SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 2001 Commission File No. 0-15087
HEARTLAND EXPRESS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 93-0926999
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
2777 Heartland Drive, Coralville, Iowa 52241
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (319)545-2728
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 [ ]
At September 30, 2001, there were 31,708,131 shares of the Company's $.01 par
value common stock outstanding.
PART I
FINANCIAL INFORMATION
Page
Number
Item 1. Financial statements
Consolidated balance sheets
September 30, 2001 (unaudited) and
December 31, 2000 2 - 3
Consolidated statements of income
(unaudited) for the three and nine month
periods ended September 30, 2001 and 2000 4
Consolidated statements of cash flows
(unaudited) for the nine months ended
September 30, 2001 and 2000 5
Notes to financial statements 6
Item 2. Management's discussion and analysis of
financial condition and results of
operations 7 - 11
Item 3. Quantitative and qualitative disclosures
about market risk 11
PART II
OTHER INFORMATION
Item 1. Legal proceedings 12
Item 2. Changes in securities 12
Item 3. Defaults upon senior securities 12
Item 4. Submission of matters to a vote of 12
security holders
Item 5. Other information 12
Item 6. Exhibits and reports on Form 8-K 12 - 13
1
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS September 30, December 31,
2001 2000
------------ -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents ................... $129,064,985 $ 128,027,076
Trade receivables, less allowance:
$402,812 at both 2001 and 2000 .............. 27,364,115 24,954,681
Prepaid tires ............................... 4,168,816 3,780,644
Investments ................................. 23,875,039 --
Deferred income taxes ....................... 17,101,000 16,846,000
Other current assets ........................ 1,150,836 328,273
------------ -------------
Total current assets ....... $202,724,791 $ 173,936,674
------------ -------------
PROPERTY AND EQUIPMENT
Land and land improvements .................. $ 4,185,288 $ 3,237,875
Buildings ................................... 8,532,621 8,532,621
Furniture and fixtures ...................... 1,777,558 2,604,400
Shop and service equipment .................. 1,556,774 1,459,862
Revenue equipment ........................... 131,083,677 129,572,317
------------ -------------
$147,135,918 $ 145,407,075
Less accumulated depreciation & amortization. 48,873,067 56,329,103
------------ -------------
Property and equipment, net ................ $ 98,262,851 $ 89,077,972
------------ -------------
OTHER ASSETS ............................... $ 4,357,928 $ 5,040,358
------------ -------------
$305,345,570 $ 268,055,004
============ =============
The accompanying notes are an integral part of these consolidated financial
statements.
2
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2001 2000
------------ -------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable & accrued liabilities ..... $ 9,920,905 $ 6,712,053
Compensation & benefits .................... 6,122,557 5,132,589
Income taxes payable ....................... 7,003,185 4,618,882
Insurance accruals ......................... 36,025,668 35,657,944
Other ...................................... 3,994,477 3,308,925
------------ ------------
Total current liabilities . $ 63,066,792 $ 55,430,393
------------ ------------
DEFERRED INCOME TAXES ........................ $ 19,343,000 $ 17,491,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Capital Stock:
Preferred, $.01 par value; authorized
5,000,000 share; none issured ............ $ -- $ --
Common, $.01 par value; authorized
395,000,000 shares; issued and
Outstanding 31,708,131 and
25,366,582, respectively ................. 317,081 253,666
Additional paid in capital ................. 6,608,170 6,608,170
Retained earnings .......................... 216,010,527 188,271,775
------------ ------------
$222,935,778 $195,133,611
------------ ------------
$305,345,570 $268,055,004
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
3
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2001 2000 2001 2000
OPERATING REVENUE ................................... $ 73,917,920 $ 68,107,430 $ 221,092,616 $ 204,558,697
------------- ------------- ------------- -------------
OPERATING EXPENSES:
Salaries, wages, benefits ........................ $ 21,969,335 $ 18,722,396 $ 65,188,099 $ 53,705,524
Rent and purchased transportation ................ 16,474,914 18,013,117 50,664,406 58,246,522
Operations and maintenance ....................... 12,405,409 10,565,512 36,714,887 30,175,800
Taxes and licenses ............................... 1,586,127 1,516,106 4,489,242 4,276,661
Insurance and claims ............................. 1,726,834 1,591,330 5,382,925 5,090,063
Communications and utilities ..................... 698,956 774,854 2,320,610 2,169,272
Depreciation ..................................... 4,279,356 4,143,218 12,723,996 11,902,708
Other operating expenses ......................... 1,785,209 1,685,214 5,036,289 4,740,272
