
The Company has established a reputation as a provider of quality service
to its customers. The keys to maintaining a high level of service are
experienced drivers, reliable equipment and equipment availability. Heartland
has one of the newest fleets in the industry with and has always hired only
experienced drivers with safe driving records. The Company has built a solid
financial foundation through effective cost controls including the operation of
new equipment, a high driver to non-driver employee ratio, a commitment to
safety, and a debt-free balance sheet.
Over the past five years the Company has achieved a 13.2% compounded annual
growth in gross revenues and a 13.9% compounded annual growth in net income. The
Company has been recognized as one of the Forbes magazine's "200 Best Small
Companies in America" fourteen times in the past nineteen years and for the past
four consecutive years including 2005. The Company has paid cash dividends over
the past nine consecutive quarters. The Company became publicly traded in
November, 1986 and is traded on the NASDAQ National Market under the symbol
HTLD.
9
Results of Operations:
The following table sets forth the percentage relationship of expense items
to operating revenue for the periods indicated.
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
------ ------ ------ ------
Operating revenue 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------
Operating expenses:
Salaries, wages, and benefits 33.1% 34.3% 34.2% 35.3%
Rent and purchased transportation 5.5 7.3 6.0 8.5
Operations and maintenance 27.9 21.6 25.7 20.4
Taxes and licenses 1.7 1.8 1.7 2.0
Insurance and claims 3.7 2.2 3.1 3.1
Communications and utilities 0.7 0.8 0.7 0.8
Depreciation 7.2 6.7 7.1 6.3
Other operating expenses, net 1.6 3.4 2.6 3.2
------ ------ ------ ------
Total operating expenses 81.4% 78.1% 81.1% 79.6%
------ ------ ------ ------
Operating income 18.6% 21.9% 18.9% 20.4%
Interest income 1.4 0.7 1.4 0.6
------ ------ ------ ------
Income before income taxes 20.0% 22.6% 20.3% 21.0%
Federal and state income taxes 7.1 8.0 7.2 7.4
------ ------ ------ ------
Net income 12.9% 14.6% 13.1% 13.6%
====== ====== ====== ======
The following is a discussion of the results of operations of the three and
nine month periods ended September 30, 2005 compared with the same periods in
2004, and the changes in financial condition through the third quarter of 2005.
Three Months Ended September 30, 2005 and 2004
Operating revenue increased $18.9 million (16.1%), to $136.2 million in the
third quarter of 2005 from $117.3 million in the third quarter of 2004. The
increase in revenue resulted from increased business with existing customers,
expansion of our customer base, and improved freight rates. Operating revenue
for both periods was positively impacted by fuel surcharges assessed to
customers. Fuel surcharge revenue increased $8.9 million to $16.3 million in the
third quarter of 2005 from $7.4 million in the third quarter of 2004.
Salaries, wages, and benefits increased $4.7 million (11.7%), to $45.0
million in the third quarter of 2005 from $40.3 million in the third quarter of
2004. These increases were primarily the result of increased reliance on
employee drivers due to a decrease in the number of independent contractors
utilized by the Company and a driver pay increase. During the third quarter of
2005, employee drivers accounted for 92% and independent contractors 8% of the
total fleet miles, compared with 89% and 11%, respectively, in the third quarter
of 2004. The Company increased pay for all drivers $0.03 per mile during the
first quarters of 2005 and 2004. During the third quarter of 2005, the Company
experienced a decrease in workers' compensation costs due to a decrease in
frequency and severity of claims. In addition, the Company incurred increased
health insurance costs due to increased frequency and severity of claims.
Rent and purchased transportation decreased $1.1 million (13.0%), to $7.5
million in the third quarter of 2005 from $8.6 million in the third quarter of
2004. This reflects the Company's decreased reliance upon independent
contractors. Rent and purchased transportation for both periods includes amounts
10
paid to independent contractors under the Company's fuel stability program. The
Company increased the independent contractor base mileage pay by $0.03 per mile
on January 1, 2005.
