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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2001
Commission File No. 000-24615
LANDAIR CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1743549
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
430 AIRPORT ROAD
GREENEVILLE, TENNESSEE 37745
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 636-7000
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 [ ]
The number of shares outstanding of the registrant's common stock, $.01 par
value, as of July 27, 2001 was 4,830,005.
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TABLE OF CONTENTS
LANDAIR CORPORATION
Page
Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
June 30, 2001 and December 31, 2000 3
Condensed Consolidated Statements of Income -
Three and six months ended June 30, 2001 and 2000, respectively 4
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 2001 and 2000 5
Notes to Condensed Consolidated Financial Statements -
June 30, 2001 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
ITEM 3. Quantitative and Qualitative Disclosure of Market Risk 15
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 17
ITEM 2. Changes in Securities and Use of Proceeds 17
ITEM 3. Defaults Upon Senior Securities 17
ITEM 4. Submission of Matters to a Vote of Security Holders 17
ITEM 5. Other Information 18
ITEM 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Landair Corporation
Condensed Consolidated Balance Sheets
June 30, December 31,
2001 2000
-----------------------
(Unaudited) (Note 1)
In thousands,
except share data)
ASSETS
Current assets:
Cash and cash equivalents $ 7 $ 9
Accounts receivable, less allowance of $858 in 2001 and
$1,267 in 2000 9,527 12,923
Other current assets 3,978 5,687
-----------------------
Total current assets 13,512 18,619
Property and equipment 89,023 88,555
Less accumulated depreciation and amortization 32,566 29,783
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56,457 58,772
Other assets 605 3,936
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Total assets $ 70,574 $ 81,327
=======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,668 $ 3,072
Accrued expenses 7,483 8,957
Current portion of long-term debt 4,339 8,495
-----------------------
Total current liabilities 14,490 20,524
Long-term debt, less current portion 11,957 20,223
Deferred income taxes 11,797 10,254
Shareholders' equity:
Preferred stock -- --
Common stock, $.01 par value:
Authorized shares - 45,000,000
Issued and outstanding shares - 4,830,605 in 2001
and 4,886,136 in 2000 48 49
Additional paid-in capital 37,755 38,078
Retained deficit (5,473) (7,801)
-----------------------
Total shareholders' equity 32,330 30,326
-----------------------
Total liabilities and shareholders' equity $ 70,574 $ 81,327
=======================
See notes to condensed consolidated financial statements.
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Landair Corporation
Condensed Consolidated Statements of Income
(Unaudited)
Three months ended Six months ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
---------------------- ----------------------
(In thousands, except per share data)
Operating revenue $ 27,102 $ 32,974 $ 56,058 $ 66,104
Operating expenses:
Salaries, wages and employee benefits 8,993 10,559 18,811 21,676
Purchased transportation 6,710 9,503 14,388 18,597
Fuel and fuel taxes 2,919 3,053 5,900 6,680
Depreciation and amortization 2,362 3,679 4,786 7,495
Insurance and claims 681 1,239 1,541 2,834
Operating leases 444 497 852 1,115
Other operating expenses 2,598 2,850 5,267 5,784
---------------------- ----------------------
24,707 31,380 51,545 64,181
---------------------- ----------------------
Income from operations 2,395 1,594 4,513 1,923
Other income (expense):
Interest expense (342) (645) (802) (1,421)
Other, net 89 65 160 305
---------------------- ----------------------
(253) (580) (642) (1,116)
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Income before income taxes 2,142 1,014 3,871 807
Income taxes 853 379 1,543 311
---------------------- ----------------------
Net income $ 1,289 $ 635 $ 2,328 $ 496
====================== ======================
Income per share:
Basic $ .27 $ .11 $ .48 $ .08
====================== ======================
Diluted $ .26 $ .11 $ .47 $ .08
====================== ======================
See notes to condensed consolidated financial statements.
