[X]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2008
OR
|
|
[
]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period
from to
|
Nevada
|
88-0320154
|
|
(State
/ other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
400
Birmingham Hwy.
|
||
Chattanooga,
TN
|
37419
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code:
|
423-821-1212
|
$0.01
Par Value Class A Common Stock – The NASDAQ Stock Market
LLC
|
|
Securities
registered pursuant to Section 12(b) of the Act:
|
(Title
of class)
|
Securities
registered pursuant to Section 12(g) of the Act:
|
None
|
[
] Large Accelerated Filer
|
[
] Accelerated Filer
|
[ X
] Non-Accelerated Filer
|
Part
I
|
|||
Item
1.
|
Business
|
||
Item
1A.
|
Risk
Factors
|
||
Item
1B.
|
Unresolved
Staff Comments
|
||
Item
2.
|
Properties
|
||
Item
3.
|
Legal
Proceedings
|
||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
||
Part
II
|
|||
Item
5.
|
Market
for Registrant's Common Equity and Related Stockholder
Matters
|
||
Item
6.
|
Selected
Financial Data
|
||
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
||
Item
7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
||
Item
8.
|
Financial
Statements and Supplementary Data
|
||
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
||
Item
9A.
|
Controls
and Procedures
|
||
Item
9B.
|
Other
Information
|
||
Part
III
|
|||
Item
10.
|
Directors,
Executive Officers, and Corporate Governance
|
||
Item
11.
|
Executive
Compensation
|
||
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
||
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
||
Item
14.
|
Principal
Accountant Fees and Services
|
||
Part
IV
|
|||
Item
15.
|
Exhibits
and Financial Statement Schedules
|
||
Signatures
|
||
Report
of Independent Registered Public Accounting Firm
|
||
Financial
Data
|
||
Consolidated
Balance Sheets
|
||
Consolidated
Statements of Operations
|
||
Consolidated
Statements of Stockholders' Equity and Comprehensive Income
(Loss)
|
||
Consolidated
Statements of Cash Flows
|
||
Notes
to Consolidated Financial Statements
|
•
|
Covenant
Transport, Inc. Covenant is our historical flagship operation
and provides expedited long haul, dedicated, and solo-driver
service. During 2008, we decreased the average fleet size by
approximately 5%, while increasing average team-driven tractors by
approximately 200, or 20%. As a result of increasing the
percentage of teams in our fleet, average freight revenue per truck per
week increased by approximately 3%, with average freight revenue per total
mile up approximately 0.4% and miles per truck up approximately 3%.
In late 2008, we stopped adding to our number of teams to evaluate
demand. Our dedicated operations declined by approximately 60
trucks, as we did not renew contracts unless the terms generated an
acceptable
margin.
|
•
|
Southern
Refrigerated Transportation, Inc., or SRT. SRT provides primarily
temperature-controlled service to food, cosmetics, pharmaceutical, and
other companies requiring temperature-protected equipment. At SRT,
profitability improved in 2008 as compared to 2007, due to significant
improvements in average freight revenue per total mile and fuel expense as
SRT reduced the percentage of its freight obtained from freight brokers
and improved its utilization of equipment. In 2008, we
decreased the SRT average fleet size by approximately 2%. Average
freight revenue per truck per week decreased slightly, but profitability
improved as average freight revenue per total mile increased 1.7%, while
miles per truck decreased approximately 2%.
|
•
|
Star
Transportation, Inc. Star provides regional solo-driver
service, with operations concentrated in the southeastern United
States. This market has been characterized by weak demand and
excess competition for the past two years. During 2008, we decreased the
average fleet size by approximately 7%. Average freight revenue per truck
per week decreased by approximately 8%, with average freight revenue per
total mile decreasing 3% and miles per truck decreasing approximately
5%. Lack of demand resulted in continued rate pressure, a high
percentage of unloaded miles, and lower fuel surcharge collection, related
in part, to Star's reliance on brokered freight.
|
•
|
Covenant
Transport Solutions, Inc. Solutions provides freight brokerage
service directly and through freight brokerage agents, who are paid a
commission for the freight they provide. The brokerage operation has
helped us continue to serve customers when we lacked capacity in a given
area or when the load has not met the operating profile of one of our
subsidiaries. Our brokerage loads increased to 27,117 in 2008 from
10,743 loads in 2007. Average revenue per load also increased
approximately 10% to $2,017 in 2008 from $1,843 per load in 2007,
primarily due to an increase in fuel surcharge collection, much of which
is passed on to the third party
carriers.
|
Distribution
of Revenue Among Subsidiaries
|
|
Covenant
Transport
|
58%
|
SRT Refrigerated
|
22%
|
Star
Regional
|
11%
|
Solutions
Brokerage
|
9%
|
Average
Length of Haul. Our average length of haul has decreased over time as we
have increased the use of solo-driver tractors and increased our focus on
regional markets. Shorter lengths of haul frequently involve higher rates
per mile from customers, fewer miles per truck, and a greater percentage
of non-revenue miles caused by re-positioning of
equipment.
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
|
Average Length of
Haul in Miles
|
1,452
|
1,240
|
1,136
|
1,159
|
1,055
|
950
|
920
|
908
|
815
|
815
|
Average
Freight Revenue Per Total Mile. Our average freight revenue per mile
increased sharply until 2006, and since then has been flat. Average
freight revenue per loaded mile has increased approximately 24% since
2000, while non-revenue miles have also increased. This led to a 20%
increase in average freight revenue per total mile. All freight revenue
per mile numbers exclude fuel surcharge revenue.
|
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
Average
Freight Revenue Per Total Mile
(excludes fuel
surcharge revenue)
|
1.13
|
1.15
|
1.14
|
1.15
|
1.17
|
1.27
|
1.36
|
1.36
|
1.36
|
1.36
|
Average
Miles Per Tractor. Our average miles per tractor decreased as our
percentage of team-driven tractors decreased, until 2008.
|
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
Average Miles Per Tractor |
144,601
|
128,754
|
127,714
|
129,906
|
129,656
|
122,899
|
115,765
|
117,621
|
118,159
|
118,992
|
Average
Freight Revenue Per Tractor Per Week. We use average freight revenue per
tractor per week (which excludes fuel surcharges) as our main measure of
asset productivity. This operating metric takes into account the effects
of freight rates, non-revenue miles, and miles per tractor. In addition,
because we calculate average freight revenue per tractor using all of our
trucks, it takes into account the percentage of our fleet that is
unproductive due to lack of drivers, repairs, and other
factors.
|
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
Average
Freight Revenue Per Tractor Per Week
(excludes fuel surcharge revenue)
|
3,123
|
2,842
|
2,803
|
2,870
|
2,897
|
2,995
|
3,013
|
3,077
|
3,088
|
3,105
|
•
|
We
may experience a reduction in overall freight levels, which may impair our
asset utilization;
|
•
|
Certain
of our customers are facing credit issues and could experience cash flow
problems that may lead to payment delays, increased credit risk,
bankruptcies, and other financial hardships that could result in even
lower freight demand and may require us to increase our allowance for
doubtful accounts;
|
•
|
Freight
patterns may change as supply chains are redesigned, resulting in an
imbalance between our capacity and our customers' freight
demand;
|
•
|
Customers
may bid out freight or select competitors that offer lower rates from
among existing choices in an attempt to lower their costs, and we might be
forced to lower our rates or lose freight; and
|
•
|
We
may be forced to accept more freight from freight brokers, where freight
rates are typically lower, or may be forced to incur more non-revenue
miles to obtain loads.
