Nevada
|
93-0926999
|
(State
or Other Jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or Organization)
|
Identification
Number)
|
PART
1 – FINANCIAL INFORMATION
|
||
Item
1.
|
Financial
Statements
|
|
Consolidated
Balance Sheets as of September 30, 2009 (unaudited)
|
||
and
December 31, 2008
|
||
Consolidated
Statements of Income for the Three and Nine Months
|
||
Ended
September 30, 2009 and 2008 (unaudited)
|
||
Consolidated
Statement of Stockholders’ Equity for the Nine Months
|
||
Ended
September 30, 2009 (unaudited)
|
||
Consolidated
Statements of Cash Flows for the Nine Months Ended
|
||
September
30, 2009 and 2008 (unaudited)
|
||
Notes
to Consolidated Financial Statements
|
||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition
|
|
and
Results of Operations
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
|
Item
4.
|
Controls
and Procedures
|
|
PART
II - OTHER INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
|
Item
2.
|
Changes
in Securities
|
|
Item
3.
|
Defaults
upon Senior Securities
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
|
Item
5.
|
Other
Information
|
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
|
Signature
|
||
HEARTLAND
EXPRESS, INC.
|
||||||||
AND
SUBSIDIARIES
|
||||||||
(in
thousands, except per share amounts)
|
||||||||
September
30,
|
December
31,
|
|||||||
ASSETS
|
2009
|
2008
|
||||||
CURRENT
ASSETS:
|
(Unaudited)
|
|||||||
Cash
and cash equivalents
|
$
|
41,341
|
$
|
56,651
|
||||
Short-term
investments
|
14,065
|
241
|
||||||
Trade
receivables, net
|
38,063
|
36,803
|
||||||
Prepaid
tires
|
6,800
|
6,449
|
||||||
Other
current assets
|
4,820
|
2,834
|
||||||
Income
tax receivable
|
3,841
|
-
|
||||||
Deferred
income taxes
|
35,499
|
35,650
|
||||||
Total
current assets
|
144,429
|
138,628
|
||||||
PROPERTY
AND EQUIPMENT
|
||||||||
Land
and land improvements
|
17,442
|
17,442
|
||||||
Buildings
|
26,761
|
26,761
|
||||||
Furniture
and fixtures
|
2,269
|
2,269
|
||||||
Shop
and service equipment
|
5,311
|
5,290
|
||||||
Revenue
equipment
|
355,351
|
337,799
|
||||||
407,134
|
389,561
|
|||||||
Less
accumulated depreciation
|
140,959
|
151,881
|
||||||
Property
and equipment, net
|
266,175
|
237,680
|
||||||
GOODWILL
|
4,815
|
4,815
|
||||||
OTHER
ASSETS
|
5,718
|
5,469
|
||||||
LONG-TERM
INVESTMENTS
|
147,489
|
171,122
|
||||||
$
|
568,626
|
$
|
557,714
|
|||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued liabilities
|
$
|
15,526
|
$
|
10,338
|
||||
Compensation
and benefits
|
15,946
|
15,862
|
||||||
Income
taxes payable
|
-
|
452
|
||||||
Insurance
accruals
|
72,810
|
70,546
|
||||||
Other
accruals
|
6,826
|
7,498
|
||||||
Total
current liabilities
|
111,108
|
104,696
|
||||||
LONG-TERM
LIABILITIES
|
||||||||
Income
taxes payable
|
30,944
|
35,264
|
||||||
Deferred
income taxes
|
67,777
|
57,715
|
||||||
Total
long-term liabilities
|
98,721
|
92,979
|
||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Preferred
stock, par value $.01; authorized 5,000
|
||||||||
shares;
none issued
|
-
|
-
|
||||||
Capital
stock; common, $.01 par value; authorized
|
||||||||
395,000
shares; issued and outstanding 90,689 in 2009
and
94,229 in 2008
|
907
|
942
|
||||||
Additional
paid-in capital
|
439
|
439
|
||||||
Retained
earnings
|
362,777
|
367,281
|
||||||
Accumulated
other comprehensive loss
|
(5,326
|
)
|
(8,623
|
)
|
||||
358,797
|
360,039
|
|||||||
$
|
568,626
|
$
|
557,714
|
HEARTLAND
EXPRESS, INC.
