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 March 31, 2004 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 (I.R.S. 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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
At March 31, 2004, there were 50,000,000 shares of the Company's $.01 par value
common stock outstanding.
PART I
FINANCIAL INFORMATION
Page
Number
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
March 31, 2004 and
December 31, 2003 1-2
Consolidated Statements of Income
for the Three Months
Ended March 31, 2004 and 2003 3
Consolidated Statements of Cash Flows
for the Three Months Ended
March 31, 2004 and 2003 4
Notes to Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6-9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
Item 4. Controls and Procedures 10
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of 11
Security Holders
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11-15
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2004 2003
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents .....................$121,229,925 $127,885,474
Investments ................................... 100,520,980 74,545,681
Trade receivables, less allowance:
$675,000 and $675,000 ......................... 39,129,263 36,836,728
Prepaid tires ................................. 1,741,230 2,529,580
Deferred income taxes ......................... 22,903,000 21,308,000
Other current assets .......................... 3,122,647 673,101
------------ ------------
Total current assets ..................... 288,647,045 263,778,564
------------ ------------
PROPERTY AND EQUIPMENT
Land and land improvements .................... 6,912,819 6,912,819
Buildings ..................................... 19,919,846 19,777,586
Furniture and fixtures ........................ 1,210,424 1,210,424
Shop and service equipment .................... 2,040,025 2,043,356
Revenue equipment ............................. 203,236,939 202,706,807
------------ ------------
233,320,053 232,650,992
Less accumulated depreciation ................. 63,411,691 56,951,186
------------ ------------
Property and equipment, net ................... 169,908,362 175,699,806
------------ ------------
OTHER ASSETS ...................................... 8,851,467 8,928,186
------------ ------------
$467,406,874 $448,406,556
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
1
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2004 2003
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable and accrued liabilities ......$ 10,269,009 $ 15,684,826
Compensation and benefits ..................... 12,447,504 10,704,329
Income taxes payable .......................... 16,083,833 7,720,875
Insurance accruals ............................ 38,511,096 37,125,109
Other accruals ................................ 6,795,813 5,895,502
------------ ------------
Total current liabilities ................ 84,107,255 77,130,641
------------ ------------
DEFERRED INCOME TAXES .............................. 39,567,000 39,760,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Capital Stock:
Preferred, $.01 par value; authorized
5,000,000 shares; none issued ............ -- --
Common, $.01 par value; authorized
395,000,000 shares; issued and
outstanding 50,000,000 ................... 500,000 500,000
Additional paid-in capital .................... 8,510,305 8,510,305
Retained earnings ............................. 335,831,893 323,710,296
------------ ------------
344,842,198 332,720,601
Less unearned compensation .................... (1,109,579) (1,204,686)
------------ ------------
343,732,619 331,515,915
------------ ------------
$467,406,874 $448,406,556
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
2
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
2004 2003
------------- -------------
OPERATING REVENUE ............................ $ 106,836,912 $ 94,839,735
------------- -------------
OPERATING EXPENSES:
Salaries, wages, and benefits ......... 39,766,096 32,312,307
Rent and purchased transportation ..... 10,518,625 13,953,071
Operations and maintenance ............ 20,945,552 19,310,180
Taxes and licenses .................... 2,290,282 1,873,406
Insurance and claims .................. 2,496,641 2,370,993
Communications and utilities .......... 962,183 893,845
Depreciation .......................... 6,613,704 5,367,543
Other operating expenses .............. 3,504,034 2,554,772
(Gain) on disposal of fixed assets .... (36,251) (3,661)
------------- -------------
87,060,866 78,632,456
------------- -------------
Operating income ............... 19,776,046 16,207,279
Interest income ....................... 567,516 538,617
------------- -------------