|
•
|
Our
vulnerability to adverse economic conditions and competitive pressures is
heightened;
|
•
|
We
will continue to be required to dedicate a substantial portion of our cash
flows from operations to operating lease payments and repayment of debt,
limiting the availability of cash for other purposes;
|
•
|
Our
flexibility in planning for, or reacting to, changes in our business and
industry will be limited;
|
•
|
Our
profitability is sensitive to fluctuations in interest rates because some
of our debt obligations are subject to variable interest rates, and future
borrowings and lease financing arrangements will be affected by any such
fluctuations;
|
•
|
Our
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, or other purposes may be limited;
and
|
•
|
We
may be required to issue additional equity securities to raise funds,
which would dilute the ownership position of our
stockholders.
|
•
|
We
compete with many other truckload carriers of varying sizes and, to a
lesser extent, with less-than-truckload carriers, railroads, intermodal
companies, and other transportation companies, many of which have more
equipment and greater capital resources than we do.
|
•
|
Many
of our competitors periodically reduce their freight rates to gain
business, especially during times of reduced growth rates in the economy,
which may limit our ability to maintain or increase freight rates or
maintain significant growth in our business.
|
•
|
Many
of our customers are other transportation companies, and they may decide
to transport their own freight.
|
•
|
Many
customers reduce the number of carriers they use by selecting "core
carriers" as approved service providers, and in some instances we may not
be selected.
|
•
|
Many
customers periodically accept bids from multiple carriers for their
shipping needs, and this process may depress freight rates or result in
the loss of some business to competitors.
|
•
|
The
trend toward consolidation in the trucking industry may create other large
carriers with greater financial resources and other competitive advantages
relating to their size.
|
•
|
Advances
in technology require increased investments to remain competitive, and our
customers may not be willing to accept higher freight rates to cover the
cost of these investments.
|
•
|
Competition
from non-asset-based logistics and freight brokerage companies may
adversely affect our customer relationships and freight
rates.
|
•
|
Economies
of scale that may be passed on to smaller carriers by procurement
aggregation providers may improve their ability to compete with
us.
|
Terminal Locations
|
Maintenance
|
Recruiting/
Orientation
|
Sales
|
Ownership
|
||||
Chattanooga,
Tennessee
|
x
|
x
|
x
|
Leased
|
||||
Indianapolis,
Indiana
|
Leased
|
|||||||
Texarkana,
Arkansas
|
x
|
x
|
x
|
Owned
|
||||
Hutchins,
Texas
|
x
|
x
|
Owned
|
|||||
French
Camp, California
|
Leased
|
|||||||
Fontana,
California
|
x
|
Leased
|
||||||
Long
Beach, California
|
Owned
|
|||||||
Pomona,
California
|
x
|
Owned
|
||||||
Allentown,
Pennsylvania
|
Owned
|
|||||||
Nashville,
Tennessee
|
x
|
x
|
x
|
Owned
|
||||
Olive
Branch, Mississippi
|
x
|
x
|
Owned
|
|||||
Orlando,
Florida
|
Leased
|
Period
|
High
|
Low
|
||||||
Calendar
Year 2007:
|
||||||||
1st
Quarter
|
$ | 12.50 | $ | 10.64 | ||||
2nd
Quarter
|
$ | 11.83 | $ | 10.42 | ||||
3rd
Quarter
|
$ | 11.55 | $ | 6.18 | ||||
4th
Quarter
|
$ | 8.25 | $ | 6.27 | ||||
Calendar
Year 2008:
|
||||||||
1st
Quarter
|
$ | 8.48 | $ | 5.10 | ||||
2nd
Quarter
|
$ | 6.45 | $ | 2.90 | ||||
3rd
Quarter
|
$ | 5.64 | $ | 2.70 | ||||
4th
Quarter
|
$ | 3.22 | $ | 1.36 |
(In
thousands, except per share and operating data amounts)
|
||||||||||||||||||||
Years Ended December
31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||
Freight
revenue
|
$ | 615,810 | $ | 602,629 | $ | 572,239 | $ | 555,428 | $ | 558,453 | ||||||||||
Fuel
surcharges
|
158,104 | 109,897 | 111,589 | 87,626 | 45,169 | |||||||||||||||
Total revenue
|
$ | 773,914 | $ | 712,526 | $ | 683,828 | $ | 643,054 | $ | 603,622 | ||||||||||
Operating
expenses:
|
||||||||||||||||||||
Salaries, wages, and related
expenses (1)
|
263,793 | 270,435 | 262,303 | 242,157 | 225,778 | |||||||||||||||
Fuel expense
|
260,704 | 211,022 | 194,355 | 170,582 | 127,723 | |||||||||||||||
Operations and
maintenance
|
42,459 | 40,437 | 36,112 | 33,625 | 30,555 | |||||||||||||||
Revenue equipment rentals
and
purchased
transportation
|
90,974 | 66,515 | 63,532 | 61,701 | 69,928 | |||||||||||||||
Operating taxes and
licenses
|
13,078 | 14,112 | 14,516 | 13,431 | 14,217 | |||||||||||||||
Insurance and claims expense
(2)
|
37,578 | 36,391 | 34,104 | 41,034 | 54,847 | |||||||||||||||
Communications and
utilities
|
6,702 | 7,377 | 6,727 | 6,579 | 6,517 | |||||||||||||||
General supplies and
expenses
|
26,399 | 23,377 | 21,387 | 17,778 | 15,104 | |||||||||||||||
Depreciation and amortization,
including
net gains on disposition of
equipment
and impairment of assets
(3)
|
63,235 | 53,541 | 41,150 | 39,101 | 45,001 | |||||||||||||||
Goodwill impairment charge
(4)
|
24,671 | - | - | - | - | |||||||||||||||
Total
operating expenses
|
829,593 | 723,207 | 674,186 | 625,988 | 589,670 | |||||||||||||||
Operating
income (loss)
|
(55,679 | ) | (10,681 | ) | 9,642 | 17,066 | 13,952 | |||||||||||||
Other
(income) expense:
|
||||||||||||||||||||
Interest expense
|
10,373 | 12,285 | 7,166 | 4,203 | 3,098 | |||||||||||||||
Interest income
|
(435 | ) | (477 | ) | (568 | ) | (273 | ) | (48 | ) | ||||||||||
Loss on early extinguishment of
debt
|
726 | - | - | - | - | |||||||||||||||
Other
|
(160 | ) | (183 | ) | (157 | ) | (538 | ) | (926 | ) | ||||||||||
Other
expenses, net
|
10,504 | 11,625 | 6,441 | 3,392 | 2,124 | |||||||||||||||
Income
(loss) before income taxes and
cumulative effect of change
in
accounting
principle
|
(66,183 | ) | (22,306 | ) | 3,201 | 13,674 | 11,828 | |||||||||||||
Income
tax expense (benefit)
|
(12,792 | ) | (5,580 | ) | 4,582 | 8,003 | 8,452 | |||||||||||||
Income
(loss) before cumulative effect of
change in accounting
principle
|
(53,391 | ) | (16,726 | ) | (1,381 | ) | 5,671 | 3,376 | ||||||||||||
Cumulative
effect of change in accounting
principle, net of tax
(5)
|
- | - | - | (485 | ) | - | ||||||||||||||
Net
income (loss)
|
$ | (53,391 | ) | $ | (16,726 | ) | $ | (1,381 | ) | $ | 5,186 | $ | 3,376 |
(1)
|
Includes
a $1,500 pre-tax increase to workers' compensation claims reserve in
2004.
|
(2)
|
Includes
an $18,000 pre-tax increase to casualty claims reserve in
2004.
|
(3)
|
Includes
a $1,665 pre-tax impairment charge related to an airplane in 2007 and a
$15,791 pretax impairment charge related to revenue equipment in
2008. See the discussion below under "Additional Information
Concerning Impairment Charges" for a more extensive description of these
impairments.
|
(4)
|
Represents
a $24,700 non-cash impairment charge to write off the goodwill associated
with the acquisition of our Star Transportation subsidiary. See
the discussion below under "Additional Information Concerning Impairment
Charges" for a more extensive description of this
impairment.
