Forward Air (FWRD) 8-K Forward Air Corporation Reports

NEWS RELEASE

FORWARD AIR CORPORATION REPORTS

FOURTH QUARTER AND FISCAL 2010 RESULTS AND

ANNOUNCES QUARTERLY CASH DIVIDEND

GREENEVILLE, Tenn.—(BUSINESS WIRE) – February 14, 2011—Forward Air Corporation (NASDAQ:FWRD) today reported results for the fourth quarter and year ended December 31, 2010.

Operating revenue for the quarter ended December 31, 2010 increased 13.0% to $133.3 million from $118.0 million for the same quarter in 2009.  Income from operations was $18.7 million, compared with $12.1 million for the fourth quarter of 2009, an increase of 54.5%.  As a percent of operating revenue, income from operations increased to 14.0% from 10.3% for the same quarter last year.  Net income during the period increased by $5.5 million, or 88.0%, to $11.8 million from $6.3 million in the fourth quarter of 2009.  Net income per diluted share for the fourth quarter of 2010 was $0.41 compared with $0.22 in the same quarter in 2009, an increase of 86.4%.

Operating revenue for the year ended December 31, 2010 increased 15.9% to $483.9 million from $417.4 million for the year ended December 31, 2009.  Income from operations was $53.7 million, compared with $18.6 million in 2009.  The Company’s net income for the year ended December 31, 2010, was $32.0 million, compared with $9.8 million in 2009.  Net income per diluted share for the year ended December 31, 2010 was $1.10 compared with $0.34 in 2009.  The income from operations, net income and net income per diluted share for the year end December 31, 2009 included the impact of a $7.2 million pre-tax charge for the impairment of goodwill and other intangible assets.

Bruce A. Campbell, Chairman, President and CEO, said, "Solid demand for our airport-to-airport service along with strong pricing delivered outstanding results for the fourth quarter. We were most encouraged by the continued positive leverage of our business model which produced a 370 basis point improvement as compared to the fourth quarter of 2009. The resulting 86.0% operating ratio is our best operating performance since the third quarter of 2008.  We are pleased with our continued progress toward attaining the returns and margins our shareholders have come to expect from Forward Air.”

Commenting further, Mr. Campbell said, “We were also encouraged by the fourth quarter performance of our Forward Air Solutions segment. With a continued firming of the economy, further success penetrating complementary industry verticals and on-going cost control initiatives, we expect this segment to be a profitable contributor in 2011.”

In closing, Mr. Campbell said, “We expect that improving macroeconomic trends as well as positive trends specific to Forward Air will continue throughout 2011. Utilizing our dedicated team of employees and independent contractors we intend to take full advantage of this improved operating environment in order to drive maximum value to our shareholders.”

In commenting further on the quarter, Rodney L. Bell, Senior Vice President and CFO said, “Strong free cash flow of $40.1 million allowed us to increase cash by $32.5 million to end 2010 with $74.5 million on our balance sheet. Consistent with the end of 2009, we closed 2010 with $50 million outstanding on our line of credit and had $38.3 million available on our credit facility.”

Commenting on the Company’s guidance for the first quarter, Mr. Bell said, “We anticipate our first quarter 2011 revenues will increase in the range of 9% to 13% over the comparable 2010 period, and we expect income per diluted share to be between $0.20 and $0.24 per share. This compares to $0.12 per share in the first quarter of 2010.”

On February 11, 2011, our Board of Directors declared a quarterly cash dividend of $0.07 per share of common stock. The dividend is payable to shareholders of record at the close of business on March 13, 2011, and is expected to be paid on March 28, 2011.

This quarterly dividend is pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.28 per share of common stock, payable in quarterly increments of $0.07 per share of common stock. The actual declaration of future cash dividends, and the establishment of record and payment dates, is subject to final determination by the Board of Directors each quarter after its review of the Company’s financial performance.

Review of Financial Results

Forward Air will hold a conference call to discuss fourth quarter and year end 2010 results on Tuesday, February 15, 2011 at 9:00 a.m. EST.  The Company’s conference call will be available online at www.forwardair.com or by dialing 800-841-9385, passcode 156 499 68.  A replay of the conference call will be available at www.forwardair.com beginning shortly after the completion of the live call.