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Landair Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
-------------------------
June 30, June 30,
2001 2000
-------------------------
(In thousands)
Cash provided by operations:
Net income $ 2,328 $ 496
Loss (gain) on disposal 17 (280)
Depreciation and amortization 4,786 6,403
Other, net 3,729 6,307
-------------------------
Net cash provided by operations 10,860 12,926
Investing activities:
Proceeds from disposal of property and
equipment 1,937 890
Purchases of property and equipment (53) (420)
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Net cash provided by investing activities 1,884 470
Financing activities:
Payments of long-term debt (12,422) (8,506)
Repurchase of common stock (494) (4,922)
Proceeds from exercise of stock options 142 --
Common stock issued under employee stock purchase plan 28 31
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Cash used in financing activities (12,746) (13,397)
-------------------------
Decrease in cash and cash equivalents $ (2) $ (1)
=========================
See notes to condensed consolidated financial statements.
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Landair Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 2001
1. BASIS OF PRESENTATION
The accompanying unaudited condensed 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 accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June 30, 2001
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2001. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Landair Corporation
Annual Report on Form 10-K for the year ended December 31, 2000.
The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date, but does not include all of the financial
information and footnotes required by generally accepted accounting principles
for complete financial statements.
Certain reclassifications have been made to the prior year financial statements
to conform to the 2001 presentation. These reclassifications had no effect on
net income as previously reported.
2. COMPREHENSIVE INCOME
The Company had no items of other comprehensive income in 2001 or 2000 and,
accordingly, comprehensive income is equivalent to net income.
3. IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, the Company performs a periodic review of
its long-lived assets, including goodwill and other intangibles, for impairment
whenever events or changes in circumstances indicate that the carrying amount of
these assets may not be recoverable. During the fourth quarter of 2000, as part
of its periodic review of long-lived assets, the Company evaluated its fleet of
tractors and trailers and determined that much of the equipment was
underutilized. As a result, the Company committed to a plan in December 2000 to
dispose of excess revenue equipment. Based on the Company's impairment analysis,
it was determined that the carrying value of certain tractors and trailers
exceeded fair value, less estimated costs of disposal.
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Landair Corporation
Notes to Condensed Consolidated Financial Statements (continued)
3. IMPAIRMENT OF LONG-LIVED ASSETS (CONTINUED)
In the fourth quarter of 2000, the Company recorded an impairment charge of $6.6
million as a result of its impairment review. The impairment charge included
approximately $3.0 million for tractors and trailers held for sale, $2.0 million
for tractors and trailers held for use and expected to be sold within one year,
$1.1 million for lost trailers and $480,000 for other operating assets.
Included in current assets held for sale at June 30, 2001, are tractors and
trailers with impaired carrying values of approximately $552,000. These tractors
and trailers are held for disposal. The Company believes that the sale of the
tractors and trailers included in current assets will occur and proceeds will be
collected within one year of the balance sheet date. Included in noncurrent
assets held for sale are trailers with impaired carrying values of approximately
$444,000. The Company has negotiated with a trailer manufacturer to trade in two
to three used trailers in exchange for each new trailer in 2001. Under the
provisions of SFAS No. 121, depreciation is not recorded during the period in
which assets are being held for sale.
The remaining tractors and trailers identified for disposal by the Company
during the fourth quarter of 2000 will be used in operations until replacement
assets can be obtained. Such assets are impaired and have been written down to
fair value less costs to sell (inclusive of the intervening depreciation).
Assets held for use expected to be sold within one year will continue to be
depreciated until their disposal date and are included in revenue equipment in
the consolidated balance sheet at June 30, 2001.
4. RESTRUCTURING COSTS
In December 2000, the Company committed to various exit and restructuring
activities. These activities included plans to exit operations at four leased
terminals (Dallas, Memphis, Camden and Chicago). In accordance with Emerging
Issues Task Force (EITF) Consensus No. 94-3, the Company accrued $56,000 in
December 2000 for future rent payments and termination penalties under
non-cancelable leases at the facilities. The Company exited the leases and paid
the remaining lease payments and termination penalties in January 2001.
