form10q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
[
X ]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
|
For
the quarterly period ended December 31, 2009
or
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
|
Commission
file number: 000-23192
CELADON
GROUP, INC.
(Exact
name of registrant as specified in its charter)
Delaware
|
13-3361050
|
(State
or other jurisdiction of
|
(IRS
Employer
|
incorporation
or organization)
|
Identification
No.)
|
|
|
9503
East 33rd
Street
|
|
One
Celadon Drive
|
|
Indianapolis,
IN
|
46235-4207
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
|
(317)
972-7000
(Registrant's
telephone number, including area
code)
|
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.
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act. (Check one):
Large
accelerated filer [ ]
|
Accelerated
filer [X]
|
Non-accelerated
filer [ ]
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12-b2 of the Exchange Act).
As of
January 29, 2010 (the latest practicable date), 22,141,092 shares of the
registrant's common stock, par value $0.033 per share, were
outstanding.
CELADON
GROUP, INC.
Index
to
December
31, 2009 Form 10-Q
Part
I.
|
Financial
Information
|
|
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets at December 31, 2009 (Unaudited) and June 30,
2009
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Income for the three and six months ended
December 31, 2009 and 2008 (Unaudited)
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the six months ended December
31, 2009 and 2008 (Unaudited)
|
|
|
|
|
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|
|
Notes
to Condensed Consolidated Financial Statements at December 31, 2009
(Unaudited)
|
|
|
|
|
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
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|
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|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
|
|
|
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|
|
Item
4.
|
Controls
and Procedures
|
|
|
|
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|
Part
II.
|
Other
Information
|
|
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
|
|
|
|
|
|
Item
1A.
|
Risk
Factors
|
|
|
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
|
|
|
|
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|
Item
5.
|
Other
Information
|
|
|
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Item
6.
|
Exhibits
|
|
Part I. Financial Information
Item
I. Financial Statements
CELADON
GROUP, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
December
31, 2009 and June 30, 2009
(Dollars
in thousands except per share and par value amounts)
|
|
December
31,
2009
|
|
|
June
30,
2009
|
|
ASSETS
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ |
6,617 |
|
|
$ |
863 |
|
Trade receivables, net of
allowance for doubtful accounts of $1,059
at December 31, 2009 and June 30, 2009
|
|
|
56,069 |
|
|
|
55,291 |
|
Prepaid expenses and other
current assets
|
|
|
17,905 |
|
|
|
10,044 |
|
Tires in
service
|
|
|
5,119 |
|
|
|
4,336 |
|
Equipment held for
resale
|
|
|
--- |
|
|
|
8,012 |
|
Income tax
receivable
|
|
|
--- |
|
|
|
232 |
|
Deferred income
taxes
|
|
|
2,994 |
|
|
|
2,780 |
|
Total
current assets
|
|
|
88,704 |
|
|
|
81,558 |
|
Property
and equipment
|
|
|
231,999 |
|
|
|
237,167 |
|
Less
accumulated depreciation and amortization
|
|
|
75,338 |
|
|
|
70,025 |
|
Net
property and equipment
|
|
|
156,661 |
|
|
|
167,142 |
|
Tires
in service
|
|
|
1,557 |
|
|
|
1,581 |
|
Goodwill
|
|
|
19,137 |
|
|
|
19,137 |
|
Other
assets
|
|
|
1,566 |
|
|
|
1,581 |
|
Total
assets
|
|
$ |
267,625 |
|
|
$ |
270,999 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
5,793 |
|
|
$ |
5,461 |
|
Accrued salaries and
benefits
|
|
|
9,632 |
|
|
|
10,084 |
|
Accrued insurance and
claims
|
|
|
9,587 |
|
|
|
8,508 |
|
Accrued fuel
expense
|
|
|
9,184 |
|
|
|
8,592 |
|
Other accrued
expenses
|
|
|
11,786 |
|
|
|
11,547 |
|
Current maturities of
long-term debt
|
|
|
697 |
|
|
|
1,109 |
|
Current maturities of capital
lease obligations
|
|
|
8,058 |
|
|
|
6,693 |
|
Provision for income
taxes
|
|
|
468 |
|
|
|
--- |
|
Total
current liabilities
|
|
|
55,205 |
|
|
|
51,994 |
|
Long-term debt, net of current
maturities
|
|
|
172 |
|
|
|
5,870 |
|
Capital lease obligations, net
of current maturities
|
|
|
30,618 |
|
|
|
35,311 |
|
Deferred income
taxes
|
|
|
33,722 |
|
|
|
34,132 |
|
Minority
interest
|
|
|
--- |
|
|
|
25 |
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.033 par
value, authorized 40,000,000 shares; issued
23,775,849 and 23,840,677 shares at December 31, 2009
and
June 30, 2009, respectively
|
|
|
785 |
|
|
|
787 |
|
Treasury stock at cost;
1,634,757 and 1,744,245 shares at December
30, 2009 and June 30, 2009, respectively
|
|
|
(11,271 |
) |
|
|
(12,025 |
) |
Additional paid-in
capital
|
|
|
97,577 |
|
|
|
97,030 |
|
Retained
earnings
|
|
|
64,541 |
|
|
|
62,955 |
|
Accumulated other
comprehensive loss
|
|
|
(3,724 |
) |
|
|
(5,080 |
) |
Total
stockholders' equity
|
|
|
147,908 |
|
|
|
143,667 |
|
Total
liabilities and stockholders' equity
|
|
$ |
267,625 |
|
|
$ |
270,999 |
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Dollars
in thousands except per share amounts)
(Unaudited)
|
|
For
the three months ended
December
31,
|
|
|
For
the six months ended
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight revenue
|
|
$ |
109,090 |
|
|
$ |
98,538 |
|
|
$ |
219,776 |
|
|
$ |
207,827 |
|
Fuel surcharges
|
|
|
18,144 |
|
|
|
21,108 |
|
|
|
35,295 |
|
|
|
58,687 |
|
Total revenue
|
|
|
127,234 |
|
|
|
119,646 |
|
|
|
255,071 |
|
|
|
266,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee
benefits
|
|
|
38,587 |
|
|
|
37,824 |
|
|
|
78,592 |
|
|
|
79,154 |
|
Fuel
|
|
|
30,393 |
|
|
|
29,882 |
|
|
|
60,130 |
|
|
|
77,948 |
|
Operations and maintenance
|
|
|
9,009 |
|
|
|
8,846 |
|
|
|
17,691 |
|
|
|
18,234 |
|
Insurance and claims
|
|
|
3,406 |
|
|
|
3,250 |
|
|
|
7,352 |
|
|
|
6,869 |
|
Depreciation and
amortization
|
|
|
7,426 |
|
|
|
8,647 |
|
|
|
15,422 |
|
|
|
16,679 |
|
Revenue equipment rentals
|
|
|
8,651 |
|
|
|
6,977 |
|
|
|
18,027 |
|
|
|
13,040 |
|
Purchased transportation
|
|
|
20,103 |
|
|
|
12,759 |
|
|
|
38,231 |
|
|
|
28,520 |
|
Costs of products and services
sold
|
|
|
1,570 |
|
|
|
1,566 |
|
|
|
3,202 |
|
|
|
3,134 |
|
Communications and utilities
|
|
|
1,206 |
|
|
|
1,131 |
|
|
|
2,444 |
|
|
|
2,348 |
|
Operating taxes and licenses
|
|
|
2,398 |
|
|
|
2,340 |
|
|
|
4,759 |
|
|
|
4,724 |
|
General and other operating
|
|
|
1,641 |
|
|
|
2,070 |
|
|
|
3,660 |
|
|
|
4,558 |
|
Total operating expenses
|
|
|
124,390 |
|
|
|
115,292 |
|
|
|
249,510 |
|
|
|
255,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
2,844 |
|
|
|
4,354 |
|
|
|
5,561 |
|
|
|
11,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
(17 |
) |
|
|
(5 |
) |
|
|
(38 |
) |
|
|
(12 |
) |
Interest expense
|
|
|
558 |
|
|
|
1,022 |
|
|
|
1,221 |
|
|
|
2,124 |
|
Other (income) expense, net
|
|
|
13 |
|
|
|
(13 |
) |
|
|
103 |
|
|
|
(10 |
) |
Income
before income taxes
|
|
|
2,290 |
|
|
|
3,350 |
|
|
|
4,275 |
|
|
|
9,204 |
|
Provision
for income taxes
|
|
|
1,269 |
|
|
|
1,652 |
|
|
|
2,688 |
|
|
|
4,737 |
|
Net income
|
|
$ |
1,021 |
|
|
$ |
1,698 |
|
|
$ |
1,587 |
|
|
$ |
4,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$ |
0.05 |
|
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.20 |
|
Basic earnings per share
|
|
$ |
0.05 |
|
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.21 |
|
Average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
22,217 |
|
|
|
22,162 |
|
|
|
22,203 |
|
|
|
22,096 |
|
Basic
|
|
|
21,867 |
|
|
|
21,746 |
|
|
|
21,857 |
|
|
|
21,664 |
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For
the six months ended December 31, 2009 and 2008
(Dollars
in thousands)
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
$ |
1,587 |
|
|
$ |
4,467 |
|
Adjustments to reconcile net
income to net cash provided
by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
14,995 |
|
|
|
18,178 |
|
(Gain)\Loss on sale of
equipment
|
|
|
433 |
|
|
|
(1,499 |
) |
Stock based compensation
|
|
|
1,695 |
|
|
|
1,169 |
|
Deferred income taxes
|
|
|
1,762 |
|
|
|
1,364 |
|
Provision for doubtful
accounts
|
|
|
117 |
|
|
|
61 |
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
(839 |
) |
|
|
21,441 |
|
Income tax recoverable
|
|
|
(1,535 |
) |
|
|
3,404 |
|
Tires in service
|
|
|
(741 |
) |
|
|
(450 |
) |
Prepaid expenses and other
current assets
|
|
|
267 |
|
|
|
4,737 |
|
Other assets
|
|
|
328 |
|
|
|
(1,201 |
) |
Accounts payable and accrued
expenses
|
|
|
803 |
|
|
|
(10,656 |
) |
Net cash provided by operating
activities
|
|
|
18,872 |
|
|
|
41,015 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property and
equipment
|
|
|
(27,511 |
) |
|
|
(21,125 |
) |
Proceeds on sale of property and
equipment
|
|
|
23,406 |
|
|
|
20,169 |
|
Purchase of business, net of
cash
|
|
|
--- |
|
|
|
(24,100 |
) |
Net cash used in investing
activities
|
|
|
(4,105 |
) |
|
|
(25,056 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Payments on long-term debt
|
|
|
(6,110 |
) |
|
|
(14,906 |
) |
Principal payments under capital
lease obligations
|
|
|
(3,327 |
) |
|
|
(3,296 |
) |
Net cash (used in) financing
activities
|
|
|
(9,437 |
) |
|
|
(18,202 |
) |
Effect of exchange rates on cash
and cash equivalents
|
|
|
424 |
|
|
|
--- |
|
Increase\(Decrease)
in cash and cash equivalents
|
|
|
5,754 |
|
|
|
(2,243 |
) |
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of year
|
|
|
863 |
|
|
|
2,325 |
|
Cash
and cash equivalents at end of year
|
|
$ |
6.617 |
|
|
$ |
82 |
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$ |
1,311 |
|
|
$ |
2,264 |
|
Income taxes paid
|
|
|
3,885 |
|
|
|
--- |
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2009
(Unaudited)
1. Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements include the
accounts of Celadon Group, Inc. and its majority owned subsidiaries (the
"Company"). All material intercompany balances and transactions have
been eliminated in consolidation.