|
(5)
|
Represents
a $485 adjustment, net of tax, related to the adoption of FIN 47, Accounting for Conditional
Asset Retirement Obligations in
2005.
|
Basic
earnings (loss) per share before
cumulative effect of change in
accounting principle
|
$ | (3.80 | ) | $ | (1.19 | ) | $ | (0.10 | ) | $ | 0.40 | $ | 0.23 | |||||||
Cumulative
effect of change in accounting principle
|
- | - | - | (0.03 | ) | - | ||||||||||||||
Basic
earnings (loss) per share
|
$ | (3.80 | ) | $ | (1.19 | ) | $ | (0.10 | ) | $ | 0.37 | $ | 0.23 | |||||||
Diluted
earnings (loss) per share before cumulative
effect
of change in accounting
principle:
|
$ | (3.80 | ) | $ | (1.19 | ) | $ | (0.10 | ) | $ | 0.40 | $ | 0.23 | |||||||
Cumulative
effect of change in accounting principle
|
- | - | - | (0.03 | ) | - | ||||||||||||||
Diluted
earnings (loss) per share
|
$ | (3.80 | ) | $ | (1.19 | ) | $ | (0.10 | ) | $ | 0.37 | $ | 0.23 | |||||||
Basic
weighted average common shares outstanding
|
14,038 | 14,018 | 13,996 | 14,175 | 14,641 | |||||||||||||||
Diluted
weighted average common shares outstanding
|
14,038 | 14,018 | 13,996 | 14,270 | 14,833 |
Years
Ended December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Selected
Balance Sheet Data:
|
||||||||||||||||||||
Net
property and equipment
|
$ | 236,018 | $ | 247,530 | $ | 274,974 | $ | 211,158 | $ | 209,422 | ||||||||||
Total
assets
|
$ | 393,676 | $ | 439,794 | $ | 475,094 | $ | 371,261 | $ | 357,383 | ||||||||||
Long-term
debt, less current maturities
|
$ | 107,956 | $ | 86,467 | $ | 104,900 | $ | 33,000 | $ | 8,013 | ||||||||||
Total
stockholders' equity
|
$ | 118,820 | $ | 172,266 | $ | 188,844 | $ | 189,724 | $ | 195,699 | ||||||||||
Selected
Operating Data:
|
||||||||||||||||||||
Average
freight revenue per loaded mile (1)
|
$ | 1.53 | $ | 1.52 | $ | 1.51 | $ | 1.51 | $ | 1.40 | ||||||||||
Average
freight revenue per total mile (1)
|
$ | 1.36 | $ | 1.36 | $ | 1.36 | $ | 1.36 | $ | 1.27 | ||||||||||
Average
freight revenue per tractor per week
(1)
|
$ | 3,105 | $ | 3,088 | $ | 3,077 | $ | 3,013 | $ | 2,995 | ||||||||||
Average
miles per tractor per year
|
118,992 | 118,159 | 117,621 | 115,765 | 122,899 | |||||||||||||||
Weighted
average tractors for year (2)
|
3,456 | 3,623 | 3,546 | 3,535 | 3,558 | |||||||||||||||
Total
tractors at end of period (2)
|
3,292 | 3,555 | 3,719 | 3,471 | 3,476 | |||||||||||||||
Total
trailers at end of period (3)
|
8,277 | 8,667 | 9,820 | 8,565 | 8,867 |
(1)
|
Excludes
fuel surcharge revenue.
|
(2)
|
Includes
monthly rental tractors and tractors provided by
owner-operators.
|
(3)
|
Excludes
monthly rental trailers.
|
•
|
Industry-wide
truckload freight tonnage will decline significantly versus 2008 in the
first three quarters of 2009, before approaching 2008 levels in the fourth
quarter;
|
•
|
Because
of expected reduced volumes in our industry and the expected further
deterioration of other sectors of the economy, freight rates will continue
to suffer from downward pressure;
|
•
|
Uncertainty
will persist regarding the availability of credit for our customers, their
ability to make payments when due, additional pressures on our customer's
cost structures, and additional pressures on our own
expenses;
|
•
|
An
anticipated reduction of our consolidated fleet size by 150 tractors in
the first quarter of 2009, any further reductions required later in the
year, and an increase in the full-year average percentage of team-driven
tractors in our fleet will limit the negative effects of rate pressure and
decreased shipments such that our revenue per tractor per week will be
similar to 2007;
|
•
|
Certain
cost savings initiatives we have identified are successfully executed
and
we do not experience upward pressure on driver
compensation;
|
•
|
Financing
under our Credit Facility, Daimler Facility, and other sources remains
available under terms substantially similar to the current terms, taking
into account the recent amendment to the Credit
Agreement;
|
•
|
Average
fuel prices as reported by the Department of Energy for 2009 remain below
$2.40 per gallon on a full-year basis and our fuel surcharge recovery
percentage does not deteriorate;
|
•
|
Our
frequency and severity of accident and workers' compensation claims, and
associated accrual amounts, remain consistent with the average level over
the past three years;
|
•
|
The
used equipment market does not continue to deteriorate below levels seen
at the end of 2008; and
|
•
|
The
legal and regulatory framework applicable to our business (including
applicable tax laws and emissions regulations) remains substantially the
same.
|
Items
Affecting Net Loss Comparability:
|
Fiscal
Year
|
|||||||
(Dollars
in Thousands)
|
2008
|
2007
|
||||||
Reported
Net Loss
|
$ | (53,391 | ) | $ | (16,726 | ) | ||
Impairment charge on
goodwill
|
$ | 24,671 | -- | |||||
Impairment charge on
assets
|
$ | 9,698 | $ | 1,024 | ||||
Non-GAAP
Basis Net Loss, Excluding Impairment Charges
|
$ | (19,022 | ) | $ | (15,702 | ) |
Items
Affecting Loss Per Share Comparability:
|
Fiscal
Year
|
|||||||
2008
|
2007
|
|||||||
Reported
Loss Per Share
|
$ | (3.80 | ) | $ | (1.19 | ) | ||
Impairment charge on
goodwill
|
$ | 1.75 | -- | |||||
Impairment charge on
assets
|
$ | 0.69 | $ | 0.07 | ||||
Non-GAAP
Basis Loss Per Share, Excluding Impairment Charges
|
$ | (1.36 | ) | $ | (1.12 | ) |
2008
|
2007
|
2006
|
2008
|
2007
|
2006
|
|||||||||
Total revenue
|
100.0%
|
100.0%
|
100.0%
|
Freight revenue (1)
|
100.0%
|
100.0%
|
100.0%
|
|||||||
Operating
expenses:
|
Operating
expenses:
|
|||||||||||||
Salaries, wages, and related
expenses
|
34.1
|
38.0
|
38.4
|
Salaries, wages, and related
expenses
|
42.8
|
44.9
|
45.8
|
|||||||
Fuel expense
|
33.7
|
29.6
|
28.4
|
Fuel expense
(1)
|
16.7
|
16.8
|
14.5
|
|||||||
Operations and
maintenance
|
5.5
|
5.7
|
5.3
|
Operations and
maintenance
|
6.9
|
6.7
|
6.3
|
|||||||
Revenue equipment
rentals
and purchased
transportation
|
11.8
|
9.3
|
9.3
|
Revenue equipment
rentals
and purchased
transportation
|
14.8
|
11.0
|
11.1
|
|||||||
Operating taxes and
licenses
|
1.7
|
2.0
|
2.1
|
Operating taxes and
licenses
|
2.1
|
2.3
|
2.5
|
|||||||
Insurance and
claims
|
4.9
|
5.1
|
5.0
|
Insurance and
claims
|
6.1
|
6.0
|
6.0
|
|||||||
Communications and
utilities
|
0.9
|
1.0
|
1.0
|
Communications and
utilities
|
1.1
|
1.2
|
1.2
|
|||||||
General supplies and
expenses
|
3.2
|
3.3
|
3.1
|
General supplies and
expenses
|
4.3
|
3.9
|
3.7
|
|||||||
Depreciation and
amortization,
including net gains
on
disposition of equipment
(2)
|
8.2
|
7.5
|
6.0
|
Depreciation and
amortization,
including net gains
on
disposition of equipment
(2)
|
10.3
|
8.9
|
7.2
|
|||||||
Goodwill
impairment (3)
|
3.2
|
0.0
|
0.0
|
Goodwill impairment (3)
|
4.0
|
0.0
|
0.0
|
|||||||
Total
operating expenses
|
107.2
|
101.5
|
98.6
|
Total
operating expenses
|
109.1
|
101.8
|
98.3
|
|||||||
Operating
income (loss)
|
(7.2)
|
(1.5)
|
1.4
|
Operating
income (loss)
|
(9.1)
|
(1.8)
|
1.7
|
|||||||
Other
expense, net
|
1.4
|
1.6
|
0.9
|
Other
expense, net
|
1.7
|
1.9
|
1.1
|
|||||||
Income
(loss) before income taxes
|
(8.6)
|
(3.1)
|
0.5
|
Income
(loss) before income taxes
|
(10.8)
|
(3.7)
|
0.6
|
|||||||
Income
tax expense (benefit)
|
(1.7)
|
(0.8)
|
0.7
|
Income
tax expense (benefit)
|
(2.1)
|
(0.9)
|
0.8
|
|||||||
Net
loss
|
(6.9)%
|
(2.3)%
|
(0.2)%
|
Net
loss
|
(8.7)%
|
(2.8)%
|
(0.2)%
|
(1)
|
Freight
revenue is total revenue less fuel surcharges. In this table, fuel
surcharges are eliminated from revenue and subtracted from fuel expense.