Income before income taxes ............ 20,343,562 16,745,896
Federal and state income taxes ........ 7,221,965 5,693,604
------------- -------------
Net income ............................ $ 13,121,597 $ 11,052,292
============= =============
Net income per common share:
Basic net income per share ......... $ 0.26 $ 0.22
============= =============
Basic weighted average shares outstanding 50,000,000 50,000,000
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
3
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
2004 2003
------------- -------------
OPERATING ACTIVITIES
Net income .............................. $ 13,121,597 $ 11,052,292
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization ......... 6,618,705 5,372,544
Deferred income taxes ................. (1,788,000) 1,026,000
Unearned compensation ................. 95,107 99,780
Gain on disposal of fixed assets ...... (36,251) (3,661)
Changes in certain working capital items:
Trade receivables ................... (2,292,535) (3,734,883)
Other current assets ................ (2,449,546) (4,695,760)
Prepaid tires ....................... 788,350 388,220
Accounts payable and accrued liabilities 3,173,568 2,907,384
Accrued income taxes ................ 8,362,958 8,353,667
------------- -------------
Net cash provided by operating activities 25,593,953 20,765,583
------------- -------------
INVESTING ACTIVITIES
Proceeds from sale of property and
equipment............................... 36,251 22,956
Capital additions ........................ (5,382,578) (24,018,572)
Net maturities (purchases) of
municipal bonds ........................ (25,975,299) 2,265,569
Increase (decrease) in other assets ...... 71,718 (222,678)
------------- -------------
Net cash used in investing activities .... (31,249,908) (21,952,725)
------------- -------------
FINANCING ACTIVITIES, cash dividend ........... (999,594) --
------------- -------------
Net decrease in cash and cash equivalents (6,655,549) (1,187,142)
CASH AND CASH EQUIVALENTS
Beginning of year ........................ 127,885,474 89,717,866
------------- -------------
End of quarter ........................... $ 121,229,925 $ 88,530,724
============= =============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid (received) during the period for:
Income taxes ........................... $ 647,007 $ (3,686,063)
Noncash investing activities:
Book value of revenue equipment traded . -- 1,401,919
The accompany notes are an integral part of these consolidated financial
statements.
4
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Heartland
Express, Inc. (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
normal, recurring adjustments considered necessary for a fair presentation have
been included. The financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended December 31, 2003
included in the Annual Report on Form 10-K of the Company filed with the
Securities and Exchange Commission. Interim results of operations are not
necessarily indicative of the results to be expected for the full year or any
other interim periods. There were no changes to the Company's significant
accounting policies during the quarter.
Note 2. Segment Information
The Company has nine 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.
Note 3. Contingencies
On June 21, 2002 a driver for the Company was involved in a multiple (5)
fatality accident in Knoxville, Tennessee. Three wrongful death lawsuits were
filed in U.S. District Court for the Eastern District of TN Northern Division in
Knoxville. The combined relief sought in the cases was approximately $65 million
for compensatory damages and $200 million for punitive damages. One of the suits
was dismissed soon after being filed. During the second quarter of 2003, the
second (4 fatality) lawsuit was settled for an amount well within the Company's
insurance limits. The third (single fatality) lawsuit was settled during July of
2003, again for an amount well within the Company's insurance limits. A fourth
personal injury lawsuit was subsequently filed, which seeks relief in the amount
of $387,500; this case is still open.
The Company is party to ordinary, routine litigation and administrative
proceedings incidental to its 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 4. Change in Accounting Estimate
Effective April 1, 2003 the Company reduced the salvage value on its
trailer fleet from $6,000 to $4,000 per trailer. This change in accounting
estimate increased first quarter 2004 depreciation expense by approximately
$576,000.
5
Note 5. Reclassifications
Certain reclassifications have been made to the prior year's financial
statements to conform to the March 31, 2004 presentation.