The
unaudited condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") in the United
States of America pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") for interim financial statements. Certain
information and footnote disclosures have been condensed or omitted pursuant to
such rules and regulations. In the opinion of management, the
accompanying unaudited financial statements reflect all adjustments, which are
necessary for a fair presentation of the financial condition and results of
operations for these periods. The results of operations for the
interim period are not necessarily indicative of the results for a full
year. These condensed consolidated financial statements and notes
thereto should be read in conjunction with the Company's audited condensed
consolidated financial statements and notes thereto, included in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2009.
The
preparation of the financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could
differ from those estimates.
2.
|
New
Accounting Pronouncements
|
In
September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 157, Fair Value
Measurements ("SFAS 157"), which was primarily codified into Topic 820 in
the Accounting Standards Codification ("ASC"). SFAS 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements required under other accounting pronouncements,
but does not change existing guidance as to whether or not an instrument is
carried at fair value. It also establishes a fair value hierarchy
that prioritizes information used in developing assumptions when pricing an
asset or liability. SFAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. In February 2008, FASB issued
Staff Position No. 157-2, which provides a one-year delayed application of
SFAS 157 for nonfinancial assets and liabilities, except for items that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). The Company's adoption of the provisions
of SFAS 157 with respect to the financial assets and liabilities measured at
fair value did not have a material impact on the fair value measurements or the
consolidated financial statements. In accordance with SFAS 157-2, the
Company's adoption did not have a material impact on nonfinancial assets and
nonfinancial liabilities, including, but not limited to, the valuation of the
Company's reporting units for the purpose of assessing goodwill impairment, the
valuation of property and equipment when assessing long-lived asset impairment,
and the valuation of assets acquired and liabilities assumed in business
combinations. In October 2008, FASB issued SFAS 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset is Not Active, which
became effective upon issuance, including periods for which financial statements
have not been issued. SFAS 157-3 clarifies the application of SFAS
157. The Company's adoption of SFAS 157-3 in determination of fair
values did not have a material impact on the consolidated financial
statements.
In
December 2007, FASB issued SFAS No. 141R (revised 2007), Business Combinations ("SFAS
141R"), which was primarily codified into Topic 805 Business Combinations in the
ASC. The statement retains the purchase method of accounting for
acquisitions, but requires a number of changes, including changes in the way
assets and liabilities are recognized in the purchase accounting. It
also changes the recognition of assets acquired and liabilities assumed arising
from contingencies, requires the capitalization of in-process research and
development at fair value, and requires the expensing of acquisition-related
costs as incurred. SFAS 141R was effective for us beginning July 1,
2009 and will apply prospectively to business combinations completed after that
date.
CELADON
GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2009
(Unaudited)
In
December 2007, FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB 51 ("SFAS 160"),
which was primarily codified in to Topic 810 Consolidations in the ASC,
and changes the accounting and reporting for minority
interests. Minority interests will be recharacterized as
noncontrolling interests and will be reported as a component of equity separate
from the parent's equity, and purchases or sales of equity interests that do not
result in a change in control will be accounted for as equity
transactions. In addition, net income attributable to the
noncontrolling interest will be included in consolidated net income on the face
of the income statement and, upon a loss of control, the interest sold, as well
as any interest retained, will be recorded at fair value with any gain or loss
recognized in earnings. SFAS 160 was effective for us beginning July
1, 2009 and did not have a material impact on the consolidated financial
statements.
In March
2008, FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement
No. 133 ("SFAS 161"), which was primarily codified into Topic 815
Derivatives and Hedging
in the ASC. SFAS 161 requires enhanced disclosures about an entity's
derivative and hedging activities, including (i) how and why an entity uses
derivative instruments, (ii) how derivative instruments and related hedged
items are accounted for under SFAS No. 133, and (iii) how derivative
instruments and related hedged items affect an entity's financial position,
financial performance, and cash flows. The Company adopted this
statement effective July 1, 2009.
In May
2009, FASB issued SFAS No. 165, Subsequent Events, which was
primarily codified into Topic 855 Subsequent Events in the
ASC. This standard is intended to establish general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be
issued. Specifically, this standard sets forth the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet
date. SFAS No. 165 is effective for fiscal years and interim periods
ended after June 15, 2009. We adopted this statement effective July
1, 2009.
In April
2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments, which were primarily codified into Topic 825
into the ASC. This FSP amends FASB Statement No. 107, to require
disclosures about fair values of financial instruments for interim reporting
periods as well as in annual financial statements. The FSP also
amends APB Opinion No. 28 to require those disclosures in summarized
financial information at interim reporting periods. This FSP was
effective for interim reporting periods ending after June 15,
2009. The adoption of this FSP did not affect the Company's condensed
consolidated financial statements.
In June
2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles, which was primarily codified into Topic 105 Generally Accepted Accounting
Standards in the ASC. This standard will become the single
source of authoritative nongovernmental U.S. generally accepted accounting
principles ("GAAP"), superseding existing FASB, American Institute of Certified
Public Accountants ("AICPA"), Emerging Issues Task Force ("EITF"), and related
accounting literature. This standard reorganizes the thousands of
GAAP pronouncements into roughly 90 accounting topics and displays them using a
consistent structure. Also included is relevant Securities and
Exchange Commission guidance organized using the same topical structure in
separate sections. This guidance was effective for financial
statements issued for reporting periods that end after September 15,
2009. Beginning in the first quarter of 2010, this guidance
impacts the Company's financial statements and related disclosures as all
references to authoritative accounting literature reflect the newly adopted
codification.
CELADON
GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2009
(Unaudited)
3. Income
Taxes
Income
tax expense varies from the federal corporate income tax rate of 35%, primarily
due to state income taxes, net of federal income tax effect and our permanent
differences primarily related to our per diem pay structure.
The
company follows ASC Topic 740-10-25 in Accounting for Uncertainty in Income
Taxes. Topic 740 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. As of
December 31, 2009, the Company recorded a $0.6 million liability for
unrecognized tax benefits, a portion of which represents penalties and
interest.
As of
December 31, 2009, we are subject to U.S. Federal income tax examinations for
the tax years 2006 through 2008. We file tax returns in numerous
state jurisdictions with varying statutes of limitations.
4. Earnings
Per Share
The
difference in basic and diluted weighted average shares is due to the assumed
exercise of outstanding stock options. A reconciliation of the basic
and diluted earnings per share calculation is as follows (amounts in thousands,
except per share amounts):
|
|
For
three months ended
December
31,
|
|
|
For
six months ended
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
1,021 |
|
|
$ |
1,698 |
|
|
$ |
1,587 |
|
|
$ |
4,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
21,867 |
|
|
|
21,746 |
|
|
|
21,857 |
|
|
|
21,664 |
|
Equivalent shares issuable upon exercise of stock options and restricted
stock
|
|
|
350 |
|
|
|
416 |
|
|
|
346 |
|
|
|
432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
shares
|
|
|
22,217 |
|
|
|
22,162 |
|
|
|
22,203 |
|
|
|
22,096 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.05 |
|
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.21 |
|
Diluted
|
|
$ |
0.05 |
|
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.20 |
|
CELADON
GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2009
(Unaudited)
5. Segment
Information and Significant Customers
The
Company operates in two segments, transportation and e-commerce. The
Company generates revenue in the transportation segment, primarily by providing
truckload-hauling services through its subsidiaries Celadon Trucking Services
Inc. ("CTSI"), Celadon Logistics Services, Inc ("CLSI"), Servicios de
Transportacion Jaguar, S.A. de C.V., ("Jaguar"), and Celadon Canada, Inc.
("CelCan"). The Company provides certain services over the Internet
through its e-commerce subsidiary, TruckersB2B, Inc.
("TruckersB2B"). TruckersB2B is an Internet based
"business-to-business" membership program, owned by Celadon E-Commerce, Inc., a
wholly owned subsidiary of Celadon Group, Inc. The e-commerce segment
generates revenue by providing discounted fuel, tires, and other products and
services to small and medium-sized trucking companies. The Company
evaluates the performance of its operating segments based on operating income
(amounts below in thousands).
|
|
Transportation
|
|
|
E-commerce
|
|
|
Consolidated
|
|
Three
months ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
$ |
125,034 |
|
|
$ |
2,200 |
|
|
$ |
127,234 |
|
Operating income
|
|
|
2,576 |
|
|
|
268 |
|
|
|
2,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
$ |
117,396 |
|
|
$ |
2,250 |
|
|
$ |
119,646 |
|
Operating income
|
|
|
4,045 |
|
|
|
309 |
|
|
|
4,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
$ |
250,559 |
|
|
$ |
4,512 |
|
|
$ |
255,071 |
|
Operating income
|
|
|
4,971 |
|
|
|
590 |
|
|
|
5,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
$ |
262,008 |
|
|
$ |
4,506 |
|
|
$ |
266,514 |
|
Operating income
|
|
|
10,668 |
|
|
|
638 |
|
|
|
11,306 |
|
Information
as to the Company's operating revenue by geographic area is summarized below (in
thousands). The Company allocates operating revenue based on country
of origin of the tractor hauling the freight:
|
|
For
the three months ended
December
31,
|
|
|
For
the six months ended
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Operating
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$ |
110,882 |
|
|
$ |
104,789 |
|
|
$ |
222,738 |
|
|
$ |
232,988 |
|
Canada
|
|
|
9,230 |
|
|
|
8,455 |
|
|
|
19,190 |
|
|
|
19,691 |
|
Mexico
|
|
|
7,122 |
|
|
|
6,402 |
|
|
|
13,143 |
|
|
|
13,835 |
|
Total
|
|
$ |
127,234 |
|
|
$ |
119,646 |
|
|
$ |
255,071 |
|
|
$ |
266,514 |
|
No
customer accounted for more than 5% of the Company's total revenue during any of
its two most recent fiscal years or the interim periods presented
above.