The amounts were $158.1 million, $109.9 million and $111.6 million in
2008, 2007, and 2006, respectively.
|
(2)
|
Includes
a $9.4 million pre-tax impairment charge for held and used equipment and
$6.4 million of pre-tax impairment charges for equipment held for sale in
the year ended December 31, 2008, which together represent 2.0% of total
revenue and 2.6% of freight revenue. Includes a $1.7 million
pre-tax impairment charge for equipment held for sale in the year ended
December 31, 2007. See the discussion above under "Additional
Information Concerning Impairment Charges" for a more extensive
description of these impairments.
|
(3)
|
Represents
a $24.7 non-cash impairment charge to write off the goodwill associated
with the acquisition of our Star Transportation subsidiary. See
the discussion above under "Additional Information Concerning Impairment
Charges" for a more extensive description of this
impairment.
|
One
month ending March 31, 2009
|
1.00
to 1.0
|
Two
months ending April 30, 2009
|
1.00
to 1.0
|
Three
months ending May 31, 2009
|
1.00
to 1.0
|
Four
months ending June 30, 2009
|
1.00
to 1.0
|
Five
months ending July 31, 2009
|
1.00
to 1.0
|
Six
months ending August 31, 2009
|
1.00
to 1.0
|
Seven
months ending September 30, 2009
|
1.00
to 1.0
|
Eight
months ending October 31, 2009
|
1.00
to 1.0
|
Nine
months ending November 30, 2009
|
1.00
to 1.0
|
Ten
months ending December 31, 2009
|
1.00
to 1.0
|
Eleven
months ending January 31, 2010
|
1.00
to 1.0
|
Twelve
months ending February 28, 2010
|
1.00
to 1.0
|
Each
rolling twelve-month period thereafter
|
1.00
to
1.0
|
Payments
due by period:
(in
thousands)
|
Total
|
2009
|
2010
|
2011
|
2012
|
2013
|
There-
after
|
|||||||||||||||||||||
Credit
Facility, including interest
(2)
|
$ | 3,940 | $ | 3,940 | - | - | - | - | - | |||||||||||||||||||
Revenue
equipment installment
notes, including interest
(3)
|
$ | 175,067 | $ | 67,217 | $ | 59,405 | $ | 36,485 | $ | 11,960 | - | - | ||||||||||||||||
Operating
leases (4)
|
$ | 98,959 | $ | 23,857 | $ | 19,658 | $ | 8,572 | $ | 7,290 | $ | 4,834 | $ | 34,748 | ||||||||||||||
Lease
residual value guarantees
|
$ | 26,212 | - | $ | 9,864 | $ | 16,348 | - | - | - | ||||||||||||||||||
Diesel
fuel and purchase obligations (5)
|
$ | 67,000 | $ | 67,000 | ||||||||||||||||||||||||
Total
contractual cash obligations
|
$ | 371,178 | $ | 162,014 | $ | 88,927 | $ | 61,405 | $ | 19,250 | $ | 4,834 | $ | 34,748 |
(1)
|
Excludes
any unrecognized tax benefits under FIN 48 as we are unable to reasonably
predict the ultimate amount or timing of settlement of such unrecognized
tax benefits.
|
(2)
|
Represents
principal and interest payments owed at December 31, 2008. The borrowings
consist of draws under the Company's Credit Agreement, with fluctuating
borrowing amounts and variable interest rates. In determining future
contractual interest and principal obligations, for variable interest rate
debt, the interest rate and principal amount in place at December 31, 2008
was utilized. The table assumes long-term debt is held to
maturity. Refer to Note 7, "Long-Term Debt and Securitization
Facility" of the accompanying consolidated financial statements for
further information.
|
(3)
|
Represents
principal and interest payments owed at December 31, 2008. The borrowings
consist of installment notes with a finance company, with fixed borrowing
amounts and fixed interest rates. The table assumes these installment
notes are held to maturity. Refer to Note 7, "Long-Term Debt and
Securitization Facility" of the accompanying consolidated financial
statements for further information.
|
(4)
|
Represents
future monthly rental payment obligations under operating leases for
over-the-road tractors, day-cabs, trailers, office and terminal
properties, and computer and office equipment. Substantially
all lease agreements for revenue equipment have fixed payment terms based
on the passage of time. The tractor lease agreements generally
stipulate maximum miles and provide for mileage penalties for excess
miles. Lease terms for tractors and trailers range from 30 to
60 months and 60 to 84 months, respectively. Refer to Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations – Off Balance Sheet Arrangements and Note 9, "Leases," of the
accompanying consolidated financial statements for further
information.
|
(5)
|
This
amount represents volume purchase commitments through our truck stop
network. We estimate that these amounts represent approximately 80% of our
fuel needs for 2009.
|
•
|
pertain
to the maintenance of records, that in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our
assets;
|
•
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and
directors; and
|
•
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have
a material effect on our financial
statements.
|
(a)
|
1.
|
Financial
Statements.
|
|
Our
audited consolidated financial statement is set forth at the following
pages of this report:
|
|||
Reports
of Independent Registered Public Accounting Firm – KPMG
LLP
|
|||
Consolidated
Balance Sheets
|
|||
Consolidated
Statements of Operations
|
|||
Consolidated
Statements of Stockholders' Equity and Comprehensive Income
(Loss)
|
|||
Consolidated
Statements of Cash Flows
|
|||
Notes
to Consolidated Financial Statements
|
|||
2.
|
Financial
Statement Schedules.
|
||
Financial
statement schedules are not required because all required information is
included in the financial statements.
|
|||
3.
|
Exhibits.
|
||
The
exhibits required to be filed by Item 601 of Regulation S-K are listed
under paragraph (b) below and on the Exhibit Index appearing at the end of
this report. Management contracts and compensatory plans or arrangements
are indicated by an asterisk.
|
|||
(b)
|
Exhibits.
|
||
The
following exhibits are filed with this Form 10-K or incorporated by
reference to the document set forth next to the exhibit listed
below.