Note 6. Subsequent Event
Subsequent to March 31, 2004, the Company entered into an agreement to
replace its entire tractor fleet. The agreement runs from May of 2004 to
December 2006.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
Except for certain historical information contained herein, this Quarterly
Report on Form 10-Q contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve risks, assumptions and uncertainties which are difficult to predict. All
statements, other than statements of historical fact, are statements that could
be deemed forward-looking statements, including any projections of earnings,
revenues, or other financial items; any statements of plans, strategies, and
objectives of management for future operations; any statements concerning
proposed new strategies or developments; any statements regarding future
economic conditions or performance; any statements of belief and any statement
of assumptions underlying any of the foregoing. Words such as "believe," "may,"
"could," "expects," "anticipates," and "likely," and variations of these words
or similar expressions, are intended to identify such forward-looking
statements. The Company's actual results could differ materially from those
discussed in the section entitled "Factors That May Affect Future Results,"
included in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" set forth in the Company's Annual report on Form 10-K,
which is by this reference incorporated herein. The Company does not assume, and
specifically disclaims, any obligation to update any forward-looking statements
contained in this Quarterly report.
Overview
Heartland Express, Inc. is a short-to-medium haul truckload carrier. The
Company transports freight for major shippers and generally earns revenue based
on the number of miles per load delivered. During the first quarter of 2004,
freight revenue, excluding fuel surcharge, increased 12.9% to $102.2 million
from $90.6 million in the first quarter of 2003.
The Company takes pride in the quality of the service that it provides to
its customers. The keys to maintaining a high level of service are experienced
drivers, reliable equipment and equipment availability. Heartland has one of the
newest fleets in the industry with an average tractor age of 24 months and
trailer age of 31 months. The Company anticipates making significant capital
expenditures for revenue equipment during the remainder of 2004. The Company
expects future revenue equipment purchases to be financed using current cash and
investment balances and cash flow provided by operations.
The Company continues to work with shippers and drivers to minimize the
impact of the revised DOT hours-of-service regulations that took effect on
January 4, 2004. These changes could adversely affect our profitability if
shippers are unwilling to assist in managing the drivers' non-driving
activities, such as loading, unloading, and waiting. A decline in driver
productivity may require increases to driver pay to attract and retain qualified
drivers. In addition, the Company may be required to increase the number of
drivers that it employs and increase its fleet of revenue equipment to serve our
current customer base and provide for future growth. The full impact of these
changes is not known at this time.
In addition to the revised hours-of-service regulations, the trucking
industry is experiencing a shortage of qualified drivers. In order to attract
and retain experienced drivers, the Company increased pay for all drivers $0.03
per mile during the first quarter of 2004. Management believes that the Company
6
continues to offer one of the highest pay packages in the industry. This pay
package along with increased recruiting efforts should allow the Company to
attract additional qualified drivers; however, a long term shortage of drivers
could hinder growth.
Effective October 1, 2002, all newly manufactured truck engines must comply
with the engine emission standards mandated by the Environmental Protection
Agency (EPA). All truck engines manufactured prior to October 1, 2002 are not
subject to these new standards. During 2002 and the first quarter of 2003, the
Company significantly increased the purchase of trucks with pre-October 2002
engines to delay the business risk of buying new engines. The new engines have
resulted in a significant increase in the cost of new tractors, lower fuel
efficiency and higher maintenance costs. During 2004, all tractors purchased by
the Company will include engines that conform to the new standards. As a result
of these purchases, the operating costs associated with tractors will increase
during the remaining portion of 2004 compared to 2003.
Results of Operations:
The following table sets forth the percentage relationship of expense items
to operating revenue for the periods indicated.
Three months Ended
March 31,
2004 2003
--------------- --------------
Operating revenue 100.0% 100.0%
--------------- --------------
Operating expenses:
Salaries, wages, and benefits 37.2% 34.1%
Rent and purchased transportation 9.9 14.7
Operations and maintenance 19.6 20.3
Taxes and licenses 2.1 2.0
Insurance and claims 2.3 2.5
Communications and utilities 0.9 0.9
Depreciation 6.2 5.7
Other operating expenses 3.3 2.7
(Gain) on disposal of fixed assets (0.0) (0.0)
-------------- --------------
Total operating expenses 81.5% 82.9%
--------------- --------------
Operating income 18.5% 17.1%
Interest income 0.5 0.6
--------------- --------------
Income before income taxes 19.0% 17.7%
Federal and state income taxes 6.7 6.0
--------------- --------------
Net income 12.3% 11.7%
=============== ==============
The following is a discussion of the results of operations of the quarter
ended March 31, 2004 compared with the same period in 2003, and the changes in
financial condition through the first quarter of 2004.