Operations and maintenance increased $12.8 million (50.4%), to $38.1
million in the third quarter of 2005 from $25.3 million in the third quarter of
2004. The increase in operations and maintenance is primarily attributable to
increased fuel costs due to the increased percentage of fleet miles driven by
employee drivers and record high fuel prices during the third quarter of 2005.
In addition, fuel efficiency for new tractors purchased beginning in 2004 is
being negatively impacted due to EPA-mandated engine clean air standards. Fuel
cost per mile increased 45.8% over the compared 2004 period due to a 40.1%
increase in fuel cost per gallon and a 5.6% decrease in fuel efficiency for
fleet tractors with EPA-mandated clean air engines.
Insurance and claims increased $2.4 million (95.7%), to $5.0 million in the
third quarter of 2005 from $2.6 million in the third quarter of 2004. Insurance
and claims expense increased due to an increase in the frequency and severity of
claims, and an increase in the claims development factors. Insurance and claims
expense will vary as a percentage of operating revenue from period to period
based on the frequency and severity of claims incurred in a given period as well
as changes in claims development trends.
Depreciation increased $2.0 million (25.2%), to $9.8 million during the
third quarter of 2005 from $7.8 million in the third quarter of 2004. This
increase is attributable to the growth of our company-owned tractor fleet,
decreased reliance on independent contractors, and the replacement of older
model tractors in our fleet. Replacement tractors have a higher cost than the
models being replaced due to EPA-mandated clean air standards. As of September
30, 2005, 53% of the Company's tractor fleet had the EPA clean air engine
compared to 26% at September 30, 2004. For the quarter ended September 30, 2005,
implementation of SFAS No. 153 resulted in approximately $70,500 of additional
depreciation.
Other operating expenses, net decreased $1.7 million (43.3%), to $2.3
million during the third quarter of 2005 from $4.0 million during the third
quarter of 2004. Other operating expenses, net consist primarily of costs
incurred for freight handling, highway tolls, driver recruiting expenses, and
administrative costs. During the third quarter of 2005, freight handling and
tolls increased $0.6 million. For the quarters ended September 30, 2005 and
2004, $2.0 million of gain and $2,085 of loss on the disposal of fixed assets is
presented as a part of other operating expenses, net. The current period
includes a gain of $1.9 million resulting from the implementation of SFAS No.
153. These gains were previously deferred as a reduction of the depreciable
basis of new revenue equipment.
The Company's effective tax rate was 35.5% for the third quarters of both
2005 and 2004.
As a result of the foregoing, the Company's operating ratio (operating
expenses as a percentage of operating revenue) was 81.4% during the third
quarter of 2005 compared with 78.1% during the third quarter of 2004. For the
three months ended, September 30, 2005 the operating ratio, excluding the effect
of gains from trade-ins of revenue equipment and the related increase in
depreciation expense resulting from the July 1, 2005 implementation of SFAS No.
153 was 82.8%. Net income increased $.5 million (2.8%), to $17.6 million during
the third quarter of 2005 from $17.1 million during the third quarter of 2004.
Nine Months Ended September 30, 2005 and 2004
Operating revenue increased $46.1 million (13.7%), to $383.7 million in the
nine months ended September 30, 2005 from $337.6 million in the 2004 period. The
increase in revenue resulted from increased business with existing customers,
expansion of our customer base, and improved freight rates. Operating revenue
for both periods was positively impacted by fuel surcharges assessed to
customers. Fuel surcharge revenue increased $21.1 million to $39.4 million for
the nine months ended September 30, 2005 from $18.3 million in the compared 2004
period.