Certain employees were terminated related to the restructuring activities. The
Company accrued termination benefits of $56,000 as of December 31, 2000 related
to severance benefits that had been communicated to the respective employees as
of December 31, 2000. The Company incurred an additional $225,000 of
restructuring costs related to termination benefits during the six month period
ended June 30, 2001. The Company paid $281,000 of restructuring costs related to
termination benefits during the six month period ended June 30, 2001.
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Landair Corporation
Notes to Condensed Consolidated Financial Statements (continued)
5. INCOME PER SHARE
The following table sets forth the computation of basic and diluted income per
share (in thousands, except per share data):
Three months Six months
ended ended
------------------------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
------------------------------------
Numerator:
Numerator for basic and diluted earnings per
share - net income $1,289 $ 635 $2,328 $ 496
Denominator:
Denominator for basic earnings per share -
weighted-average shares 4,832 5,833 4,843 5,925
Effect of dilutive stock options 86 34 61 50
------------------------------------
Denominator for diluted earnings per share -
adjusted weighted-average shares 4,918 5,867 4,904 5,975
====================================
Basic earnings per share $ .27 $ .11 $ .48 $ .08
====================================
Diluted earnings per share $ .26 $ .11 $ .47 $ .08
====================================
6. INCOME TAXES
For the three and six months ended June 30, 2001 and 2000, the effective income
tax rate varied from the statutory federal income tax rate of 34% primarily as a
result of the effect of state income taxes, net of the federal benefit, and
permanent differences.
7. COMMITMENTS AND CONTINGENCIES
The primary claims in the Company's business are workers' compensation, property
damage, auto liability and medical benefits. Most of the Company's insurance
coverage provides for self-insurance levels with primary and excess coverage
which management believes is sufficient to adequately protect the Company from
catastrophic claims. In the opinion of management, adequate provision has been
made for all incurred claims up to the self-insured limits, including provision
for estimated claims incurred but not reported.
The Company estimates its self-insurance loss exposure by evaluating the merits
and circumstances surrounding individual known claims, and by performing
hindsight analysis to determine an estimate of probable losses on claims
incurred but not reported. Such losses could
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Landair Corporation
Notes to Condensed Consolidated Financial Statements (continued)
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
be realized immediately as the events underlying the claims have already
occurred as of the balance sheet dates.
Because of the uncertainty of the ultimate resolution of outstanding claims, as
well as uncertainty regarding claims incurred but not reported, it is possible
that management's provision for these losses could change materially in the near
term. However, no estimate can currently be made of the range of additional loss
that is at least reasonably possible.
8. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARD
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities, effective January
1, 2001. The effect of the adoption of SFAS No. 133 was not material to the
Company's earnings, financial position or cash flows.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
The following table sets forth the percentage relationship of expense items to
operating revenue for the periods indicated.
Three months ended Six months ended
--------------------- ---------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
--------------------- ---------------------
Operating revenue 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages and employee benefits 33.2 32.0 33.6 32.8
Purchased transportation 24.8 28.8 25.7 28.1
Fuel and fuel taxes 10.8 9.2 10.5 10.1
Depreciation and amortization 8.7 11.2 8.5 11.3
Insurance and claims 2.5 3.8 2.7 4.3
Operating leases 1.6 1.5 1.5 1.7
Other operating expenses 9.6 8.7 9.4 8.8
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91.2 95.2 91.9 97.1
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Income from operations 8.8 4.8 8.1 2.9
Other income (expense):
Interest expense (1.2) (1.9) (1.4) (2.1)
Other, net 0.3 0.1 0.3 0.5
--------------------- ---------------------
(0.9) (1.8) (1.1) (1.6)
--------------------- ---------------------
Income before income taxes 7.9 3.0 7.0 1.3
Income taxes 3.1 1.1 2.8 0.5
--------------------- ---------------------
Net income 4.8% 1.9% 4.2% 0.8%
===================== =====================
Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000
Operating revenue decreased by $5.9 million, or 17.8%, to $27.1 million in the
second quarter of 2001 from $33.0 million in 2000. This decrease was the result
of a 22.9% decrease in the average tractors in service, including
owner-operators, during the second quarter of 2001 compared to the same period
in 2000, partially offset by higher equipment utilization. During the second
quarters of 2001 and 2000, the average tractors in service were 767 and 995,
respectively. The average revenue per tractor per week increased from $2,437 per
tractor per week in the second quarter of 2000 to $2,531 per tractor per week in
the second quarter of 2001.