Operating revenue increased $12.0 million (12.6%), to $106.8 million in the
first quarter of 2004 from $94.8 million in the first quarter of 2003. The
increase in revenue resulted from additional business from existing customers
and the growth of our customer base. Operating revenue for both periods was
positively impacted by fuel surcharges assessed to customers. Fuel surcharge
revenue increased $0.3 million to $4.6 million in the first quarter of 2004 from
$4.3 million in the first quarter of 2003.
Salaries, wages, and benefits increased $7.5 million (23.1%), to $39.8
million in the first quarter of 2004 from $32.3 million in the first quarter of
2003. These increases were primarily the result of increased reliance on
employee drivers due to a decrease in the number of independent contractors
7
utilized by the Company. During the first quarter of 2004, employee drivers
accounted for 86% and independent contractors 14% of the total fleet miles,
compared with 79% and 21%, respectively, in the first quarter of 2003. The
Company also increased pay for all drivers $0.03 per mile during the first
quarter of 2004. In addition, the Company incurred increased workers'
compensation costs due to the increased frequency and severity of claims.
Rent and purchased transportation decreased $3.4 million (24.6%), to $10.5
million in the first quarter of 2004 from $13.9 million in the first quarter of
2003. This reflects the Company's decreased reliance upon independent
contractors. Rent and purchased transportation for both periods includes amounts
paid to independent contractors under the Company's fuel stability program.
Operations and maintenance increased $1.6 million (8.5%) to $20.9 million
in the first quarter of 2004 from $19.3 million in the first quarter of 2003.
The increase in operations and maintenance is primarily attributable to
increased fuel costs due to the increased percentage of fleet miles driven by
employee drivers.
Insurance and claims increased $0.1 million (5.3%), to $2.5 million in the
first quarter of 2004 from $2.4 million in the first quarter of 2003. 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.
Depreciation increased $1.2 million (23.2%) to $6.6 million during the
first quarter of 2004 from $5.4 million in the first quarter of 2003. Effective
April 1, 2003, the Company decreased the salvage value on all trailers to $4,000
from $6,000. The reduction of salvage value increased depreciation expense
approximately $0.6 million during the first quarter of 2004. In addition,
depreciation increased because of the growth of our company owned tractor and
trailer fleet.
Other operating expenses increased $0.9 million (37.2%) to $3.5 million
during the first quarter of 2004 from $2.6 million during the first quarter
2003. Other operating expenses consist primarily of costs incurred for freight
handling, highway tolls, driver recruiting expenses, and administrative costs.
During the first quarter of 2004, freight handling and tolls increased $0.4
million and advertising expense related to driver recruiting increased $0.2
million compared to the first quarter of 2003.
The Company's effective tax rate was 35.5% and 34.0% for the first quarter
of 2004 and 2003, respectively.
As a result of the foregoing, the Company's operating ratio (operating
expenses as a percentage of operating revenue) was 81.5% during the first
quarter of 2004 compared with 82.9% during the first quarter of 2003. Net income
increased $2.1 million (18.7%), to $13.1 million during the first quarter of
2004 from $11.0 million during the first quarter of 2003.
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, funding
revenue equipment purchases with cash flow provided by 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 for the three months ended March 31, 2004,
was net cash provided by operating activities of $25.6 million compared to $20.8
million in the corresponding 2003 period.