|
Exhibit
Number
|
Reference
|
Description
|
3.1
|
(1)
|
Amended
and Restated Articles of Incorporation
|
3.2
|
(8)
|
Amended
and Restated Bylaws dated December 6, 2007
|
4.1
|
(1)
|
Amended
and Restated Articles of Incorporation
|
4.2
|
(8)
|
Amended
and Restated Bylaws dated December 6, 2007
|
10.1
|
(2)
|
401(k)
Plan, filed as Exhibit 10.10
|
10.2
|
(3)
|
Master
Lease Agreement dated April 15, 2003, between Transport International
Pool, Inc. and Covenant Transport, Inc., filed as Exhibit
10.4
|
10.3
|
(4)
|
Form
of Indemnification Agreement between Covenant Transport, Inc. and each
officer and director effective May 1, 2004, filed as Exhibit
10.2*
|
10.4
|
(5)
|
Purchase
and Sale Agreement dated April 3, 2006, between Covenant Transport, Inc.,
a Tennessee corporation, and CT Chattanooga TN, LLC, filed as Exhibit
10.18
|
10.5
|
(5)
|
Lease
Agreement dated April 3, 2006, between Covenant Transport, Inc., a
Tennessee corporation, and CT Chattanooga TN, LLC, filed as Exhibit
10.19
|
10.6
|
(5)
|
Lease
Guaranty dated April 3, 2006, by Covenant Transport, Inc., a Nevada
corporation, for the benefit of CT Chattanooga TN, LLC, filed as Exhibit
10.20
|
10.7
|
(6)
|
Covenant
Transport, Inc. 2006 Omnibus Incentive Plan*
|
10.8
|
(7)
|
Form
of Restricted Stock Award Notice under the Covenant Transport, Inc. 2006
Omnibus Incentive Plan, filed as Exhibit 10.22*
|
10.9
|
(7)
|
Form
of Restricted Stock Special Award Notice under the Covenant Transport,
Inc. 2006 Omnibus Incentive Plan, filed as Exhibit
10.23*
|
10.10
|
(7)
|
Form
of Incentive Stock Option Award Notice under the Covenant Transport, Inc.
2006 Omnibus Incentive Plan, filed as Exhibit 10.24*
|
10.11
|
(9)
|
Covenant
Transport, Inc. 2008 Named Executive Bonus Program dated April 8, 2008,
filed as Exhibit 10.1*
|
10.12
|
(10)
|
Form
of Lease Agreement used in connection with Daimler Facility, filed as
Exhibit 10.3.
|
10.13
|
(10)
|
Amendment
to Lease Agreement (Open End) dated June 30, 2008, filed as Exhibit
10.4
|
10.14
|
(10)
|
Form
of Direct Purchase Money Loan and Security Agreement used in connection
with Daimler Facility, filed as Exhibit 10.5
|
10.15
|
(10)
|
Amendment
to Direct Purchase Money Loan and Security Agreement dated June 30, 2008,
filed as
Exhibit 10.6
|
10.16
|
(11)
|
Third
Amended and Restated Credit Agreement dated September 23, 2008 among
Covenant Transportation Group, Inc., Covenant Transport, Inc., CTG Leasing
Company, Covenant Asset Management, Inc., Southern Refrigerated Transport,
Inc., Covenant Transport Solutions, Inc., Star Transportation, Inc., Bank
of America, N.A., JPMorgan Chase Bank, N.A., and Textron Financial
Corporation, filed as Exhibit 10.1
|
#
|
List
of Subsidiaries
|
|
#
|
Consent
of Independent Registered Public Accounting Firm – KPMG
LLP
|
|
#
|
Certification
pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the
Company's Chief Executive Officer
|
|
#
|
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 Richard B. Cribbs, the
Company's Chief Financial Officer
|
|
#
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Chief
Executive Officer
|
|
#
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, by Richard B. Cribbs, the Company's Chief
Financial Officer
|
#
|
Filed
herewith
|
*
|
Management
contract or compensatory plan or
arrangement.
|
(1)
|
Form
8-K, filed May 29, 2007 (SEC Commission File No.
0-24960)
|
(2)
|
Form
S-1, Registration No. 33-82978, effective October 28,
1994
|
(3)
|
Form
10-Q/A, filed October 31, 2003 (SEC Commission File No.
0-24960)
|
(4)
|
Form
10-Q, filed August 5, 2004 (SEC Commission File No.
0-24960)
|
(5)
|
Form
8-K, filed April 7, 2006 (SEC Commission File No.
0-24960)
|
(6)
|
Schedule
14A, filed April 17, 2006 (SEC Commission File No.
0-24960)
|
(7)
|
Form
10-Q, filed August 9, 2006 (SEC Commission File No.
0-24960)
|
(8)
|
Form
10-K, filed March 17, 2008 (SEC Commission File No.
0-24960)
|
(9)
|
Form
10-Q, filed May 9, 2008 (SEC Commission File No.
0-24960)
|
(10)
|
Form
10-Q, filed August 11, 2008 (SEC Commission File No.
0-24960)
|
(11)
|
Form
10-Q, filed November 10, 2008 (SEC Commission File No.
0-24960)
|
COVENANT
TRANSPORTATION GROUP, INC.
|
||
Date: March
31, 2009
|
By:
|
/s/
Richard B. Cribbs
|
Richard
B. Cribbs
|
||
Senior
Vice President and Chief Financial Officer in his capacity as such and on
behalf of the issuer.
|
Signature
and Title
|
Date
|
|
/s/
David R. Parker
|
March
31, 2009
|
|
David
R. Parker
|
||
Chairman
of the Board, President, and Chief Executive Officer
(principal
executive officer)
|
||
/s/
Richard B. Cribbs
|
March
31, 2009
|
|
Richard
B. Cribbs
|
||
Senior Vice President and Chief
Financial Officer
(principal
financial and accounting officer)
|
||
/s/
Bradley A. Moline
|
March
31, 2009
|
|
Bradley
A. Moline
|
||
Director
|
||
/s/
William T. Alt
|
March
31, 2009
|
|
William
T. Alt
|
||
Director
|
||
/s/
Robert E. Bosworth
|
March
31, 2009
|
|
Robert
E. Bosworth
|
||
Director
|
||
/s/
Niel B. Nielson
|
March
31, 2009
|
|
Niel
B. Nielson
|
||
Director
|
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31, 2008 AND 2007
(In
thousands, except share data)
|
||||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash and cash
equivalents
|
$ | 6,300 | $ | 4,500 | ||||
Accounts receivable, net of
allowance of $1,484 in 2008 and
$1,537 in 2007
|
72,635 | 79,207 | ||||||
Drivers' advances and other
receivables, net of allowance of
$2,794 in 2008 and $2,706 in 2007
|
6,402 | 5,479 | ||||||
Inventory and
supplies
|
3,894 | 4,102 | ||||||
Prepaid
expenses
|
8,921 | 7,030 | ||||||
Assets held for
sale
|
21,292 | 10,448 | ||||||
Deferred income
taxes
|
7,129 | 18,484 | ||||||
Income taxes
receivable
|
717 | 7,500 | ||||||
Total
current assets
|
127,290 | 136,750 | ||||||
Property
and equipment, at cost
|
352,857 | 350,158 | ||||||
Less:
accumulated depreciation and amortization
|
(116,839 | ) | (102,628 | ) | ||||
Net property and
equipment
|
236,018 | 247,530 | ||||||
Goodwill
|
11,539 | 36,210 | ||||||
Other
assets, net
|
18,829 | 19,304 | ||||||
Total
assets
|