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The operating ratio (operating expenses as a percentage of operating revenue)
was 91.2% for the second quarter of 2001 compared to 95.2% for 2000. The
decrease in the operating ratio in 2001 was due primarily to lower depreciation
and amortization, insurance and claims, and other factors as discussed below.
Salaries, wages and employee benefits were 33.2% of operating revenue in the
second quarter of 2001 compared to 32.0% in 2000. The increase in salaries,
wages and employee benefits as a percentage of operating revenue was due to an
increase in the percentage of Company-operated tractors in service. During the
second quarter of 2001, Company-operated tractors in service represented
approximately 71.6% of the total average tractors in service including
owner-operators. In the second quarter of 2000, Company-operated tractors in
service represented approximately 65.2% of the total average tractors in
service.
Purchased transportation was 24.8% of operating revenue in the second quarter of
2001 compared to 28.8% in 2000. The decrease in purchased transportation as a
percentage of operating revenue in the second quarter of 2001 was primarily
attributable to a decrease in the percentage of owner-operated tractors as a
percent of the Company's overall fleet. In the second quarter of 2001,
owner-operated tractors averaged approximately 28.4% of the Company's fleet. In
the second quarter of 2000, owner-operated tractors averaged approximately 34.8%
of the Company's fleet.
Fuel and fuel taxes were 10.8% of operating revenue in the second quarter of
2001 compared to 9.2% in 2000. The increase in fuel and fuel taxes as a
percentage of operating revenue during the second quarter of 2001 is primarily
attributable to the increase in the percentage of Company-operated tractors
compared to owner-operated tractors during the period as previously discussed.
Owner-operators are responsible for purchasing their own fuel.
Depreciation and amortization expense as a percentage of operating revenue was
8.7% in the second quarter of 2001 compared to 11.2% in 2000. The decrease in
depreciation and amortization as a percentage of operating revenue is
attributable to a decrease in the average number of tractors and trailers in
service in the second quarter of 2001 compared to the same period in 2000. The
average number of Company tractors in service decreased from 649 in the second
quarter of 2000 to 549 in the second quarter of 2001. The average number of
trailers in service decreased from 3,100 in 2000 to 1,955 in 2001. Additionally,
depreciation and amortization expense in the second quarter of 2000 included
approximately $107,000 of goodwill amortization expense associated with the
acquisition of Laker Express, Inc. ("Laker") in 1999. In the fourth quarter of
2000, the Company determined that the goodwill associated with the acquisition
of Laker was fully impaired. As a result, the Company recorded an impairment
charge in the fourth quarter of 2000 for the unamortized portion of the
goodwill. Accordingly, the operating results for the three month period ended
June 30, 2001 do not include goodwill amortization expense associated with the
purchase of Laker.
Insurance and claims were 2.5% of operating revenue in the second quarter of
2001 compared to 3.8% in 2000. The decrease in insurance and claims expense is
due primarily to a decrease
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in the frequency and severity of accidents during the second quarter of 2001
compared with 2000.
Operating leases were 1.6% of operating revenue in the second quarter of 2001
compared to 1.5% in 2000.
Other operating expenses, a large component of which relates to equipment
maintenance, were 9.6% of operating revenue in the second quarter of 2001
compared to 8.2% in 2000. The increase in other operating expenses as a
percentage of operating revenue is primarily attributed to an increase in
Company-operated equipment as a percentage of the Company's fleet including
owner-operators.