(Gain) loss on sale of fixed assets .............. 52,371 (23,235) 16,913 (1,516,913)
------------- ------------- ------------- -------------
$ 60,978,511 $ 56,988,512 $ 182,537,367 $ 168,789,909
------------- ------------- ------------- -------------
Operating income ....................... $ 12,939,409 $ 11,118,918 $ 38,555,249 $ 35,768,788
Interest income ................................... 1,022,472 1,592,934 3,569,134 4,244,938
------------- ------------- ------------- -------------
Income before income taxes ..................... $ 13,961,881 $ 12,711,852 $ 42,124,383 $ 40,013,726
Income taxes ...................................... 4,746,965 4,322,021 14,322,216 13,604,658
------------- ------------- ------------- -------------
Net income ..................................... $ 9,214,916 8,389,831 $ 27,802,167 $ 26,409,068
============= ============= ============= =============
Earnings per common share:
Basic earnings per share ...................... $ 0.29 $ 0.26 $ 0.88 $ 0.82
============= ============= ============= =============
Basic weighted average shares outstanding ......... 31,708,131 31,708,131 31,708,131 31,997,534
============= ============= ============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
4
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
2001 2000
------------- --------------
OPERATING ACTIVITIES
Net Income ................................. $ 27,802,167 $ 26,409,068
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization ............ 13,307,583 12,641,155
Deferred income taxes .................... 1,597,000 230,000
Gain on sale of fixed assets ............. 16,913 (1,516,913)
Changes in certain working capital items:
Trade receivables ...................... (2,409,434) (3,294,077)
Other current assets ................... (450,501) (669,901)
Prepaid expenses ....................... (388,172) (1,655,156)
Accounts payable and accrued expenses .. 4,462,893 2,018,864
Accrued income tax ..................... 2,384,303 653,127
------------- -------------
Net cash provided by operating activities. $ 46,322,752 $ 34,816,167
------------- -------------
INVESTING ACTIVITIES
Proceeds from sale of prop. and equipment .. $ 182,795 $ 2,140,220
Capital additions .......................... (21,691,442) (24,026,206)
Net purchases of municipal bonds ........... (23,875,039) (2,609,839)
Other ...................................... 98,843 (432,726)
------------- -------------
Net cash used in investing activities ...... $ (45,284,843) $ (24,928,551)
------------- -------------
FINANCING ACTIVITIES
Repurchase of common stock ................. $ -- $ (14,009,900)
------------- -------------
Net cash used in financing activities .... $ -- $ (14,009,900)
------------- -------------
Net increase (decrease) in cash and
cash equivalents ....................... $ 1,037,909 $ (4,122,284)
CASH AND CASH EQUIVALENTS
Beginning of period ........................ 128,027,076 126,211,056
------------- -------------
End of period .............................. $ 129,064,985 $ 122,088,772
============= =============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes ............................. $ 10,340,913 $ 12,721,531
Noncash investing activities:
Book value of revenue equipment traded ... $ 9,250,948 $ 9,105,429
The accompanying notes are an integral part of these consolidated financial
statements.
5
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The consolidated financial statements include the accounts of Heartland
Express, Inc., a Nevada holding company, and its wholly-owned subsidiaries
("Heartland" or the "Company"). All significant intercompany balances and
transactions have been eliminated in consolidation.
The financial statements have been prepared, without audit, in accordance
with generally accepted accounting principles, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, the accompanying financial statements include all adjustments which
are necessary for a fair presentation of the results for the interim periods
presented, such adjustments being of a normal recurring nature. Certain
information and footnote disclosures have been condensed or omitted pursuant to
such rules and regulations. The December 31, 2000 Consolidated Balance Sheet was
derived from the audited balance sheet of the Company for the year then ended.
It is suggested that these consolidated financial statements and notes thereto
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's Form 10-K for the year ended December 31,
2000. Results of operations in interim periods are not necessarily indicative of
results to be expected for a full year.
Note 2. Income Taxes
Income taxes for the nine month period ended September 30, 2001 are based
on the Company's estimated effective tax rates. The rate for the nine months
ended September 30, 2001 and 2000 was 34%.
Note 3. Common Stock
On May 10, 2001, the Company effected a five-for-four common stock split in
the form of a 25% stock dividend to stockholders of record as of May 21, 2001,
payable on May 31, 2001. All share and per share information included in the
accompanying financial statements have been adjusted to reflect the stock split.