$ | 393,676 | $ | 439,794 | ||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Securitization
facility
|
$ | - | $ | 47,964 | ||||
Checks outstanding in excess of
bank balances
|
85 | 4,572 | ||||||
Current maturities of
acquisition obligation
|
250 | 333 | ||||||
Current maturities of long-term
debt
|
59,083 | 2,335 | ||||||
Accounts payable and accrued
expenses
|
33,214 | 35,029 | ||||||
Current portion of insurance
and claims accrual
|
16,811 | 19,827 | ||||||
Total
current liabilities
|
109,443 | 110,060 | ||||||
Long-term debt
|
107,956 | 86,467 | ||||||
Insurance and claims accrual,
net of current portion
|
15,869 | 10,810 | ||||||
Deferred income
taxes
|
39,669 | 57,902 | ||||||
Other long-term
liabilities
|
1,919 | 2,289 | ||||||
Total
liabilities
|
274,856 | 267,528 | ||||||
Commitments
and contingent liabilities
|
- | - | ||||||
Stockholders'
equity:
|
||||||||
Class A common stock, $.01 par
value; 20,000,000 shares authorized;
13,469,090 shares issued;
11,699,182 and 11,676,298
outstanding as of December 31,
2008 and 2007, respectively
|
135 | 135 | ||||||
Class B common stock, $.01 par
value; 5,000,000 shares authorized;
2,350,000 shares issued and
outstanding
|
24 | 24 | ||||||
Additional
paid-in-capital
|
91,912 | 92,238 | ||||||
Treasury stock at cost;
1,769,908 and 1,792,792 shares as of December 31,
2008 and 2007,
respectively
|
(21,007 | ) | (21,278 | ) | ||||
Retained
earnings
|
47,756 | 101,147 | ||||||
Total
stockholders' equity
|
118,820 | 172,266 | ||||||
Total
liabilities and stockholders' equity
|
$ | 393,676 | $ | 439,794 | ||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
YEARS
ENDED DECEMBER 31, 2008, 2007, AND 2006
(In
thousands, except per share data)
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Revenues
|
||||||||||||
Freight revenue
|
$ | 615,810 | $ | 602,629 | $ | 572,239 | ||||||
Fuel surcharge
revenue
|
158,104 | 109,897 | 111,589 | |||||||||
Total
revenue
|
$ | 773,914 | $ | 712,526 | $ | 683,828 | ||||||
Operating
expenses:
|
||||||||||||
Salaries, wages, and related
expenses
|
263,793 | 270,435 | 262,303 | |||||||||
Fuel expense
|
260,704 | 211,022 | 194,355 | |||||||||
Operations and
maintenance
|
42,459 | 40,437 | 36,112 | |||||||||
Revenue equipment rentals and
purchased transportation
|
90,974 | 66,515 | 63,532 | |||||||||
Operating taxes and
licenses
|
13,078 | 14,112 | 14,516 | |||||||||
Insurance and
claims
|
37,578 | 36,391 | 34,104 | |||||||||
Communications and
utilities
|
6,702 | 7,377 | 6,727 | |||||||||
General supplies and
expenses
|
26,399 | 23,377 | 21,387 | |||||||||
Depreciation and
amortization, including gains and losses on
disposition of equipment and
impairment of assets (1)
|
63,235 | 53,511 | 41,150 | |||||||||
Goodwill impairment
charge
|
24,671 | - | - | |||||||||
Total
operating expenses
|
829,593 | 723,207 | 674,186 | |||||||||
Operating
income (loss)
|
(55,679 | ) | (10,681 | ) | 9,642 | |||||||
Other
(income) expenses:
|
||||||||||||
Interest
expense
|
10,373 | 12,285 | 7,166 | |||||||||
Interest income
|
(435 | ) | (477 | ) | (568 | ) | ||||||
Loss on early extinguishment of
debt
|
726 | - | - | |||||||||
Other
|
(160 | ) | (183 | ) | (157 | ) | ||||||
Other
expenses, net
|
10,504 | 11,625 | 6,441 | |||||||||
Income
(loss) before income taxes
|
(66,183 | ) | (22,306 | ) | 3,201 | |||||||
Income
tax expense (benefit)
|
(12,792 | ) | (5,580 | ) | 4,582 | |||||||
Net
loss
|
$ | (53,391 | ) | $ | (16,726 | ) | $ | (1,381 | ) |
(1)
|
Includes
a $15,791 pre-tax impairment charge related to revenue equipment in 2008
and a $1,665 pre-tax impairment charge related to an airplane in
2007.
|
Loss
per share:
|
||||||||||||
Basic
and diluted loss per share:
|
$ | (3.80 | ) | $ | (1.19 | ) | $ | (0.10 | ) | |||
Basic
and diluted weighted average shares outstanding
|
14,038 | 14,018 | 13,996 |
Common
Stock
|
Additional
Paid-In
Capital
|
Treasury
Stock
|
Retained
Earnings
|
Total
Stockholders'
Equity
|
Comprehensive
Income
(Loss)
|
|||||||||||||||||||||||
Class
A
|
Class
B
|
|||||||||||||||||||||||||||
Balances
at December 31, 2005
|
$ | 134 | $ | 24 | $ | 91,553 | $ | (21,582 | ) | $ | 119,595 | $ | 189,724 | |||||||||||||||
Exercise
of employee stock options
|
1 | - | 245 | - | - | 246 | ||||||||||||||||||||||
Income
tax benefit arising from the
exercise of stock
options
|
- | - | 17 | - | - | 17 | ||||||||||||||||||||||
SFAS
No. 123R stock-based employee
compensation
cost
|
- | - | 238 | - | - | 238 | ||||||||||||||||||||||
Net
loss
|
- | - | - | - | (1,381 | ) | (1,381 | ) | (1,381 | ) | ||||||||||||||||||
Comprehensive
loss for 2006
|
$ | (1,381 | ) | |||||||||||||||||||||||||
Balances
at December 31, 2006
|
$ | 135 | $ | 24 | $ | 92,053 | $ | (21,582 | ) | $ | 118,214 | $ | 188,844 | |||||||||||||||
SFAS
No. 123R stock-based employee
compensation
cost
|
- | - | 189 | - | - | 189 | ||||||||||||||||||||||
Cumulative
impact of change in
accounting for uncertainties
in
income taxes (FIN 48 – See Note
10)
|
- | - | - | - | (341 | ) | (341 | ) | ||||||||||||||||||||
Issuance
of restricted stock to non-
employee directors from
treasury
stock
|
- | - | (4 | ) | 304 | - | 300 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | (16,726 | ) | (16,726 | ) | (16,726 | ) | ||||||||||||||||||
Comprehensive
loss for 2007
|
$ | (16,726 | ) | |||||||||||||||||||||||||
Balances
at December 31, 2007
|
$ | 135 | $ | 24 | $ | 92,238 | $ | (21,278 | ) | $ | 101,147 | $ | 172,266 | |||||||||||||||
Reversal
of previously recognized
SFAS No. 123R
stock-based
employee compensation
cost
|
- | - | (414 | ) | - | - | (414 | ) | ||||||||||||||||||||
SFAS
No. 123R stock-based employee
compensation
cost
|
- | - | 260 | - | - | 260 | ||||||||||||||||||||||
Issuance
of restricted stock to non-
employee directors from
treasury
stock
|
- | - | (172 | ) | 271 | - | 99 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | (53,391 | ) | (53,391 | ) | (53,391 | ) | ||||||||||||||||||
Comprehensive
loss for 2008
|
$ | (53,391 | ) | |||||||||||||||||||||||||
Balances
at December 31, 2008
|