CELADON
GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2009
(Unaudited)
6. Stock
Based Compensation
The
company accounts for all share-based grants to employees based up a grant date
fair value of an award in accordance with FAS 123R, which was primarily codified
into Topic 718 in the ASC. On January 2006, stockholders approved the
Company's 2006 Omnibus Incentive Plan ("2006 Plan"), which provides various
vehicles to compensate the Company's key employees. The 2006 Plan
utilizes such vehicles as stock options, restricted stock grants, and stock
appreciation rights ("SARs"). The 2006 Plan, as amended, authorized
the Company to grant 2,687,500 shares. The Company has granted 2,000
stock options and 57,604 shares of restricted stock pursuant to the 2006 Plan in
fiscal 2010. The Company is authorized to grant an additional
1,019,881 shares pursuant to the 2006 Plan.
The
following table summarizes the expense components of our stock based
compensation program:
|
|
For
three months ended
December
31,
|
|
|
For
six months ended
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options expense
|
|
$ |
271 |
|
|
$ |
299 |
|
|
$ |
591 |
|
|
$ |
630 |
|
Restricted
stock expense
|
|
|
350 |
|
|
|
431 |
|
|
|
692 |
|
|
|
725 |
|
Stock
appreciation rights expense (income)
|
|
|
(79 |
) |
|
|
(601 |
) |
|
|
320 |
|
|
|
(340 |
) |
Total stock related
compensation expense
|
|
$ |
542 |
|
|
$ |
129 |
|
|
$ |
1,603 |
|
|
$ |
1,015 |
|
The
Company has granted a number of stock options under various
plans. Options granted to employees have been granted with an
exercise price equal to the market price on the grant date and expire on the
tenth anniversary of the grant date. The majority of options granted
to employees vest 25 percent per year, commencing with the first anniversary of
the grant date. Options granted to non-employee directors have been
granted with an exercise price equal to the market price on the grant date, vest
over one to four years, commencing with the first anniversary of the grant date,
and expire on the tenth anniversary of the grant date.
A summary
of the activity of the Company's stock option plans as of December 31, 2009 and
changes during the period then ended is presented below:
Options
|
|
Shares
|
|
|
Weighted-Average
Exercise
Price
|
|
|
Weighted-Average Remaining Contractual Term
|
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at July 1, 2009
|
|
|
1,289,841 |
|
|
$ |
9.87 |
|
|
|
7.04 |
|
|
$ |
677,650 |
|
Granted
|
|
|
2,000 |
|
|
$ |
10.23 |
|
|
|
--- |
|
|
|
--- |
|
Exercised
|
|
|
(7,500 |
) |
|
$ |
1.83 |
|
|
|
--- |
|
|
|
--- |
|
Forfeited or
expired
|
|
|
(10,750 |
) |
|
$ |
10.42 |
|
|
|
--- |
|
|
|
--- |
|
Outstanding
at December 31, 2009
|
|
|
1,273,591 |
|
|
$ |
9.91 |
|
|
|
6.57 |
|
|
$ |
2,252,621 |
|
Exercisable
at December 31, 2009
|
|
|
812,566 |
|
|
$ |
9.97 |
|
|
|
6.11 |
|
|
$ |
1,523,146 |
|
CELADON GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2009
(Unaudited)
The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:
|
|
Fiscal
2010
|
|
|
Fiscal
2009
|
|
Weighted
average grant date fair value
|
|
$ |
4.12 |
|
|
$ |
4.84 |
|
Dividend
yield
|
|
|
0 |
|
|
|
0 |
|
Expected
volatility
|
|
|
49.8 |
% |
|
|
47.1 |
% |
Risk-free
interest rate
|
|
|
1.32 |
% |
|
|
2.09 |
% |
Expected
lives
|
|
4.0
years
|
|
|
4.0
years
|
|
Restricted
Shares
|
|
Number of
Shares
|
|
|
Weighted Average Grant Date Fair
Value
|
|
Unvested
at July 1, 2009
|
|
|
309,706 |
|
|
$ |
11.81 |
|
Granted
|
|
|
57,604 |
|
|
$ |
9.24 |
|
Vested
|
|
|
(101,988 |
) |
|
$ |
10.61 |
|
Forfeited
|
|
|
(20,444 |
) |
|
$ |
14.88 |
|
Unvested
at December 31, 2009
|
|
|
244,878 |
|
|
$ |
11.45 |
|
Restricted
shares granted to employees have been granted with a fair value equal to the
market price on the grant date and the grants vest by 25 percent or 33 percent
per year, commencing with the first anniversary of the grant date. In
addition, for a portion of the shares certain financial targets must be met for
these shares to vest. Restricted shares granted to non-employee
directors have been granted with a fair value equal to the market price on the
grant date and vest on the date of the Company's next annual
meeting.
As of
December 31, 2009, the Company had $1.0 million and $2.4 million of total
unrecognized compensation expense related to stock options and restricted stock,
respectively, that is expected to be recognized over the remaining period of
approximately 2.1 years for stock options and 2.5 years for restricted
stock.
Stock
Appreciation Rights
|
|
Number of
Shares
|
|
|
Weighted Average Grant Date Fair
Value
|
|
Vested
at July 1, 2009
|
|
|
144,844 |
|
|
$ |
8.64 |
|
Granted
|
|
|
--- |
|
|
|
--- |
|
Paid
|
|
|
--- |
|
|
|
--- |
|
Forfeited
|
|
|
--- |
|
|
|
--- |
|
Vested
at December 31, 2009
|
|
|
144,844 |
|
|
$ |
8.64 |
|
SARs
granted to employees vested on a four year vesting schedule.
CELADON GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2009
(Unaudited)
7. Stock
Repurchase Programs
On
October 24, 2007, the Company's Board of Directors authorized a stock repurchase
program pursuant to which the Company purchased 2,000,000 shares of the
Company's common stock in open market transactions at an aggregate cost of
approximately $13.8 million. We intend to hold repurchased shares in
treasury for general corporate purposes, including issuances under stock
plans. We account for treasury stock using the cost
method.
8. Comprehensive
Income
Comprehensive
income consisted of the following components for the quarter and the six months
ended December 31, 2009 and 2008, respectively (in thousands):
|
|
Three
months ended
December
31,
|
|
|
Six
months ended
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
1,021 |
|
|
$ |
1,698 |
|
|
$ |
1,587 |
|
|
$ |
4,467 |
|
Currency
hedges
|
|
|
72 |
|
|
|
(45 |
) |
|
|
29 |
|
|
|
(45 |
) |
Foreign
currency translation adjustments
|
|
|
620 |
|
|
|
(4,669 |
) |
|
|
1,326 |
|
|
|
(5,862 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income
|
|
$ |
1,713 |
|
|
$ |
(3,016 |
) |
|
$ |
2,942 |
|
|
$ |
(1,440 |
) |
9. Commitments
and Contingencies
The
Company has outstanding commitments to purchase approximately $32.6 million of
revenue equipment at December 31, 2009.
Standby
letters of credit, not reflected in the accompanying consolidated financial
statements, aggregated to approximately $0.3 million at December 31,
2009. In addition, at December 31, 2009, 650,000 treasury shares
were held in a trust as collateral for self insurance reserves.
The
Company has employment and consulting agreements with various key employees
providing for minimum combined annual compensation of $700,000 in fiscal
2010.
There are
various claims, lawsuits, and pending actions against the Company and its
subsidiaries in the normal course of the operation of their businesses with
respect to cargo, auto liability, and income taxes.
The Company has future operating lease residual value guarantees
of approximately $76.7 million, as of December 31, 2009.
On August
8, 2007, the 384th District Court of the State of Texas situated in El Paso,
Texas, rendered a judgment against CTSI, for approximately $3.4 million in the
case of Martinez v. Celadon Trucking Services, Inc., which was originally filed
on September 4, 2002. The case involves a workers' compensation claim
of a former employee of CTSI who suffered a back injury as a result of a traffic
accident. CTSI and the Company believe all actions taken were proper
and legal and contend that the proper and exclusive place for resolution of this
dispute was before the Indiana Workers' Compensation Board. While
there can be no certainty as to the outcome, the Company believes that the
ultimate resolution of this dispute will not have a materially adverse effect on
its consolidated financial position, cash flows, or results of
operations. CTSI filed an appeal of the decision to the Texas Court
of Appeals in October 2007. Appellate briefs have been filed by CTSI
and the plaintiff and the Americal Trucking Associations Litigation Center has
filed an amicus curiae brief in support of CTSI's position. The Texas Court of Appeals
has set this matter for oral argument on February 18, 2010 in El Paso,
Texas.
CELADON
GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2009
(Unaudited)
10. Fair
Value Measurements
The
Company adopted SFAS No. 157, which was primarily codified into Topic 820 in the
ASC,
effective October 1, 2008. Under this standard, the definition
of fair value focuses on the price that would be received to sell an asset or
paid to transfer a liability (i.e., the "exit price") in an orderly transaction
between market participants at the measurement date. As permitted by
FSP No. FAS 157-2, Effective
Date of FASB Statement No. 157, we deferred the adoption of SFAS No. 157
until October 1, 2010 for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at fair value in the
consolidated financial statements on a recurring basis (at lease
annually).
SFAS No.
157 establishes a fair value hierarchy that prioritizes the valuation
approaches, based on reliability of inputs, as follows:
Level 1 inputs are
quoted prices in active markets for identical assets or liabilities that the
reporting entity has the ability to access at the measurement
date. An active market for the asset or liability is a market in
which transactions for the asset or liability occur with sufficient frequency
and volume to provide pricing information on an ongoing basis.
Level 2 inputs are
inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly. Level 2 inputs
include: quoted prices for similar assets or liabilities in active markets,
inputs other than quoted prices that are observable for the asset or liability
(e.g., interest rates
and yield curves observable at commonly quoted intervals or current market) and
contractual prices for the underlying financial instrument, as well as other
relevant economic measures.
Level 3 inputs are
unobservable inputs for the asset or liability. Unobservable inputs
shall be used to measure fair value to the extent that observable inputs are not
available, thereby allowing for situations in which there is little, if any,
market activity for the asset or liability at the measurement
date. Unobservable inputs shall reflect the reporting entity's own
assumptions about the assumptions that market participants would use in pricing
the asset or liability (including assumptions about risk).
As of
December 31, 2009, the only assets or liabilities that were carried at fair
value within our consolidated financial statements (other than cash equivalents)
were derivative instruments of $4,000 which were valued based upon Level 2
inputs.
