SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QA
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1997 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 June 30, 1997, there were 30,000,000 shares of the Company's
$0.01 par value common stock outstanding.
PART I
FINANCIAL INFORMATION
Item 1. Financial statements
Consolidated balance sheets
June 30, 1997 (unaudited) and
December 31, 1996 2-3
Consolidated statements of income
(unaudited) for the three and six month
periods ended June 30, 1997 and 1996 4
Consolidated statements of cash flows
(unaudited) for the six months ended
June 30, 1997 and 1996 5
Notes to financial statements 6
Item 2. Management's discussion and analysis of
financial condition and results of
operations 7-10
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
security holders 11
Item 5. Other information 11
Item 6. Exhibits and reports on Form 8-K 11-12
Note: This form 10-QA is being submitted for the sole purpose of
including Exhibits 3.3 and 4.3 which were omitted in the original
filing. No other changes have been made to the original filing.
-1-
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
- ------
June 30, DECEMBER 31,
1997 1996
-------------- ---------------
(Unaudited) *(Note 1)
CURRENT ASSETS
Cash and cash equivalents $ 95,246,447 $ 59,593,468
Trade receivables, less allowance
of $402,812 in each period 19,943,096 15,696,591
Prepaid tires 732,137 1,213,210
Municipal bonds 10,445,727 31,461,259
Deferred income taxes 15,356,500 13,057,000
Other current assets 1,823,773 395,594
-------------- ---------------
Total current assets $ 143,547,680 $ 121,417,122
-------------- ---------------
PROPERTY AND EQUIPMENT
Land and land improvements $ 2,506,010 $ 2,401,010
Buildings 7,837,703 6,886,615
Furniture and fixtures 2,235,836 2,125,847
Shop and service equipment 1,330,289 1,245,337
Revenue equipment 98,230,024 97,433,211
-------------- ---------------
$ 112,139,862 $ 110,092,020
Less accumulated depreciation
& amortization 47,879,17 41,697,199
-------------- ---------------
Property and equipment, net $ 64,260,688 $ 68,394,821
--------------- --------------
OTHER ASSETS $ 1,679,408 $ 1,692,279
--------------- --------------
$ 209,487,776 $ 191,504,222
=============== ==============
*Note: See Note 1 of "Notes to Financial Statements" for
information regarding the December 31, 1996 balance
sheet.
-2-
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, DECEMBER 31,
1997 1996
-------------- ---------------
(Unaudited) *(Note 1)
CURRENT LIABILITIES
Accounts payable & accrued
liabilities $ 10,606,271 $ 11,384,188
Compensation & benefits 4,847,486 3,878,002
Income taxes payable 4,531,804 3,913,871
Insurance accruals 33,162,953 30,085,809
Other 2,467,458 2,310,185
-------------- ---------------
Total current liabilities $ 55,615,972 $ 51,572,055
DEFERRED INCOME TAXES 15,848,000 16,266,000
-------------- ---------------
$ 71,463,972 $ 67,838,055
-------------- ---------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Capital Stock:
Preferred, par value 1997 $.01;
1996 $.10 Authorized
5,000,000 share; none issued $ -- $ --
Common, par value 1997 $.01;
1996 $.10 Authorized
shares 1997 395,000,000;
1996 35,000,000; issued and
outstanding 30,000,000 shares 300,000 3,000,000
Additional paid in capital 6,608,170 3,908,170
Retained earnings 131,115,634 116,757,997
-------------- ---------------
$ 138,023,804 $ 123,666,167
-------------- ---------------
$ 209,487,776 $ 191,504,222
============== ===============
*Note: See Note 1 of "Notes to Financial Statements" for
information regarding the December 31, 1996 balance
sheet.