$ | 135 | $ | 24 | $ | 91,912 | $ | (21,007 | ) | $ | 47,756 | $ | 118,820 |
2008
|
2007
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
loss
|
$ | (53,391 | ) | $ | (16,726 | ) | $ | (1,381 | ) | |||
Adjustments
to reconcile net loss to net cash provided
by operating activities:
|
||||||||||||
Provision for losses on accounts
receivable
|
987 | 1,163 | 590 | |||||||||
Loss on early extinguishment of
debt
|
726 | - | - | |||||||||
Depreciation and amortization,
including impairment charges
|
85,960 | 51,801 | 43,234 | |||||||||
Amortization of deferred financing
fees
|
405 | 281 | - | |||||||||
Deferred income taxes
(benefit)
|
(2,456 | ) | 4,414 | 3,660 | ||||||||
Loss (gain) on disposition of
property and equipment
|
1,946 | 1,741 | (2,071 | ) | ||||||||
Non-cash stock compensation
(reversal), net
|
(55 | ) | 489 | 239 | ||||||||
Changes
in operating assets and liabilities, net of effects from
purchase of Star Transportation, Inc.:
|
||||||||||||
Receivables and
advances
|
7,023 | (7,631 | ) | 14,449 | ||||||||
Prepaid expenses and other
assets
|
(1,709 | ) | 4,386 | 6,295 | ||||||||
Inventory and
supplies
|
286 | 865 | (283 | ) | ||||||||
Insurance and claims
accrual
|
2,044 | (7,462 | ) | (6,255 | ) | |||||||
Accounts payable and accrued
expenses
|
(1,458 | ) | 400 | 2,187 | ||||||||
Net
cash flows provided by operating activities
|
40,308 | 33,721 | 60,664 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Acquisition of property and
equipment
|
(89,024 | ) | (64,261 | ) | (162,750 | ) | ||||||
Proceeds from disposition of
property and equipment
|
26,711 | 53,486 | 71,652 | |||||||||
Proceeds from building sale
leaseback
|
- | - | 29,630 | |||||||||
Payment of acquisition
obligation
|
(333 | ) | (333 | ) | (83 | ) | ||||||
Purchase of Star
Transportation, Inc., net of cash acquired
|
- | - | (39,061 | ) | ||||||||
Net
cash flows used in investing activities
|
(62,646 | ) | (11,108 | ) | (100,612 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Exercise of stock
options
|
- | - | 246 | |||||||||
Excess tax benefits from exercise
of stock options
|
- | - | 17 | |||||||||
Proceeds from disposition of
interest rate hedge
|
- | - | 175 | |||||||||
Change in checks outstanding in
excess of bank balances
|
(4,487 | ) | 292 | 4,280 | ||||||||
Proceeds from issuance of
debt
|
450,896 | 62,839 | 167,188 | |||||||||
Repayments of debt
|
(420,394 | ) | (85,954 | ) | (129,768 | ) | ||||||
Debt refinancing
costs
|
(1,877 | ) | (697 | ) | (401 | ) | ||||||
Net
cash flows provided by/(used in) financing activities
|
24,138 | (23,520 | ) | 41,737 | ||||||||
Net
change in cash and cash equivalents
|
1,800 | (907 | ) | 1,789 | ||||||||
Cash
and cash equivalents at beginning of year
|
$ | 4,500 | 5,407 | 3,618 | ||||||||
Cash
and cash equivalents at end of year
|
$ | 6,300 | $ | 4,500 | $ | 5,407 | ||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||
Cash paid (received) during the
year for:
|
||||||||||||
Interest, net of capitalized
interest
|
$ | 9,296 | $ | 11,969 | $ | 7,486 | ||||||
Income taxes
|
$ | (12,480 | ) | $ | (11,287 | ) | $ | 1,485 |
(in
thousands except per share data)
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Numerator:
|
||||||||||||
Net
loss
|
$ | (53,391 | ) | $ | (16,726 | ) | $ | (1,381 | ) | |||
Denominator:
|
||||||||||||
Denominator
for basic earnings per share –
weighted-average shares
|
14,038 | 14,018 | 13,996 | |||||||||
Effect of dilutive
securities:
|
||||||||||||
Employee stock
options
|
- | - | - | |||||||||
Denominator
for diluted earnings per share –
adjusted weighted-average shares
and
assumed
conversions
|
14,038 | 14,018 | 13,996 | |||||||||
Net
loss per share:
|
||||||||||||
Basic
and diluted loss per share
|
$ | (3.80 | ) | $ | (1.19 | ) | $ | (0.10 | ) |
Number
of
options
(in
thousands)
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
term
|
Aggregate
intrinsic
value
(in
thousands)
|
||||||||||
Outstanding
at December 31, 2005
|
1,454 | $ | 14.33 |
68
months
|
$ | 1,608 | |||||||
Options
granted
|
106 | $ | 13.15 | ||||||||||
Options
exercised
|
(19 | ) | $ | 12.64 | |||||||||
Options
canceled
|
(254 | ) | $ | 15.74 | |||||||||
Outstanding
at December 31, 2006
|
1,287 | $ | 13.98 |
68
months
|
$ | 685 | |||||||
Options
granted
|
112 | $ | 6.76 | ||||||||||
Options
exercised
|
- | - | |||||||||||
Options
canceled
|
(194 | ) | $ | 13.93 | |||||||||
Outstanding
at December 31, 2007
|
1,205 | $ | 13.33 |
64
months
|
$ | - | |||||||
Options
granted
|
- | - | |||||||||||
Options
exercised
|
- | - | |||||||||||
Options
canceled
|
(109 | ) | $ | 12.30 | |||||||||
Outstanding
at December 31, 2008
|
1,096 | $ | 13.43 | ||||||||||
Exercisable
at December 31, 2008
|
984 | $ | 13.93 |
50
months
|
$ | - |
2007
|
2006
|
|||||||
Expected
volatility
|
57.3%
|
37.4%
|
||||||
Risk-free
interest rate
|
4.4%
|
4.6%
- 5.0%
|
||||||
Expected
lives (in years)
|
5.0
|
5.0
|
Number
of
stock
awards
|
Weighted
average
grant
date
fair value
|
|||||||
Unvested
at January 1, 2006
|
- | - | ||||||
Granted
|
484,984 | $ | 12.65 | |||||
Vested
|
- | - | ||||||
Forfeited
|
(28,000 | ) | $ | 12.65 | ||||
Unvested
at December 31, 2006
|
456,984 | $ | 12.65 | |||||
Granted
|
113,533 | $ | 10.72 | |||||
Vested
|
- | - | ||||||
Forfeited
|
(69,933 | ) | $ | 12.68 | ||||
Unvested
at December 31, 2007
|
500,584 | $ | 12.21 | |||||
Granted
|
268,785 | $ | 3.44 | |||||
Vested
|
- | - | ||||||
Forfeited
|
3,170 | $ | 5.83 | |||||
Unvested
at December 31, 2008
|
766,199 | $ | 9.14 |
(in
thousands)
|
Estimated
Useful
Lives
|
2008
|
2007
|
||||||
Revenue
equipment
|
3-10
years
|
$ | 266,148 | $ | 266,189 | ||||
Communications
equipment
|
5
years
|
15,602 | 15,325 | ||||||
Land
and improvements
|
10-24
years
|
16,690 | 16,663 | ||||||
Buildings
and leasehold improvements
|
10-40
years
|
37,030 | 36,503 | ||||||
Construction
in-progress
|
2,054 | 768 | |||||||
Other
|
1-5
years
|
15,333 | 14,710 | ||||||
$ | 352,857 | $ | 350,158 |
(in
thousands)
|
2008
|
2007
|
||||||
Covenants
not to compete
|
$ | 2,690 | $ | 2,690 | ||||
Trade
name
|