11. Reclassifications
and Adjustments
Certain
items in the prior fiscal year's consolidated financial statements have been
reclassified to conform to the current presentation. In addition,
during the first quarter of fiscal 2010, the Company recorded a $0.5 million
reduction to accumulated other comprehensive loss related to foreign currency
translations from a discontinued operation in fiscal 1996. The
Company determined that the amounts that related to prior periods were
immaterial to all prior periods and therefore recognized the reduction to
retained earnings during the first quarter of fiscal 2010 as an immaterial error
correction.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Disclosure
Regarding Forward Looking Statements
This
Quarterly Report contains certain statements that may be considered
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements involve known and
unknown risks, uncertainties, and other factors which may cause the actual
results, events, performance, or achievements of the Company to be materially
different from any future results, events, performance, or achievements
expressed in or implied by such forward-looking statements. Such
statements may be identified by the fact that they do not relate strictly to
historical or current facts. These statements generally use words
such as "believe," "expect," "anticipate," "project," "forecast," "should,"
"estimate," "plan," "outlook," "goal," and similar expressions. While
it is impossible to identify all factors that may cause actual results to differ
from those expressed in or implied by forward-looking statements, the risks and
uncertainties that may affect the Company's business, include, but are not
limited to, those discussed in the section entitled Item 1A. Risk Factors set
forth below.
All such
forward-looking statements speak only as of the date of this Form
10-Q. You are cautioned not to place undue reliance on such
forward-looking statements. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in the
Company's expectations with regard thereto or any change in the events,
conditions, or circumstances on which any such statement is based.
References
to the "Company," "we," "us," "our," and words of similar import refer to
Celadon Group, Inc. and its consolidated subsidiaries.
Business
Overview
We are
one of North America's twenty largest truckload carriers as measured by
revenue. We generated $490.3 million in operating revenue during
our fiscal year ended June 30, 2009. We have grown significantly
since our incorporation in 1986 through internal growth and a series of
acquisitions since 1995. As a dry van truckload carrier, we generally
transport full trailer loads of freight from origin to destination without
intermediate stops or handling. Our customer base includes many
Fortune 500 companies.
In our
international operations, we offer time-sensitive transportation in and between
the United States and two of its largest trading partners, Mexico and
Canada. We generated approximately one-half of our revenue in fiscal
2009 from international movements, and we believe our annual border crossings
make us the largest provider of international truckload movements in North
America. We believe that our strategically located terminals and
experience with the language, culture, and border crossing requirements of each
North American country provide a competitive advantage in the international
trucking marketplace.
We
believe our international operations, particularly those involving Mexico, offer
an attractive business niche. The additional complexity of and need
to establish cross-border business partners and to develop strong organization
and adequate infrastructure in Mexico affords some barriers to competition that
are not present in traditional U.S. truckload services. Recently, we
have become aware of various manufacturers that have moved, or indicated an
interest in moving, certain of their manufacturing plants from China to
Mexico. To the extent this near-sourcing trend develops and expands,
we believe it will offer us a unique opportunity to increase our operations to
and from Mexico.
Our
success is partially dependent upon the success of our operations in Mexico and
Canada, and we are subject to risks of doing business internationally, including
fluctuations in foreign currencies, changes in the economic strength of the
countries in which we do business, difficulties in enforcing contractual
obligations and intellectual property rights, burdens of complying with a wide
variety of international and United States export and import laws, and social,
political, and economic instability. Additional risks associated with
our foreign operations, including restrictive trade policies and imposition of
duties, taxes, or government royalties by foreign governments, are present but
largely mitigated by the terms of NAFTA.
In
addition to our international business, we offer a broad range of truckload
transportation services within the United States, including long-haul, regional,
dedicated, intermodal, and logistics. With six different asset-based
acquisitions from 2003 to 2008, we expanded our operations and service offerings
within the United States and significantly improved our lane density, freight
mix, and customer diversity.
We also
operate TruckersB2B, a profitable marketing business that affords volume
purchasing power for items such as fuel, tires, and equipment to approximately
20,000 trucking fleets representing approximately 480,000
tractors. TruckersB2B is included in our e-commerce unit, which is a
separate operating segment under generally accepted accounting
principles
Recent
Results and Financial Condition
For the
second quarter of fiscal 2010, total revenue increased 6.4% to $127.2 million,
compared with $119.6 million for the second quarter of fiscal
2009. Freight revenue, which excludes fuel surcharge, increased 10.8%
to $109.1 million for the second quarter of fiscal 2010, compared with $98.5
million for the second quarter of fiscal 2009. Net income decreased
to $1.0 million for the second quarter of fiscal 2010, compared with $1.7
million for the second quarter of fiscal 2009, and earnings per diluted share
decreased to $0.05 from $0.08.
At
December 31, 2009, our total balance sheet debt (including capital lease
obligations less cash) was $32.9 million, and our total stockholders' equity was
$147.9 million. At December 31, 2009, our debt to capitalization
ratio was 18.2%. At December 31, 2009, we had $39.7 million of
available borrowing capacity under our revolving credit facility.
Revenue
We
generate substantially all of our revenue by transporting freight for our
customers. Generally, we are paid by the mile or by the load for our
services. We also derive revenue from fuel surcharges, loading and
unloading activities, equipment detention, brokerage, intermodal,
less-than-truckload, other trucking related services, and from
TruckersB2B. We believe that eliminating the impact of the sometimes
volatile fuel surcharge revenue affords a more consistent basis for comparing
our results of operations from period to period. The main factors
that affect our revenue are the revenue per mile we receive from our customers,
the percentage of miles for which we are compensated, the number of tractors
operating, and the number of miles we generate with our
equipment. These factors relate to, among other things, the U.S.
economy, inventory levels, the level of truck capacity in our markets, specific
customer demand, the percentage of team-driven tractors in our fleet, driver
availability, and our average length of haul.
Expenses
and Profitability
The main
factors that impact our profitability on the expense side are the variable costs
of transporting freight for our customers. These costs include fuel
expense, driver-related expenses, such as wages, benefits, training,
recruitment, and independent contractor costs, which we record as purchased
transportation. Expenses that have both fixed and variable components
include maintenance and tire expense and our total cost of insurance and
claims. These expenses generally vary with the miles we travel, but
also have a controllable component based on safety, fleet age, efficiency, and
other factors. Our main fixed cost is the acquisition and financing
of long-term assets, primarily revenue equipment. Other mostly fixed
costs include our non-driver personnel and facilities expenses. In
discussing our expenses as a percentage of revenue, we sometimes discuss changes
as a percentage of revenue before fuel surcharges, in addition to absolute
dollar changes, because we believe the high variable cost nature of our business
makes a comparison of changes in expenses as a percentage of revenue more
meaningful at times than absolute dollar changes.
The
trucking industry has experienced significant increases in expenses over the
past three years, in particular those relating to equipment costs
and insurance. Until recently, many trucking companies had been
able to raise freight rates to cover the increased costs. As freight
demand has softened, carriers have been willing to accept rate decreases to
utilize assets in service.
Revenue
Equipment and Related Financing
For the
remainder of fiscal 2010, we expect to obtain tractors primarily for
replacement. At December 31, 2009, the average age of our
domestic tractor fleet was approximately 1.3 years and the average age of our
trailer fleet was approximately 5.0 years. At December 31, 2009,
we had future operating lease obligations totaling $180.7 million, including
residual value guarantees of approximately $76.7 million.
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
|
|
Tractors
|
|
|
Trailers
|
|
|
Tractors
|
|
|
Trailers
|
|
Owned
equipment
|
|
|
975 |
|
|
|
2,916 |
|
|
|
1,737 |
|
|
|
3,251 |
|
Capital
leased equipment
|
|
|
--- |
|
|
|
3,717 |
|
|
|
--- |
|
|
|
3,723 |
|
Operating
leased equipment
|
|
|
1,735 |
|
|
|
3,332 |
|
|
|
1,166 |
|
|
|
3,101 |
|
Independent
contractors
|
|
|
349 |
|
|
|
--- |
|
|
|
206 |
|
|
|
--- |
|
Total
|
|
|
3,059 |
|
|
|
9,965 |
|
|
|
3,109 |
|
|
|
10,075 |
|
Independent
contractors are utilized through a contract with us to supply one or more
tractors and drivers for our use. Independent contractors must pay
their own tractor expenses, fuel, maintenance, and driver costs and must meet
our specified guidelines with respect to safety. A lease-purchase
program that we offer provides independent contractors the opportunity to
lease-to-own a tractor from the Company or a third party. As of
December 31, 2009, there were 349 independent contractors providing a combined
11.4% of our tractor capacity.
Outlook
Looking
forward, our profitability goal is to achieve an operating ratio of
approximately 90%. We expect this to require improvements in rate per
mile and miles per tractor and decreased non-revenue miles, to overcome expected
additional cost increases. Because a large percentage of our costs
are variable, changes in revenue per mile affect our profitability to a greater
extent than changes in miles per tractor. For the remainder of fiscal
2010, the key factors that we expect to have the greatest effect on our
profitability are our freight revenue per tractor per week (which will be
affected by the general freight environment, including the balance of freight
demand and industry-wide trucking capacity), our compensation of
drivers, our fuel costs, and our insurance and claims. To
overcome cost increases and improve our margins, we will need to achieve
increases in freight revenue per tractor. Operationally, we will seek
improvements in safety, driver recruiting, and retention. Our success
in these areas primarily will affect revenue, driver-related expenses, and
insurance and claims expense. Given the difficult freight market
confronting our industry and the difficult economy, we believe achieving our
near term profitability goal will be difficult.