Interest expense was $342,000, or 1.2% of operating revenue, in the second
quarter of 2001 compared to $645,000 or 2.1% in 2000. The decrease was due to
lower average net borrowings during 2001 resulting from the Company's strategy
to repay long-term debt coupled with lower effective interest rates in the
second quarter of 2001 compared to the second quarter of 2000.
The combined federal and state effective tax rate for the second quarter of 2001
was 39.8% compared to 37.4% for 2000.
As a result of the foregoing factors, net income increased by $654,000 from
$635,000 in the second quarter of 2000 to $1.3 million in the second quarter of
2001.
Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000
Operating revenue decreased by $10.0 million, or 15.1%, to $56.1 million during
the first six months of 2001 from $66.1 million in 2000. This decrease was a
result of a 20.0% decrease in the average tractors in service, including
owner-operators, during the first six months of 2001 compared to the same period
in 2000, partially offset by higher equipment utilization. During the first six
months of 2001 and 2000, the average tractors in service were 816 and 1,020,
respectively. The average revenue per tractor per week increased from $2,369 per
tractor per week in the first six months of 2000 to $2,480 per tractor per week
in the first six months of 2001.
The operating ratio (operating expenses as a percentage of operating revenue)
was 91.9% for the first six months of 2001 compared to 97.1% for 2000. The
decrease in the operating ratio in 2001 resulted primarily from the factors
discussed below.
Salaries, wages and employee benefits were 33.6% of operating revenue in the
first six months of 2001 compared to 32.8% in 2000. The increase in salaries,
wages and employee benefits as a percentage of operating revenue resulted
primarily from restructuring costs related to termination benefits of $215,000
incurred during the first six months of 2001 and an increase in the percentage
of Company-operated tractors in service. During the first six months of 2001,
Company-operated tractors in service represented approximately 68.4% of the
total average
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tractors in service including owner-operators. During the first six months of
2000, Company-operated tractors in service represented approximately 66.3% of
the total average tractors in service including owner-operators.
Purchased transportation was 25.7% of operating revenue in the first six months
of 2001 compared to 28.1% in 2000. The decrease in purchased transportation as a
percentage of operating revenue in the first six months of 2001 was primarily
attributable to a decrease in the ratio of owner-operated tractors to
Company-operated tractors. Owner-operators represented 31.6% of the Company's
average tractors in service during the six months ended June 30, 2001 compared
to 33.7% for the same prior year period.
Fuel and fuel taxes were 10.5% of operating revenue in the first six months of
2001 compared to 10.1% in 2000. The increase in fuel and fuel taxes as a
percentage of operating revenue during the second quarter of 2001 resulted
primarily from an increase in the ratio of Company-operated tractors to
owner-operated tractors during the period. Owner-operators are responsible for
purchasing their own fuel.
Depreciation and amortization expense as a percentage of operating revenue was
8.5% in the first six months of 2001 compared to 11.3% in 2000. The decrease in
depreciation and amortization as a percentage of operating revenue is
attributable to a decrease in the average number of tractors and trailers in
service in the first six months of 2001 compared to the same period in 2000. The
average number of Company tractors in service decreased from 676 in the first
six months of 2000 to 558 in the first six months of 2001. The average number of
trailers in service decreased from 3,120 in 2000 to 2,102 in 2001. Additionally,
depreciation and amortization expense during the first six months of 2000
included approximately $215,000 of goodwill amortization expense associated with
the acquisition of Laker in 1999. In the fourth quarter of 2000, the Company
determined that the goodwill associated with the acquisition of Laker was fully
impaired. As a result, the Company recorded an impairment charge in the fourth
quarter of 2000 for the unamortized portion of the goodwill. Accordingly, the
operating results for the six month period ended June 30, 2001 do not include
goodwill amortization expense associated with the purchase of Laker.
Insurance and claims were 2.7% of operating revenue in the first six months of
2001 compared to 4.3% in 2000. The decrease in insurance and claims expense as a
percentage of operating revenue was a result of decreased frequency and severity
of accidents which was partially offset by higher insurance premiums during the
first six months of 2001 compared with 2000.