About Forward Air Corporation

Forward Air Corporation operates two business segments, Forward Air, Inc. and Forward Air Solutions, Inc.

Forward Air, Inc. is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of terminals located on or near major airports in 84 cities in the United States and Canada.  It provides these services as a cost-effective alternative to air transportation of cargo that must be delivered at a specific time but is relatively less time-sensitive than traditional air freight or when air transportation is not economical.

Forward Air Solutions, Inc. is a provider of pool distribution services. Pool distribution involves the consolidation and shipment of several smaller less-than-truckload shipments to a common area or region. Once at the regional destination, the loads are deconsolidated, then grouped with other shipments with common delivery points, and delivered in a very precise, time-sensitive manner. Our pool distribution network consists of terminals and service locations in 19 cities within the Mid-Atlantic, Southeast, Midwest and Southwestern United States.

Forward Air Corporation
Consolidated Condensed Statements of Income
(In thousands, except per share data)
(Unaudited)
	Three months ended						Year ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009
Operating revenue:
Forward Air
Airport-to-airport	$	87,245		$	73,338		$	321,702		$	268,245
Logistics		17,147			15,422			64,935			54,067
Other		6,386			6,100			25,130			23,076
Forward Air Solutions
Pool distribution		22,532			23,158			72,172			72,022
Total operating revenue		133,310			118,018			483,939			417,410
Operating expenses:
Purchased transportation
Forward Air
Airport-to-airport		34,959			30,509			129,111			112,516
Logistics		13,445			12,061			50,225			42,188
Other		1,476			1,553			6,288			5,234
Forward Air Solutions
Pool distribution		5,123			4,715			15,747			14,490
Total purchased transportation		55,003			48,838			201,371			174,428
Salaries, wages and employee benefits		33,426			31,971			129,108			118,804
Operating leases		6,864			6,853			26,252			27,294
Depreciation and amortization		5,167			5,035			20,450			19,722
Insurance and claims		2,442			2,735			8,425			9,719
Fuel expense		2,409			2,113			8,461			7,312
Other operating expenses		9,321			8,441			36,133			34,424
Impairment of goodwill and other intangible assets		--			--			--			7,157
Total operating expenses		114,632			105,986			430,200			398,860
Income from operations		18,678			12,032			53,739			18,550
Other income (expense):
Interest expense		(173	)		(202	)		(730	)		(670	)
Other, net		53			20			90			69
Total other expense		(120	)		(182	)		(640	)		(601	)
Income before income taxes		18,558			11,850			53,099			17,949
Income taxes		6,741			5,566			21,063			8,147
Net income	$	11,817		$	6,284		$	32,036		$	9,802
Net income per share:
Basic	$	0.41		$	0.22		$	1.11		$	0.34
Diluted	$	0.41		$	0.22		$	1.10		$	0.34
Weighted average shares outstanding:
Basic		29,010			28,943			28,984			28,928
Diluted		29,174			29,041			29,111			28,993
Dividends per share:	$	0.07		$	0.07		$	0.28		$	0.28

2

Forward Air Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
	December 31,		December 31,
	2010		2009 (a)
Assets
Current assets:
Cash	$	74,504	$	42,035
Accounts receivable, net		62,763		55,720
Other current assets		8,696		9,471
Total current assets		145,963		107,226
Property and equipment		213,704		204,716
Less accumulated depreciation and amortization		87,272		75,990
Total property and equipment, net		126,432		128,726
Goodwill and other acquired intangibles:
Goodwill		43,332		43,332
Other acquired intangibles, net		31,259		35,849
Total goodwill and other acquired intangibles		74,591		79,181
Other assets		1,810		1,597
Total assets	$	348,796	$	316,730
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	10,687	$	10,333
Accrued expenses		16,280		18,531
Current portion of debt and capital lease obligations		638		919
Total current liabilities		27,605		29,783
Debt and capital lease obligations, less current portion		50,883		52,169
Other long-term liabilities		8,106		4,485
Deferred income taxes		6,116		5,786
Shareholders’ equity:
Common stock		290		290
Additional paid-in capital		24,300		16,631
Retained earnings		231,496		207,586
Total shareholders’ equity		256,086		224,507
Total liabilities and shareholders’ equity	$	348,796	$	316,730

(a) Taken from audited financial statements, which are not presented in their entirety.

