UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2005
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number: 0-19582
OLD DOMINION FREIGHT LINE, INC.
(Exact name of registrant as specified in its charter)
| VIRGINIA | 56-0751714 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
500 Old Dominion Way
Thomasville, NC 27360
(Address of principal executive offices)
(Zip Code)
(336) 889-5000
(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. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of May 10, 2005, there were 24,845,235 shares of the registrant’s Common Stock ($0.10 par value) outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED BALANCE SHEETS
| (In thousands, except share data) |
March 31, 2005 |
December 31, 2004 |
||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 2,539 | $ | 742 | ||||
| Customer receivables, less allowances of $7,873 and $8,109, respectively |
110,466 | 94,495 | ||||||
| Other receivables |
2,151 | 2,753 | ||||||
| Tires on equipment |
11,653 | 10,551 | ||||||
| Prepaid expenses |
12,554 | 14,238 | ||||||
| Deferred income taxes |
5,638 | 4,602 | ||||||
| Total current assets |
145,001 | 127,381 | ||||||
| Property and equipment: |
||||||||
| Revenue equipment |
343,985 | 311,405 | ||||||
| Land and structures |
206,892 | 198,194 | ||||||
| Other fixed assets |
89,372 | 84,941 | ||||||
| Leasehold improvements |
1,247 | 1,103 | ||||||
| Total property and equipment |
641,496 | 595,643 | ||||||
| Less accumulated depreciation and amortization |
(242,279 | ) | (232,375 | ) | ||||
| Net property and equipment |
399,217 | 363,268 | ||||||
| Other assets |
21,918 | 18,928 | ||||||
| Total assets |
$ | 566,136 | $ | 509,577 | ||||
The accompanying notes are an integral part of these financial statements.
2
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
| (In thousands, except share data) |
March 31, 2005 (Unaudited) |
December 31, 2004 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 32,292 | $ | 25,300 | ||
| Compensation and benefits |
30,815 | 21,323 | ||||
| Claims and insurance accruals |
22,983 | 22,051 | ||||
| Other accrued liabilities |
7,747 | 6,586 | ||||
| Income taxes payable |
7,514 | 1,374 | ||||
| Current maturities of long-term debt |
19,380 | 22,030 | ||||
| Total current liabilities |
120,731 | 98,664 | ||||
| Long-term liabilities: |
||||||
| Long-term debt |
82,695 | 57,424 | ||||
| Other non-current liabilities |
23,516 | 22,646 | ||||
| Deferred income taxes |
38,323 | 39,315 | ||||
| Total long-term liabilities |
144,534 | 119,385 | ||||
| Total liabilities |
265,265 | 218,049 | ||||
| Shareholders’ equity: |
||||||
| Common stock - $0.10 par value, 70,000,000 shares authorized, 24,845,235 shares outstanding at March 31, 2005 and December 31, 2004 |
2,485 | 2,485 | ||||
| Capital in excess of par value |
92,088 | 92,088 | ||||
| Retained earnings |
206,298 | 196,955 | ||||
| Total shareholders’ equity |
300,871 | 291,528 | ||||
| Commitments and contingencies |
— | — | ||||
| Total liabilities and shareholders’ equity |
$ | 566,136 | $ | 509,577 | ||
The accompanying notes are an integral part of these financial statements.
3
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Quarter Ended | ||||||
| (In thousands, except share data) |
March 31, 2005 (Unaudited) |
March 31, 2004 (Unaudited) | ||||
| Revenue from operations |
$ | 236,770 | $ | 182,769 | ||
| Operating expenses: |
||||||
| Salaries, wages and benefits |
134,244 | 108,450 | ||||
| Operating supplies and expenses |
33,092 | 20,835 | ||||
| General supplies and expenses |
7,648 | 6,430 | ||||
| Operating taxes and licenses |
9,007 | 7,300 | ||||
| Insurance and claims |
7,855 | 5,842 | ||||
| Communications and utilities |
3,214 | 2,806 | ||||
| Depreciation and amortization |
12,335 | 10,596 | ||||
| Purchased transportation |
8,803 | 6,281 | ||||
| Building and office equipment rents |
2,097 | 1,830 | ||||
| Miscellaneous expenses, net |
1,239 | 1,498 | ||||
| Total operating expenses |
219,534 | 171,868 | ||||
| Operating income |
17,236 | 10,901 | ||||
| Other deductions: |
||||||
| Interest expense, net |
1,433 | 1,370 | ||||
| Other expense, net |
153 | 167 | ||||
| Total other deductions |
1,586 | 1,537 | ||||
| Income before income taxes |
15,650 | 9,364 | ||||
| Provision for income taxes |
6,307 | 3,652 | ||||
| Net income |
$ | 9,343 | $ | 5,712 | ||
| Earnings per share: |
||||||
| Basic |
$ | 0.38 | $ | 0.24 | ||
| Diluted |
$ | 0.38 | $ | 0.24 | ||
| Weighted average shares outstanding: |
||||||
| Basic |
24,845,235 | 24,089,028 | ||||
| Diluted |
24,855,039 | 24,110,532 | ||||
The accompanying notes are an integral part of these financial statements.