-3-
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------- -------------
OPERATING REVENUE $ 65,381,405 $ 59,383,574 $125,268,705 $113,746,666
------------ ------------ ------------- ------------
OPERATING EXPENSES:
Salaries, wages, benefits $ 11,688,827 $ 9,750,869 $ 22,593,106 $ 20,057,157
Rent and purchased
transportation 26,801,685 25,286,282 50,655,733 47,011,568
Operations and maintenance 6,276,055 5,559,281 12,460,171 10,985,343
Taxes and licenses 1,413,861 1,450,383 2,755,612 2,762,154
Insurance and claims 3,073,478 2,726,671 5,935,097 5,080,905
Communications and utilities 520,913 515,226 1,156,861 1,031,767
Depreciation 3,345,012 3,541,140 6,647,150 7,004,691
Other operating expense 1,090,205 946,721 2,252,608 1,915,361
(Gain) on sale of
fixed assets (24,980) 0 (25,780) (189,041)
------------ ------------ ------------ ------------
$ 54,185,056 $ 49,776,573 $104,430,558 $ 95,659,905
------------ ------------ ------------ ------------
Operating income $ 11,196,349 $ 9,607,001 $ 20,838,147 $ 18,086,761
Interest income 1,072,712 611,141 1,951,757 1,242,812
Interest expense 0 (10,920) 0 (26,078)
------------ ------------ ------------ ------------
Income before income taxes $ 12,269,061 $ 10,207,222 $ 22,789,904 $ 19,303,495
Federal and state
income taxes(Note 2) 4,539,695 3,776,728 8,432,267 7,142,347
------------ ------------ ------------ ------------
Net income $ 7,729,366 $ 6,430,494 $ 14,357,637 $ 12,161,148
============ ============ ============ ============
Earnings per common share:
Net income $ 0.26 $ 0.21 $ 0.48 $ 0.41
============ ============ ============ ============
Weighted average shares
outstanding 30,000,000 30,000,000 30,000,000 30,000,000
============ ============ ============ ============
-4-
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
Six months ended
June 30,
1997 1996
OPERATING ACTIVITIES
Net income $ 14,357,637 $ 12,161,148
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 6,764,674 7,197,151
Deferred income taxes (2,717,500) (1,239,300)
Gain on sale of fixed assets (15,564) (189,041)
Changes in certain working capital items:
Trade receivables (4,246,505) 295,583
Other current assets (1,484,429) (1,030,169)
Prepaid Expenses 409,169 766,297
Accounts payable and accrued expenses 6,599,212 3,752,300
Accrued income taxes 617,933 1,106,640
-------------- -------------
Net cash provided by operating activities $ 20,284,627 $ 22,820,609
-------------- -------------
INVESTING ACTIVITIES
Proceeds from sale of prop. and equipment 25,780 393,513
Purchase of property and equipment (5,685,831) (2,849,793)
Redemption of municipal bonds 21,015,532 2,519,461
Other 12,871 (7,104)
-------------- -------------
Net cash provided by investment activities $ 15,368,352 $ 56,077
-------------- -------------
FINANCING ACTIVITIES
Principal payments on long-term notes $ 0 $ (426,733)
-------------- -------------
Net cash (used in) financing activities $ 0 $ (426,733)
-------------- -------------
Net increase in cash and cash equivalents $ 35,652,979 $ 22,449,953
CASH AND CASH EQUIVALENTS
Beginning of year 59,593,468 46,162,143
-------------- -------------
End of quarter $ 95,246,447 $ 68,612,096
============== =============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 0 $ 26,078
Income taxes 10,531,834 7,275,699
Noncash investing activities:
Book value of revenue equipment traded $ 340,884 $ 5,585,217
-5-
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 and six month periods ended June 30, 1997 are not
necessarily indicative of the results that may be expected for
the year ended December 31, 1997. 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, 1996.
Note 2. Income Taxes
Income taxes for the three and six month periods ended June 30,
1997 are based on the Company's estimated effective tax rates.
The rate for the three and six month periods ended June 30, 1997
and 1996 was 37%.
Note 3. Subsequent Event
On July 14, 1997, the Company acquired the outstanding stock of
A & M Express, Inc., a Kingsport, Tennessee based truckload
motor carrier. The acquisition will be accounted for by the
purchase method of accounting. A & M Express, Inc. reported
gross revenues for 1996 of approximately $28 million.
-6-
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 quarter and six months ended June 30, 1997 compared with the
same periods in 1996, and the changes in financial condition
through the second quarter of 1997.