Salaries, wages, and benefits increased $12.0 million (10.1%), to $131.2
million in the nine months ended September 30, 2005 from $119.2 million in the
2004 period. These increases were a result of increased reliance on employee
11
drivers due to a decrease in the number of independent contractors utilized by
the Company and a driver pay increase. During the first nine months of 2005,
employee drivers accounted for 91% and independent contractors 9% of the total
fleet miles, compared with 87% and 13%, respectively, in the compared 2004
period. The Company increased pay for all drivers $0.03 per mile during the
first quarters of 2005 and 2004. In addition, the Company experienced a decrease
in workers' compensation costs during the nine month period of 2005 due to a
decrease in the frequency and severity of workers' compensation claims during
the period. The Company experienced an increase in health insurance expense
during the nine month period of 2005 due to an increase in the frequency and
severity of health insurance claims during the period.
Rent and purchased transportation decreased $5.6 million (19.6%), to $23.0
million in the first nine months of 2005 from $28.6 million in the 2004 period.
This reflects the Company's decreased reliance upon independent contractors.
Rent and purchased transportation for both periods includes amounts paid to
independent contractors under the Company's fuel stability program. The Company
increased the independent contractor base mileage pay by $0.03 per mile on
January 1, 2005.
Operations and maintenance increased $29.5 million (42.8%), to $98.5
million in the nine months ended September 30, 2005 from $69.0 million in the
2004 period. The increase in operations and maintenance is primarily
attributable to increased fuel costs due to the increased percentage of fleet
miles driven by employee drivers and record high fuel prices during the first
nine months of 2005. In addition, fuel efficiency for new tractors purchased
beginning in 2004 is being negatively impacted due to EPA-mandated engine clean
air standards. Fuel cost per mile increased 41.6% over the compared 2004 period
due to a 35.8% increase in fuel cost per gallon and a 7.8% decrease in fuel
efficiency for fleet tractors with EPA-mandated clean air engines.
Insurance and claims increased $1.4 million (13.0%), to $11.8 million in
the first nine months of 2005 from $10.4 million in the compared 2004 period.
The frequency and severity of the claims incurred in the nine months ended
September 30, 2005 exceeded those incurred in the same period of 2004. In
addition, the Company experienced an increase in claims development factors
during the current period. Insurance and claims expense will vary as a
percentage of operating revenue from period to period based on the frequency and
severity of claims incurred in a given period as well as changes in claims
development trends.
Depreciation increased $6.1 million (28.5%), to $27.3 million during the
first nine months of 2005 from $21.2 million in the compared 2004 period. This
increase is attributable to the growth of our company-owned tractor fleet,
decreased reliance on independent contractors, and the replacement of older
model tractors in our fleet. Replacement tractors have a higher cost than the
models being replaced due to EPA-mandated clean air standards. As of September
30, 2005, 53% of the Company's tractor fleet had the EPA clean air engine
compared to 26% at September 30, 2004. For the nine months ended September 30,
2005, implementation of SFAS No. 153 resulted in approximately $70,500 of
additional depreciation.
Other operating expenses, net decreased $.6 million (5.7%), to $10.2
million during the first nine months 2005 from $10.8 million during the compared
2004 period. Other operating expenses, net consist primarily of freight
handling, highway tolls, driver recruiting expenses, and administrative costs.
During the nine months ended September 30, 2005, freight handling and tolls
increased $1.8 million and advertising expense related to driver recruiting
increased $0.4 million. For the nine months ended September 30, 2005 and 2004,
$2.3 million and $0.1 million, respectively, of gain on the disposal of fixed
assets is presented as a reduction of other operating expenses, net. The current
period includes a gain of $1.9 million resulting from the implementation of SFAS
No. 153. These gains were previously deferred as a reduction of the depreciable
basis of new revenue equipment.
The Company's effective tax rate was 35.5% and 35.3% for the nine months
ended September 30, 2005 and 2004, respectively. The increase resulted from an
increase in state income taxes.
12
As a result of the foregoing, the Company's operating ratio (operating
expenses as a percentage of operating revenue) was 81.1% during the first nine
months of 2005 compared with 79.6% during the first nine months of 2004. For the
nine months ended, September 30, 2005 the operating ratio, excluding the effect
of gains from trade-ins of revenue equipment and the related increase in
depreciation expense resulting from the July 1, 2005 implementation of SFAS No.
