[X]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
For
the fiscal year ended December 31, 2005
|
|
[
]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
For
the transition period
from
to
|
Nevada
|
88-0320154
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
|
400
Birmingham Hwy.
|
||
Chattanooga,
TN
|
37419
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code:
|
423-821-1212
|
Securities
registered pursuant to Section 12(b) of the Act:
|
None
|
Securities
registered pursuant to Section 12(g) of the Act:
|
$0.01
Par Value Class A Common Stock
|
(Title of class)
|
Part
I
|
|||
Item
1.
|
Business
|
||
Item
1A.
|
Risk
Factors
|
||
Item
1B.
|
Unresolved
Staff Comments
|
||
Item
2.
|
Properties
|
||
Item
3.
|
Legal
Proceedings
|
||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
||
Part
II
|
|||
Item
5.
|
Market
for Registrant's Common Equity, Related Stockholder Matters and
Issuer
Purchases of Equity Securities
|
||
Item
6.
|
Selected
Financial and Operating Data
|
||
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
||
Item
7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
||
Item
8.
|
Financial
Statements and Supplementary Data
|
||
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
||
Item
9A.
|
Controls
and Procedures
|
||
Item
9B.
|
Other
Information
|
||
Part
III
|
|||
Item
10.
|
Directors
and Executive Officers of the Registrant
|
||
Item
11.
|
Executive
Compensation
|
||
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management
|
||
Item
13.
|
Certain
Relationships and Related Transactions
|
||
Item
14.
|
Principal
Accounting Fees and Services
|
||
Part
IV
|
|||
Item
15.
|
Exhibits,
Financial Statement Schedules
|
||
Signatures
|
|||
Reports
of Independent Registered Public Accounting Firm
|
|||
Financial
Data
|
|||
Consolidated
Balance Sheets
|
|||
Consolidated
Statements of Operations
|
|||
Consolidated
Statements of Stockholders' Equity and Comprehensive Income
(Loss)
|
|||
Consolidated
Statements of Cash Flows
|
|||
Notes
to Consolidated Financial Statements
|
•
|
Greater
emphasis and ownership of driver management leading to better
retention;
|
•
|
Better
and faster information about our business, together with fast-acting
smaller service offerings;
|
•
|
More
responsiveness to customers;
|
•
|
More
attractive lanes for drivers; and
|
•
|
More
emphasis on lanes with most of the freight that travels by
truck.
|
•
|
Developing
depth at the General Manager level;
|
•
|
Becoming
accustomed to distributed decision making;
|
•
|
Coordination
of loads, rates, bids, customers, and drivers among
regions;
|
•
|
Headcount
while regions develop and over-the-road remains; and
|
•
|
Increasing
the percentage of transaction-intense freight that requires more
frequent
communications, customer appointments, equipment turns, driver home
time,
and billing.
|
•
|
Expedited
team service. Focused attention on teams has produced a substantial
increase in average length of haul, average miles per tractor, and
average
freight revenue per tractor. As a result of greater productivity,
the
previous decline in team-driven tractors has
stabilized.
|
•
|
Refrigerated
service. Prioritizing certain lanes and the allocation of teams to
this
service offering increased average length of haul, average miles
per
tractor, and average revenue per tractor. In addition, we are increasing
the allocation of tractors to this service offering.
|
•
|
Dedicated
service. There has been essentially no change in Dedicated service
because
of the longer contract duration. In addition, we are continuing to
evaluate individual candidates to manage this business.
|
•
|
Regional
solo-driver service. This service offering is our largest and is
in the
beginning stages of significant changes in its operating lanes and
territories, freight mix, personnel, and policies and procedures.
Over the
long term we expect these changes to result in a shorter average
length of
haul and an increase in average freight revenue per tractor. However,
interim results may fluctuate substantially. We expect to allocate
trucks
to other service offerings until the operating results of this service
offering improve and become more
consistent.
|
•
|
Expedited
team service offering. At December 31, 2005, we operated
approximately 910 tractors in our Expedited team service offering.
Our
teams generally operate over distances ranging from 1,000 to 2,000
miles
and had an average length of haul 1,525 miles in the fourth quarter
of
2005. Our expedited teams offer service standards such as coast-to-coast
delivery in 72 hours, meeting delivery appointments within
15 minutes, and delivering 99% of loads on-time. We believe our
expedited teams offer greater speed and reliability than rail, rail-truck
intermodal, and solo-driver competitors at a lower cost than air
freight.
The main advantage to us of expedited team service is high revenue
per
tractor. The main challenges are managing the mileage on the trucks
to
avoid decreasing the resale value and recruiting and pairing two
drivers,
particularly during driver shortages, which tend to coincide with
strong
economic activity that increases demand.
|
•
|
Dedicated
service offering. At December 31, 2005, we operated approximately 609
tractors in our Dedicated service offering. These tractors operate
for a
single customer or on a defined route and frequently have contractually
guaranteed revenue. This part of our business has grown over the
past few
years as customers have desired committed capacity, and we have expanded
our participation in their design, development, and execution of
supply
chain solutions. We believe the advantages of dedicated service include
protection against rate pressure during the term of the agreement
and
predictable equipment utilization and routes, which assist with driver
retention, asset productivity, and management planning. We believe
the
challenges of dedicated fleets include limited ability to react to
certain
cost changes and to increase rates to take advantage of market
shifts.
|
•
|
Refrigerated
service offering. At December 31, 2005, we operated approximately
765 tractors in our Refrigerated service offering, which consists of
our refrigerated trucks in operation under the Covenant Transport
name and
the Southern Refrigerated Transport, or SRT, name. Our Refrigerated
service offering includes the transport of fresh produce from the
West
Coast to the Midwest or Southeast and return with either refrigerated
or
general commodities and a growing presence within traditional food
and
beverage shippers. We believe the advantages of refrigerated
service include less cyclical freight patterns and a growing
population that requires food products. We believe the challenges
of
refrigerated service include more expensive trailers, the perishable
nature of commodities, and the fuel and maintenance expense associated
with refrigeration units.
|
•
|
Regional
solo-driver service offering. At December 31, 2005, we operated
approximately 1,187 tractors in our Regional solo-driver service
offering.
The average length of haul was 655 miles in the fourth quarter of
2005. We
expect this to decrease over time as our business gravitates toward
movements with lengths of haul closer to 500-600 miles. According
to
industry sources, 70-80% of the freight transported in the United
States
moves in distances of less than 500 miles. We expect most freight
to
continue to move in regional lengths of haul as manufacturers, retailers,
and distributors move elements of their supply chains into closer
proximity. We believe the advantages of regional truckload service
include
access to large freight volumes, generally higher rates per mile,
and
driver-friendly routes. We believe the disadvantages of regional
truckload
service include lower equipment utilization and a greater percentage
of
non-revenue miles than in long-haul lanes. We are in the process
of
dividing our approximately 1,200 regional truck fleet into sub-regions,
with the goal of enabling each sub-region to operate with a separate
General Manager, separate accountability and responsibility, and
separate
financial statements. This process requires intricate planning, and
we
expect it will take a year or two to complete.
|
Average
Length of Haul. Our average length of haul has decreased significantly
as
we have increased the use of solo-driver tractors and increased our
focus
on regional markets. Shorter lengths of haul frequently involve higher
rates per mile from customers, fewer miles per truck, and a greater
percentage of non-revenue miles caused by re-positioning of
equipment.
|
Average
Freight Revenue Per Total Mile. Our average freight revenue per mile
has
increased sharply. Average freight revenue per loaded mile has increased
approximately 23% since 2000, while non-revenue miles have also increased.
This led to a 21.4% increase in average freight revenue per total
mile.