3

Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Three Months Ended
	December 31,			December 31,
	2010			2009
Operating activities:
Net income	$	11,817		$	6,284
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		5,167			5,035
Share-based compensation		1,397			1,732
Gain on disposal of property and equipment		78			7
Provision for (recovery) loss on receivables		(254	)		14
Provision for revenue adjustments		127			474
Deferred income taxes		3,060			(1,572	)
Tax (benefit) expense for stock options exercised		(166	)		371
Changes in operating assets and liabilities
Accounts receivable		(198	)		(3,214	)
Prepaid expenses and other current assets		989			2,115
Accounts payable and accrued expenses		(5,883	)		8,226
Net cash provided by operating activities		16,134			19,472
Investing activities:
Proceeds from disposal of property and equipment		69			39
Purchases of property and equipment		(3,259	)		(2,019	)
Other		(224	)		(33	)
Net cash used in investing activities		(3,414	)		(2,013	)
Financing activities:
Payments of debt and capital lease obligations		(173	)		(386	)
Proceeds from exercise of stock options		501			--
Payments of cash dividends		(2,033	)		(2,028	)
Common stock issued under employee stock purchase plan		104			138
Cash settlement of share-based awards for minimum tax withholdings		--			(7	)
Tax benefit (expense) for stock options exercised		166			(371	)
Net cash used in financing activities		(1,435	)		(2,654	)
Net increase in cash		11,285			14,805
Cash at beginning of period		63,219			27,230
Cash at end of period	$	74,504		$	42,035

4

Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Year ended
	December 31,			December 31,
	2010			2009
Operating activities:
Net income	$	32,036		$	9,802
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		20,450			19,722
Impairment of goodwill and other intangible assets		--			7,157
Share-based compensation		6,284			6,754
Gain on disposal of property and equipment		(570	)		(6	)
Provision for recovery on receivables		(52	)		(60	)
Provision for revenue adjustments		1,589			2,390
Deferred income taxes		1,436			(4,581	)
Tax (benefit) expense for stock options exercised		(194	)		370
Changes in operating assets and liabilities
Accounts receivable		(8,580	)		(844	)
Prepaid expenses and other current assets		(40	)		548
Accounts payable and accrued expenses		1,636			8,927
Net cash provided by operating activities		53,995			50,179
Investing activities:
Proceeds from disposal of property and equipment		1,482			270
Purchases of property and equipment		(15,148	)		(20,847	)
Other		(224	)		372
Net cash used in investing activities		(13,890	)		(20,205	)
Financing activities:
Payments of debt and capital lease obligations		(895	)		(1,549	)
Proceeds from exercise of stock options		991			8
Payments of cash dividends		(8,121	)		(8,109	)
Common stock issued under employee stock purchase plan		195			237
Cash settlement of share-based awards for minimum tax withholdings		--			(249	)
Tax benefit (expense) for stock options exercised		194			(370	)
Net cash used in financing activities		(7,636	)		(10,032	)
Net increase in cash		32,469			19,942
Cash at beginning of period		42,035			22,093
Cash at end of period	$	74,504		$	42,035