153 was 81.5%. Net income increased $4.4 million (9.5%), to $50.3 million during
the first nine months of 2005 from $45.9 million during the compared 2004
period.
Liquidity and Capital Resources
The growth of the Company's business has required significant investments
in new revenue equipment. Historically the Company has been debt-free, funding
revenue equipment purchases with cash flow provided by operations. The Company
also obtains tractor capacity by utilizing independent contractors, who provide
a tractor and bear all associated operating and financing expenses. The
Company's primary source of liquidity for the nine months ended September 30,
2005 and 2004 was net cash provided by operating activities of $72.8 million and
$72.9 million, respectively.
Capital expenditures for property and equipment, primarily revenue
equipment net of trade-ins, totaled $28.6 million for the first nine months of
2005 compared to $32.9 million for the same period in 2004. Capital expenditures
during the last three months of 2005 for revenue equipment net of trade-ins are
projected to be approximately $20.1 million.
During the nine months ended September 30, 2005, the Company repurchased
1.2 million shares of its common stock in the amount of $22.4 million. The
Company's Board of Directors authorized a repurchase of up to a maximum of 5.0
million shares of the Company's common stock. At September 30, 2005, the Company
has 3.8 million shares remaining under the current Board authorization. Future
purchases are dependent upon market conditions. In addition, the Company paid
cash dividends of $4.5 million during the first nine months of 2005. The Company
declared a $1.5 million cash dividend in September 2005, payable on October 3,
2005.
Management believes the Company has adequate liquidity to meet its current
and projected needs. The Company will continue to have significant capital
requirements over the long term. Future capital expenditures are expected to be
funded by cash flow provided by operations and from existing cash, cash
equivalents, and short-term investments. The Company ended the quarter with
$276.5 million in cash, cash equivalents, and short-term investments and no
debt. Based on the Company's strong financial position, management believes
outside financing could be obtained, if necessary, to fund capital expenditures.
Factors That May Affect Future Results
The Company's future results may be affected by a number of factors over
which the Company has little or no control. Fuel prices, insurance and claims
costs, liability claims, interest rates, the availability of qualified drivers,
fluctuations in the resale value of revenue equipment, economic and customer
business cycles, and shipping demands are economic factors over which the
Company has little or no control. Significant increases or rapid fluctuations in
fuel prices, interest rates or insurance and claims costs, to the extent not
offset by increases in freight rates, and the resale value of revenue equipment,
could reduce the Company's profitability.
Weakness in the general economy, including a weakness in consumer demand
for goods and services, could adversely affect the Company's customers and the
Company's growth and revenues, if customers reduce their demand for
transportation services. Customers encountering adverse economic conditions
represent a greater potential for loss, and the Company may be required to
increase its reserve for bad debt losses. Weakness in customer demand for the
Company's services or in the general rate environment may also restrain the
Company's ability to increase rates or obtain fuel surcharges.
13
The Company implemented SFAS No. 153 for trade-ins of revenue equipment
beginning on July 1, 2005 resulting in an increased depreciable basis for
revenue equipment acquired through non-monetary exchanges. Gains from the
trade-in of revenue equipment were previously deferred as a reduction of the
depreciable basis of the new asset and are now presented as a reduction of other
operating expenses, net. Future results will be affected by the timing of the
trade-ins of revenue equipment.
Effective October 1, 2002, all newly manufactured truck engines must comply
with the engine emission standards mandated by the Environmental Protection
Agency (EPA). The new engines have resulted in a significant increase in the
cost of new tractors, lower fuel efficiency, and higher maintenance costs. All
new tractor purchases beginning in 2004 include engines that conform to the new
standards. As a result of these purchases, the operating costs, primarily fuel
and depreciation, associated with new replacement tractors have increased.
Additional EPA engine design requirements will take effect in 2007 and are
expected to further reduce fuel efficiency and increase engine prices.