All freight revenue per mile numbers exclude fuel surcharge
revenue.
|
Average
Miles Per Tractor. Our average miles per tractor have decreased because
of
a lower percentage of teams in our fleet and a shortening of our
average
length of haul.
|
Average
Freight Revenue per Tractor per Week. We use average freight revenue
per
tractor per week (which excludes fuel surcharges) as our main measure
of
asset productivity. This operating metric takes into account the
effects
of freight rates, non-revenue miles, and miles per tractor. In addition,
because we calculate average freight revenue per tractor using all
of our
trucks, it takes into account the percentage of our fleet that is
unproductive due to lack of drivers, repairs, and other
factors.
|
•
|
Developing
management depth to oversee the service offerings and also manage
regional
terminals within the service offerings;
|
•
|
Adapting
our personnel to new strategies, policies, and procedures, including
more
distributed decision making;
|
•
|
Maintaining
customer relationships and freight volumes while changing routes,
pricing,
and other aspects of our operations;
|
•
|
Maintaining
a sufficient number of qualified drivers while changing routes, policies,
procedures, and management structures;
|
•
|
Controlling
headcount and expenses generally during a transition that may entail
a
period of duplication of some functions; and
|
•
|
Improving
or eliminating processes, functions, services, or other items that
are
identified as substandard.
|
•
|
We
compete with many other truckload carriers of varying sizes and,
to a
lesser extent, with less-than-truckload carriers, railroads, and
other
transportation companies, many of which have more equipment and greater
capital resources than we do.
|
•
|
Many
of our competitors periodically reduce their freight rates to gain
business, especially during times of reduced growth rates in the
economy,
which may limit our ability to maintain or increase freight rates
or
maintain significant growth in our business.
|
•
|
Many
of our customers are other transportation companies, and they may
decide
to transport their own freight.
|
•
|
Many
customers reduce the number of carriers they use by selecting "core
carriers" as approved service providers, and in some instances we
may not
be selected.
|
•
|
Many
customers periodically accept bids from multiple carriers for their
shipping needs, and this process may depress freight rates or result
in
the loss of some business to competitors.
|
•
|
The
trend toward consolidation in the trucking industry may create other
large
carriers with greater financial resources and other competitive advantages
relating to their size.
|
•
|
Advances
in technology require increased investments to remain competitive,
and our
customers may not be willing to accept higher freight rates to cover
the
cost of these investments.
|
•
|
Competition
from non-asset-based logistics and freight brokerage companies may
adversely affect our customer relationships and freight rates.
|
•
|
Economies
of scale that may be passed on to smaller carriers by procurement
aggregation providers may improve their ability to compete with us.
|
•
|
Our
vulnerability to adverse economic conditions and competitive pressures
is
heightened;
|
•
|
We
will continue to be required to dedicate a substantial portion of
our cash
flows from operations to operating lease payments and repayment of
debt,
limiting the availability of cash for other purposes;
|
•
|
Our
flexibility in planning for, or reacting to, changes in our business
and
industry will be limited;
|
•
|
Our
profitability is sensitive to fluctuations in interest rates because
some
of our debt obligations are subject to variable interest rates, and
future
borrowings and lease financing arrangements will be affected by any
such
fluctuations;
|
•
|
Our
ability to obtain additional financing in the future for working
capital,
capital expenditures, acquisitions, or other purposes may be limited;
and
|
•
|
We
may be required to issue additional equity securities to raise funds,
which would dilute the ownership position of our
stockholders.
|
Terminal
Locations
|
Maintenance
|
Recruiting/
Orientation
|
Sales
|
Ownership
|
Chattanooga,
Tennessee
|
x
|
x
|
x
|
Owned
|
Dalton,
Georgia
|
x
|
Owned
|
||
Charlotte,
North Carolina
|
Leased
|
|||
Dayton,
Ohio
|
Leased
|
|||
Sayreville,
New Jersey
|
Leased
|
|||
Indianapolis,
Indiana
|
Leased
|
|||
Ashdown,
Arkansas
|
x
|
x
|
x
|
Owned
|
Little
Rock, Arkansas
|
Owned
|
|||
Oklahoma
City, Oklahoma
|
Owned
|
|||
Hutchins,
Texas
|
x
|
x
|
Owned
|
|
El
Paso, Texas
|
x
|
Leased
|
||
Columbus,
Ohio
|
Leased
|
|||
French
Camp, California
|
Leased
|
|||
Fontana,
California
|
x
|
Leased
|
||
Long
Beach, California
|
Owned
|
|||
Pomona,
California
|
x
|
Owned
|
Period
|
High
|
Low
|
|
Calendar
Year 2004
|
|||
1st
Quarter
|
$20.66
|
$16.50
|
|
2nd
Quarter
|
$19.21
|
$15.08
|
|
3rd
Quarter
|
$20.60
|
$16.28
|
|
4th
Quarter
|
$20.97
|
$16.50
|
|
Calendar
Year 2005
|
|||
1st
Quarter
|
$21.57
|
$16.05
|
|
2nd
Quarter
|
$18.13
|
$11.64
|
|
3rd
Quarter
|
$14.94
|
$11.91
|
|
4th
Quarter
|
$14.40
|
$9.80
|
(In
thousands, except per share and operating data
amounts)
|
||||||||||||||||
Years
Ended December 31,
|
||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||||
Statement
of Operations Data:
|
||||||||||||||||
Freight
revenue
|
$
|
555,428
|
$
|
558,453
|
$
|
555,678
|
$
|
550,603
|
$
|
554,132
|
||||||
Fuel
surcharges
|
87,626
|
45,169
|
26,779
|
13,815
|
19,489
|
|||||||||||
Total
revenue
|
$
|
643,054
|
$
|
603,622
|
$
|
582,457
|
$
|
564,418
|
$
|
573,621
|
||||||
Operating
expenses:
|
||||||||||||||||
Salaries,
wages, and related expenses (1)
|
242,157
|
225,778
|
220,665
|
227,332
|
244,849
|
|||||||||||
Fuel
expense
|
170,582
|
127,723
|
109,231
|
96,332
|
103,894
|
|||||||||||
Operations
and maintenance
|
33,625
|
30,555
|
39,822
|
39,625
|
39,410
|
|||||||||||
Revenue
equipment rentals and
purchased
transportation
|
61,701
|
69,928
|
69,997
|
59,265
|
65,104
|
|||||||||||
Operating
taxes and licenses
|
13,431
|
14,217
|
14,354
|
13,934
|
14,358
|
|||||||||||
Insurance
and claims expense (2)
|
41,034
|
54,847
|
35,454
|
31,761
|
27,838
|
|||||||||||
Communications
and utilities
|
6,579
|
6,517
|
7,177
|
7,021
|
7,439
|
|||||||||||
General
supplies and expenses
|
17,778
|
15,104
|
14,495
|
14,677
|
14,468
|
|||||||||||
Depreciation
and amortization, including
gains
(losses) on disposition of
equipment
and impairment of assets (3)
|
39,101
|
45,001
|
43,041
|
49,497
|
56,324
|
|||||||||||
Total
operating expenses
|
625,988
|
589,670
|
554,236
|
539,444
|
573,684
|
|||||||||||
Operating
income (loss)
|
17,066
|
13,952
|
28,221
|
24,974
|
(63
|
)
|
||||||||||
Other
(income) expense:
|
||||||||||||||||
Interest
expense
|
4,203
|
3,098
|
2,332
|
3,542
|
7,855
|
|||||||||||
Interest
income
|
(273
|
)
|
(48
|
)
|
(114
|
)
|
(63
|
)
|
(328
|
)
|
||||||
Other
|
(538
|
)
|
(926
|
)
|
(468
|
)
|
916
|
799
|
||||||||
Loss
on early extinguishment of debt
|
-
|
-
|
-
|
1,434
|
-
|
|||||||||||
Other
expenses, net
|
3,392
|
2,124
|
1,750
|
5,829
|
8,326
|
|||||||||||
Income
(loss) before income taxes and
cumulative
effect of change in
accounting
principle
|
13,674
|
11,828
|
26,471
|
19,145
|
(8,389
|
)
|
||||||||||
Income
tax expense (benefit)
|
8,003
|
8,452
|
14,315
|
10,871
|
(1,727
|
)
|
||||||||||
Income
(loss) before cumulative effect of
change
in accounting principle
|
5,671
|
3,376
|
12,156
|
8,274
|
(6,662
|
)
|
||||||||||
Cumulative
effect of change in accounting
principle,
net of tax (4)
|
(485
|
) |
-
|
-
|
-
|
-
|
||||||||||
Net
income (loss)
|
$
|
5,186
|
$
|
3,376
|
$
|
12,156
|
$
|
8,274
|
$
|
(6,662
|
)
|
|||||
(1)
|
Includes
a $1,500 pre-tax increase to workers' compensation claims reserve in
2004.