Note 4. Commitments and Contingencies
The Company is involved in certain legal proceedings arising in the normal
course of business. In the opinion of management, the Company's potential
exposure under pending legal proceedings is adequately provided for in the
accompanying consolidated financial statements.
Note 5. Segment Information
The Company has eight operating divisions; however, it has determined that
it has one reportable segment. All of the divisions are managed based on similar
economic characteristics. Each of the regional operating divisions provides
short to medium-haul truckload carrier services of general commodities to a
similar class of customers. In addition, each division exhibits similar
financial performance, including average revenue per mile and operating ratio.
As a result of the foregoing, the Company has determined that it is appropriate
to aggregate its operating divisions into one reportable segment consistent with
the guidance in SFAS No. 131. Accordingly, the Company has not presented
separate financial information for each of its operating divisions as the
Company's consolidated financial statements present its one reportable segment.
6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Information
Except for the historical information contained herein, the discussion in
this quarterly report contains forward-looking statements that involve risk,
assumptions, and uncertainties that are difficult to predict. Words such as
"believe," "may," "could," "expects," "likely," variations of these words, and
similar expressions, are intended to identify such forward-looking statements.
The Company's actual results could differ materially from those discussed
herein. Forward-looking information is subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. Without limitation, these risks and uncertainties include economic
factors such as recessions, downturns in customers' business cycles, surplus
inventories, inflation, fuel price increases, and higher interest rates: the
resale value of the Company's used revenue equipment; the availability and
compensation of qualified drivers, competition from trucking, rail, and
intermodal competitors; and the ability to identify acceptable acquisition
targets and negotiate, finance, and consummate acquisitions and integrate
acquired companies. Readers should review and consider the various disclosures
made by the Company in its press releases, stockholders reports, and public
filings, as well as the factors explained in greater detail in the Company's
annual report on Form 10-K.
Results of Operations:
The following table sets forth the percentage relationship of expense items
to operating revenue for the periods indicated.
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
------ ------ ------ ------
Operating revenue .................... 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------
Operating expenses:
Salaries, wages, and benefits ...... 29.8% 27.5% 29.5% 26.2%
Rent and purchased transportation .. 26.5 22.9 28.5 22.3
Operations and maintenance ......... 16.8 15.5 16.7 14.7
Taxes and licenses ................. 2.1 2.2 2.0 2.1
Insurance and claims................ 2.3 2.3 2.4 2.5
Communications and utilities........ 0.9 1.1 1.0 1.1
Depreciation ....................... 5.8 5.8 6.1 5.8
Other operating expenses ........... 2.4 2.5 2.3 2.3
(Gain) loss on sales of fixed assets 0.1 -- -- (0.7)
------ ------ ------ ------
Total operating expenses ........... 82.5% 83.7% 82.6% 82.5%
------ ------ ------ ------
Operating income ................. 17.5% 16.3% 17.4% 17.5%
Interest income ...................... 1.4 2.3 1.6 2.1
------ ------ ------ ------
Income before income taxes ....... 18.9% 18.6% 19.0% 19.6%
Income taxes.......................... 6.4 6.3 6.4 6.7
------ ------ ------ ------
Net income ....................... 12.5% 12.3% 12.6% 12.9%
====== ====== ====== ======
The following is a discussion of the results of operations of the three and
nine months periods ended September 30, 2001 compared with the same periods in
2000, and the changes in financial condition through the third quarter of 2001.
7
Three Months Ended September 30, 2001 and 2000
Operating revenue increased $5.8 million (8.5%), to $73.9 million in the
third quarter of 2001 from $68.1 million in the third quarter of 2000. The
revenue increase was primarily attributable to the expansion of the Company's
customer base as well as increased volume from existing customers. Operating
revenue for both compared periods was also positively impacted by fuel
surcharges assessed to customers.
Salaries, wages, and benefits increased $3.2 million (17.3%), to $21.9
million in the third quarter of 2001 from $18.7 million in the third quarter of
2000. As a percentage of revenue, salaries, wages and benefits increased to
29.8% in 2001 from 27.5% in 2000. These increases were a result of increased
reliance on employee drivers and a corresponding decrease in miles driven by
independent contractors. The increase in employee driver miles was attributable
to internal growth in the company tractor fleet. During the third quarter of
2001, employee drivers accounted for 68% and independent contractors 32% of the
total fleet miles, compared with 61% and 39%, respectively, in the third quarter
of 2000. The Company also experienced an increase in the frequency and severity
of workers' compensation and health insurance claims in comparison to the 2000
period.