The Federal Motor Carrier Safety Administration revised the federal hours
of service regulations effective October 1, 2005. The most significant change
requires that drivers utilizing the sleeper berth provision must take at least
eight consecutive hours in the sleeper berth during their ten hours off-duty.
Under the previous regulations, drivers were allowed to split their ten hour
off-duty time in the sleeper berth in two periods, provided neither period was
less than two hours. This more restrictive sleeper berth provision may impact
multi-stop shipments and those shipments incurring delays in loading or
unloading. The inability to properly plan on such shipments could have a
negative impact on equipment utilization.
The Company is committed to safety and customer service and thus hires only
experienced and safe drivers. The industry continues to experience a limited
supply of drivers meeting the Company's hiring requirements. The Company is
promoting fleet growth through an industry leading compensation package, a newer
fleet of tractors and trailers, and a continued focus on quality of life and
professionalism. The inability to hire and retain qualified drivers could have a
negative impact on future growth and earnings.
Inflation and Fuel Cost
Most of the Company's operating expenses are inflation-sensitive, with
inflation generally producing increased costs of operations. During the past
three years, the most significant effects of inflation have been on revenue
equipment prices and the compensation paid to the drivers. Innovations in
equipment technology and comfort have resulted in higher tractor prices, and
there has been an industry-wide increase in wages paid to attract and retain
qualified drivers. The Company historically has limited the effects of inflation
through increases in freight rates and certain cost control efforts.
In addition to inflation, fluctuations in fuel prices can affect
profitability. Based on the Department of Energy national average diesel prices,
the cost of fuel increased 40% over the third quarter of 2004 primarily due to
the impact of hurricanes Rita and Katrina. Most of the Company's contracts with
customers contain fuel surcharge provisions. Although the Company historically
has been able to pass through most long-term increases in fuel prices and
operating taxes to customers in the form of surcharges and higher rates,
short-term increases are not fully recovered. Competitive conditions in the
transportation industry, such as lower demand for transportation services, could
affect the Company's ability to obtain rate increases or fuel surcharges. We
expect that high fuel prices will continue to adversely affect our operating
expenses during the last three months of 2005.
Seasonality
The nature of the Company's primary traffic (appliances, automotive parts,
paper products, retail goods, and packaged foodstuffs) causes it to be
distributed with relative uniformity throughout the year. However, seasonal
variations during and after the winter holiday season have historically resulted
in reduced shipments by several industries served. In addition, the Company's
operating expenses historically have been higher during the winter months due to
increased operating costs and higher fuel consumption in colder weather.
14
Concentrations of Credit Risk and Major Customers
The Company's major customers represent the consumer goods, appliances,
food products, and automotive industries. Credit is usually granted to customers
on an unsecured basis. The Company's five largest customers accounted for 32%
and 34% of revenues for the quarters ended September 30, 2005 and 2004,
respectively. The top five largest customers accounted for 32% and 33% of
revenues for the nine months ended September 30, 2005 and 2004, respectively.
Operating revenue from one customer exceeded 10% of total gross revenues in both
the three and nine month periods ended September 30, 2005 and 2004.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company purchases only high quality, liquid investments. Primarily all
investments as of September 30, 2005 have an original maturity or interest reset
date of twelve months or less. Due to the short term nature of the investments,
the Company is exposed to minimal market risk related to its cash equivalents
and investments.
The Company has no debt outstanding as of September 30, 2005, and
therefore, has no market risk related to debt.
As of September 30, 2005, the Company has no derivative financial
instruments to reduce its exposure to fuel price fluctuations.
Item 4. Controls and Procedures
As of the end of the period covered by this report, the Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operations of the Company's
disclosure controls and procedures, and as defined in Exchange Act Rule
15d-15(e). Based upon that evaluation, the Company's Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective in enabling the Company to record, process, summarize,
and report information required to be included in the Company's periodic SEC
filings within the required time period. There have been no changes in the
Company's internal controls over financial reporting that occurred during the
Company's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
15
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to ordinary, routine litigation and
administrative proceedings incidental to its business. None of the
claims would materially impact net income or financial position. These
proceedings primarily involve claims for personal injury and property
damage incurred in connection with the transportation of freight. The
Company maintains insurance to cover liabilities arising from the
transportation of freight for amounts in excess of certain
self-insured retentions.