Results of Operations:
Operating revenue increased 10.1% to $65.4 million in the second
quarter of 1997 from $59.4 million in the second quarter of
1996. Operating revenue for the six months ended June 30, 1997,
(the "1997 Period") increased 10.1% to $125.3 million from
$113.7 million for the six months ended June 30, 1996 (the "1996
Period"). In both periods, the revenue increase was
attributable to the Company's expansion of the customer base as
well as increased business volume from existing customers.
Salaries, wages, and benefits increased to 17.9% of revenue in
the second quarter of 1997 from 16.4.% in the second quarter of
1996 and to 18.0% of revenue in the 1997 Period from 17.6% of
revenue in the 1996 Period. For both the quarter and six month
periods, the increase was the result of the increase in the
company driver mileage pay rate effective January 1, 1997 and
increased reliance on the company driver fleet. During the
second quarter of 1997, company drivers accounted for 39.7% and
independent contractors 60.3% of the total fleet miles, compared
with 37.6% and 62.4%, respectively, in the second quarter of
1996. During the first six months of 1997, company drivers
accounted for 40.2% and independent contractors 59.8% of the
total fleet miles, compared with 39.6% and 60.4% respectively in the first
six months of 1996.
Rent and purchased transportation decreased to 41.0% of revenue
during the second quarter of 1997 from 42.6% in the second
quarter of 1996 and to 40.4% of revenue during the 1997 Period
from 41.3% during the 1996 Period. The decrease in both the
quarter and six months was attributable to the slight decrease
in percentage of fleet miles driven by independent contractors.
-7-
Operations and maintenance expense increased to 9.6% of revenue in the
second quarter of 1997 from 9.4% in the second quarter of 1996
and to 9.9% of revenue during the 1997 Period from 9.7% during
the 1996 Period. For both the quarter and six months, the
increase was attributable to an increase in miles driven by
company drivers. Cost increases associated with increased miles
were offset by a decrease in fuel costs in the second quarter of
1997.
Taxes and licences decreased to 2.2% of revenue in the second
quarter of 1997 from 2.4% in the second quarter of 1996 and to
2.2% of revenue during the 1997 period from 2.4% during the 1996
period.
Insurance and claims increased slightly in the second quarter
and first six months of 1997 versus the same periods in 1996.
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 decreased to 5.1% of revenue during the second
quarter of 1997 from 6.0% reported in the second quarter of 1996
and to 5.3% of revenue during the 1997 Period from 6.2% during
the 1996 Period. For both the quarter and six months,
depreciation as a percentage of revenue decreased because of an increase in
miles driven by independent contractors and from better utilization of
company-owned tractors.
Other operating expenses increased slightly as a percentage of
revenue in both the second quarter and the first six months of
1997 versus the same periods in 1996.
Interest income (net) increased to $1.1 million for the three
months ended June 30, 1997 from $0.6 million for the three
months ended June 30, 1996 and to $1.9 million for the 1997
period from $1.2 million for the 1996 period. The Company
invests primarily in tax exempt financial instruments. The
Company's effective tax rate was 37.0% for both the three six
month periods ended June 30, 1997 and 1996.
-8-
As a result of the foregoing, the Company's operating ratio
(operating expenses as a percentage of operating revenue) was
82.9% during the second quarter of 1997 compared with 83.8%
during the second quarter of 1996 and 83.4 % during the 1997
Period compared with 84.1% during the 1996 Period. Net income
increased 20.2% to $7.7 million during the second quarter of
1997 from $6.4 million during the second quarter of 1996, and
increased 18.1% to $14.3 million during the 1997 Period from $12.2
million during the 1996 Period. The decrease in the operating
ratio for both 1997 periods and the corresponding increase in
net income was attributable primarily to management's emphasis
on controlling costs.
Liquidity and Capital Resources
The growth of the Company's business requires 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 expects to finance future growth in its company-owned
fleet through cash flow from operations and cash equivalents
currently on hand.
The Company's primary sources of cash flow from operations are
net income increased by depreciation. The Company's principal
use of cash in operations is to finance receivables and expenses
associated with growth in the business. Net cash flow provided
by operating activities was $20.3 million during the first six
months of 1997 and $22.8 million for the first six months of
1996.
