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, 1996 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) 645-2728
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 March 31, 1996, there were 20,000,000 shares of the Company's $.10 par
value common stock outstanding.
PART I
FINANCIAL INFORMATION
Page
Number
Item 1. Financial statements
Consolidated balance sheets
March 31, 1996 (unaudited) and
December 31, 1995 2-3
Consolidated statements of income
(unaudited) for the three month
periods ended March 31, 1996 and 1995 4
Consolidated statements of cash flows
(unaudited) for the three months ended
March 31, 1996 and 1995 5
Notes to financial statements 6
Item 2. Management's discussion and analysis of
financial condition and results of
operations 7-8
PART II
OTHER INFORMATION
Item 1. Legal proceedings 9
Item 2. Changes in securities 9
Item 3. Defaults upon senior securities 9
Item 4. Submission of matters to a vote of 9
security holders
Item 5. Other information 9
Item 6. Exhibits and reports on Form 8-K 9
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HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
--------
MARCH 31, DECEMBER 31,
1996 1995
--------------- ---------------
(Unaudited) *(Note 1)
CURRENT ASSETS
Cash and cash equivalents $ 57,259,688 $ 46,162,143
Trade receivables, less allowance,,
of $402,812 in each period 17,896,786 18,035,002
Prepaid tires 2,303,794 2,322,826
Municipal bonds 7,744,869 4,519,461
Deferred income taxes 11,955,000 11,377,000
Other current assets 1,717,029 481,761
--------------- ---------------
Total current assets $ 98,877,166 $ 82,898,193
--------------- ---------------
PROPERTY AND EQUIPMENT
Land and land improvements $ 2,401,010 $ 2,463,010
Buildings 6,886,615 7,299,415
Furniture and Fixtures 1,669,739 1,656,094
Shop and service equipment 1,105,137 1,092,107
Revenue equipment 96,200,848 97,642,433
--------------- ---------------
$ 108,263,349 $ 110,153,059
Less accumulated depreciation
& amortization 35,610,891 36,459,541
--------------- ---------------
Property and equipment, net $ 72,652,458 $ 73,693,518
--------------- ---------------
OTHER ASSETS $ 1,574,686 $ 1,554,660
$ 173,104,310 $ 158,146,371
=============== ===============
*Note: See Note 1 of "Notes to Financial Statements" for information
regarding the December 31, 1995 balance sheet.
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HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, DECEMBER 31,
1996 1995
--------------- ---------------
(Unaudited) *(Note 1)
CURRENT LIABILITIES,
Current maturities of long-term debt $ 571,117 $ 705,437
Accounts payable & accrued liabilities 11,990,810 7,388,330
Compensation & benefits 3,376,793 3,349,995
Income taxes payable 5,648,465 1,678,814
Insurance accruals 27,576,903 26,684,440
Other 2,302,893 2,310,679
--------------- ---------------
Total current liabilities $ 51,466,981 $ 42,117,695
DEFERRED INCOME TAXES 17,271,000 17,393,000
--------------- ---------------
$ 68,737,981 $ 59,510,695
--------------- ---------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Capital Stock:
Preferred, $.10 par value; authorized
5,000,000 share; none issued $ -- $ --
Common, $.10 par value; authorized
35,000,000 shares; issued and
outstanding 20,000,000 shares 2,000,000 2,000,000
Additional paid in capital 5,609,124 5,609,124
Retained earnings 96,757,205 91,026,552
--------------- ---------------
$ 104,366,329 $ 98,635,676
--------------- ---------------
$ 173,104,310 $ 158,146,371
=============== ===============
*Note: See Note 1 of "Notes to Financial Statements" for information
regarding the December 31, 1995 balance sheet.
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HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended
March 31,
1996 1995
--------------- ---------------
OPERATING REVENUE $ 54,363,092 $ 47,583,123
--------------- ---------------
OPERATING EXPENSES:
Salaries, wages, benefits $ 10,306,288 $ 11,747,603
Rent and purchased transportation 21,725,286 13,570,080
Operations and maintenance 5,426,063 5,865,404
Taxes and licenses 1,311,771 1,306,806
Insurance and claims 2,354,234 2,286,797
Communications and utilities 516,541 758,625
Depreciation 3,463,551 4,067,512
Other operating expenses 968,640 974,525
(Gain) on sale of fixed assets (189,041) (19,831)
--------------- ---------------
$ 45,883,333 $ 40,557,521
--------------- ---------------
Operating income $ 8,479,759 $ 7,025,602
Interest income 631,671 281,637
Interest expense (15,158) (25,181)
--------------- ---------------
Income before income taxes $ 9,096,272 $ 7,282,058
Federal and state income taxes(Note 2) 3,365,619 2,694,400
--------------- ---------------
Net income $ 5,730,653 $ 4,587,658
=============== ===============
Earnings per common share:
Net income $ 0.29 $ 0.23
=============== ===============
Weighted average shares outstanding 20,000,000 20,026,140
=============== ===============
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HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
Three months ended
March 31,
1996 1995
-------------- --------------
OPERATING ACTIVITIES
Net income $ 5,730,653 $ 4,587,658
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 3,559,752 4,179,287
Deferred income taxes (700,000) 1,177,000
Gain on sale of fixed assets, (189,041) (19,831)
Changes in certain working capital items:
Trade receivables 138,216 (1,434,204)
Other current assets (1,390,568) (1,562,068)
Prepaid expenses 652,037 1,103,660
Accounts payable and accrued expenses 2,315,915 1,867,266
Accrued income taxes 3,969,651 835,098
-------------- --------------
Net cash provided by operating activities $ 14,086,615 $ 10,733,866
INVESTING ACTIVITIES
Proceeds from sale of prop. and equipment 393,513 22,963
Purchase of property and equipment (2,829) (103,410)
Purchase of municipal bonds (3,225,408) (66,329)
Other (20,026) 27,464
-------------- --------------
Net cash (used in) investment activities, $ (2,854,750) $ (119,312)
-------------- --------------
FINANCING ACTIVITIES
Principal payments on long-term notes $ (134,320) $ (106,794)
-------------- --------------
Net cash (used in) financing activities $ (134,320) $ (106,794)
-------------- --------------
Net increase in cash and cash equivalents $ 11,097,545 $ 10,507,760
CASH AND CASH EQUIVALENTS
Beginning of year 46,162,143 10,218,484
-------------- --------------
End of quarter $ 57,259,688 $ 20,726,244
============== ==============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 15,158 $ 25,181
Income taxes 95,967 660,820
Noncash investing activities:
Book value of revenue equipment traded $ 2,677,133 $ 6,635,985
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HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of 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 adjustments (consisting of normal recurring and certain
nonrecurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March
31, 1996 are not necessarily indicative of the results that may be expected
for the year ended December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Heartland Express, Inc. and Subsidiaries ("Heartland" or the "Company")
annual report on Form 10-K for the year ended December 31, 1995.