|
||||||||||||||||
AND
SUBSIDIARIES
|
||||||||||||||||
(in
thousands, except per share amounts)
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Operating
revenue
|
$ | 113,390 | $ | 169,935 | $ | 345,343 | $ | 483,577 | ||||||||
Operating
expenses:
|
||||||||||||||||
Salaries,
wages, and benefits
|
41,755 | 51,462 | 128,752 | 148,646 | ||||||||||||
Rent
and purchased transportation
|
2,766 | 4,725 | 8,510 | 14,975 | ||||||||||||
Fuel
|
26,454 | 58,393 | 76,098 | 169,386 | ||||||||||||
Operations
and maintenance
|
3,618 | 4,051 | 11,972 | 12,367 | ||||||||||||
Operating
taxes and licenses
|
1,958 | 2,323 | 6,675 | 6,908 | ||||||||||||
Insurance
and claims
|
3,658 | 6,443 | 11,797 | 17,237 | ||||||||||||
Communications
and utilities
|
881 | 856 | 2,783 | 2,792 | ||||||||||||
Depreciation
|
15,468 | 11,504 | 40,443 | 32,580 | ||||||||||||
Other
operating expenses
|
2,743 | 4,456 | 9,332 | 12,928 | ||||||||||||
Gain
on disposal of property and
equipment
|
(8,321 | ) | (2,899 | ) | (14,178 | ) | (3,533 | ) | ||||||||
Total
operating expenses
|
90,980 | 141,314 | 282,184 | 414,286 | ||||||||||||
Operating
income
|
22,410 | 28,621 | 63,159 | 69,291 | ||||||||||||
Interest
income
|
489 | 1,943 | 1,922 | 7,042 | ||||||||||||
Income
before income taxes
|
22,899 | 30,564 | 65,081 | 76,333 | ||||||||||||
Federal
and state income taxes
|
8,392 | 11,841 | 18,818 | 25,715 | ||||||||||||
Net
income
|
$ | 14,507 | $ | 18,723 | $ | 46,263 | $ | 50,618 | ||||||||
Earnings
per share
|
$ | 0.16 | $ | 0.19 | $ | 0.51 | $ | 0.53 | ||||||||
Weighted
average shares outstanding
|
90,689 | 96,158 | 91,281 | 96,177 | ||||||||||||
Dividends
declared per share
|
$ | 0.02 | $ | 0.02 | $ | 0.06 | $ | 0.06 |
HEARTLAND
EXPRESS, INC.
|
||||||||||||||||||||
AND
SUBSIDIARIES
|
||||||||||||||||||||
(in
thousands, except per share amounts)
|
||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
|
Additional
|
Other
|
||||||||||||||||||
Capital Stock, |
Paid-In
|
Retained
|
Compre-hensive
|
|||||||||||||||||
Common
|
Capital
|
Earnings
|
Loss
|
Total
|
||||||||||||||||
Balance,
January 1, 2009
|
$ | 942 | $ | 439 | $ | 367,281 | $ | (8,623 | ) | $ | 360,039 | |||||||||
Comprehensive
income:
|
||||||||||||||||||||
Net
income
|
- | - | 46,263 | - | 46,263 | |||||||||||||||
Unrealized
gain on
available-for-sale
securities, net
of tax
|
- | - | - | 3,297 | 3,297 | |||||||||||||||
Total
comprehensive income
|
49,560 | |||||||||||||||||||
Dividends
on common stock, $0.06 per
share
|
- | - | (5,442 | ) | - | (5,442 | ) | |||||||||||||
Stock
repurchase
|
(35 | ) | - | (45,325 | ) | - | (45,360 | ) | ||||||||||||
Balance,
September 30, 2009
|
$ | 907 | $ | 439 | $ | 362,777 | $ | (5,326 | ) | $ | 358,797 |
HEARTLAND
EXPRESS, INC.