Working capital at June 30, 1997 was $87.9 million compared with
$69.8 million at December 31, 1996. This increase is primarily
due to increases in cash, cash equivalents, and municipal bonds
during the first six months of 1997. At June 30, 1997, the
Company had $105.7 million in cash, cash equivalents, and
municipal bonds, and such investments generated $1.9 million in
interest income (primarily tax exempt) during the six months
ended June 30, 1997. The Company's policy is to purchase only
investment quality, highly liquid investments.
-9-
Forward Looking Information
Statements by the Company in reports to its stockholders and public
filings, as well as oral public statements by Company representatives may
contain certain forward looking information that 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 recessions or downturns in customers'
business cycles, excessive increases in capacity within truckload markets,
decreased demand for transportation services offered by the Company, rapid
inflation and fuel price increases, increases in interest rates, and the
availability and compensation of qualified drivers and owner-operators.
Readers should review and consider the various disclosures made by the
Company in its reports to stockholders and periodic reports on forms 10-K
and 10-Q.
-10-
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
There were no reports on Form 8-K during the 2nd
Quarter of 1997.
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 to Filed Herewith
Articles of Incorporation
-11-
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 on form
S-1, Registration
No. 33-8165,
effective
November 5, 1986.
4.3 Certificate of Amendment to Filed Herewith
Articles of Incorporation
10.1 Business Property Lease Incorporated by
between Russell A. Gerdin Reference to the
as Lessor and the Company Company's Form 10-K
as Lessee, regarding the for the year ended
Company's headquarters at December 31, 1995.
2777 Heartland Drive,
Coralville, Iowa 52241
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
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.
-12-
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
-13-
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF HEARTLAND EXPRESS, INC.
(PURSUANT TO SECTION 78.39 OF THE NEVADA GENERAL CORPORATION LAW)
Pursuant to Section 78.39 of the Nevada General Corporation Law, the
Undersigned hereby sets forth the following:
1. The name of the corporation is Heartland Express, Inc., a corporation
organized under and existing by virtue of the laws of the State of Nevada
(the "Corporation").
2. On February 18, 1997, the Board of Directors of the Corporation,
pursuant to the aforementioned statute, adopted resolutions by unanimous
consent approving the amendment of the Articles of Incorporation of the
Corporation by deleting the first sentence of Article FOURTH and
substituting the following in place thereof:
The total number of shares of capital stock of all classes which the
Corporation shall have authority to issue is Four Hundred Million
(400,000,000) shares, of which Three Hundred Ninety Five Million
(395,000,000) shares, par value One Cent ($.01) per share, shall be
of a class designated "Common Stock" and Five Million (5,000,000)
shares, par value One Cent ($0.01) per share, shall be of a class
designated "Preferred Stock." The par value of all common stock
shares outstanding on the date of filing this Certificate of
Amendment shall be decreased to One Cent ($.01) per share without
any change in the number of outstanding shares.
3. Pursuant to said unanimous written consent the Board of Directors
declared the advisability of the aforesaid amendment and called upon the
stockholders to meet and to vote for the adoption of the aforesaid
amendment.
4. On May 15, 1997, at the annual meeting of the stockholders of the
Corporation, where a quorum was present, 24,787,225 out of the 30,000,000
outstanding shares were represented in person or by proxy, and the
amendment was approved by a vote of 21,428,513 shares of common stock FOR
the amendment and 3,358,712 shares of common stock AGAINST or abstaining
from a vote on the amendment.
IN WITNESS WHEREOF, the undersigned hereby set forth their hands
this 29th day of May, 1997.
/s/ Russell A. Gerdin
Russell A. Gerdin, President
ATTEST:
/s/ Russell A. Gerdin
Russell A. Gerdin, Secretary
STATE OF IOWA )
) ss.
COUNTY OF JOHNSON )
Before me, Thomas E. Hill, a Notary Public in and for the state and county
aforesaid, personally appeared Russell A. Gerdin, with whom I am personally
acquainted, and who, upon oath, acknowledged himself to be the President
and Secretary of Heartland Express, Inc., and that he as such President and
Secretary being authorized to do so, executed the foregoing instrument for
the purposes therein contained, by signing the name of the corporation as
such President and Secretary.
Witness my hand and official seal at office in the state and county
aforesaid, this 29th day of May, 1997.
/s/ Thomas E. Hill
Notary Public
My Commission expires: 7-7-2000