4
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
| Capital in excess of par value |
Retained earnings |
Total | ||||||||||||
| Common Stock |
||||||||||||||
| (In thousands) |
Shares |
Amount |
||||||||||||
| Balance as of December 31, 2003 |
24,089 | $ | 2,409 | $ | 72,169 | $ | 157,963 | $ | 232,541 | |||||
| Net income |
— | — | — | 38,992 | 38,992 | |||||||||
| Sale of common stock |
736 | 74 | 19,679 | — | 19,753 | |||||||||
| Exercise of common stock options |
20 | 2 | 169 | — | 171 | |||||||||
| Tax benefit from exercise of common stock options |
— | — | 71 | — | 71 | |||||||||
| Balance as of December 31, 2004 |
24,845 | 2,485 | 92,088 | 196,955 | 291,528 | |||||||||
| Net income (Unaudited) |
— | — | — | 9,343 | 9,343 | |||||||||
| Balance as of March 31, 2005 (Unaudited) |
24,845 | $ | 2,485 | $ | 92,088 | $ | 206,298 | $ | 300,871 | |||||
The accompanying notes are an integral part of these financial statements.
5
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Quarter Ended March 31, |
||||||||
| (In thousands) |
2005 (Unaudited) |
2004 (Unaudited) |
||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 9,343 | $ | 5,712 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
12,335 | 10,596 | ||||||
| Loss on sale of property and equipment |
142 | 44 | ||||||
| Changes in assets and liabilities: |
||||||||
| Customer and other receivables, net |
(13,450 | ) | (7,349 | ) | ||||
| Tires on equipment |
(1,102 | ) | (269 | ) | ||||
| Prepaid expenses and other assets |
1,910 | 1,749 | ||||||
| Accounts payable |
6,992 | 9,760 | ||||||
| Compensation, benefits and other accrued liabilities |
10,653 | 4,581 | ||||||
| Claims and insurance accruals |
1,727 | 2,806 | ||||||
| Deferred income tax |
(2,028 | ) | (867 | ) | ||||
| Income taxes payable |
6,140 | 2,688 | ||||||
| Other liabilities |
75 | 455 | ||||||
| Net cash provided by operating activities |
32,737 | 29,906 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment |
(37,692 | ) | (23,292 | ) | ||||
| Proceeds from sale of property and equipment |
206 | 34 | ||||||
| Acquisition of business assets, net |
(16,075 | ) | — | |||||
| Net cash used for investing activities |
(53,561 | ) | (23,258 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of long-term debt |
50,000 | — | ||||||
| Principal payments under long-term debt agreements |
(10,046 | ) | (10,281 | ) | ||||
| Net (payments) proceeds from revolving line of credit |
(17,333 | ) | 3,636 | |||||
| Net cash provided by (used for) financing activities |
22,621 | (6,645 | ) | |||||
| Increase in cash and cash equivalents |
1,797 | 3 | ||||||
| Cash and cash equivalents at beginning of period |
742 | 1,051 | ||||||
| Cash and cash equivalents at end of period |
$ | 2,539 | $ | 1,054 | ||||
The accompanying notes are an integral part of these financial statements.
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Old Dominion Freight Line, Inc. and its wholly owned subsidiary. All significant intercompany balances and transactions are eliminated in consolidation.
The accompanying unaudited, interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and, in management’s opinion, contain all adjustments (consisting of normal recurring items) necessary for a fair presentation, in all material respects, of the financial position and results of operations for the periods presented. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the interim period ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.
The consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes, which appear in our Annual Report on Form 10-K for the year ended December 31, 2004. For comparability, certain reclassifications were made to conform prior period financial statements to the current presentation.
There have been no significant changes in the accounting policies of Old Dominion Freight Line, Inc. or significant changes in our commitments and contingencies as previously described in our Annual Report on Form 10-K for the year ended December 31, 2004, other than the changes described in this quarterly report.
Unless the context requires otherwise, references in these Notes to “Old Dominion”, the “Company”, “we”, “us” and “our” refer to Old Dominion Freight Line, Inc. and its subsidiary on a consolidated basis.
Common Stock Split
On April 20, 2004, the Board of Directors approved a three-for-two common stock split for shareholders of record as of the close of business on May 6, 2004. On May 20, 2004, those shareholders received one additional share of common stock for every two shares owned. All references in this report to shares outstanding, weighted average shares outstanding and earnings per share amounts have been restated retroactively for this stock split.
Earnings Per Share
Net income per share of common stock is based on the weighted average number of shares outstanding during each period. Net income per common share is computed using the weighted average number of common shares outstanding during the period. The effect of dilutive employee stock options is immaterial to the calculation of diluted earnings per share for the quarterly periods ended March 31, 2005 and 2004.
Stock-Based Compensation
Effective December 31, 2002, Old Dominion adopted the prospective method of transition of SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment of
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
SFAS No. 123. Stock based compensation expense for our employee stock option plan that was granted prior to January 1, 2003 continues to be recognized under the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related interpretations. Consistent with APB 25, the exercise price of our employee stock options equals the market price of the underlying stock on the date of grant; therefore, no compensation expense is recognized. Pro forma information regarding net income and earnings per share required by SFAS No. 123, Accounting for Stock-Based Compensation, as amended, is not significant.
Recent Accounting Pronouncements
On December 16, 2004, the Financial Accounting Standards Board issued SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of Accounting Principles Board Opinion No. 29 (“APB 29”). This Statement requires exchanges of nonmonetary assets to be accounted for on the fair value of the assets exchanged, unless the exchange lacks commercial substance. Under APB 29, an exchange of a productive asset for a similar productive asset was based on the recorded amount of the asset relinquished. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005, with earlier application permitted for such exchanges occurring in fiscal periods beginning after December 16, 2004, the provisions of which are applied prospectively. The Company adopted this standard effective January 1, 2005 without a material impact on its financial position, results of operation or cash flows.
Note 2. Long-term Debt
Long-term debt consisted of the following:
| (In thousands) |
March 31, 2005 (unaudited) |
December 31, 2004 | ||||
| Senior notes |
$ | 94,964 | $ | 53,714 | ||
| Revolving credit facility |
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