|
|||||||
AND
SUBSIDIARIES
|
|||||||
(in
thousands)
|
|||||||
(Unaudited)
|
|||||||
Nine
months ended
|
|||||||
September
30,
|
|||||||
2009
|
2008
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
income
|
$
|
46,263
|
$
|
50,618
|
|||
Adjustments
to reconcile net income to net cash provided
by
operating activities:
|
|||||||
Depreciation
|
40,443
|
32,580
|
|||||
Deferred
income taxes
|
10,213
|
(891
|
)
|
||||
Gain
on disposal of property and equipment
|
(14,178
|
)
|
(3,533
|
)
|
|||
Changes
in certain working capital items:
|
|||||||
Trade
receivables
|
(1,260
|
)
|
(2,810
|
)
|
|||
Prepaid
expenses and other current assets
|
(2,128
|
)
|
(2,843
|
)
|
|||
Accounts
payable, accrued liabilities, and accrued expenses
|
813
|
11,631
|
|||||
Accrued
income taxes
|
(8,613
|
)
|
(2,986
|
)
|
|||
Net
cash provided by operating activities
|
71,553
|
81,766
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Proceeds
from sale of property and equipment
|
11
|
1,833
|
|||||
Purchases
of property and equipment, net of trades
|
(50,744
|
)
|
(4,357
|
)
|
|||
Net
sale (purchases) of investments
|
13,106
|
(3,100
|
)
|
||||
Change
in other assets
|
(249
|
)
|
126
|
||||
Net
cash used in investing activities
|
(37,876
|
)
|
(5,498
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Cash
dividend
|
(3,627
|
)
|
(5,786
|
)
|
|||
Stock
repurchase
|
(45,360
|
)
|
(10,622
|
)
|
|||
Net
cash used in financing activities
|
(48,987
|
)
|
(16,408
|
)
|
|||
Net
(decrease) increase in cash and cash equivalents
|
(15,310
|
)
|
59,860
|
||||
CASH
AND CASH EQUIVALENTS
|
|||||||
Beginning
of period
|
56,651
|
7,960
|
|||||
End
of period
|
$
|
41,341
|
$
|
67,820
|
|||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW
INFORMATION
|
|||||||
Cash
paid during the period for income taxes, net
|
$
|
17,219
|
$
|
29,583
|
|||
Noncash
investing and financing activities:
|
|||||||
Fair
value of revenue equipment traded
|
$
|
38,769
|
$
|
7,297
|
|||
Purchased
property and equipment in accounts payable
|
$
|
6,905
|
$
|
13,245
|
|||
Common
stock dividends declared in accounts payable
|
$
|
1,830
|
$
|
1,939
|
·
|
Current
market activity and the lack of severity or extended decline do not
warrant such action at this time.
|
·
|
Since
auction failures began in February 2008, the Company has received
approximately $41.0 million as the result of partial calls by issuers,
including $9.0 million received in October 2009. The Company
received par value for the amount of these calls plus accrued
interest.
|
·
|
Based
on the Company’s financial operating results, operating cash flows and
debt free balance sheet, the Company has the ability and intent to hold
such securities until recovery of the unrealized
loss.
|
·
|
There
have not been any significant changes in collateralization and ratings of
the underlying securities since the first failed auction. The
Company continues to hold 95% of the auction rate security portfolio in
senior positions of AAA (or equivalent) rated
securities.
|
·
|
The
Company is aware of recent increases in default rates of the underlying
student loans that are the assets to the trusts issuing the auction rate
security debt, which management believes is due to current overall
negative economic conditions. As the underlying loans are
guaranteed by the U.S. Government, defaults of the loans accelerate
payment of the underlying loan to the trust. As trusts are no
longer recycling repayment money for new loans, accelerated repayment of
any student loan to the underlying trust would increase cash flows of the
trust which would potentially result in partial calls by the underlying
trusts.
|
·
|
Currently,
there is legislative pressure to provide liquidity in student loan
investments, providing liquidity to state student loan agencies, to
continue to provide financial assistance to eligible students to enable
higher educations as well as improve overall liquidity in the student loan
auction rate market. This has the potential to impact existing
securities with underlying student
loans.
|
·
|
All
of the auction rate securities are held with financial institutions that
have agreed in principle to settlement agreements with various regulatory
agencies to provide liquidity. Although the principles of the
respective settlement agreements focus mostly on small investors
(generally companies and individual investors with auction rate security
assets less than $25 million) the respective settlements state the
financial institutions will work with issuers and other interested parties
to use their best efforts to provide liquidity solutions to companies not
specifically covered by the principle terms of the respective settlements
by the end of 2009 in certain settlement agreements. Regulatory
agencies continue to monitor the progress of the respective financial
institutions towards this goal.