|
(2)
|
Includes
an $18,000 pre-tax increase to casualty claims reserve in
2004.
|
(3)
|
Includes
a $3,300 and a $15,400 pre-tax impairment charge related to tractors
in
2002 and 2001, respectively.
|
(4)
|
Includes
a $485 adjustment, net of tax, related to the adoption of FIN 47,
Accounting
for Conditional Asset Retirement Obligations.
|
Basic
earnings (loss) per share before
cumulative
effect of change in
accounting
principle:
|
$
|
0.40
|
$
|
0.23
|
$
|
0.84
|
$
|
0.58
|
$
|
(0.48
|
)
|
|||||
Cumulative
effect of change in accounting
principle
|
|
(0.03
|
)
|
|
-
|
-
|
-
|
-
|
||||||||
Basic
earnings (loss) per share:
|
$
|
0.37
|
$
|
0.23
|
$
|
0.84
|
$
|
0.58
|
$
|
(0.48
|
)
|
|||||
Diluted
earnings (loss) per share before
cumulative
effect of change in
accounting
principle:
|
$
|
0.40
|
$
|
0.23
|
$
|
0.83
|
$
|
0.57
|
$
|
(0.48
|
)
|
|||||
Cumulative
effect of change in accounting
principle
|
|
(0.03
|
) |
|
-
|
-
|
-
|
-
|
||||||||
Diluted
earnings (loss) per share:
|
$
|
0.37
|
$
|
0.23
|
$
|
0.83
|
$
|
0.57
|
$
|
(0.48
|
)
|
|||||
Basic
weighted average common shares
outstanding
|
14,175
|
14,641
|
14,467
|
14,223
|
13,987
|
|||||||||||
Diluted
weighted average common shares
outstanding
|
14,270
|
14,833
|
14,709
|
14,519
|
13,987
|
Years
Ended December 31,
|
||||||||||||||||
Selected
Balance Sheet Data:
|
2005
|
2004
|
2003
|
2002
|
2001
|
|||||||||||
Net
property and equipment
|
$
|
214,362
|
$
|
209,422
|
$
|
221,734
|
$
|
238,488
|
$
|
231,536
|
||||||
Total
assets
|
371,261
|
357,383
|
354,281
|
361,541
|
349,782
|
|||||||||||
Long-term
debt, less current maturities
|
33,000
|
8,013
|
12,000
|
1,300
|
29,000
|
|||||||||||
Total
stockholders' equity
|
189,724
|
195,699
|
192,142
|
175,588
|
161,902
|
|||||||||||
Selected
Operating Data:
|
||||||||||||||||
Average
freight revenue per loaded mile (1)
|
$
|
1.51
|
$
|
1.40
|
$
|
1.27
|
$
|
1.24
|
$
|
1.23
|
||||||
Average
freight revenue per total mile (1)
|
$
|
1.36
|
$
|
1.27
|
$
|
1.17
|
$
|
1.15
|
$
|
1.14
|
||||||
Average
freight revenue per tractor per week
(1)
|
$
|
3,013
|
$
|
2,995
|
$
|
2,897
|
$
|
2,870
|
$
|
2,803
|
||||||
Average
miles per tractor per year
|
115,765
|
122,899
|
129,656
|
129,906
|
127,714
|
|||||||||||
Weighted
average tractors for year (2)
|
3,535
|
3,558
|
3,667
|
3,680
|
3,791
|
|||||||||||
Total
tractors at end of period (2)
|
3,471
|
3,476
|
3,752
|
3,738
|
3,700
|
|||||||||||
Total
trailers at end of period (3)
|
8,565
|
8,867
|
9,255
|
7,485
|
7,702
|
(1)
|
Excludes
fuel surcharge revenue.
|
(2)
|
Includes
monthly rental tractors and tractors provided by
owner-operators.
|
(3)
|
Excludes
monthly rental trailers.
|
Quarter
ended
|
March
31
|
June
30
|
September
30
|
December
31
|
Average
freight revenue per tractor per week
|
$2,769
|
$2,961
|
$3,067
|
$3,254
|
Diluted
earnings (loss) per share
|
$(0.04)
|
$0.05
|
$0.09
|
$0.28
|
•
|
Expedited
team service. Focused attention on teams has produced a substantial
increase in average length of haul, average miles per tractor, and
average
freight revenue per tractor. As a result of greater productivity,
the
previous decline in team-driven tractors has
stabilized.
|
•
|
Refrigerated
service. Prioritizing certain lanes and the allocation of teams to
this
service offering increased average length of haul, average miles
per
tractor, and average revenue per tractor. In addition, we are increasing
the allocation of tractors to this service offering.
|
•
|
Dedicated
service. There has been essentially no change in Dedicated service
because
of the longer contract duration. In addition, we are continuing to
evaluate individual candidates to manage this business.
|
•
|
Regional
solo-driver service. This service offering is our largest and is
in the
beginning stages of significant changes in its operating lanes and
territories, freight mix, personnel, and policies and procedures.
Over the
long term we expect these changes to result in a shorter average
length of
haul and an increase in average freight revenue per tractor. However,
interim results may fluctuate substantially. We expect to allocate
trucks
to other service offerings until the operating results of this service
offering improve and become more
consistent.
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||||||
Total
revenue
|
100.0%
|
100.0%
|
100.0%
|
Freight
revenue
(1)
|
100.0%
|
100.0%
|
100.0%
|
|||||||||||||||
Operating
expenses:
|
Operating
expenses:
|
|||||||||||||||||||||
Salaries,
wages, and related
expenses
|
37.7
|
37.4
|
37.9
|
Salaries,
wages, and related
expenses
|
43.6
|
40.4
|
39.7
|
|||||||||||||||
Fuel
expense
|
26.5
|
21.2
|
18.8
|
Fuel expense (1)
|
|
14.9
|
14.8
|
14.8
|
||||||||||||||
Operations
and maintenance
|
5.2
|
5.1
|
6.8
|
Operations and maintenance
|
6.1
|
5.5
|
7.2
|
|||||||||||||||
Revenue
equipment rentals
and
purchased transportation
|
9.6
|
11.6
|
12.0
|
Revenue
equipment rentals
and
purchased transportation
|
11.1
|
12.5
|
12.6
|
|||||||||||||||
Operating
taxes and licenses
|
2.1
|
2.4
|
2.5
|
Operating taxes and licenses
|
2.4
|
2.5
|
2.6
|
|||||||||||||||
Insurance
and claims
|
6.4
|
9.1
|
6.1
|
Insurance and claims
|
7.4
|
9.8
|
6.4
|
|||||||||||||||
Communications
and utilities
|
1.0
|
1.1
|
1.2
|
Communications and utilities
|
1.2
|
1.2
|
1.3
|
|||||||||||||||
General
supplies and expenses
|
2.8
|
2.5
|
2.5
|
General supplies and expenses
|
3.2
|
2.7
|
2.6
|
|||||||||||||||
Depreciation
and amortization,
including
gains (losses) on
disposition
of equipment
|
6.1
|
7.5
|
7.4
|
Depreciation
and amortization,
including
gains (losses) on
disposition
of equipment
|
7.0
|
8.1
|
7.7
|
|||||||||||||||
Total
operating expenses
|
97.3
|
97.7
|
95.2
|
Total
operating expenses
|
96.9
|
97.5
|
94.9
|
|||||||||||||||
Operating
income
|
2.7
|
2.3
|
4.8
|
Operating
income
|
3.1
|
2.5
|
5.1
|
|||||||||||||||
Other
expense, net
|
0.5
|
0.4
|
0.3
|
Other
expense, net
|
0.6
|
0.4
|
0.3
|
|||||||||||||||
Income
before income taxes and
cumulative
effect of change
in
accounting principle
|
2.1
|
2.0
|
4.5
|
Income
before income taxes and
cumulative
effect of change
in
accounting principle
|
2.5
|
2.1
|
4.8
|
|||||||||||||||
Income
tax expense
|
1.2
|
1.4
|
2.4
|
Income
tax expense
|
1.4
|
1.5
|
2.6
|
|||||||||||||||
Cumulative
effect of change in
accounting
principle,
net
of tax
|
0.1
|
0.0
|
0.0
|
Cumulative
effect of change in
accounting
principle,
net
of tax
|
0.1
|
0.0
|
0.0
|
|||||||||||||||
Net
income
|
0.9
|
%
|
0.6
|
%
|
2.1
|
%
|
Net
income
|
1.0
|
%
|
0.6
|
%
|
2.2
|
%
|
|||||||||
(1)
|
Freight
revenue is total revenue less fuel surcharges. In this table, fuel
surcharges are eliminated from revenue and subtracted from fuel expense.