1,250 | 1,250 | ||||||
Customer
relationships
|
3,490 | 3,490 | ||||||
Less:
accumulated amortization of intangibles
|
(4,712 | ) | (3,671 | ) | ||||
Net intangible
assets
|
2,718 | 3,759 | ||||||
Investment in
Transplace
|
10,666 | 10,666 | ||||||
Note receivable from
Transplace
|
2,748 | 2,748 | ||||||
Other, net
|
2,697 | 2,131 | ||||||
$ | 18,829 | $ | 19,304 |
(in
thousands)
|
December 31, 2008
|
December 31, 2007
|
||||||||||||||
Current
|
Long-Term
|
Current
|
Long-Term
|
|||||||||||||
Borrowings
under Credit Agreement
|
$ | - | $ | 3,807 | $ | - | $ | 75,000 | ||||||||
Revenue
equipment installment notes; weighted average interest rate of 6.0% and
5.65% at December 31, 2008, and December 31, 2007, respectively, due in
monthly installments with final maturities at various dates ranging from
December 2010 to December 2011, secured by related revenue
equipment
|
58,718 | 101,118 | 2,335 | 11,467 | ||||||||||||
Real
estate note; interest rate of 4.0%
|
365 | 3,031 | - | - | ||||||||||||
Securitization
Facility
|
- | - | 47,964 | - | ||||||||||||
Total
debt
|
$ | 59,083 | $ | 107,956 | $ | 50,299 | $ | 86,467 |
Years
ended December 31:
|
Beginning
balance
January
1,
|
Additional
provisions
to
allowance
|
Write-offs
and
other
deductions
|
Ending
balance
December
31,
|
||||
2008
|
$1,537
|
$987
|
$1,040
|
$1,484
|
||||
2007
|
$1,491
|
$1,163
|
$1,117
|
$1,537
|
||||
2006
|
$2,200
|
$590
|
$1,299
|
$1,491
|
||||
2009
|
$ | 23,857 | ||
2010
|
19,658 | |||
2011
|
8,572 | |||
2012
|
7,290 | |||
2013
|
4,834 | |||
Thereafter
|
34,748 |
(in
thousands)
|
2008
|
2007
|
2006
|
|||||||||
Revenue
equipment rentals
|
$ | 31,783 | $ | 33,546 | $ | 42,129 | ||||||
Building
and lot rentals
|
3,884 | 4,067 | 3,508 | |||||||||
Other
equipment rentals
|
2,097 | 2,759 | 3,311 | |||||||||
$ | 37,764 | $ | 40,372 | $ | 48,948 |
(in
thousands)
|
2008
|
2007
|
2006
|
|||||||||
Federal,
current
|
$ | (208 | ) | $ | (6,202 | ) | $ | 784 | ||||
Federal,
deferred
|
(10,901 | ) | (498 | ) | 3,415 | |||||||
State,
current
|
72 | (78 | ) | 138 | ||||||||
State,
deferred
|
(1,755 | ) | 1,198 | 245 | ||||||||
$ | (12,792 | ) | $ | (5,580 | ) | $ | 4,582 |
(in
thousands)
|
2008
|
2007
|
2006
|
|||||||||
Computed
"expected" income tax expense
|
$ | (23,164 | ) | $ | (7,809 | ) | $ | 1,120 | ||||
State
income taxes, net of federal income tax effect
|
(2,316 | ) | (781 | ) | 96 | |||||||
Per
diem allowances
|
2,769 | 2,371 | 2,233 | |||||||||
Tax
contingency accruals
|
13 | (105 | ) | 470 | ||||||||
Nondeductible
foreign operating loss
|
298 | 290 | 294 | |||||||||
Nondeductible
goodwill impairment
|
9,498 | - | - | |||||||||
Other,
net
|
110 | 454 | 369 | |||||||||
Actual
income tax expense
|
$ | (12,792 | ) | $ | (5,580 | ) | $ | 4,582 |
(in
thousands)
|
2008
|
2007
|
||||||
Net
deferred tax assets:
|
||||||||
Allowance for doubtful
accounts
|
$ | 412 | $ | 378 | ||||
Insurance and
claims
|
11,087 | 10,469 | ||||||
Net operating loss
carryovers
|
13,625 | 2,601 | ||||||
Investments
|
163 | 163 | ||||||
Other accrued
liabilities
|
988 | 910 | ||||||
Other, net
|
2,221 | 1,245 | ||||||
Total
net deferred tax assets
|
28,496 | 15,766 | ||||||
Net
deferred tax liabilities:
|
||||||||
Property and
equipment
|
(56,865 | ) | (51,773 | ) | ||||
Intangible and other
assets
|
(1,797 | ) | (1,952 | ) | ||||
Prepaid expenses
|
(2,374 | ) | (1,459 | ) | ||||
Total
net deferred tax liabilities
|
(61,036 | ) | (55,184 | ) | ||||
Net
deferred tax liability
|
$ | (32,540 | ) | $ | (39,418 | ) |
2008
|
2007
|
|||||||
Balance
as of January 1,
|
$ | 1,923 | $ | 2,295 | ||||
Increases related to prior year
tax positions
|
206 | 53 | ||||||
Decreases related to prior year
positions
|
(3 | ) | (439 | ) | ||||
Increases related to current
year tax positions
|
17 | 159 | ||||||
Decreases related to settlements
with taxing authorities
|
(28 | ) | (69 | ) | ||||
Decreases related to lapsing of
statute of limitations
|
(144 | ) | (76 | ) | ||||
Balance
as of December 31,
|
$ | 1,971 | $ | 1,923 |
(in
thousands)
|
2006
|
|||
Net
liability for derivatives at January 1,
|
$ | (13 | ) | |
Gain
in value of derivative instruments that did not qualify as hedging
instruments
|
13 | |||
Net
liability for derivatives at December 31,
|
$ | - |
Current
assets
|
$ | 10,970 | ||
Property
and equipment
|
62,339 | |||
Deferred
tax assets
|
275 | |||
Other
assets – Interest rate swap
|
252 | |||
Identifiable
intangible assets:
|
||||
Tradename (4-year estimated
useful life)
|
920 | |||
Noncompetition agreement
(7-year useful life)
|
1,000 | |||
Customer relationships (20-year
estimated useful life)
|
3,490 | |||
Goodwill
|
24,655 | |||
Total assets
|
$ | 103,901 | ||
Current
liabilities
|
$ | 13,181 | ||
Long-term
debt, net of current maturities
|
36,298 | |||
Deferred
tax liabilities
|
14,361 | |||
Total
liabilities
|
$ | 63,840 | ||
Total
purchase price
|
$ | 40,061 |
(in
thousands, except per share data)
|
Year
ended December 31, 2006
|
|||
Pro
forma revenues
|
$ | 744,813 | ||
Pro
forma net income
|
$ | 389 | ||
Pro
forma basic and diluted earnings per share
|
$ | 0.03 | ||
(in
thousands except per share amounts)
|
||||||||||||||||
Quarters
ended
|
Mar.
31, 2008
|
June
30, 2008
|
Sep.
30, 2008
|
Dec.
31, 2008
|
||||||||||||
Freight
revenue
|
$ | 148,596 | $ | 160,451 | $ | 162,901 | $ | 143,862 | ||||||||
Operating
loss
|
(9,594 | ) | (256 | ) | (720 | ) | (45,109 | ) | ||||||||
Net
loss
|
(7,821 | ) | (2,349 | ) | (3,416 | ) | (39,805 | ) | ||||||||
Basic
and diluted loss per share
|
(0.56 | ) | (0.17 | ) | (0.24 | ) | (2.83 | ) |
(in
thousands except per share amounts)
|
||||||||||||||||
Quarters
ended
|
Mar.
31, 2007
|
June
30, 2007
|
Sep.
30, 2007
|
Dec.
31, 2007
|
||||||||||||
Freight
revenue
|
$ | 143,542 | $ | 151,033 | $ | 148,531 | $ | 159,524 | ||||||||
Operating
income (loss)
|
(2,744 | ) | (11,072 | ) | (2,168 | ) | 5,302 | |||||||||
Net
income (loss)
|
(2,070 | ) | (11,257 | ) | (3,575 | ) | 176 | |||||||||
Basic
and diluted earnings (loss) per share
|
(0.15 | ) | (0.80 | ) | (0.25 | ) | 0.01 |