|
Level
3 Fair Value Measurements
|
Available-for-sale
debt
securities
|
|||
(in
thousands)
|
||||
Balance,
December 31, 2008
|
$ | 171,122 | ||
Purchases,
sales, issuances, and settlements
|
(13,449 | ) | ||
Transfers
in to (out of) Level 3
|
- | |||
Total
gains or losses (realized/unrealized):
|
||||
Included
in earnings
|
- | |||
Included
in other comprehensive loss
|
3,297 | |||
Balance,
September 30, 2009
|
$ | 160,970 | ||
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
September
30, 2009:
|
(in
thousands)
|
|||||||||||||||
Current:
|
||||||||||||||||
Municipal
bonds
|
$ | 584 | - | $ | - | $ | 584 | |||||||||
Auction
rate student loan educational
bonds
|
13,500 | - | 19 | 13,481 | ||||||||||||
$ | 14,084 | - | $ | 19 | $ | 14,065 | ||||||||||
Long-term
|
||||||||||||||||
Auction
rate student loan
educational
bonds
|
153,050 | - | 5,561 | 147,489 | ||||||||||||
$ | 167,134 | - | $ | 5,580 | $ | 161,554 | ||||||||||
December
31, 2008:
|
||||||||||||||||
Current:
|
||||||||||||||||
Municipal
bonds
|
$ | 241 | - | $ | - | $ | 241 | |||||||||
Long-term
|
||||||||||||||||
Auction
rate student loan educational
bonds
|
180,000 | - | 8,878 | 171,122 | ||||||||||||
$ | 180,241 | - | $ | 8,878 | $ | 171,363 |
Derivatives
in SFAS 133 Cash Flow Hedging Relationship
|
Amount
of Gain or (Loss) Recognized in OCI on Derivative (Effective
Portion)
|
Location
of Gain or (Loss) Reclassified from Accumulated OCI into income (Effective
Portion)
|
Amount
of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective
Portion)
|
Location
of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion
and Amount Excluded from Effectiveness Testing)
|
Amount
of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion
and Amount Excluded from Effectiveness Testing)
|
|||||||||||
(000’s) | ||||||||||||||||
Fuel
contract
|
$ | - |
Fuel
expense
|
$ | - |
Fuel
expense
|
$ | 561 |
Nine
Months Ended
September
30,
|
||||||||
2009
|
2008
|
|||||||
Shares
of Common Stock Repurchased (in millions)
|
3.5 | 0.8 | ||||||
Value
of stock repurchased (in millions)
|
$ | 45.4 | $ | 10.6 |
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||||
Operating
revenue
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
Operating
expenses:
|
||||||||||||||||||
Salaries,
wages, and benefits
|
36.8 | % | 30.3 | % | 37.3 | % | 30.7 | % | ||||||||||
Rent
and purchased transportation
|
2.4 | 2.8 | 2.5 | 3.1 | ||||||||||||||
Fuel
|
23.3 | 34.4 | 22.0 | 35.0 | ||||||||||||||
Operations
and maintenance
|
3.2 | 2.4 | 3.5 | 2.6 | ||||||||||||||
Operating
taxes and licenses
|
1.7 | 1.4 | 1.9 | 1.4 | ||||||||||||||
Insurance
and claims
|
3.2 | 3.8 | 3.4 | 3.6 | ||||||||||||||
Communications
and utilities
|
0.8 | 0.5 | 0.8 | 0.6 | ||||||||||||||
Depreciation
|
13.6 | 6.8 | 11.7 | 6.7 | ||||||||||||||
Other
operating expenses
|
2.4 | 2.6 | 2.7 | 2.7 | ||||||||||||||
Gain
on disposal of property and equipment
|
(7.3 | ) | (1.7 | ) | (4.1 | ) | (0.7 | ) | ||||||||||
Total
operating expenses
|
80.2 | % | 83.2 | % | 81.7 | % | 85.7 | % | ||||||||||
Operating
income
|
|
19.8 | % | 16.8 | % | 18.3 | % | 14.3 | % | |||||||||
Interest
income
|
0.4 | 1.1 | 0.6 | 1.5 | ||||||||||||||
Income
before income taxes
|
20.2 | % | 18.0 | % | 18.8 | % | 15.8 | % | ||||||||||
Federal
and state income taxes
|
7.4 | 7.0 | 5.4 | 5.3 | ||||||||||||||
Net
income
|
12.8 | % | 11.0 | % | 13.4 | % | 10.5 | % |
·
|
Current
market activity and the lack of severity or extended decline do not
warrant such action at this time.