The amounts were $87.6 million, $45.2 million, and
$26.8 million in 2005, 2004, and 2003,
respectively.
|
Payments
due by period
(in
thousands)
|
Total
|
2006
|
2007
|
2008
|
2009
|
2010
|
There-
after
|
|||||||||||||||
Long-term
debt, including
current
maturities (1)
|
$
|
40,237
|
$
|
1,862
|
$
|
1,790
|
$
|
1,795
|
$
|
34,790
|
$
|
-
|
$
|
-
|
||||||||
Securitization
facility,
including interest (2)
|
47,833
|
47,833
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Operating
leases (3)
|
110,134
|
39,025
|
27,167
|
18,726
|
12,990
|
9,940
|
2,286
|
|||||||||||||||
Lease
residual value
guarantees
|
47,369
|
9,124
|
10,553
|
14,401
|
4,418
|
8,873
|
-
|
|||||||||||||||
Purchase
obligations:
|
||||||||||||||||||||||
Diesel
fuel (4)
|
110,421
|
110,421
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Equipment
(5)
|
217,600
|
217,600
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
contractual cash
obligations
|
$
|
573,594
|
$
|
425,865
|
$
|
39,510
|
$
|
34,922
|
$
|
52,198
|
$
|
18,813
|
$
|
2,286
|
||||||||
(1)
|
Represents
principal and interest payments owed at December 31, 2005. The
borrowings consist of draws under a revolving line of credit, with
fluctuating borrowing amounts and variable interest rates. In
determining future contractual interest and principal obligations,
for
variable interest rate debt, the interest rate and principal amount
in
place at December 31, 2005 was utilized. The table assumes long-term
debt
is held to maturity. Refer to Note 5, "Long-term Debt" and Note 6,
"Accounts Receivable Securitization and Allowance for Doubtful
Accounts."
|
(2)
|
In
2006, this amount represents proceeds drawn under our Securitization
Facility, and the interest rate in place at December 31, 2005 was
utilized. The net proceeds under the Securitization Facility are
required
to be shown as a current liability because the term, subject to annual
renewals, is 364 days. We expect the Securitization Facility to be
renewed
in December 2006.
|
(3)
|
Represents
future monthly rental payment obligations under operating leases
for
over-the-road tractors, day-cabs, and trailers. Substantially
all lease agreements for revenue equipment have fixed payment terms
based
on the passage of time. The tractor lease agreements generally stipulate
maximum miles and provide for mileage penalties for excess miles.
Lease
terms for tractors and trailers range from 30 to 60 months and 60
to 84
months, respectively. Refer to Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations - Off Balance
Sheet Arrangements and Note 7, "Leases," in the accompanying consolidated
financial statements for further information.
|
(4)
|
This
amount represents volume purchase commitments through our truck stop
network. We estimate that these amounts represent approximately 65%
of our
fuel needs for 2006.
|
(5)
|
Amount
reflects the total purchase price or lease commitment of tractors
and
trailers scheduled for delivery throughout 2006. Net of estimated
trade-in
values and other dispositions, the estimated amount due under these
commitments is approximately $127.0 million. These purchases are
expected to be financed by debt, proceeds from sales of existing
equipment, cash flows from operations, and operating leases. We have
the
option to cancel commitments relating to tractor equipment with 60
days
notice.
|
(in
thousands except per share data)
|
2005
|
2004
|
2003
|
|||||||
Income
before cumulative effect of change in accounting principle,
as
reported:
|
$
|
5,671
|
$
|
3,376
|
$
|
12,156
|
||||
Deduct:
Accretion of conditional asset retirement liability and
amortization
of related asset, net of related tax effects
|
(251
|
)
|
(130
|
)
|
(81
|
)
|
||||
Pro
forma net income
|
$
|
5,420
|
$
|
3,246
|
$
|
12,075
|
||||
Basic
earnings per share:
|
||||||||||
As
reported, before cumulative effect of change in accounting
principle
|
$
|
0.40
|
$
|
0.23
|
$
|
0.84
|
||||
Pro
forma earnings per share:
|
$
|
0.38
|
$
|
0.22
|
$
|
0.83
|
||||
Diluted
earnings per share:
|
||||||||||
As
reported, before cumulative effect of change in accounting
principle
|
$
|
0.40
|
$
|
0.23
|
$
|
0.83
|
||||
Pro
forma diluted earnings per share:
|
$
|
0.38
|
$
|
0.22
|
$
|
0.82
|
December
31, 2005
|
December
31, 2004
|
December
31, 2003
|
$1.6
million
|
$1.3
million
|
$1.0
million
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|
2005
|
27,245
|
28,589
|
29,592
|
30,376
|
2004
|
29,749
|
31,215
|
31,043
|
30,911
|
2003
|
30,308
|
32,612
|
33,568
|
33,214
|
•
|
pertain
to the maintenance of records, that in reasonable detail, accurately
and
fairly reflect the transactions and dispositions of our
assets;
|
•
|
provide
reasonable assurance that transactions are recorded as necessary
to permit
preparation of financial statements in accordance with generally
accepted
accounting principles, and that our receipts and expenditures are
being
made only in accordance with authorizations of our management and
directors; and
|
•
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could
have
a material effect on our financial
statements.
|
Plan
category
|
Number
of
securities
to
be
issued
upon
exercise
of
outstanding
options,
warrants
and
rights
|
Weighted-
average
exercise
price
of
outstanding
options,
warrants
and
rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column
(a))
|
(a)
|
(b)
|
(c)
|
|
Equity
compensation plans approved
by
security holders (1)
|
1,328,513
|
$14.37
|
765,031
|
Equity
compensation plans not
approved
by security holders (2)
|
125,000
|
$13.93
|
-
|
Total
|
1,453,513
|
$14.33
|
765,031
|
(1)
|
Includes
1994 Incentive Stock Plan, Outside Director Stock Option Plan, and
2003
Incentive Stock Plan.
|
(2)
|
Includes
1998 Non-Officer Incentive Stock Plan, and shares reserved for issuance
pursuant to grants outside any
plan.
|
(a)
|
1.
|
Financial
Statements.
|
|
Our
audited consolidated financial statements are set forth at the following
pages of this report:
|
|||
Reports
of Independent Registered Public Accounting Firm - KPMG
LLP
|
44
|
||
Consolidated
Balance Sheets
|
46
|
||
Consolidated
Statements of Operations
|
47
|
||
Consolidated
Statements of Stockholders' Equity and Comprehensive Income
(Loss)
|
48
|
||
Consolidated
Statements of Cash Flows
|
49
|
||
Notes
to Consolidated Financial Statements
|
50
|
||
2.
|
Financial
Statement Schedules.
|
||
Financial
statement schedules are not required because all required information
is
included in the financial statements.
|
|||
3.
|
Exhibits.
|
||
The
exhibits required to be filed by Item 601 of Regulation S-K are listed
under paragraph (b) below and on the Exhibit Index appearing at the
end of
this report. Management contracts and compensatory plans or arrangements
are indicated by an asterisk.
|
|||
(b)
|
Exhibits.