Capital expenditures for property and equipment, primarily revenue
equipment net of trade-ins, totaled $5.4 million for the first three months of
2004 compared to $24.0 million for the same period in 2003. The decrease in
purchases of revenue equipment during the first quarter of 2004 is primarily due
to the Company increasing tractor purchases during 2002 and the first quarter of
2003 to delay the business risk of buying tractors with engines that comply with
new EPA emissions standards.
8
Management believes the Company has adequate liquidity to meet its current
and projected needs. The Company will continue to have significant capital
requirements over the long term. Future capital expenditures are expected to be
funded by cash flow provided by operations and from existing cash, cash
equivalents, and investments. The Company ended the quarter with $221.8 million
in cash, cash equivalents, and investments and no debt. Based on the Company's
strong financial position, management believes outside financing could be
obtained, if necessary, to fund capital expenditures.
Contractual Obligations
The impact that our contractual obligations as of March 31, 2004 are
expected to have on our liquidity and cash flow in future periods is as follows:
Payments due by period
-----------------------------------------
Total Less than 1 1 - 3 years
year
------------- ------------- -------------
Operating Lease Obligations $ 349,562 $ 224,718 $ 124,844
============= ============= =============
Factors That May Affect Future Results
The Company's future results may be affected by a number of factors over
which the Company has little or no control. Fuel prices, insurance and claims
costs, liability claims, interest rates, the availability of qualified drivers,
fluctuations in the resale value of revenue equipment, economic and customer
business cycles and shipping demands are economic factors over which the Company
has little or no control. Significant increases or rapid fluctuations in fuel
prices, interest rates or insurance and claims costs, to the extent not offset
by increases in freight rates, and the resale value of revenue equipment could
reduce the Company's profitability.
Weakness in the general economy, including a weakness in consumer demand
for goods and services, could adversely affect the Company's customers and the
Company's growth and revenues, if customers reduce their demand for
transportation services. Customers encountering adverse economic conditions
represent a greater potential for loss, and the Company may be required to
increase its reserve for bad debt losses. Weakness in customer demand for the
Company's services or in the general rate environment may also restrain the
Company's ability to increase rates or obtain fuel surcharges.
Inflation and Fuel Cost
Most of the Company's operating expenses are inflation-sensitive, with
inflation generally producing increased costs of operations. During the past
three years, the most significant effects of inflation have been on revenue
equipment prices and the compensation paid to the drivers. Innovations in
equipment technology and comfort have resulted in higher tractor prices, and
there has been an industry-wide increase in wages paid to attract and retain
qualified drivers. The Company historically has limited the effects of inflation
through increases in freight rates and certain cost control efforts.
In addition to inflation, fluctuations in fuel prices can affect
profitability. Most of the Company's contracts with customers contain fuel
surcharge provisions. Although the Company historically has been able to pass
through most long-term increases in fuel prices and operating taxes to customers
in the form of surcharges and higher rates, short-term increases are not fully
recovered. Competitive conditions in the transportation industry, such as lower
demand for transportation services, could affect the Company's ability to obtain
rate increases or fuel surcharges.
9
Seasonality
The nature of the Company's primary traffic (appliances, automotive parts,
paper products, retail goods, and packages foodstuffs) causes it to be
distributed with relative uniformity throughout the year. However, seasonal
variations during and after the winter holiday season have historically resulted
in reduced shipments by several industries served. In addition, the Company's
operating expenses historically have been higher during the winter months due to
increased operating costs and higher fuel consumption in colder weather.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company purchases only high quality, liquid investments. Primarily all
investments as of March 31, 2004 have an original maturity or interest reset
date of twelve months or less. Due to the short term nature of the investments,
the Company is exposed to minimal market risk related to its cash equivalents
and investments.
The Company has no debt outstanding as of March 31, 2004 and therefore, has
no market risk related to debt.
As of March 31, 2004, the Company has no derivative financial instruments
to reduce its exposure to fuel price fluctuations.