5

Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
	Three months ended
	December 31,			Percent of		December 31,			Percent of					Percent
	2010			Revenue		2009			Revenue		Change			Change
Operating revenue
Forward Air	$	111.1		83.3	%	$	95.1		80.6	%	$	16.0		16.8	%
FASI		22.6		17.0			23.3		19.7			(0.7	)	(3.0	)
Intercompany Eliminations		(0.4	)	(0.3	)		(0.4	)	(0.3	)		--		--
Total		133.3		100.0			118.0		100.0			15.3		13.0
Purchased transportation
Forward Air		49.9		44.9			44.2		46.5			5.7		12.9
FASI		5.5		24.3			5.0		21.4			0.5		10.0
Intercompany Eliminations		(0.4	)	100.0			(0.4	)	100.0			--		--
Total		55.0		41.3			48.8		41.4			6.2		12.7
Salaries, wages and employee benefits
Forward Air		24.9		22.4			22.6		23.8			2.3		10.2
FASI		8.5		37.6			9.3		39.9			(0.8	)	(8.6	)
Total		33.4		25.0			31.9		27.0			1.5		4.7
Operating leases
Forward Air		5.0		4.5			4.6		4.8			0.4		8.7
FASI		1.9		8.4			2.3		9.9			(0.4	)	(17.4	)
Total		6.9		5.2			6.9		5.8			--		--
Depreciation and amortization
Forward Air		4.2		3.8			4.1		4.3			0.1		2.4
FASI		1.0		4.4			0.9		3.9			0.1		11.1
Total		5.2		3.9			5.0		4.2			0.2		4.0
Insurance and claims
Forward Air		1.6		1.4			2.1		2.2			(0.5	)	(23.8	)
FASI		0.8		3.6			0.7		3.0			0.1		14.3
Total		2.4		1.8			2.8		2.4			(0.4	)	(14.3	)
Fuel expense
Forward Air		1.0		0.9			0.8		0.8			0.2		25.0
FASI		1.4		6.2			1.3		5.6			0.1		7.7
Total		2.4		1.8			2.1		1.8			0.3		14.3
Other operating expenses
Forward Air		7.6		6.9			6.6		7.0			1.0		15.2
FASI		1.7		7.5			1.8		7.7			(0.1	)	(5.6	)
Total		9.3		7.0			8.4		7.1			0.9		10.7
Income from operations
Forward Air		16.9		15.2			10.1		10.6			6.8		67.3
FASI		1.8		8.0			2.0		8.6			(0.2	)	(10.0	)
Total	$	18.7		14.0	%	$	12.1		10.3	%	$	6.6		54.5	%

6

Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
	Year ended
	December 31,			Percent of		December 31,			Percent of					Percent
	2010			Revenue		2009			Revenue		Change			Change
Operating revenue
Forward Air	$	412.9		85.3	%	$	346.3		83.0	%	$	66.6		19.2	%
FASI		72.5		15.0			72.5		17.4			--		--
Intercompany Eliminations		(1.5	)	(0.3	)		(1.4	)	(0.4	)		(0.1	)	7.1
Total		483.9		100.0			417.4		100.0			66.5		15.9
Purchased transportation
Forward Air		185.8		45.0			160.3		46.3			25.5		15.9
FASI		16.9		23.3			15.4		21.2			1.5		9.7
Intercompany Eliminations		(1.3	)	(86.7	)		(1.3	)	92.9			--		--
Total		201.4		41.6			174.4		41.8			27.0		15.5
Salaries, wages and employee benefits
Forward Air		98.3		23.8			85.7		24.7			12.6		14.7
FASI		30.8		42.5			33.1		45.6			(2.3	)	(6.9	)
Total		129.1		26.7			118.8		28.5			10.3		8.7
Operating leases
Forward Air		18.6		4.5			18.7		5.4			(0.1	)	(0.5	)
FASI		7.7		10.6			8.6		11.9			(0.9	)	(10.5	)
Total		26.3		5.4			27.3		6.5			(1.0	)	(3.7	)
Depreciation and amortization
Forward Air		16.5		4.0			16.1		4.6			0.4		2.5
FASI		3.9		5.4			3.6		5.0			0.3		8.3
Total		20.4		4.2			19.7		4.7			0.7		3.6
Insurance and claims
Forward Air		6.2		1.5			7.6		2.2			(1.4	)	(18.4	)
FASI		2.2		3.0			2.1		2.9			0.1		4.8
Total		8.4		1.7			9.7		2.3			(1.3	)	(13.4	)
Fuel expense
Forward Air		3.8		0.9			3.1		0.9			0.7		22.6
FASI		4.7		6.5			4.2		5.8			0.5		11.9
Total		8.5		1.8			7.3		1.8			1.2		16.4
Other operating expenses
Forward Air		29.8		7.2			27.7		8.0			2.1		7.6
FASI		6.5		9.0			6.8		9.4			(0.3	)	(4.4	)
Intercompany Eliminations		(0.2	)	(13.3	)		(0.1	)	7.1			(0.1	)	100.0
Total		36.1		7.5			34.4		8.3			1.7		4.9
Impairment of goodwill and other intangible assets
Forward Air		--		--			0.2		0.1			(0.2	)	(100.0	)
FASI		--		--			7.0		9.6			(7.0	)	(100.0	)
Total		--		--			7.2		1.7			(7.2	)	(100.0	)
Income (loss) from operations
Forward Air		53.9		13.1			26.9		7.8			27.0		100.4
FASI		(0.2	)	(0.3	)		(8.3	)	(11.4	)		8.1		(97.6	)
Total	$	53.7		11.1	%	$	18.6		4.4	%	$	35.1		188.7	%