Item 2. Changes in Securities
The following table provides information on the Company's repurchase of common
stock for the periods indicated.
Period Total Number Average Price Authorization
of Shares Paid per Remaining
Purchased Share
4/1/2005 - 4/30/2005 - - - - 5,000,000
5/1/2005 - 5/31/2005 239,700 $19.09 4,760,300
6/1/2005 - 6/30/2005 894,300 $18.95 3,866,000
7/1/2005 - 7/31/2005 44,500 $19.49 3,821,500
8/1/2005 - 8/31/2005 - - - - 3,821,500
9/1/2005 - 9/30/2005 - - - - 3,821,500
--------- ----------- ------------
Total 1,178,500 $18.99 3,821,500
========= =========== ============
In September 2001, the Board of Directors of Heartland Express, Inc. approved a
Stock Repurchase plan authorizing the repurchase of up to 5.0 million shares of
its common shares. All purchases noted above were made pursuant to that program.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities Exchange Act, as amended.
31.2 Certification of Chief Financial Officer
Pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities Exchange Act, as amended.
32 Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
16
(b) Reports on Form 8-K
1. Report on Form 8-K, dated July 18, 2005, announcing the
Company's financial results for the quarter ended
June 30, 2005.
2. Report on Form 8-K, dated September 9, 2005, announcing the
declaration of a quarterly cash dividend.
3. Report on Form 8-K, dated September 19, 2005, announcing the
Company expansion to the Western United States.
4. Report on Form 8-K, dated September 22, 2005, announcing
plans for a new corporate headquarters.
No other information is required to be filed under Part II of the form.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEARTLAND EXPRESS, INC.
Date: November 7, 2005 BY /s/ JOHN P COSAERT
-------------------
John P. Cosaert
Executive Vice President-Finance,
Chief Financial Officer and Treasurer
(principal accounting and financial officer)
17
Exhibit No. 31.1
Certification
I, Russell A. Gerdin, Chairman, President and Chief Executive Officer of
Heartland Express, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Heartland
Express, Inc. (the "Registrant");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rule
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or cause
such disclosure controls and procedures to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls: and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: November 7, 2005 By /s/ RUSSELL A GERDIN
---------------------
Russell A. Gerdin
Chairman, President and
Chief Executive Officer
18
Exhibit No. 31.2
Certification
I, John P. Cosaert, Executive Vice President, Chief Financial Officer and
Treasurer of Heartland Express, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Heartland
Express, Inc. (the "Registrant");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rule
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;
b) Designed such internal control over financial reporting, or cause
such disclosure controls and procedures to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls: and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: November 7, 2005 By /s/ JOHN P COSAERT
-------------------
John P. Cosaert
Executive Vice President-Finance
Chief Financial Officer and
Treasurer
(principal accounting and
financial officer)
19
Exhibit No. 32
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
AND
CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Russell A. Gerdin, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
Quarterly Report of Heartland Express, Inc., on Form 10-Q for the period ended
September 30, 2005 fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, and that information
contained in such Quarterly Report on Form 10-Q fairly presents in all material
respects the financial condition and results of operations of Heartland Express,
Inc.
Dated: November 7, 2005 By /s/ RUSSELL A GERDIN
--------------------
Russell A. Gerdin
Chairman, President and
Chief Executive Officer
I, John P. Cosaert, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
Report of Heartland Express, Inc., on Form 10-Q for the period ended September
30, 2005 fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, and that information contained in
such Quarterly Report on Form 10-Q fairly presents in all material respects the
financial condition and results of operations of Heartland Express, Inc.
Dated: November 7, 2005 By: /s/ JOHN P COSAERT
------------------
John P. Cosaert
Executive Vice President
and Chief Financial Officer
20