Rent and purchased transportation decreased $1.5 million (8.5%), to $16.5
million in the third quarter of 2001 from $18.0 million in the third quarter of
2000. As a percentage of revenue, rent and purchased transportation decreased to
22.3% in the third quarter of 2001 from 26.5% in the third quarter of 2000. This
reflects the Company's decreased reliance upon independent contractors. In
addition, the extended period of high fuel prices has resulted in a reduction of
the number of available independent contractors in the industry. During both
periods, the Company has reimbursed independent contractors for the higher cost
of fuel based on fuel surcharges collected from customers.
Operations and maintenance increased $1.8 million (17.4%) to $12.4 million
in the third quarter of 2001 from $10.6 million in the third quarter of 2000. As
a percentage of revenue, operations and maintenance increased to 16.8% during
the third quarter of 2001 from 15.5% in the third quarter of 2000. This increase
is attributable to increased reliance on the company-owned fleet.
Taxes and licenses increased $0.1 million (4.6%), to $1.6 million in the
third quarter of 2001 from $1.5 million in the third quarter of 2000. As a
percentage of revenue, taxes and licenses decreased to 2.1% in the third quarter
of 2001 from 2.2% in the third quarter of 2000.
Insurance and claims increased $0.1 million (8.5%), to $1.7 million in the
third quarter of 2001 from $1.6 million in the third quarter of 2000. As a
percentage of revenue, insurance and claims remained the constant at 2.3% for
both compared periods. Insurance and claims expense will vary as a percentage of
operating revenue from period to period based on the frequency and severity of
claims incurred in a given period as well as changes in claims development
trends.
Communications and utilities decreased $0.1 million (9.8%), to $0.7 million
in the 2001 period from $0.8 million in the 2000 period. As a percentage of
revenue, communications and utilities decreased to 0.9% in the third quarter of
2001 from 1.1% in the third quarter of 2000.
Depreciation increased $0.1 million (3.3%) to $4.3 million during the third
quarter of 2001 from $4.2 million in the third quarter of 2000. As a percentage
of revenue, depreciation decreased to 5.8% of revenue during the third quarter
of 2001 from 6.1% during the third quarter of 2000. Depreciation increased
because of increased reliance on company owned tractors.
8
Other operating expenses increased $0.1 million (6.0%) to $1.8 million
during the third quarter of 2001 from $1.7 million during the third quarter
2000. As a percentage of revenue, other operating expenses decreased to 2.4%
from 2.5% in the third quarter of 2000. Other operating expenses consists
primarily of pallet cost, driver recruiting expense, goodwill, and
administrative costs.
Interest income decreased $0.6 (35.8%) to $1.0 million in the third quarter
of 2001 from $1.6 million in the third quarter of 2000. Interest income earned
is primarily exempt from federal taxes and therefore earned at a lower pre-tax
rate. Interest earned has been negatively impacted by Federal Reserve Bank
reductions in short term interest rates.
The Company's effective tax rate was 34.0% for both compared periods.
As a result of the foregoing, the Company's operating ratio (operating
expenses as a percentage of operating revenue) was 82.5% during the third
quarter of 2001 compared with 83.7% during the third quarter of 2000. Net income
increased $0.8 million (9.8%), to $9.2 million during the third quarter of 2001
from $8.4 million during the third quarter of 2000.
Nine Months Ended September 30, 2001 and 2000
Operating revenue increased $16.5 million (8.1%), to $221.1 million in the
nine months ended September 30, 2001 from $204.6 million in the 2000 period. The
revenue increase was primarily attributable to the expansion of the Company's
customer base as well as increased volume from existing customers. Operating
revenue for both periods was also positively impacted by fuel surcharges
assessed to customers.
Salaries, wages, and benefits increased $11.5 million (21.4%), to $65.2
million in the nine months ended September 30, 2001 from $53.7 million in the
2000 period. As a percentage of revenue, salaries, wages and benefits increased
to 29.5% in 2001 from 26.2% in 2000. These increases were a result of increased
reliance on employee drivers and a corresponding decrease in miles driven by
independent contractors. In addition, the Company increased employee driver pay
in March, 2000. The increase in employee driver miles was attributable to
internal growth in the company tractor fleet. During the first nine months of
2001, employee drivers accounted for 67% and independent contractors 33% of the
total fleet miles, compared with 58% and 42%, respectively, in the compared 2000
period. The Company also experienced an increase in the frequency and severity
of workers' compensation and health insurance claims in comparison to the
compared 2000 period.