7

Forward Air Corporation
Forward Air Inc. Operating Statistics
	Three months ended
	December 31,			December 31,			Percent
	2010			2009			Change
Operating ratio		84.8	%		89.4	%	(5.1	)	%
Business days		63.0			64.0		(1.6	)
Business weeks		12.6			12.8		(1.6	)
Airport-to-airport:
Tonnage
Total pounds ¹		437,977			398,921		9.8
Average weekly pounds ¹		34,760			31,166		11.5
Linehaul shipments
Total linehaul		623,211			565,922		10.1
Average weekly		49,461			44,213		11.9
Forward Air Complete shipments		85,917			71,442		20.3
As a percentage of linehaul shipments		13.8	%		12.6	%	9.5
Average linehaul shipment size		703			705		(0.3	)
Revenue per pound ²
Linehaul yield	$	16.70		$	15.84		4.7
Fuel surcharge impact		1.28			0.96		1.7
Forward Air Complete impact		1.97			1.62		1.9
Total airport-to-airport yield	$	19.95		$	18.42		8.3
Logistics:
Miles
Owner operator ¹		7,179			6,421		11.8
Third party ¹		3,617			3,220		12.3
Total Miles		10,796			9,641		12.0
Revenue per mile	$	1.61		$	1.62		(0.6	)
Cost per mile	$	1.25		$	1.25		--		%
¹ - In thousands
² - In cents per pound; percentage change is expressed as a percent of total yield.

8

Forward Air Corporation
Forward Air Inc. Operating Statistics
	Year ended
	December 31,			December 31,			Percent
	2010			2009			Change
Operating ratio		86.9	%		92.2	%	(5.7	)	%
Business days		254.0			255.0		(0.4	)
Business weeks		50.8			51.0		(0.4	)
Airport-to-airport:
Tonnage
Total pounds ¹		1,655,075			1,452,969		13.9
Average weekly pounds ¹		32,580			28,490		14.4
Linehaul shipments
Total linehaul		2,308,468			2,095,223		10.2
Average weekly		45,442			41,083		10.6
Forward Air Complete shipments		314,203			266,136		18.1
As a percentage of linehaul shipments		13.6	%		12.7	%	7.1
Average linehaul shipment size		717			693		3.5
Revenue per pound ²
Linehaul yield	$	16.40		$	16.06		1.8
Fuel surcharge impact		1.21			0.84		2.0
Forward Air Complete impact		1.86			1.60		1.4
Total airport-to-airport yield	$	19.47		$	18.50		5.2
Logistics:
Miles
Owner operator ¹		27,086			24,338		11.3
Third party ¹		12,943			9,929		30.4
Total Miles		40,029			34,267		16.8
Revenue per mile	$	1.64		$	1.59		3.1
Cost per mile	$	1.25		$	1.23		1.6		%
¹ - In thousands
² - In cents per pound; percentage change is expressed as a percent of total yield.

9

Important Information

This press release contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance.  Some forward-looking statements may be identified by use of such terms as “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or “expects.”  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, our inability to maintain our historical growth rate because of a decreased volume of freight moving through our network or decreased average revenue per pound of freight moving through our network, increasing competition and pricing pressure, surplus inventories, loss of a major customer, the creditworthiness of our customers and their ability to pay for services rendered, our ability to secure terminal facilities in desirable locations at reasonable rates, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, claims for property damage, personal injurie s or workers’ compensation, employment matters including rising health care costs, enforcement of and changes in governmental regulations, environmental and tax matters, the handling of hazardous materials, the availability and compensation of qualified independent owner-operators and freight handlers needed to serve our transportation needs and our inability to successfully integrate acquisitions.  As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations.  We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

-END-

CONTACT:    

Forward Air Corporation

Rodney L. Bell, 423-636-7000

rbell@forwardair.com