|
·
|
Since
auction failures began in February 2008, the Company has received
approximately $41.0 million as the result of partial calls by issuers,
including $9.0 million received in October 2009. The Company
received par value for the amount of these calls plus accrued
interest.
|
·
|
Based
on the Company’s financial operating results, operating cash flows and
debt free balance sheet, the Company has the ability and intent to hold
such securities until recovery of the unrealized
loss.
|
·
|
There
have not been any significant changes in collateralization and ratings of
the underlying securities since the first failed auction. The
Company continues to hold 95% of the auction rate security portfolio in
senior positions of AAA (or equivalent) rated
securities.
|
·
|
The
Company is aware of recent increases in default rates of the underlying
student loans that are the assets to the trusts issuing the auction rate
security debt, which management believes is due to current overall
negative economic conditions. As the underlying loans are
guaranteed by the U.S. Government, defaults of the loans accelerate
payment of the underlying loan to the trust. As trusts are no
longer recycling repayment money for new loans, accelerated repayment of
any student loan to the underlying trust would increase cash flows of the
trust which would potentially result in partial calls by the underlying
trusts.
|
·
|
Currently,
there is legislative pressure to provide liquidity in student loan
investments, providing liquidity to state student loan agencies, to
continue to provide financial assistance to eligible students to enable
higher educations as well as improve overall liquidity in the student loan
auction rate market. This has the potential to impact existing
securities with underlying student
loans.
|
·
|
All
of the auction rate securities are held with financial institutions that
have agreed in principle to settlement agreements with various regulatory
agencies to provide liquidity. Although the principles of the
respective settlement agreements focus mostly on small investors
(generally companies and individual investors with auction rate security
assets less than $25 million) the respective settlements state the
financial institutions will work with issuers and other interested parties
to use their best efforts to provide liquidity solutions to companies not
specifically covered by the principle terms of the respective settlements
by the end of 2009 in certain settlement agreements. Regulatory
agencies continue to monitor the progress of the respective financial
institutions towards this goal.
|
·
|
Our
business is subject to general economic and business factors that are
largely out of our control, any of which could have a materially adverse
effect on our operating results.
|
·
|
Our
growth may not continue at historic
rates.
|
·
|
Increased
prices, reduced productivity, and restricted availability of new revenue
equipment may adversely affect our earnings and cash
flows.
|
·
|
If
fuel prices increase significantly, our results of operations could be
adversely affected.
|
·
|
Difficulty
in driver and independent contractor recruitment and retention may have a
materially adverse effect on our
business.
|
·
|
We
operate in a highly regulated industry and changes in regulations could
have a materially adverse effect on our
business.
|
·
|
We
operate in a highly regulated industry, and increased costs of compliance
with, or liability for violation of, existing or future regulations could
have a materially adverse effect on our
business.
|
·
|
Our
operations are subject to various environmental laws and regulations, the
violations of which could result in substantial fines or
penalties.
|
·
|
We
may not make acquisitions in the future, or if we do, we may not be
successful in integrating the acquired company, either of which could have
a materially adverse effect on our
business.
|
·
|
If
we are unable to retain our key employees or find, develop, and retain
service center managers, our business, financial condition, and results of
operations could be adversely
affected.
|
·
|
We
are highly dependent on a few major customers, the loss of one or more of
which could have a materially adverse effect on our
business.
|
·
|
If
the estimated fair value of auction rate securities continues to remain
below cost or if the fair value decreases significantly from the current
fair value, we may be required to record an other-than-temporary
impairment of these investments, through a charge in the consolidated
statement of income, which could have a materially adverse effect on our
earnings.
|
·
|
Seasonality
and the impact of weather affect our operations
profitability.
|
·
|
Ongoing
insurance and claims expenses could significantly reduce our
earnings.
|
·
|
We
are dependent on computer and communications systems, and a systems
failure could cause a significant disruption to our
business.
|
Item
1. Legal
Proceedings
|
(a)
|
Exhibit
|
|
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.
|
|
32.1 Certification of Chief
Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2 Certification of Chief
Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.
|
(b)
|
Reports
on Form 8-K
|
1.
|
Report
on Form 8-K, dated July 15, 2009, announcing the Company’s financial
results for the quarter ended June 30,
2009.
|
2.
|
Report
on Form 8-K, dated September 14, 2009, announcing the declaration of a
quarterly cash dividend.
|