|
||
The
following exhibits are filed with this Form10-K or incorporated by
reference to the document set forth next to the exhibit listed
below.
|
Exhibit
Number
|
Reference
|
Description
|
3.1
|
(1)
|
Restated
Articles of Incorporation
|
3.2
|
(1)
|
Amended
Bylaws dated September 27, 1994
|
4.1
|
(1)
|
Restated
Articles of Incorporation
|
4.2
|
(1)
|
Amended
Bylaws dated September 27, 1994
|
10.1
|
(1)
|
401(k)
Plan filed as Exhibit 10.10*
|
10.2
|
(2)
|
Outside
Director Stock Option Plan, filed as Appendix A*
|
10.3
|
(3)
|
Amendment
No. 1 to the Outside Director Stock Option Plan, filed as Exhibit
10.11*
|
10.4
|
(4)
|
Loan
Agreement dated December 12, 2000, among CVTI Receivables Corp.,
Covenant
Transport, Inc., Three Pillars Funding Corporation, and SunTrust
Equitable
Securities Corporation, filed as Exhibit 10.10
|
10.5
|
(4)
|
Receivables
Purchase Agreement dated as of December 12, 2000, among CVTI
Receivables Corp., Covenant Transport, Inc., and Southern Refrigerated
Transport, Inc., filed as Exhibit 10.11
|
10.6
|
(5)
|
Clarification
of Intent and Amendment No. 1 to Loan Agreement dated March 7, 2001,
among
CVTI Receivables Corp., Covenant Transport, Inc., Three Pillars Funding
Corporation, and SunTrust Equitable Securities Corporation, filed
as
Exhibit 10.12
|
10.7
|
(6)
|
Incentive
Stock Plan, Amended and Restated as of May 17, 2001, filed as
Appendix B*
|
10.8
|
(7)
|
Covenant
Transport, Inc. 2003 Incentive Stock Plan, filed as Appendix
B*
|
10.9
|
(8)
|
Consolidating
Amendment No. 1 to Loan Agreement effective May 2, 2003, among CVTI
Receivables Corp., Covenant Transport, Inc., Three Pillars Funding
Corporation, and SunTrust Capital Markets, Inc. (formerly SunTrust
Equitable Securities Corporation), filed as Exhibit
10.3
|
10.10
|
(9)
|
Master
Lease Agreement dated April 15, 2003, between Transport International
Pool, Inc. and Covenant Transport, Inc., filed as Exhibit
10.4
|
10.11
|
(10)
|
Amendment
No. 5 to Loan Agreement dated December 9, 2003, among CVTI Receivables
Corp., Covenant Transport, Inc., Three Pillars Funding LLC (successor
to
Three Pillars Funding Corporation), and SunTrust Capital Markets,
Inc.
(formerly SunTrust Equitable Securities Corporation), filed as Exhibit
10.16
|
10.12
|
(11)
|
Amendment
No. 6 to Loan Agreement dated July 8, 2004, among CVTI Receivables
Corp.,
Covenant Transport, Inc., Three Pillars Funding LLC (f/k/a Three
Pillars
Funding Corporation), and SunTrust Capital Markets, Inc. (formerly
SunTrust Equitable Securities Corporation) effective July 1, 2004,
filed
as Exhibit 10.1
|
10.13
|
(11)
|
Form
of Indemnification Agreement between Covenant Transport, Inc. and
each
officer and director, effective May 1, 2004, filed as Exhibit
10.2
|
10.14
|
(12)
|
Amendment
No. 7 to Loan Agreement dated November 17, 2004, among CVTI Receivables
Corp., Covenant Transport, Inc., Three Pillars Funding LLC (f/k/a
Three
Pillars Funding Corporation), and SunTrust Capital Markets, Inc.
(formerly
SunTrust Equitable Securities Corporation), filed as Exhibit
10.14
|
10.15
|
(12)
|
Amended
and Restated Credit Agreement dated December 16, 2004, among Covenant
Asset Management, Inc., Covenant Transport, Inc., Bank of America,
N.A.,
and each other financial institution which is a party to the Credit
Agreement, filed as Exhibit 10.15
|
10.16
|
(13)
|
Amendment
No. 8 to Loan Agreement dated March 29, 2005, among Three Pillars
Funding
LLC (f/k/a Three Pillars Funding Corporation), SunTrust Capital Markets,
Inc. (f/k/a SunTrust Equitable Securities Corporation), CVTI Receivables
Corp., and Covenant Transport, Inc., filed as Exhibit
10.16
|
10.17
|
(14)
|
Amendment
No. 1 to Amended and Restated Credit Agreement dated July 18, 2005,
among
Covenant Asset Management, Inc., Covenant Transport, Inc., a Nevada
Corporation, Bank of America, N.A., as Agent, and the lenders party
thereto from time-to-time, filed as Exhibit 10.1
|
21
|
#
|
List
of Subsidiaries
|
23
|
#
|
Consent
of Independent Registered Public Accounting Firm - KPMG
LLP
|
31.1
|
#
|
Certification
pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant
to
Section 302 of the Sarbanes-Oxley Act of 2002, by David R. Parker,
the
Company's Chief Executive Officer
|
31.2
|
#
|
Certification
pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant
to
Section 302 of the Sarbanes-Oxley Act of 2002, by Joey B. Hogan,
the
Company's Chief Financial Officer
|
32.1
|
#
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's
Chief
Executive Officer
|
32.2
|
#
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002, by Joey B. Hogan, the Company's Chief
Financial Officer
|
#
|
Filed
herewith
|
(1)
|
Form
S-1, Registration No. 33-82978, effective October 28,
1994
|
(2)
|
Schedule
14A, filed April 13, 2000
|
(3)
|
Form
10-Q for the quarter ended September 30, 2000, filed November 13,
2000
|
(4)
|
Form
10-K for the year ended December 31, 2000, filed March 29,
2001
|
(5)
|
Form
10-Q for the quarter ended March 31, 2001, filed May 14,
2001
|
(6)
|
Schedule
14A, filed April 5, 2001
|
(7)
|
Schedule
14A, filed April 16, 2003
|
(8)
|
Form
10-Q for the quarter ended June 30, 2003, filed August 11,
2003
|
(9)
|
Form
10-Q/A for the quarter ended June 30, 2003, filed October 31,
2003
|
(10)
|
Form
10-K, filed March 15, 2004
|
(11)
|
Form
10-Q, filed August 5, 2004
|
(12)
|
Form
10-K, filed March 16, 2005
|
(13)
|
Form
10-Q, filed May 9, 2005
|
(14)
|
Form
8-K, filed July 22, 2005
|
(c)
|
Financial
Statement Schedules.
|
||
Not
applicable.
|
COVENANT
TRANSPORT, INC.
|
||
Date:
March 31, 2006
|
By:
|
/s/
Joey B. Hogan
|
Joey
B. Hogan
|
||
Executive
Vice President and Chief
Financial
Officer
|
Signature
and Title
|
Date
|
|
/s/
David R. Parker
|
March
31, 2006
|
|
David
R. Parker
|
||
Chairman
of the Board, President, and Chief Executive Officer (principal executive
officer)
|
||
/s/
Joey B. Hogan
|
March
31, 2006
|
|
Joey
B. Hogan
|
||
Executive
Vice President and Chief Financial Officer
(principal
financial and accounting officer)
|
||
/s/
Bradley A. Moline
|
March
31, 2006
|
|
Bradley
A. Moline
|
||
Director
|
||
/s/
William T. Alt
|
March
31, 2006
|
|
William
T. Alt
|
||
Director
|
||
/s/
Robert E. Bosworth
|
March
31, 2006
|
|
Robert
E. Bosworth
|
||
Director
|
||
/s/
Hugh O. Maclellan, Jr.