Results
of Operations
The
following table sets forth the percentage relationship of expense items to
freight revenue for the periods indicated:
|
|
For
the three months ended
December 31,
|
|
|
For
the six months ended
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Freight
revenue(1)
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee
benefits
|
|
|
35.4 |
% |
|
|
38.4 |
% |
|
|
35.8 |
% |
|
|
38.1 |
% |
Fuel(1)
|
|
|
11.2 |
% |
|
|
8.9 |
% |
|
|
11.3 |
% |
|
|
9.3 |
% |
Operations and
maintenance
|
|
|
8.3 |
% |
|
|
9.0 |
% |
|
|
8.0 |
% |
|
|
8.8 |
% |
Insurance and
claims
|
|
|
3.1 |
% |
|
|
3.3 |
% |
|
|
3.3 |
% |
|
|
3.3 |
% |
Depreciation and
amortization
|
|
|
6.8 |
% |
|
|
8.8 |
% |
|
|
7.0 |
% |
|
|
8.0 |
% |
Revenue equipment
rentals
|
|
|
7.9 |
% |
|
|
7.1 |
% |
|
|
8.2 |
% |
|
|
6.3 |
% |
Purchased
transportation
|
|
|
18.4 |
% |
|
|
12.9 |
% |
|
|
17.4 |
% |
|
|
13.7 |
% |
Costs of products and services
sold
|
|
|
1.4 |
% |
|
|
1.6 |
% |
|
|
1.5 |
% |
|
|
1.5 |
% |
Communications and
utilities
|
|
|
1.1 |
% |
|
|
1.1 |
% |
|
|
1.1 |
% |
|
|
1.1 |
% |
Operating taxes and
licenses
|
|
|
2.2 |
% |
|
|
2.4 |
% |
|
|
2.2 |
% |
|
|
2.3 |
% |
General and other
operating
|
|
|
1.6 |
% |
|
|
2.1 |
% |
|
|
1.7 |
% |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating
expenses
|
|
|
97.4 |
% |
|
|
95.6 |
% |
|
|
97.5 |
% |
|
|
94.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
2.6 |
% |
|
|
4.4 |
% |
|
|
2.5 |
% |
|
|
5.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
0.5 |
% |
|
|
1.0 |
% |
|
|
0.6 |
% |
|
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income
taxes
|
|
|
2.1 |
% |
|
|
3.4 |
% |
|
|
1.9 |
% |
|
|
4.4 |
% |
Provision
for income
taxes
|
|
|
1.2 |
% |
|
|
1.7 |
% |
|
|
1.2 |
% |
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
0.9 |
% |
|
|
1.7 |
% |
|
|
0.7 |
% |
|
|
2.1 |
% |
(1)
|
Freight
revenue is total revenue less fuel surcharges. In this table,
fuel surcharges are eliminated from revenue and subtracted from fuel
expense. Fuel surcharges were $18.1 million and $21.1 million
for the second quarter of fiscal 2010 and 2009, respectively, and $35.3
million and $58.7 million for the six months ended December 31, 2009 and
2008, respectively.
|
Comparison
of Three Months Ended December 31, 2009 to Three Months Ended December
31, 2008
Operating
revenue increased by $7.6 million, or 6.4%, to $127.2 million for the
second quarter of fiscal 2010, from $119.6 million for the second quarter
of fiscal 2009. Freight revenue excludes $18.1 million and $21.1
million of fuel surcharge revenue for the second quarter of fiscal 2010 and
2009, respectively.
Freight
revenue increased by $10.6 million, or 10.8%, to $109.1 million for the second
quarter of fiscal 2010, from $98.5 million for the second quarter of fiscal
2009. This increase was attributable to an increase in loaded miles
to 65.1 million for the second quarter of fiscal 2010, from 55.7 million for the
second quarter of fiscal 2009, offset by average freight revenue per loaded mile
decreasing to $1.385 for the second quarter of fiscal 2010, from $1.485 for the
second quarter of fiscal 2009. This decrease in revenue per loaded
mile was the result of a difficult freight market and the aggressive rate
environment confronting our industry and a weakened economy. Despite
the difficult freight market, aggressive rate environment, and weakened economy,
we achieved more than a seasonal pick up in shipments in the second quarter of
fiscal 2010, which resulted in an increase in loaded miles and an increase in
average revenue per tractor per week, which is our primary measure of asset
productivity, to $2,370 in the second quarter of fiscal 2010, from $2,306 for
the second quarter of fiscal 2009.
Revenue
for TruckersB2B was $2.2 million in the second quarter of fiscal 2010, compared
to $2.3 million for the second quarter of fiscal 2009. This
decrease was primarily related to a drop in tire revenues and an increase in the
number of member fleets that failed in the fiscal 2010 quarter, which was
partially offset by an increase in fuel revenues.
Salaries,
wages, and employee benefits were $38.6 million, or 35.4% of freight
revenue, for the second quarter of fiscal 2010, compared to $37.8 million,
or 38.4% of freight revenue, for the second quarter of fiscal
2009. This dollar increase was due to increased driver payroll due to
increased miles and an increase in the value of stock appreciation rights.
These increases were offset by a decrease in administrative payroll due to
efforts to eliminate positions and increase efficiencies. Also, offsetting
this increase was a reduction in driver pay per mile and a reduction in our
driver recruiting costs in the fiscal 2010 quarter as compared to the
fiscal 2009 quarter.
Fuel
expenses, net of fuel surcharge revenue of $18.1 million and $21.1 million for
the second quarter of fiscal 2010 and 2009, respectively, increased to
$12.2 million, or 11.2% of freight revenue, for the second quarter of
fiscal 2010, compared to $8.8 million, or 8.9% of freight revenue, for the
second quarter of fiscal 2009. These increases were related to a
decrease in fuel surcharge revenue, which offsets our fuel expense, and an
increase in the gallons of fuel purchased, due to an increase in miles per
tractor per week. The cost associated with the increase in gallons of
fuel purchased was offset by a 3.1% decrease in average fuel prices to $2.50 per
gallon in the second quarter of fiscal 2010, from $2.58 per gallon in the second
quarter of fiscal 2009.
Operations
and maintenance expense increased to $9.0 million, or 8.3% of freight
revenue, for the second quarter of fiscal 2010, from $8.8 million, or 9.0% of
freight revenue, for the second quarter of fiscal 2009. Operations
and maintenance consist of direct operating expense, maintenance, and tire
expense. These dollar increases in the second quarter of fiscal 2010
are primarily related to an increase in costs associated with physical damage
expense, offset by decreases in our maintenance expenses.
Insurance
and claims expense increased to $3.4 million, or 3.1% of freight revenue, for
the second quarter of fiscal 2010, from $3.3 million, or 3.3% of freight
revenue, for the second quarter of fiscal 2009. Insurance consists of
premiums for liability, physical damage, cargo damage, and workers compensation
insurance, in addition to claims expense. This dollar increase
resulted from an increase in our workers' compensation expense, related to the
severity of claims in the quarter. The majority of this increase was
offset by a decrease in liability claims. Our insurance program
involves self-insurance at various risk retention levels. Claims in
excess of these risk levels are covered by insurance in amounts we consider to
be adequate. We accrue for the uninsured portion of claims based on
known claims and historical experience. We continually revise and
change our insurance program to maintain a balance between premium expense and
the risk retention we are willing to assume. Insurance and claims
expense will vary based primarily on the frequency and severity of claims, the
level of self-retention, and the premium expense.
Depreciation
and amortization, consisting primarily of depreciation of revenue equipment,
decreased to $7.4 million, or 6.8% of freight revenue, for the second quarter of
fiscal 2010, compared to $8.6 million, or 8.8% of freight revenue, for the
second quarter of fiscal 2009. This decrease was primarily
attributable to decreased tractor depreciation, related to a net decrease of
approximately 750 tractors out of our owned fleet as compared to the second
quarter of fiscal 2009. Revenue equipment held under operating leases is
not reflected on our balance sheet and the expenses related to such equipment
are reflected on our statements of operations in revenue equipment rentals,
rather than in depreciation and amortization and interest expense, as is the
case for revenue equipment that is financed with borrowings or capital
leases.
Revenue
equipment rentals increased to $8.7 million, or 7.9% of freight revenue,
for the second quarter of fiscal 2010, compared to $7.0 million or 7.1% of
freight revenue for the second quarter of fiscal 2009. These
increases were attributable to an increase in the number of tractors and
trailers financed under operating leases. At December 31, 2009, 1,735
tractors, or 64.0% of our company tractors, were held under operating leases,
compared to 1,166 tractors, or 40.2% of our company tractors, at December 31,
2008. At December 31, 2009, 3,332 trailers, or 33.4%, of our trailer
fleet were held under operating leases, compared to 3,101, or 30.8% of our
trailer fleet, at December 31, 2008. To the extent we acquire any
tractors in fiscal 2010, we expect to use operating leases for such acquisitions
and, if so, we expect our revenue equipment rental to increase as a percentage
of freight revenue.
Purchased
transportation increased to $20.1 million, or 18.4% of freight revenue, for
the second quarter of fiscal 2010, from $12.8 million or 12.9% of freight
revenue, for the second quarter of fiscal 2009. These increases are
primarily related to an increase in independent contractors to 349, or 11.4% of
our tractor capacity, in the second quarter of fiscal 2010 compared to 206, or
6.6% of tractors in the second quarter of 2009, and the growth of our intermodal
operations, which we added in the middle of fiscal 2009 with the acquisition of
Continental Express, Inc. Independent contractors are drivers who
cover all their operating expenses (fuel, driver salaries, maintenance, and
equipment costs) for a fixed payment per mile. Many of our
independent contractors operate under a tractor lease purchase program that we
began in mid fiscal 2009. Going forward, depending on outside factors
such as the freight environment confronting our industry and the strength of the
U.S. economy, in general, we may decide to increase the number of independent
contractors we engage. Accordingly, to the extent we increase the
number of independent contractors in our fleet and continue to increase our
purchased transportation for brokerage and intermodal transportation, we expect
purchased transportation to increase as well.
All of
our other operating expenses are relatively minor in amount, and there were no
significant changes in such expenses. Accordingly, we have not
provided a detailed discussion of such expenses.
Our
pretax margin, which we believe is a useful measure of our operating performance
because it is neutral with regard to the method of revenue equipment financing
that a company uses, decreased 130 basis points to 2.1% of freight revenue for
the second quarter of fiscal 2010, from 3.4% of freight revenue for the second
quarter of fiscal 2009.
In
addition to other factors described above, Canadian exchange rate fluctuations
principally impact salaries, wages, and benefits and purchased transportation
and, therefore, impacted our pretax margin and results of
operations.
Income
taxes decreased to $1.3 million, with an effective tax rate of 55.4%, for
the second quarter of fiscal 2010, from $1.7 million, with an effective tax rate
of 49.3%, for the second quarter of fiscal 2009. As pre-tax net
income decreases, our non-deductible expenses, such as per diem expense, will
have a greater impact on our effective rate.
As a
result of the factors described above, net income decreased to $1.0 million for
the second quarter of fiscal 2010, compared to a net income of $1.7 million for
the second quarter of fiscal 2009.
Comparison
of Six Months Ended December 31, 2009 to Six Months Ended
December 31, 2008
Operating
revenue decreased by $11.4 million, or 4.3%, to $255.1 million for the
six months ended December 31, 2009, from $266.5 million for the six
months ended December 31, 2008.
Freight
revenue, which excludes $35.3 million and $58.7 million of fuel surcharge for
the six months ended December 31, 2009 and 2008, respectively, increased by
$12.0 million, or 5.8%, to $219.8 million for the six months ended December 31,
2009, from $207.8 million for the six months ended December 31,
2009. This increase was attributable to an increase in loaded miles
to 131.2 million for the first six months ended December 31, 2009, from 116.2
million for the first six months ended December 31, 2008, offset by average
freight revenue per loaded mile decreasing to $1.396 for the six months ended
December 31, 2009, from $1.498 for the six months ended December 31,
2008. This decrease in revenue per loaded mile was the result of a
difficult freight market and the aggressive rate environment confronting our
industry and a weakened economy. This
combination of factors resulted in a decrease in average revenue per tractor per
week, which is our primary measure of asset productivity, to $2,432 for six
months ended December 31, 2009, from $2,488 for six months ended December 31,
2008.