Rent and purchased transportation decreased $7.5 million (13.0%), to $50.7
million in the first nine months of 2001 from $58.2 million in the 2000 period.
As a percentage of revenue, rent and purchased transportation decreased to 22.9%
in the 2001 period from 28.5% in the compared 2000 period. This reflects the
Company's decreased reliance upon independent contractors. The extended period
of high fuel has resulted in a reduction of the number of available independent
contractors in the industry. During both periods, the Company has reimbursed
independent contractors for the higher cost of fuel based on fuel surcharges
collected from customers.
Operations and maintenance increased $6.5 million (21.7%) to $36.7 million
in the nine months ended September 30, 2001 from $30.2 million in the 2000
period. As a percentage of revenue, operations and maintenance increased to
16.7% in the 2001 period from 14.7% during the 2000 period. This increase is
attributable to increased reliance on the company-owned fleet.
Taxes and licenses increased $0.2 million (5.0%), to $4.5 million in the
first nine months of 2001 from $4.3 million in the compared 2000 period. As a
percentage of revenue, taxes and licenses decreased to 2.0% in the 2001 period
from 2.1% in the compared 2000 period.
9
Insurance and claims increased $0.3 million (5.8%), to $5.4 million in the
first nine months of 2001 from $5.1 million in the compared 2000 period. As a
percentage of revenue, insurance and claims decreased to 2.4% in the 2001 period
from 2.5% in the 2000 period. Insurance and claims expense will vary as a
percentage of operating revenue from period to period based on the frequency and
severity of claims incurred in a given period as well as changes in claims
development trends.
Communications and utilities increased $0.1 million (7.0%), to $2.3 million
in the 2001 period from $2.2 million in 2000 period. As a percentage of revenue,
communications and utilities decreased to 1.0% in the 2001 period from 1.1% in
the 2000 periods.
Depreciation increased $0.8 million (6.9%) to $12.7 million during the
first nine months of 2001 from $11.9 million in the compared 2000 period. As a
percentage of revenue, depreciation remained constant at 5.8% of revenue for
both compared periods. Depreciation expense increased due to growth in the
company owned tractor fleet and the replacement of fully-depreciated trailers.
Other operating expenses increased $0.3 million (6.3%) to $5.0 million
during the first nine months 2001 from $4.7 million during the compared 2000
period. As a percentage of revenue, other operating expenses remained constant
at 2.3% for both compared periods. Other operating expenses consists primarily
of pallet cost, driver recruiting expense, goodwill, and administrative costs.
Interest income decreased $0.6 (15.9%) to $3.6 million in the first nine
months of 2001 from $4.2 million in the compared 2000 period. Interest income
earned is primarily exempt from federal taxes and therefore earned at a lower
pre-tax rate. Interest earned has been negatively impacted by the Federal
Reserve Bank reductions in short-term interest rates.
The Company's effective tax rate is 34.0% for both the nine months ended
September 30, 2001 and 2000.
As a result of the foregoing, the Company's operating ratio (operating
expenses as a percentage of operating revenue) was 82.6% during the first nine
months of 2001 compared with 82.5% during the first nine months of 2000. Net
income increased $1.4 million (5.3%), to $27.8 million during the first nine
months of 2001 from $26.4 million during the compared 2000 period. The Company's
operating ratio and net income for the first nine months of 2000 were positively
impacted by a $1.5 million gain recognized on the sale of two properties.
Liquidity and Capital Resources
The growth of the Company's business has required significant investments
in new revenue equipment. Historically the Company has been debt-free, financing
revenue equipment through cash flow from operations. The Company also obtains
tractor capacity by utilizing independent contractors, who provide a tractor and
bear all associated operating and financing expenses. The Company's primary
source of liquidity at September 30, 2001, were funds provided by cash flow from
operating activities. The Company believes its sources of liquidity are adequate
to meet its current and projected needs.
The Company expects to finance future growth in its company-owned fleet
through cash flow from operations, cash, cash equivalents, and investments.
Based on the Company's strong financial position (current ratio of 3.2 and no
debt), management foresees no barrier to obtaining outside financing, if
necessary, to continue with its growth plans.
During the nine months ended September 30, 2001, the Company generated net
cash flow from operations of $46.3 million. Net cash used in investing and
financing activities included $21.7 million for capital expenditures, primarily
revenue equipment.