|
March
31, 2006
|
|
Hugh
O. Maclellan, Jr.
|
||
Director
|
||
/s/
Mark A. Scudder
|
March
31, 2006
|
|
Mark
A. Scudder
|
||
Director
|
||
/s/
Niel B. Nielson
|
March
31, 2006
|
|
Niel
B. Nielson
|
||
Director
|
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31, 2005 AND 2004
(In
thousands, except share data)
|
|||||||
2005
|
2004
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
3,618
|
$
|
5,066
|
|||
Accounts
receivable, net of allowance of $2,200 in 2005
and
$1,700 in 2004
|
77,969
|
74,127
|
|||||
Drivers
advances and other receivables
|
3,932
|
7,400
|
|||||
Inventory
and supplies
|
4,661
|
3,581
|
|||||
Prepaid
expenses
|
16,199
|
11,643
|
|||||
Deferred
income taxes
|
16,158
|
17,189
|
|||||
Income
taxes receivable
|
7,559
|
5,689
|
|||||
Total
current assets
|
130,096
|
124,695
|
|||||
Property
and equipment, at cost
|
301,129
|
298,389
|
|||||
Less
accumulated depreciation and amortization
|
(86,767
|
)
|
(88,967
|
)
|
|||
Net
property and equipment
|
214,362
|
209,422
|
|||||
Other
assets, net
|
26,803
|
23,266
|
|||||
Total
assets
|
$
|
371,261
|
$
|
357,383
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Current
maturities of long-term debt
|
-
|
9
|
|||||
Securitization
facility
|
47,281
|
44,148
|
|||||
Accounts
payable
|
8,457
|
6,574
|
|||||
Accrued
expenses
|
17,088
|
15,253
|
|||||
Insurance
and claims accrual
|
41,801
|
46,200
|
|||||
Total
current liabilities
|
114,627
|
112,184
|
|||||
Long-term
debt, less current maturities
|
33,000
|
8,013
|
|||||
Deferred
income taxes
|
33,910
|
41,487
|
|||||
Total
liabilities
|
181,537
|
161,684
|
|||||
Commitments
and contingent liabilities
|
|||||||
Stockholders'
equity:
|
|||||||
Class
A common stock, $.01 par value; 20,000,000 shares authorized;
13,447,608
and 13,421,527 shares issued; 11,629,208 and 12,323,927
outstanding
as of December 31, 2005 and 2004, respectively
|
134
|
134
|
|||||
Class
B common stock, $.01 par value; 5,000,000 shares authorized;
2,350,000
shares issued and outstanding as of December 31, 2005 and
2004
|
24
|
24
|
|||||
Additional
paid-in-capital
|
91,553
|
91,058
|
|||||
Treasury
stock at cost; 1,818,400 and 1,097,600 shares as of December
31,
2005
and 2004, respectively
|
(21,582
|
)
|
(9,925
|
)
|
|||
Retained
earnings
|
119,595
|
114,408
|
|||||
Total
stockholders' equity
|
189,724
|
195,699
|
|||||
Total
liabilities and stockholders' equity
|
$
|
371,261
|
$
|
357,383
|
|||
CONSOLIDATED
STATEMENTS OF OPERATIONS
YEARS
ENDED DECEMBER 31, 2005, 2004, AND 2003
(In
thousands, except per share data)
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Revenues
|
||||||||||
Freight
revenue
|
$
|
555,428
|
$
|
558,453
|
$
|
555,678
|
||||
Fuel
surcharges
|
87,626
|
45,169
|
26,779
|
|||||||
Total
revenue
|
643,054
|
603,622
|
582,457
|
|||||||
Operating
expenses:
|
||||||||||
Salaries,
wages, and related expenses
|
242,157
|
225,778
|
220,665
|
|||||||
Fuel
expense
|
170,582
|
127,723
|
109,231
|
|||||||
Operations
and maintenance
|
33,625
|
30,555
|
39,822
|
|||||||
Revenue
equipment rentals and purchased
transportation
|
61,701
|
69,928
|
69,997
|
|||||||
Operating
taxes and licenses
|
13,431
|
14,217
|
14,354
|
|||||||
Insurance
and claims
|
41,034
|
54,847
|
35,454
|
|||||||
Communications
and utilities
|
6,579
|
6,517
|
7,177
|
|||||||
General
supplies and expenses
|
17,778
|
15,104
|
14,495
|
|||||||
Depreciation
and amortization, including gains (losses) on
disposition
of equipment
|
39,101
|
45,001
|
43,041
|
|||||||
Total
operating expenses
|
625,988
|
589,670
|
554,236
|
|||||||
Operating
income
|
17,066
|
13,952
|
28,221
|
|||||||
Other
(income) expenses:
|
||||||||||
Interest
expense
|
4,203
|
3,098
|
2,332
|
|||||||
Interest
income
|
(273
|
)
|
(48
|
)
|
(114
|
)
|
||||
Other
|
(538
|
)
|
(926
|
)
|
(468
|
)
|
||||
Other
expenses, net
|
3,392
|
2,124
|
1,750
|
|||||||
Income
before income taxes and cumulative effect of change in
accounting
principle
|
13,674
|
11,828
|
26,471
|
|||||||
Income
tax expense
|
8,003
|
8,452
|
14,315
|
|||||||
Income
before cumulative effect of change in accounting
principle
|
5,671
|
3,376
|
12,156
|
|||||||
Cumulative
effect of change in accounting principle, net of tax
(Note
1)
|
(485
|
|
-
|
-
|
||||||
Net
income
|
$
|
5,186
|
$
|
3,376
|
$
|
12,156
|
||||
Net
income per share:
|
||||||||||
Basic
earnings per share before cumulative effect of change in
accounting
principle:
|
$
|
0.40
|
$
|
0.23
|
$
|
0.84
|
||||
Cumulative
effect of change in accounting principle
|
|
(0.03
|
)
|
-
|
-
|
|||||
Basic
earnings per share:
|
$
|
0.37
|
$
|
0.23
|
$
|
0.84
|
||||
Diluted
earnings per share before cumulative effect of change in
accounting
principle:
|
$
|
0.40
|
$
|
0.23
|
$
|
0.83
|
||||
Cumulative
effect of change in accounting principle
|
|
(0.03
|
)
|
-
|
-
|
|||||
Diluted
earnings per share:
|
$
|
0.37
|
$
|
0.23
|
$
|
0.83
|
||||
Basic
weighted average shares outstanding
|
14,175
|
14,641
|
14,467
|
|||||||
Diluted
weighted average shares outstanding
|
14,270
|
14,833
|
14,709
|
Common
Stock
|
Additional
Paid-In
Capital
|
Treasury
Stock
|
Retained
Earnings
|
Total
Stockholders'
Equity
|
Comprehensive
Income
|
||
Class
A
|
Class
B
|
||||||
Balances at December 31, 2002 |
$130
|
$24
|
$84,493 | $(7,935) | $98,876 | $175,588 | |
Exercise
of employee stock options
|
3
|
-
|
3,615
|
-
|
-
|
3,618
|
|
Income
tax benefit arising from the
exercise
of stock options
|
-
|
-
|
780
|
-
|
-
|
780
|
|
Net
income
|
-
|
-
|
-
|
-
|
12,156
|
12,156
|
12,156
|
Comprehensive
income for 2003
|
$12,156
|
||||||
Balances
at December 31, 2003
|
$133
|
$24
|
$88,888
|
$(7,935)
|
$111,032
|
$192,142
|
|
Exercise
of employee stock options
|
1
|
-
|
1,960
|
-
|
-
|
1,961
|
|
Income
tax benefit arising from the
exercise
of stock options
|
-
|
-
|
210
|
-
|
-
|
210
|
|
Stock
repurchase
|
-
|
-
|
-
|
(1,990)
|
-
|
(1,990)
|
|
Net
income
|
-
|
-
|
-
|
-
|
3,376
|
3,376
|
3,376
|