Revenue
for TruckersB2B was flat at $4.5 million for the six months ended December 31,
2009 and 2008.
Salaries,
wages, and employee benefits were $78.6 million, or 35.8% of freight
revenue, for the six months ended December 31, 2009, compared to $79.2 million,
or 38.1% of freight revenue, for the six months ended December 31,
2008. These decreases were due
to a reduction in driver pay per mile, a reduction in our driver recruiting
costs, and a decrease in administrative payroll due to efforts to eliminate
positions and increase efficiencies. These decreases were offset by an
increase in driver payroll due to increased miles and an increase in the value
of stock appreciation rights.
Fuel
expenses, net of fuel surcharge revenue of $35.3 million and $58.7 million for
the six months ended December 31, 2009 and 2008, respectively, increased to
$24.8 million, or 11.3% of freight revenue, for the six months ended
December 31, 2009, compared to $19.3 million, or 9.3% of freight
revenue, for the six months ended December 31, 2008. These increases
were attributable to a decrease in fuel surcharge revenue, which offsets our
fuel expense, and an increase in the gallons of fuel purchased, due to an
increase in miles per tractor per week. The cost associated with the
increase in gallons of fuel purchased was partially offset by a 26.7% decrease
in average fuel prices to $2.41 per gallon in the six months ended December 31,
2009, from $3.29 in the six months ended December 31, 2008.
Operations
and maintenance decreased to $17.7 million, or 8.0% of freight revenue, for
the six months ended December 31, 2009, from $18.2 million, or 8.8% of
freight revenue, for the six months ended December 31,
2008. Operations and maintenance consist of direct operating expense,
maintenance, physical damage, and tire expense. These decreases are
primarily related to a decrease in costs associated with equipment
maintenance.
Insurance
and claims expense was $7.4 million for the six months ended December 31,
2009, compared to $6.9 million for the six months ended December 31,
2008. The percentage of freight revenue remained constant at
3.3%. Insurance consists of premiums for liability, cargo
damage, and workers compensation insurance. This dollar increase is
attributed to an increase in workers' compensation claims and cargo claims,
offset by a decrease in our liability claims. Our insurance program
involves self-insurance at various risk retention levels. Claims in
excess of these risk levels are covered by insurance in amounts we consider to
be adequate. We accrue for the uninsured portion of claims based on
known claims and historical experience. We continually revise and
change our insurance program to maintain a balance between premium expense and
the risk retention we are willing to assume.
Depreciation
and amortization, consisting primarily of depreciation of revenue equipment,
decreased to $15.4 million, or 7.0% of freight revenue, for the six months
ended December 31, 2009, from $16.7 million, or 8.0% of freight
revenue, for the six months ended December 31, 2008. These decreases
are primarily due to a decrease in tractor depreciation related to a net
decrease of approximately 750 tractors out of our owned fleet, as compared to
fiscal 2009. Revenue equipment held under operating leases is not
reflected on our balance sheet and the expenses related to such equipment are
reflected on our statements of operations in revenue equipment rentals, rather
than in depreciation and amortization and interest expense, as is the case for
revenue equipment that is financed with borrowings or capital
leases.
Revenue
equipment rentals were $18.0 million, or 8.2% of freight revenue, for the
six months ended December 31, 2009, compared to $13.0 million, or 6.3% of
freight revenue for the six months ended December 31, 2008. At
December 31, 2009, 1,735 tractors, or 64.0% of our company tractors, were held
under operating leases, compared to 1,166 tractors, or 40.2% of our company
tractors, at December 31, 2008. At December 31, 2009, 3,332 trailers,
or 33.4%, of our trailer fleet were held under operating leases, compared to
3,101, or 30.8% of our trailer fleet, at December 31, 2008. To the
extent we acquire any tractors in fiscal 2010, we expect to use operating leases
for such acquisitions and, if so, we expect our revenue equipment rental to
increase as a percentage of freight revenue.
Purchased
transportation increased to $38.2 million, or 17.4% of freight revenue, for
the six months ended December 31, 2009, from $28.5 million, or 13.7%
of freight revenue, for the six months ended December 31, 2008. These
increases are primarily related to an increase in independent contractors to
349, or 11.4% of our tractor capacity, in fiscal 2010 compared to 206, or 6.6%
of tractors in fiscal 2009, and the growth of our intermodal operations, which
we added in the middle of fiscal 2009 with the acquisition of Continental
Express, Inc. Independent contractors are drivers who cover all their
operating expenses (fuel, driver salaries, maintenance, and equipment costs) for
a fixed payment per mile. Many of our independent contractors operate
under a tractor lease purchase program that we began in mid fiscal
2009. Going forward, depending on outside factors such as the freight
environment confronting our industry and the strength of the U.S. economy, in
general, we may decide to increase the number of independent contractors we
engage. Accordingly, to the extent we increase the number of
independent contractors in our fleet and continue to increase our purchased
transportation for brokerage and intermodal transportation, we expect purchased
transportation to increase as well.
All of
our other operating expenses are relatively minor in amount, and there were no
significant changes in such expenses. Accordingly, we have not
provided a detailed discussion of such expenses.
Our
pretax margin decreased 250 basis points to 1.9% of freight revenue for the six
months ended December 31, 2009, from 4.4% of freight revenue for the six months
ended December 31, 2008.
In
addition to other factors described above, Canadian exchange rate fluctuations
primarily impact salaries, wages and benefits, and purchased transportation,
and, therefore impact our pretax margin and results of operations.
Income
taxes decreased to $2.7 million for the six months ended December 31, 2009,
compared to $4.7 million, for the six months ended December 31, 2008, while the
effective tax rate increased to 62.9% from 51.5%. Income tax expense
for the six months ended December 31, 2008 included an adjustment of
approximately $300,000 related to per diem calculations for prior
years. As per diem is a partially non-deductible expense, our
effective tax rate will fluctuate as net income and per diem fluctuates in the
future.
As a
result of the factors described above, net income decreased by $2.9 million
to $1.6 million for the six months ended December 31, 2009, from a net income of
$4.5 million for the six months ended December 31, 2008.
Liquidity
and Capital Resources
Trucking
is a capital-intensive business. We require cash to fund our
operating expenses (other than depreciation and amortization), to make capital
expenditures and acquisitions, and to repay debt, including principal and
interest payments. Other than ordinary operating expenses, we
anticipate that capital expenditures for the acquisition of revenue equipment
will constitute our primary cash requirement over the next twelve
months. Given our trade cycle for revenue equipment, we
expect minimal capital expenditures over the next twelve
months. We frequently consider potential acquisitions, and if we were
to consummate an acquisition, our cash requirements would increase and we may
have to modify our expected financing sources for the purchase of
tractors. Subject to any required lender approval, we may make
acquisitions in the future. Our principal sources of liquidity are
cash generated from operations, bank borrowings, capital and operating lease
financing of revenue equipment, and proceeds from the sale of used revenue
equipment.
As of
December 31, 2009, we had on order 345 tractors for delivery through fiscal
2010. These revenue equipment orders represent a capital commitment of
approximately $32.6 million, before considering the proceeds of equipment
dispositions. We are using a mixture of cash and off balance sheet
debt to purchase our new tractors. At December 31, 2009, our
total balance sheet debt, including capital lease obligations and current
maturities less cash, was $32.9 million, compared to $84.2 million at December
31, 2008. Our debt-to-capitalization ratio (total balance sheet debt
as a percentage of total balance sheet debt plus total stockholders' equity) was
18.2% at December 31, 2009, and 37.5% at December 31,
2008.
We
believe we will be able to fund our operating expenses, as well as our current
commitments for the acquisition of revenue equipment over the next twelve
months, with a combination of cash generated from operations, borrowings
available under our primary credit facility, and lease financing
arrangements. We will continue to have significant capital
requirements over the long term, and the availability of the needed capital will
depend upon our financial condition and operating results and numerous other
factors over which we have limited or no control, including prevailing market
conditions and the market price of our common stock. However, based
on our operating results, anticipated future cash flows, current availability
under our credit facility, and sources of equipment lease financing that we
expect will be available to us, we do not expect to experience significant
liquidity constraints in the foreseeable future.
Cash
Flows
For the
six months ended December 31, 2009, net cash provided by operations was $18.9
million, compared to cash provided by operations of $41.0 million for the six
months ended December 31, 2008. Cash provided by operations decreased
due to the change in trade receivables, partially offset by the change in
accounts payable and accrued expenses.
Net cash
used in investing activities was $4.1 million for the six months ended December
31, 2009, compared to net cash used in investing activities of $25.1 million for
the six months ended December 31, 2008. Cash used in investing
activities includes the net cash effect of acquisitions and dispositions of
revenue equipment during each period. Capital expenditures for new
equipment totaled $27.5 million for the six months ended December 31, 2009, and
$21.1 million for the six months ended December 31, 2008. Also, in
December 2008 we used $24.1 million to purchase the assets of
Continental. We generated proceeds from the sale of property and
equipment of $23.4 million for the six months ended December 31, 2009, compared
to $20.2 million in proceeds for the six months ended December 31,
2008.
Net cash
used in financing activities was $9.4 million for the six months ended December
31, 2009, compared to net cash used in financing activities of $18.2 million for
the six months ended December 31, 2008. The decrease in cash used for
financing activities was primarily due to the increased payment on our revolving
debt line in the six months ended December 31, 2008. Financing
activity represents borrowings (new borrowings, net of repayment) and payments
of the principal component of capital lease obligations and long-term
debt.
Off-Balance
Sheet Arrangements
Operating
leases have been an important source of financing for our revenue
equipment. Our operating leases include some under which we do not
guarantee the value of the asset at the end of the lease term ("walk-away
leases") and some under which we do guarantee the value of the asset at the end
of the lease term ("residual value"). Therefore, we are subject to
the risk that equipment value may decline, in which case we would suffer a loss
upon disposition and be required to make cash payments because of the residual
value guarantees. We were obligated for residual value guarantees
related to operating leases of $76.7 million at December 31, 2009 compared to
$83.1 million at December 31, 2008. We believe that any residual payment
obligations will be satisfied by the value of the related equipment at the end
of the lease. To the extent the expected value at the lease
termination date is lower than the residual value guarantees, we would accrue
for the difference over the remaining lease term. We anticipate that
going forward we will use a combination of cash generated from operations and
operating leases to finance tractor purchases and operating leases to finance
trailer purchases.