Item 4. Controls and Procedures
As of the end of the period covered by this report, the Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operations of the Company's
disclosure controls and procedures, and as defined in Exchange Act Rule
15d-15(e). Based upon that evaluation, the Company's Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective in enabling the Company to record, process, summarize
and report information required to be included in the Company's periodic SEC
filings within the required time period. There have been no changes in the
Company's internal controls over financial reporting that occurred during the
Company's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
10
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
On June 21, 2002 a driver for the Company was involved in a multiple
(5) fatality accident in Knoxville, Tennessee. Three wrongful death
lawsuits were filed in U.S. District Court for the Eastern District of
TN Northern Division in Knoxville. The combined relief sought in the
cases was approximately $65 million for compensatory damages and $200
million for punitive damages. One of the suits was dismissed soon
after being filed. During the second quarter of 2003, the second (4
fatality) lawsuit was settled for an amount well within the Company's
insurance limits. The third (single fatality) lawsuit was settled
during July of 2003, again for an amount well within the Company's
insurance limits. A fourth personal injury lawsuit was subsequently
filed, which seeks relief in the amount of $387,500; this case is
still open.
Additionally, the Company is a party to ordinary, routine litigation
and administrative proceedings incidental to its business. None of the
claims would materially impact net income or financial position. These
proceedings primarily involve claims for personal injury and property
damage incurred in connection with the transportation of freight. The
Company maintains insurance to cover liabilities arising from the
transportation of freight for amounts in excess of certain
self-insured retentions.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
31.1 Certification of Chief Executive Officer Pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange
Act, as amended.
31.2 Certification of Chief Financial Officer Pursuant to
Rule 13a-14(a) and Rule 15d-14(a) of the Securities Ex-
change Act, as amended.
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
1. Report on Form 8-K, dated January 23, 2004, announcing the
Company's financial results for the quarter ended December
31, 2003.
2. Report on Form 8-K, dated March 10, 2004, announcing the
declaration of a quarterly cash dividend.
No other information is required to be filed under Part II of the form.
11
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.
Date: May 6, 2004 BY:/s/ John P. Cosaert
John P. Cosaert
Executive Vice President-Finance,
Chief Financial Officer
and Treasurer
(principal accounting and financial
officer)
12
Exhibit No. 31.1
Certification
I, Russell A. Gerdin, Chairman, President and Chief Executive Officer of
Heartland Express, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Heartland
Express, Inc. (the "Registrant");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange
Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or cause
such disclosure controls and procedures to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's first fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls: and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 6, 2004
/s/ Russell A. Gerdin
Russell A. Gerdin
Chairman, President and
Chief Executive Officer
13
Exhibit No. 31.2
Certification
I, John P. Cosaert, Executive Vice President, Chief Financial Officer and
Treasurer of Heartland Express, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Heartland
Express, Inc. (the "Registrant");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rule
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;
b) Designed such internal control over financial reporting, or cause
such disclosure controls and procedures to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's first fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls: and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 6, 2004
/s/ John P. Cosaert
John P. Cosaert
Executive Vice President-Finance
Chief Financial Officer and
Treasurer
(principal accounting and
financial officer)
14
Exhibit No. 32
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
AND
CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Russell A. Gerdin, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
Quarterly Report of Heartland Express, Inc., on Form 10-Q for the period ended
March 31, 2004 fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, and that information contained
in such Quarterly Report on Form 10-Q fairly presents in all material respects
the financial condition and results of operations of Heartland Express, Inc.
Dated: May 6, 2004 By /s/ Russell A. Gerdin
Russell A. Gerdin
Chairman, President and
Chief Executive Officer
I, John P. Cosaert, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
Report of Heartland Express, Inc., on Form 10-Q for the period ended March 31,
2004 fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, and that information contained in
such Quarterly Report on Form 10-Q fairly presents in all material respects the
financial condition and results of operations of Heartland Express, Inc.
Dated: May 6, 2004 By: /s/ John P. Cosaert
John P. Cosaert
Executive Vice President
and Chief Financial Officer
END OF REPORT
15