10
Working capital at September 30, 2001 was $139.7 million, including $152.9
million in cash, cash equivalents, and investments. The cash and investments
generated $3.6 million in interest income (primarily tax-exempt) during the nine
months ended September 30, 2001. The Company's policy is to purchase only
investment quality, highly liquid investments.
Recently Issued Accounting Pronouncements
In the third quarter, the Financial Accounting Standards Board (FASB)
issued SFAS No. 142, Goodwill and Other Intangible Assets, that will be adopted
by the Company on January 1, 2002. SFAS No. 142 requires that at least annually,
the Company assess goodwill impairment by applying a fair value based test. With
the adoption of SFAS No. 142, goodwill will no longer be subject to amortization
resulting in a decrease in annualized operating expenses of $778,116. The
Company is in the process of determining the impact of this new statement to the
net book value for goodwill currently recorded of $609,126.
Also, in the third quarter, the FASB issued SFAS No. 143, Accounting for
Asset Retirement Obligations, and SFAS No. 144, Accounting for the Impairment or
Disposal of Long-lived Assets. SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred. SFAS No. 144 addresses financial accounting and reporting
for impairment or disposal of long-lived assets, superceding FASB Statement 121,
Accounting for the Impairment of Long-lived Assets to be Disposed Of, and the
accounting and reporting provisions of APB Opinion No. 30, Reporting the Results
of Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual, and Infrequently Occurring Events and Transactions. SFAS
No. 143 and SFAS No. 144 are effective for the Company as of January 1, 2003 and
2002, respectively. At present, the Company is currently assessing, but has not
yet determined, the complete impact the adoption of SFAS No. 143 and SFAS No.
144 will have on its financial position and results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company purchases only high quality, liquid investments. Primarily all
investments as of September 30, 2001 have an original maturity of three months
or less. The Company holds all investments to maturity and therefore, is exposed
to minimal market risk related to its cash equivalents.
The Company has no debt outstanding as of September 30, 2001 and therefore,
has no market risk related to debt.
As of September 30, 2001, the Company has no derivative financial
instruments to reduce its exposure to fuel price fluctuations.
11
PART II
OTHER INFORMATION
Item 1. Legal proceedings
Not applicable
Item 2. Changes in securities
Not applicable
Item 3. Defaults upon senior securities
Not applicable
Item 4. Submission of matters to a vote of security holders
Not applicable
Item 5. Other information
None
Item 6. Exhibits and reports on Form 8-K
The Company filed a report on Form 8-K on September 18,2001
reporting a stock repurchase program.
Page of Method of
Exhibit No. Document Filing
3.1 Articles of Incorporation Incorporated by
Reference to the
Company's registration
statement on Form S-1,
Registration No.33-
8165, effective
November 5, 1986.
3.2 Bylaws Incorporated by
Reference to the
Company's registration
statement on Form S-1,
Registration No. 33-
8165, effective
November 5, 1986.
3.3 Certificate of Amendment Incorporated by
To Articles of Incorporation Reference to the
Company's Form 10-QA,
for the quarter ended
June 30, 1997, dated
March 26, 1998.
12
4.1 Articles of Incorporation Incorporated by
Reference to the
Company's registration
statement on Form S-1,
Registration No. 33-
8165, effective
November 5, 1986.
4.2 Bylaws Incorporated by
Reference to the
Company's registration
statement of Form S-1,
Registration No. 33-
8165, effective
November 5, 1986.
4.3 Certificate of Amendment Incorporated by
to Articles of Incorporation Reference to the
Company's Form
10-QA, for the
quarter ended June
30, 1997, dated
March 26, 1998.
10.1 Business Property Lease Incorporated by
between Russell A. Gerdin Reference to the
as Lessor and the Company Company's Form 10-Q
as Lessee, regarding the for the year ended
Company's headquarters at September 30, 2000.
2777 Heartland Drive, Commission file no.
Coralville, Iowa 52241 0-15087.
10.2 Form of Independent Incorporated by
Contractor Operating Reference to the
Agreement between the Company's Form 10-K
Company and its for the year ended
independent contractor December 31, 1993.
providers of tractors Commission file no.
0-15087.
10.3 Description of Key Incorporated by
Management Deferred Reference to the
Incentive Compensation Company's Form 10-K
Arrangement for the year ended
December 31, 1993.
Commission file no.
0-15087.
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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.
HEARTLAND EXPRESS, INC.
BY: /s/ John P. Cosaert_____
JOHN P. COSAERT
Vice-President
Finance and Treasurer
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