Operating leases were 1.5% of operating revenue in the first six months of 2001
compared to 1.7% in 2000.
Other operating expenses, a large component of which relates to equipment
maintenance, were 9.4% of operating revenue in the first six months of 2001
compared to 8.8% in 2000. The increase in other operating expenses as a
percentage of operating revenue is primarily attributed
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to the increase in Company-operated equipment as a percentage of the Company's
overall fleet, including owner-operators.
Interest expense was $802,000, or 1.4% of operating revenue in the first six
months of 2001 compared to $1.4 million or 2.1% in 2000. The decrease was due to
lower average net borrowings during 2001 resulting from the Company's strategy
to repay long-term debt and lower effective interest rates in 2001 compared to
2000.
The combined federal and state effective tax rate for the first six months of
2001 was 39.9% compared to 38.5% for 2000.
As a result of the foregoing factors, net income increased by approximately $1.8
million from net income of $496,000 in the first six months of 2000 to net
income of $2.3 million in the first six months of 2001.
Liquidity and Sources of Capital
Working capital needs have generally been met with cash flows from operations
and borrowings under credit agreements. Net cash provided by operating
activities of the Company was $10.9 million for the first six months of 2001
compared with $12.9 million in the same period of 2000.
Net cash provided by investing activities was approximately $1.9 million in the
first six months of 2001 compared with net cash provided by investing activities
of $470,000 in the same period of 2000. Investing activities consisted primarily
of the proceeds from disposal of property and equipment during the first six
months of 2001 and 2000.
Net cash used in financing activities was $12.7 million in the first six months
of 2001 compared with net cash used in financing activities of $13.4 million in
the same period of 2000. Financing activities consisted primarily of the
repayment of long-term debt and the repurchase of the Company's common stock
during the first six months of 2001 and 2000.
The Company's credit facilities include a working capital line of credit and an
equipment financing facility. Subject to maintenance of financial covenants and
ratios, these credit facilities permit the Company to borrow up to $15.0 million
under the working capital line of credit and $15.0 million under an equipment
financing facility. Interest rates for advances under the facilities vary based
on covenants related to total indebtedness, cash flows, results of operations
and other ratios. The facilities bear interest at LIBOR plus 0.75% to 1.75% and
are secured by accounts receivable and certain revenue equipment. The Company's
working capital line of credit expires in November 2002. Availability under the
line of credit is reduced by the amount of outstanding letters of credit. Among
other restrictions, the terms of the line of credit require maintenance of
certain levels of net worth and other financial ratios. As of June 30, 2001, the
Company had $1.9 million of borrowings and $3.2 million of letters of credit
outstanding under the working capital line of credit facility and $2.9 million
of borrowings outstanding under the equipment financing facilities. As of June
30, 2001, the Company had $9.9 million and $12.1
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million of available additional borrowing capacity under the working capital
line of credit and the equipment financing facilities, respectively.
The Company maintains a $20 million equipment financing facility with a retail
finance company. At June 30, 2001, $7.8 million was outstanding under this
credit facility. Additionally, the Company had a total of $3.7 million in
installment notes payable at June 30, 2001.
The Company expects to finance its normal operating requirements and planned
revenue equipment purchases through available borrowing capacity under existing
lines of credit, future borrowings under installment notes for revenue
equipment, operating lease financing and cash generated by operations. The
availability of debt financing or equity capital will depend upon the Company's
financial condition and results of operations as well as prevailing market
conditions and other factors over which the Company has little or no control.