Primary Credit Agreement
On
September 26, 2005, Celadon Group, Inc., Celadon Trucking Services, Inc., and
TruckersB2B entered into an unsecured Credit Agreement (the "Credit Agreement")
with LaSalle Bank National Association, as administrative agent, and LaSalle
Bank National Association, Fifth Third Bank (Central Indiana), and JPMorgan
Chase Bank, N.A., as lenders. The Credit Agreement was amended on
December 23, 2005, by the First Amendment to Credit Agreement, pursuant to which
Celadon Logistics Services, Inc. was added as a borrower to the Credit
Agreement. The Credit Agreement was also amended on June 30, 2007 and
January 22, 2008 by the Second Amendment to Credit Agreement and Third Amendment
to Credit Agreement, respectively. On August 11, 2009, the Credit
Agreement was amended and restated (the "Restatement"). Pursuant to
the Restatement, (i) the maximum available borrowing limit under the Credit
Agreement was reduced from a $70 million unsecured line to a $40 million secured
line and (ii) certain financial covenants were adjusted as follows: Minimum
Fixed Charge ratio to a minimum of .90, Maximum Lease-Adjusted Total Debt to
EBITDAR ratio up to 3.25 to 1, Minimum Tangible Net Worth to $100 million, and
the Minimum Asset Coverage ratio to be no less than 1.25 to 1. The
Restatement and the financial covenants included therein were in effect starting
June 30, 2009. The Credit Agreement, as amended by the Restatement,
matures on January 23, 2013. The Credit Agreement is intended to
provide for ongoing working capital needs and general corporate
purposes. Borrowings under the Credit Agreement are based, at the
option of the Company, on a base rate equal to the greater of the federal funds
rate plus an applicable margin between 0.75% and 1.50% and the administrative
agent's prime rate or LIBOR plus an applicable margin between 2.25% and 3.00%
that is adjusted quarterly based on cash flow coverage. The Credit
Agreement is guaranteed by Celadon E-Commerce, Inc., CelCan, and Jaguar, each of
which is a subsidiary of the Company.
Letters
of credit are limited to an aggregate commitment of $15.0 million and the swing
line facility has a limit of $3.0 million. A commitment fee that is
adjusted quarterly between 0.375% and 0.5% per annum based on cash flow coverage
is due on the daily unused portion of the Credit Agreement. The
Credit Agreement contains certain restrictions and covenants relating to, among
other things, dividends, tangible net worth, cash flow, mergers, consolidations,
acquisitions and dispositions, and total indebtedness. We were in
compliance with these covenants at December 31, 2009, and expect to remain in
compliance for the foreseeable future. At December 31, 2009, none of
our credit facility was utilized for outstanding borrowings and $0.3 million was
utilized for standby letters of credit.
Contractual
Obligations
As of
December 31, 2009, our operating leases, capitalized leases, other debts,
and future commitments have stated maturities or minimum annual payments as
follows:
|
|
Annual
Cash Requirements
as
of December 31, 2009
(in
thousands)
Payments
Due by Period
|
|
|
|
Total
|
|
|
Less
than
1 year
|
|
|
1-3
Years
|
|
|
3-5
Years
|
|
|
More
than
5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
leases
|
|
$ |
104,010 |
|
|
$ |
37,347 |
|
|
$ |
47,688 |
|
|
$ |
11,897 |
|
|
$ |
7,078 |
|
Lease
residual value guarantees
|
|
|
76,717 |
|
|
|
3,662 |
|
|
|
53,647 |
|
|
|
12,806 |
|
|
|
6,602 |
|
Capital
leases(1)
|
|
|
41,543 |
|
|
|
9,692 |
|
|
|
30,281 |
|
|
|
1,570 |
|
|
|
--- |
|
Long-term
debt(1)
|
|
|
912 |
|
|
|
735 |
|
|
|
177 |
|
|
|
--- |
|
|
|
--- |
|
Sub-total
|
|
$ |
223,182 |
|
|
$ |
51,436 |
|
|
$ |
131,793 |
|
|
$ |
26,273 |
|
|
$ |
13,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future
purchase of revenue equipment
|
|
$ |
32,551 |
|
|
$ |
20,857 |
|
|
$ |
3,511 |
|
|
$ |
8,183 |
|
|
|
--- |
|
Employment
and consulting agreements(2)
|
|
|
700 |
|
|
|
700 |
|
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Standby
Letters of
Credit
|
|
|
259 |
|
|
|
259 |
|
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
256,692 |
|
|
$ |
73,252 |
|
|
$ |
135,304 |
|
|
$ |
34,456 |
|
|
$ |
13,680 |
|
(1)
|
Includes
interest.
|
(2)
|
Amounts
do not include amounts that could become payable to our Chief Executive
Officer and Chief Financial Officer under certain circumstances if
their employment by the Company is
terminated.
|
Critical
Accounting Policies
The
preparation of our financial statements in conformity with U.S. generally
accepted accounting principles requires us to make estimates and assumptions
that impact the amounts reported in our consolidated financial statements and
accompanying notes. Therefore, the reported amounts of assets,
liabilities, revenues, expenses, and associated disclosures of contingent assets
and liabilities are affected by these estimates and assumptions. We
evaluate these estimates and assumptions on an ongoing basis,
utilizing
historical experience, consultation with experts, and other methods considered
reasonable in the particular circumstances. Nevertheless, actual
results may differ significantly from our estimates and assumptions, and it is
possible that materially different amounts would be reported using differing
estimates or assumptions. We consider our critical accounting
policies to be those that require us to make more significant judgments and
estimates when we prepare our financial statements. Our critical
accounting policies include the following:
Depreciation of Property and
Equipment. We depreciate our property and equipment using the
straight-line method over the estimated useful life of the asset. We
generally use estimated useful lives of two to seven years for tractors and
trailers, and estimated salvage values for tractors and trailers generally range
from 35% to 50% of the capitalized cost. Gains and losses on the
disposal of revenue equipment are included in depreciation expense in our
statements of operations.
We review
the reasonableness of our estimates regarding useful lives and salvage values of
our revenue equipment and other long-lived assets based upon, among other
things, our experience with similar assets, conditions in the used equipment
market, and prevailing industry practice. Changes in our useful life
or salvage value estimates or fluctuations in market values that are not
reflected in our estimates, could have a material effect on our results of
operations.
Revenue
equipment and other long-lived assets are tested for impairment whenever an
event occurs that indicates an impairment may exist. Expected future
cash flows are used to analyze whether an impairment has occurred. If
the sum of expected undiscounted cash flows is less than the carrying value of
the long-lived asset, then an impairment loss is recognized. We
measure the impairment loss by comparing the fair value of the asset to its
carrying value. Fair value is determined based on a discounted cash
flow analysis or the appraised or estimated market value of the asset, as
appropriate.
Operating
leases. We have financed a substantial percentage of our
tractors and trailers with operating leases. These leases generally
contain residual value guarantees, which provide that the value of equipment
returned to the lessor at the end of the lease term will be no lower than a
negotiated amount. To the extent that the value of the equipment is
below the negotiated amount, we are liable to the lessor for the shortage at the
expiration of the lease. For all equipment, we are required to
recognize additional rental expense to the extent we believe the fair market
value at the lease termination will be less than our obligation to the
lessor.
In
accordance with ASC Topic 840, Accounting for Leases,
property and equipment held under operating leases, and liabilities related
thereto, are not reflected on our balance sheet. All expenses related
to revenue equipment operating leases are reflected on our statements of
operations in the line item entitled "Revenue equipment rentals." As
such, financing revenue equipment with operating leases instead of bank
borrowings or capital leases effectively moves the interest component of the
financing arrangement into operating expenses on our statements of
operations.
Claims Reserves and Estimates.
The primary claims arising for us consist of cargo liability, personal
injury, property damage, collision and comprehensive, workers' compensation, and
employee medical expenses. We maintain self-insurance levels for
these various areas of risk and have established reserves to cover these
self-insured liabilities. We also maintain insurance to cover
liabilities in excess of these self-insurance amounts. Claims
reserves represent accruals for the estimated uninsured portion of reported
claims, including adverse development of reported claims, as well as estimates
of incurred but not reported claims. Reported claims and related loss
reserves are estimated by third party administrators, and we refer to these
estimates in establishing our reserves. Claims incurred but not
reported are estimated based on our historical experience and industry trends,
which are continually monitored, and accruals are adjusted when warranted by
changes in facts and circumstances. In establishing our reserves we
must take into account and estimate various factors, including, but not limited
to, assumptions concerning the nature and severity of the claim, the effect of
the jurisdiction on any award or settlement, the length of time until ultimate
resolution, inflation rates in health care, and in general interest rates, legal
expenses, and other factors. Our actual experience may be different
than our estimates, sometimes significantly. Changes in assumptions
as well as changes in actual experience could cause these estimates to change in
the near term. Insurance and claims expense will vary from period to
period based on the severity and frequency of claims incurred in a given
period.
Accounting for Income
Taxes. Deferred income taxes represent a substantial liability
on our consolidated balance sheet. Deferred income taxes are
determined in accordance with ASC topic 740, Accounting for Income
Taxes. Deferred tax assets and liabilities are recognized for
the expected future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases, and operating loss and tax credit
carry-forwards. We evaluate our tax assets and liabilities on a
periodic basis and adjust these balances as appropriate. We believe
that we have adequately provided for our future tax consequences based upon
current facts and circumstances and current tax law. However, should
our tax positions be challenged and not prevail, different outcomes could result
and have a significant impact on the amounts reported in our consolidated
financial statements.
The
carrying value of our deferred tax assets (tax benefits expected to be realized
in the future) assumes that we will be able to generate, based on certain
estimates and assumptions, sufficient future taxable income in certain tax
jurisdictions to utilize these deferred tax benefits. If these
estimates and related assumptions change in the future, we may be required to
reduce the value of the deferred tax assets resulting in additional income tax
expense. We believe that it is more likely than not that the deferred
tax assets, net of valuation allowance, will be realized, based on forecasted
income. However, there can be no assurance that we will meet our
forecasts of future income. We evaluate the deferred tax assets on a
periodic basis and assess the need for additional valuation
allowances.
Federal
income taxes are provided on that portion of the income of foreign subsidiaries
that is expected to be remitted to the United States.
Seasonality
In the
trucking industry, revenue generally decreases as customers reduce shipments
during the winter holiday season and as inclement weather impedes
operations. At the same time, operating expenses generally increase,
with fuel efficiency declining because of engine idling and
weather. We have substantial operations in the Midwestern and Eastern
United States and Canada. For the reasons stated, in those geographic
regions in particular, third quarter net income historically has been lower than
net income in each of the other three quarters of the year excluding
charges. Our equipment utilization typically improves substantially
between May and October of each year because of seasonal increased shipping and
better weather. Also, during September and October, business
generally increases as a result of increased retail merchandise shipped in
anticipation of the holidays.