Comprehensive
income for 2004
|
$3,376
|
||||||
Balances
at December 31, 2004
|
$134
|
$24
|
$91,058
|
$(9,925)
|
$114,408
|
$195,699
|
|
Exercise
of employee stock options
|
-
|
-
|
445
|
-
|
-
|
445
|
|
Income
tax benefit arising from the
exercise
of stock options
|
-
|
-
|
50
|
-
|
-
|
50
|
|
Stock
repurchase
|
-
|
-
|
-
|
(11,657)
|
-
|
(11,657)
|
|
Net
income
|
-
|
-
|
-
|
-
|
5,186
|
5,186
|
5,186
|
Comprehensive
income for 2005
|
$5,186
|
||||||
Balances
at December 31, 2005
|
$134
|
$24
|
$91,553
|
$(21,582)
|
$119,595
|
$189,724
|
2005
|
2004
|
2003
|
||||||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
5,186
|
$
|
3,376
|
$
|
12,156
|
||||
Adjustments
to reconcile net income to net cash
provided
by operating activities:
|
||||||||||
Net
provision for losses on accounts receivable
|
1,598
|
547
|
94
|
|||||||
Depreciation
and amortization
|
39,769
|
41,456
|
43,909
|
|||||||
Income
tax benefit from exercise of stock options
|
50
|
210
|
780
|
|||||||
Deferred
income taxes (benefit)
|
(6,249
|
)
|
(12,063
|
)
|
(9,605
|
)
|
||||
Loss
(gain) on disposition of property and equipment
|
(668
|
)
|
3,545
|
(867
|
)
|
|||||
Cumulative effect of change in accounting principle, net of
tax
|
485
|
-
|
-
|
|||||||
Changes
in operating assets and liabilities:
|
||||||||||
Receivables
and advances
|
(4,841
|
)
|
(9,454
|
)
|
(4,193
|
)
|
||||
Prepaid
expenses and other assets
|
(4,555
|
)
|
4,542
|
(1,735
|
)
|
|||||
Inventory
and supplies
|
(1,081
|
)
|
-
|
(356
|
)
|
|||||
Insurance
and claims accrual
|
(4,399
|
)
|
18,779
|
6,210
|
||||||
Accounts
payable and accrued expenses
|
278
|
|
(6,825
|
)
|
1,343
|
|||||
Net
cash flows provided by operating activities
|
25,573
|
44,113
|
47,716
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Acquisition
of property and equipment
|
(109,918
|
)
|
(81,615
|
)
|
(94,362
|
)
|
||||
Proceeds
from disposition of property and equipment
|
65,992
|
49,179
|
68,487
|
|||||||
Net
cash used in investing activities
|
(43,926
|
)
|
(32,436
|
)
|
(25,875
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Exercise
of stock options
|
445
|
1,961
|
3,615
|
|||||||
Repurchase
of company stock
|
(11,657
|
)
|
(1,990
|
)
|
-
|
|||||
Proceeds
from Credit Facility
|
105,000
|
47,026
|
59,000
|
|||||||
Proceeds
from Securitization Facility
|
17,000
|
10,000
|
13,000
|
|||||||
Repayment
from Credit Facility
|
(80,022
|
)
|
(52,305
|
)
|
(90,000
|
)
|
||||
Repayments
of Securitization Facility
|
(13,867
|
)
|
(14,205
|
)
|
(3,877
|
)
|
||||
Deferred
costs
|
6
|
(404
|
)
|
(315
|
)
|
|||||
Net
cash provided by (used in) financing activities
|
16,905
|
(9,917
|
)
|
(18,577
|
)
|
|||||
Net
change in cash and cash equivalents
|
(1,448
|
)
|
1,760
|
3,264
|
||||||
Cash
and cash equivalents at beginning of year
|
5,066
|
3,306
|
42
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
3,618
|
$
|
5,066
|
$
|
3,306
|
||||
Supplemental
disclosure of cash flow information:
|
||||||||||
Cash
paid during the year for:
|
||||||||||
Interest
|
$
|
4,255
|
$
|
3,031
|
$
|
2,332
|
||||
Income
taxes
|
$
|
16,261
|
$
|
20,867
|
$
|
22,795
|
(in
thousands except per share data)
|
2005
|
2004
|
2003
|
|||||||
Income
before cumulative effect of change in accounting principle,
as
reported:
|
$5,671
|
$3,376
|
$12,156
|
|||||||
Deduct:
Accretion of conditional asset retirement liability and
amortization
of related asset, net of related tax effects
|
(251
|
)
|
(130
|
)
|
(81
|
)
|
||||
Pro
forma net income
|
$
|
5,420
|
$
|
3,246
|
$
|
12,075
|
||||
Basic
earnings per share:
|
||||||||||
As
reported, before cumulative effect of change in accounting
principle
|
$
|
0.40
|
$
|
0.23
|
$
|
0.84
|
||||
Pro
forma earnings per share:
|
$
|
0.38
|
$
|
0.22
|
$
|
0.83
|
||||
Diluted
earnings per share:
|
||||||||||
As
reported, before cumulative effect of change in accounting
principle
|
$
|
0.40
|
$
|
0.23
|
$
|
0.83
|
||||
Pro
forma diluted earnings per share:
|
$
|
0.38
|
$
|
0.22
|
$
|
0.82
|
December
31, 2005
|
December
31, 2004
|
December
31, 2003
|
$1.6
million
|
$1.3
million
|
$1.0
million
|
(in
thousands)
|
2005
|
2004
|
2003
|
||
Denominator
for basic earnings per share - weighted-average shares
|
14,175
|
14,641
|
14,467
|
||
Effect
of dilutive securities:
|
|||||
Dilutive
options
|
95
|
192
|
242
|
||
Denominator
for diluted earnings per share - adjusted weighted-
average
shares and assumed conversions
|
14,270
|
14,833
|
14,709
|
||
(in
thousands except per share data)
|
2005
|
2004
|
2003
|
|||||||
Net
income, as reported:
|
$
|
5,186
|
$
|
3,376
|
$
|
12,156
|
||||
Deduct:
Total stock-based compensation expense determined
under
fair value based method for all awards, net of related tax
effects
|
(2,235
|
)
|
(1,185
|
)
|
(1,743
|
)
|
||||
Pro
forma net income
|
$
|
2,951
|
$
|
2,190
|
$
|
10,413
|
||||
Basic
earnings per share:
|
||||||||||
As
reported
|
$
|
0.37
|
$
|
0.23
|
$
|
0.84
|
||||
Pro
forma
|
$
|
0.21
|
$
|
0.15
|
$
|
0.72
|
||||
Diluted
earnings per share:
|
||||||||||
As
reported
|
$
|
0.37
|
$
|
0.23
|
$
|
0.83
|
||||
Pro
forma
|
$
|
0.21
|
$
|
0.15
|
$
|
0.71
|
(in
thousands)
|
Estimated
Useful
Lives
|
2005
|
2004
|
|||||||
Revenue
equipment
|
3-8
years
|
$
|
202,027
|
$
|
207,422
|
|||||
Communications
equipment
|
5
years
|
16,422
|
16,829
|
|||||||
Land
and improvements
|
10-24
years
|
15,216
|
14,781
|
|||||||
Buildings
and leasehold improvements
|
10-40
years
|
46,503
|
40,423
|
|||||||
Construction
in progress
|
6,432
|
5,611
|
||||||||
Other
|
1-5
years
|
14,529
|
13,323
|
|||||||
$
|
301,129
|
$
|
298,389
|
|||||||
(in
thousands)
|
2005
|
2004
|
|||||
Covenants
not to compete
|
$
|
1,690
|
$
|
1,690
|
|||
Trade
name
|
330
|
330
|
|||||
Goodwill
|
12,416
|
12,416
|
|||||
Less
accumulated amortization of intangibles
|
(2,566
|
)
|
(2,536
|
)
|
|||
Net
intangible assets
|
11,870
|
11,900
|
|||||
Investment
in Transplace
|
10,666
|
10,666
|
|||||
Note
receivable from Transplace