Note 2. Income Taxes
Income taxes for the three month period ended March 31, 1996 are based on
the Company's estimated effective tax rates. The rate for the quarters
ended March 31, 1996 and 1995 was 37%.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following is a discussion of the results of operations of the first
quarter of 1996 compared with the first quarter of 1995 and the changes in
financial condition through the first quarter of 1996.
Results of Operations:
Operating revenue increased 14.2% to $54.4 million in the first quarter of
1996 from $47.6 million in the first quarter of 1995. The company was able
to increase revenue through building on existing relationships with it
current customer base and attracting new business based on its reputation.
Salaries, wages, and benefits decreased to 19.0% of revenue in the first
quarter of 1996 from 24.7% in the first quarter of 1995. This decrease was
attributable to (I) a reduction in the miles driven by company drivers and
a corresponding increase in miles driven by independent contractors, and
(II) a reduction in health and workers' compensation claims due to fewer
and less severe claims. During the first quarter of 1996, company drivers
accounted for 42% and independent contractors 58% of the total fleet miles,
compared with 58% and 42%, respectively, in the first quarter of 1995.
Rent and purchased transportation expenses increased to 40.0% of revenue
during the first quarter of 1996 compared to 28.5% reported in the first
quarter of 1995. This increase is attributable to an increase in miles
driven by independent contractors as a result of independent contractors
comprising a greater percentage of the Company's fleet.
Operations and maintenance expenses decreased to 10.0% of revenue in the
first quarter of 1996 from 12.3% in the first quarter of 1995. The
decrease is attributable to increased reliance upon independent
contractors(who pay their own repair, maintenance, and fuel costs). The
Company did, however, experience an increase in the cost of fuel as a
result of the nationwide increase in fuel prices.
Insurance and claims expenses decreased to 4.3% of revenue during the
first quarter of 1996 from 4.8% during the first quarter of
1995. This decrease was primarily due to fewer and less severe claims as a
result of the Company's continued focus on safe operations and the practice
of hiring only experienced drivers.
-7-
Communication and utilities decreased to 1.0% of revenue during the the
first quarter of 1996 from 1.6% in the first quarter of 1995, primarily
because the company has grown its fleet with independent contractors who
are not equipped with satellite equipment.
Depreciation expense decreased to 6.4% of revenue during the first quarter
of 1996 from 8.5% reported in the first quarter of 1995. This reduction is
the result of a decreased reliance on company-owned tractors as a
percentage of the Company's fleet and a corresponding increase in the
percentage of independent contractors.
Interest expense decreased to less than 0.1% of revenue during the first
quarter of 1996 compared to 0.1% in the first quarter of 1995 as a result
of the reduction of debt and capital lease obligations. The Company's
long-term debt was approximately $571,000 at March 31, 1996 compared with
approximately $1.0 million at March 31, 1995.
The Company's effective tax rate was 37.0% for the three month periods
ended March 31, 1996 and 1995.
The Company's operating ratio (operating expenses as a percentage of
operating revenue) improved to 84.4% for the first quarter of
1996 compared with 85.2% for the first quarter of 1995. Net income for the
first quarter of 1996 was $5.7 million compared with $4.6 million for the
first quarter of 1995.
Liquidity and Capital Resources
Net cash flow provided by operating activities was $14.1 million during the
first three months of 1996 and $10.7 million for the first three months of
1995. Working capital at March 31, 1996 was $47.4 million compared with
$40.8 million at December 31, 1995. This increase is primarily due to a
$14.3 million increase in cash, cash equivalents, and municipal bonds
during the first three months of 1996.
Since the March 21, 1994 merger with Munson Transportation, the Company has
improved its financial position by reducing long-term debt to approximately
$571,000 at March 31, 1996 from $51.0 million at March 31, 1994. The
remaining long-term debt is now classified as a current liability with
payoffs expected to be made in the next six months.
The Company expects to finance future growth in its company-owned fleet
primarily through cash flow from operations and with trade
allowances received from traded revenue equipment.
-8-
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
Not applicable
Item 6. Exhibits and reports on Form 8-K
None
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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