Forward-Looking Statements
The Company, or its executive officers and directors on behalf of the Company,
may from time to time make written or oral "forward-looking statements." Written
forward-looking statements may appear in documents filed with the Securities and
Exchange Commission, in press releases and in reports to shareholders. Oral
forward-looking statements may be made by the Company's executive officers and
directors on behalf of the Company to the press, potential investors, securities
analysts and others. The Private Securities Litigation Reform Act of 1995
contains a safe harbor for forward-looking statements. The Company relies on
this safe harbor in making such disclosures. In connection with this safe harbor
provision, the Company is hereby identifying important factors that could cause
actual results to differ materially from those contained in any forward-looking
statement made by or on behalf of the Company. Without limitation, factors that
might cause such a difference include economic factors such as recessions,
inflation, higher interest rates, downturns in customer business cycles,
competition, surplus inventories, loss of a major customer, fuel price
increases, the Company's lack of prior operating history as an independent
entity, the inability of the Company's information systems to handle increased
volume of freight, and the lack of availability and/or insufficient compensation
of qualified drivers and independent owner-operators needed to serve the
Company's transportation needs. The Company disclaims any intent or obligation
to update these forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
The Company is exposed to market risk from changes in interest rates and
commodity prices. To reduce such risks, the Company selectively uses forward
purchase contracts for fuel. All such forward purchase transactions are
authorized.
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Interest Rates
At June 30, 2001 and 2000, the fair value of the Company's total variable rate
debt was estimated to be approximately $8.5 million and $24.0 million,
respectively, which approximated carrying value based on the Company's current
incremental borrowing rates for similar types of borrowing arrangements. At
these borrowing levels, a hypothetical 10% adverse change in interest rates on
the debt would increase interest expense and decrease income before income taxes
by approximately $45,000 and $99,000 in the first six months of 2001 and 2000,
respectively. These amounts were determined by considering the impact of the
hypothetical interest rate increase on the Company's borrowing cost at the June
30, 2001 and 2000 borrowing levels.
Commodities
The availability and price of fuel are subject to fluctuations due to factors
such as seasonality, weather, government programs and policies, and changes in
global production. To reduce price sensitivity caused by market fluctuations,
the Company from time to time will enter into forward purchase contracts. At
June 30, 2001 and 2000, the Company had no outstanding commitments to purchase
fuel.
The above market risk discussion and the estimated amounts presented are
forward-looking statements of market risk based on the assumed occurrence of
certain adverse market conditions. Actual results in the future may differ
materially from those projected due to actual developments in the market.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is, from time to time, a party to litigation arising in the normal
course of its business, most of which involve claims for personal injury and
property damage incurred in connection with the transportation of freight.
Management believes that none of these actions, individually or in the
aggregate, will have a material adverse effect on the financial condition or
results of operations of the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company was held on May 21, 2001, for
the purpose of (a) electing seven directors; (b) approving and adopting a First
Amendment to the Company's Amended and Restated Non-Employee Director Stock
Option Plan; and (c) approving the appointment of independent auditors for 2001.
(a) Shareholders elected each director nominee for a one-year term expiring
at the 2002 annual meeting. The vote for each director was as follows:
For Withheld
--- --------
Jerry T. Armstrong 4,042,783 18,756
C. John Langley, Jr. 4,042,183 19,356
Andrew J. Mantey 4,044,183 17,356
Courtney J. Munson 4,042,783 18,756
Scott M. Niswonger 4,042,183 19,356
Richard H. Roberts 4,042,183 17,356
John A. Tweed 4,042,183 19,356
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(b) The First Amendment to the Company's Amended and Restated Non-Employee
Director Stock Option Plan was approved and adopted by the shareholders
by the following vote:
For Against Abstain
--- ------- -------
4,024,706 35,267 1,556
(c) The appointment of Ernst & Young LLP as independent auditors for 2001 was
ratified and approved as follows:
For Against Abstain
--- ------- -------
4,045,139 15,900 500
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are included herein:
(a) Exhibits - Not applicable
(b) Reports on Form 8-K - The Company did not file any reports on Form 8-K
during the three months ended June 30, 2001.
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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.
Landair Corporation
Date: August 1, 2001 By: /s/ Andrew J. Mantey
----------------------------------------
Andrew J. Mantey
Chief Financial Officer
and Senior Vice President
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