|
2,869
|
-
|
|||||
Other,
net
|
1,398
|
700
|
|||||
$
|
26,803
|
$
|
23,266
|
||||
(in
thousands)
|
2005
|
2004
|
|||||
Borrowings
under the Credit Agreement
|
$
|
33,000
|
$
|
8,000
|
|||
Equipment
and vehicle obligations with commercial lending
institutions
|
-
|
22
|
|||||
Total
long-term debt
|
33,000
|
8,022
|
|||||
Less
current maturities
|
-
|
9
|
|||||
Long-term
debt, less current portion
|
$
|
33,000
|
$
|
8,013
|
|||
Years
ended
December
31:
|
Beginning
balance
January
1,
|
Additional
provisions
to
allowance
|
Write-offs
and
other
deductions
|
Ending
balance
December
31,
|
||||
2005
|
$1,700
|
$1,598
|
$1,098
|
$2,200
|
||||
2004
|
$1,350
|
$547
|
$197
|
$1,700
|
||||
2003
|
$1,800
|
$94
|
$544
|
$1,350
|
||||
2006
|
$39,025
|
2007
|
27,167
|
2008
|
18,726
|
2009
|
12,990
|
2010
|
9,940
|
Thereafter
|
2,286
|
(in
thousands)
|
2005
|
2004
|
2003
|
|||||||
Revenue
equipment rentals
|
$
|
41,379
|
$
|
36,625
|
$
|
25,625
|
||||
Terminal
rentals
|
1,252
|
1,236
|
1,041
|
|||||||
Other
equipment rentals
|
3,060
|
3,158
|
3,201
|
|||||||
$
|
45,691
|
$
|
41,019
|
$
|
29,867
|
|||||
(in
thousands)
|
2005
|
2004
|
2003
|
|||||||
Federal,
current
|
$
|
13,344
|
$
|
17,796
|
$
|
20,011
|
||||
Federal,
deferred
|
(6,056
|
)
|
(10,930
|
)
|
(7,771
|
)
|
||||
State,
current
|
1,205
|
2,720
|
3,909
|
|||||||
State,
deferred
|
(490
|
)
|
(1,134
|
)
|
(1,834
|
)
|
||||
$
|
8,003
|
$
|
8,452
|
$
|
14,315
|
|||||
(in
thousands)
|
2005
|
2004
|
2003
|
|||||||
Computed
"expected" income tax expense
|
$
|
4,786
|
$
|
4,140
|
$
|
9,265
|
||||
State
income taxes, net of federal income tax
effect
|
465
|
1,031
|
1,349
|
|||||||
Per
diem allowances
|
2,591
|
2,760
|
3,487
|
|||||||
Other,
net
|
161
|
521
|
214
|
|||||||
Actual
income tax expense
|
$
|
8,003
|
$
|
8,452
|
$
|
14,315
|
||||
(in
thousands)
|
2005
|
2004
|
|||||
Net
current deferred tax assets:
|
|||||||
Accounts
receivable
|
$
|
475
|
$
|
249
|
|||
Insurance
and claims
|
15,493
|
16,652
|
|||||
State
net operating loss carryovers
|
179
|
87
|
|||||
Deferred
gain
|
11
|
201
|
|||||
Total
net current deferred tax assets
|
16,158
|
17,189
|
|||||
Net
non-current deferred tax liabilities:
|
|||||||
Property
and equipment
|
33,305
|
41,377
|
|||||
Intangible
and other assets
|
766
|
271
|
|||||
Investments
|
(161
|
)
|
(161
|
)
|
|||
Total
net non-current deferred tax liabilities
|
33,910
|
41,487
|
|||||
Net
deferred tax asset/ liability
|
$
|
17,752
|
$
|
24,298
|
|||
Shares
|
Weighted
Average
Exercise
Price
|
Options
Exercisable
at
Year
End
|
|
Under
option at December 31, 2002
|
1,381,540
|
$13.48
|
855,685
|
Options
granted in 2003
|
196,664
|
$17.51
|
|
Options
exercised in 2003
|
(295,711)
|
$12.24
|
|
Options
canceled in 2003
|
(53,103)
|
$15.19
|
|
Under
option at December 31, 2003
|
1,229,390
|
$14.37
|
891,813
|
Options
granted in 2004
|
196,300
|
$15.81
|
|
Options
exercised in 2004
|
(126,501)
|
$15.50
|
|
Options
canceled in 2004
|
(38,097)
|
$16.45
|
|
Under
option at December 31, 2004
|
1,261,092
|
$14.42
|
926,713
|
Options
granted in 2005
|
237,085
|
$14.11
|
|
Options
exercised in 2005
|
(28,081)
|
$15.86
|
|
Options
canceled in 2005
|
(16,583)
|
$14.99
|
|
Under
option at December 31, 2005
|
1,453,513
|
$14.33
|
1,443,513
|
Options
Outstanding
|
Options
Exercisable
|
||||
Range
of Exercise
Prices
|
Number
Outstanding
at
12/31/05
|
Weighted-
Average
Remaining
Contractual
Life
|
Weighted-
Average
Exercise
Price
|
Number
Exercisable
at
12/31/05
|
Weighted-
Average
Exercise
Price
|
$
8.00 to $13.00
|
392,356
|
50
|
$10.08
|
382,356
|
$10.06
|
$13.01
to $16.50
|
681,387
|
74
|
$14.94
|
681,387
|
$14.94
|
$16.51
to $21.50
|
379,770
|
75
|
$17.64
|
379,770
|
$17.64
|
1,453,513
|
1,443,513
|
||||
(in
thousands):
|
2005
|
2004
|
|||||
Net
liability for derivatives at January 1
|
$
|
(439
|
)
|
$
|
(1,201
|
)
|
|
Changes
in statements of operations:
|
|||||||
Gain
on derivative instruments:
|
|||||||
Gain
in value of derivative instruments that do
not
qualify as hedging instruments
|
426
|
762
|
|||||
Net
liability for derivatives at December 31
|
$
|
(13
|
)
|
$
|
(439
|
)
|
|
(In
thousands except per share amounts)
|
|||||||||||||
Quarters
ended
|
March
31, 2005
|
June
30, 2005
|
Sept.
30, 2005
|
Dec.
31, 2005 (1)
|
|||||||||
Freight
revenue
|
$
|
123,570
|
$
|
138,736
|
$
|
144,681
|
$
|
148,442
|
|||||
Operating
income
|
276
|
3,042
|
3,850
|
9,898
|
|||||||||
Net
income (loss) before cumulative
effect
of change in accounting
principle
|
(649
|
)
|
652
|
1,217
|
4,451
|
||||||||
Cumulative
effect of change in
accounting
principle
|
-
|
-
|
-
|
(485
|
) | ||||||||
Net
income (loss)
|
(649
|
)
|
652
|
1,217
|
3,966
|
||||||||
Basic
earnings (loss) per share
before
cumulative effect of
change
in accounting principle
|
(0.04
|
)
|
0.05
|
0.09
|
0.31
|
||||||||
Cumulative
effect of change in
accounting
principle
|
-
|
-
|
-
|
(0.03
|
) | ||||||||
Basic
earnings (loss) per share
|
(0.04
|
)
|
0.05
|
0.09
|
0.28
|
||||||||
Diluted
earnings (loss) per share
before
cumulative effect of
change
in accounting principle
|
(0.04
|
)
|
0.05
|
0.09
|
0.31
|
||||||||
Cumulative
effect of change in
accounting
principle
|
-
|
-
|
-
|
(0.03
|
) | ||||||||
Diluted
earnings (loss) per share
|
(0.04
|
)
|
0.05
|
0.09
|
0.28
|
Quarters
ended
|
March
31, 2004
|
June
30, 2004
|
Sept.
30, 2004
|
Dec.
31, 2004 (2)
|
|||||||||
Freight
revenue
|
$
|
130,590
|
$
|
140,036
|
$
|
140,631
|
$
|
147,196
|
|||||
Operating
income (loss)
|
3,058
|
8,725
|
10,242
|
(8,071
|
)
|
||||||||
Net
income (loss)
|
721
|
4,388
|
4,745
|
(6,476
|
)
|
||||||||
Basic
earnings (loss) per share
|
0.05
|
0.30
|
0.33
|
(0.44
|
)
|
||||||||
Diluted
earnings (loss) per share
|
0.05
|
0.30
|
0.32
|
(0.44
|
)
|
||||||||
(1)
|
Includes
a $485 net of tax adjustment for the cumulative effect of a change
in
accounting principle.
|
(2)
|
Includes
a $19,600 pre-tax adjustment to claims
reserves.
|