Inflation
Many of
our operating expenses, including fuel costs, revenue equipment, and driver
compensation, are sensitive to the effects of inflation, which result in higher
operating costs and reduced operating income. The effects of
inflation on our business during the past three years were most significant in
fuel. The effects of inflation on revenue were not material in the
past three years. We attempt to limit the effects of inflation
through increases in freight rates and fuel surcharges.
Item 3. Quantitative and Qualitative Disclosures about
Market Risk
We
experience various market risks, including fluctuations in interest rates,
variability in currency exchange rates, and fuel prices. We have
established policies, procedures, and internal processes governing our
management of market risks and the use of financial instruments to manage our
exposure to such risks.
Interest Rate
Risk. We are exposed to interest rate risk principally from
our primary credit facility. The credit facility carries a maximum
variable interest rate of either the bank's base rate or LIBOR plus
1.125%. At December 31, 2009, the interest rate for revolving
borrowings under our credit facility was LIBOR plus 1.5%, an effective rate of
4.75%. At December 31, 2009, we did not have any borrowings
outstanding under the credit facility. A hypothetical 10% increase in
the bank's base rate and LIBOR would be immaterial to our net
income.
Currency Exchange Rate
Risk. We are subject to variability in foreign currency
exchange rates in our international operations. Exposure to this
variability is periodically managed primarily through the use of natural hedges,
whereby funding obligations and assets are both managed in the local
currency. We, from time-to-time, enter into currency exchange
agreements to manage our exposure arising from fluctuating exchange rates
related to specific and forecasted transactions. We operate this
program pursuant to documented corporate risk management policies and do not
enter into derivative transactions for speculative purposes.
Our
currency risk consists primarily of foreign currency denominated firm
commitments and forecasted foreign currency denominated intercompany and
third-party transactions. At December 31, 2009, we had outstanding
foreign exchange derivative contracts in notional amounts of $5.1 million with a
fair value of these contracts approximately equal to the original contract
value. Derivative gains/(losses), initially reported as a component
of other comprehensive income, are reclassified to earnings in the period when
the forecasted transaction affects earnings.
Assuming
revenue and expenses for our Canadian operations identical to that in the second
quarter of fiscal 2010 (both in terms of amount and currency mix), we estimate
that a $0.01 decrease in the Canadian dollar exchange rate would reduce our
annual net income by approximately $130,000. Also, we estimate that a
$0.01 decrease in the Mexican peso exchange rate would reduce our annual net
income by approximately $82,000.
Commodity Price
Risk. Shortages of fuel, increases in prices, or rationing of
petroleum products can have a materially adverse effect on our operations and
profitability. Fuel is subject to economic, political, and market
factors that are outside of our control. Historically, we have sought
to recover a portion of short-term increases in fuel prices from customers
through the collection of fuel surcharges. However, fuel surcharges
do not always fully offset increases in fuel prices. As of December
31, 2009, we had no derivative financial instruments in place to reduce our
exposure to fuel price fluctuations.
Item 4. Controls and Procedures
As
required by Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the Company has carried out an evaluation of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures as of the end of the period covered by this Quarterly
Report on Form 10-Q. This evaluation was carried out under the
supervision and with the participation of the Company's management, including
our Chief Executive Officer and our Chief Financial Officer. Based
upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of the
end of the period covered by this Quarterly Report on Form
10-Q. There were no changes in the Company's internal control over
financial reporting that occurred during the second quarter of fiscal 2010 that
have materially affected, or that are reasonably likely to materially affect,
the Company's internal control over financial reporting.
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in the Company's reports filed
or submitted under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Disclosure controls and
procedures include controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding disclosures.
The
Company has confidence in its disclosure controls and
procedures. Nevertheless, the Company's management, including the
Chief Executive Officer and Chief Financial Officer, does not expect that our
disclosure controls and procedures will prevent all errors or intentional
fraud. An internal control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of such internal controls are met. Further, the design of
an internal control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all internal control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected.
Part II. Other Information
Item
1. Legal Proceedings
There are
various claims, lawsuits, and pending actions against the Company and its
subsidiaries which arose in the normal course of the operations of its
business. The Company believes many of these proceedings are covered
in whole or in part by insurance and that none of these matters will have a
material adverse effect on its consolidated financial position or results of
operations in any given period.
On August
8, 2007, the 384th District Court of the State of Texas situated in El Paso,
Texas, rendered a judgment against CTSI, for approximately $3.4 million in the
case of Martinez v. Celadon Trucking Services, Inc., which was originally filed
on September 4, 2002. The case involves a workers' compensation claim
of a former employee of CTSI who suffered a back injury as a result of a traffic
accident. CTSI and the Company believe all actions taken were proper
and legal and contend that the proper and exclusive place for resolution of this
dispute was before the Indiana Workers' Compensation Board. While
there can be no certainty as to the outcome, the Company believes that the
ultimate resolution of this dispute will not have a materially adverse effect on
its consolidated financial position, cash flows, or results of
operations. CTSI filed an appeal of the decision to the Texas Court
of Appeals in October 2007. Appellate briefs have been
filed by CTSI and the plaintiff and the Ameritan Trucking Associations
Litigation Center has filed an amicus curiae brief in support of CTSI's
position. The Texas Court of Appeals has set this matter for oral
argument on February 18, 2010 in El Paso, Texas.
While we
attempt to identify, manage, and mitigate risks and uncertainties associated
with our business, some level of risk and uncertainty will always be
present. Our Form 10-K for the year ended June 30, 2009, in the
section entitled Item 1A. Risk Factors, describes the risks and
uncertainties associated with our business. These risks and
uncertainties have the potential to materially affect our business, financial
condition, results of operations, cash flows, projected results, and future
prospects.
The
Federal Motor Carrier Safety Administration's new Comprehensive Safety Analysis
2010 initiative may decrease the number of available drivers, which may make it
more difficult for us to attract and retain drivers.
The
Federal Motor Carrier Safety Administration's new Comprehensive Safety Analysis
2010 initiative introduces a new enforcement and compliance model, which
implements driver standards in addition to the company standards currently in
place. As a result of this new regulation, there may be a reduced
number of eligible drivers. If current or potential drivers are
eliminated due to the Comprehensive Safety Analysis 2010 initiative, we may have
difficulty attracting and retaining qualified drivers.
Item
4. Submission of Matters to a Vote of Security Holders.
The
Company held its regular Annual Meeting of Stockholders (the "Annual Meeting")
on November 13, 2009. Stockholders representing 20,375,176 shares, or
93.3%, of the total outstanding shares were present in person or by
proxy. At the Annual Meeting, Stephen Russell, Michael Miller,
Anthony Heyworth, Catherine Langham, and Paul Will were elected to serve as
directors for one-year terms. A tabulation of the vote with respect
to each nominee follows:
|
Votes For
|
|
Votes Withheld(1)
|
|
|
|
|
Stephen
Russell
|
13,444,376
|
|
6,930,800
|
Michael
Miller
|
12,361,853
|
|
8,013,323
|
Anthony
Heyworth
|
11,690,447
|
|
8,684,729
|
Catherine
Langham
|
12,399,583
|
|
7,975,593
|
Paul
Will
|
12,778,216
|
|
7,596,960
|
(1)
Includes votes withheld, votes against, abstentions, and broker
non-votes.
Item 5. Other Information.
Item
5.02
|
Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
|
By action
unanimously approved on January 26, 2010, the Compensation and Nominating
Committee of the Board of Directors of the Company made the following stock
option and restricted stock awards, effective January 26, 2010, to Stephen
Russell, Paul Will, Chris Hines, Jonathan Russell, and Kenneth Core, the
Company's named executive officers:
Name and Position
|
|
Stock
Option Awards
|
|
|
Restricted
Stock Awards
|
|
|
|
|
|
|
|
|
Stephen
Russell,
Chairman
and CEO
|
|
|
94,000 |
|
|
|
46,000 |
|
|
|
|
|
|
|
|
|
|
Paul
Will,
Vice
Chairman, Executive Vice President, CFO, Treasurer, and Assistant
Secretary
|
|
|
71,000 |
|
|
|
35,000 |
|
|
|
|
|
|
|
|
|
|
Chris
Hines,
President
and COO
|
|
|
39,000 |
|
|
|
19,000 |
|
|
|
|
|
|
|
|
|
|
Jonathan
Russell,
Executive
Vice President of Logistics
|
|
|
36,000 |
|
|
|
17,000 |
|
|
|
|
|
|
|
|
|
|
Kenneth
Core,
Vice
President and Secretary
|
|
|
-- |
|
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
The
restricted stock and stock option awards vest one-fourth on each of the first
four anniversaries of the grant date, conditioned on continued
employment. The exercise price of the stock options is the closing
price of the Company's stock on January 25, 2010, $9.86. Upon
exercise, the stock options will convert to the Company’s common stock on a
one-for-one basis.
3.1
|
Amended
and Restated Certificate of Incorporation of the Company, effective
January 12, 2006. (Incorporated by reference to Exhibit 3.1 to
the Company's Quarterly Report on Form 10-Q for the quarterly period
ending December 31, 2005, filed with the SEC on January 30,
2006.)
|
3.2
|
Certificate
of Designation for Series A Junior Participating Preferred
Stock. (Incorporated by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2000, filed with the SEC on
September 28, 2000.)
|
3.3
|
Amended
and Restated By-laws of the Company. (Incorporated by reference
to Exhibit 3 to the Company's Current Report on Form 8-K filed with the
SEC on July 3, 2006.)
|
4.1
|
Amended
and Restated Certificate of Incorporation of the Company, effective
January 12, 2006. (Incorporated by reference to Exhibit 3.1 to
the Company's Quarterly Report on Form 10-Q for the quarterly period
ending December 31, 2005, filed with the SEC on January 30,
2006.)
|
4.2
|
Certificate
of Designation for Series A Junior Participating Preferred
Stock. (Incorporated by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2000, filed with the SEC on
September 28, 2000.)
|
4.3
|
Rights
Agreement, dated as of July 20, 2000, between Celadon Group, Inc. and
Fleet National Bank, as Rights Agent. (Incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement on Form
8-A, filed with the SEC on July 20, 2000.)
|
4.4
|
Amended
and Restated By-laws of the Company. (Incorporated by reference
to Exhibit 3 to the Company's Current Report on Form 8-K filed with the
SEC on July 3, 2006.)
|
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 Stephen Russell, 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 Paul Will, 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 Stephen Russell, 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 Paul Will, the Company's Chief
Financial Officer.*
|
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.
|
Celadon
Group, Inc.
(Registrant)
|
|
|
|
|
|
/s/
Stephen Russell |
|
Stephen
Russell
|
|
Chief
Executive Officer
|
|
|
|
|
|
/s/
Paul Will |
|
Paul
Will
|
|
Chief
Financial Officer, Executive Vice President, Treasurer, and Assistant
Secretary
|
|
|
Date: January
29, 2010
|
|
30