SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 2007 Commission File No. 0-15087
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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)
901 North Kansas Avenue, North Liberty, Iowa 52317
-------------------------------------------- -----
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (319) 626-3600
---------------
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 a large accelerated filer, an
accelerated filer, or a non-accelerated filer. (See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act). Large
accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
At September 30, 2007, there were 96,956,833 shares of the Company's $0.01 par
value common stock outstanding.
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
PART I
FINANCIAL INFORMATION
Page
Number
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
September 30, 2007 and December 31, 2006 1-2
Consolidated Statements of Income
for the Three and Nine Months Ended
September 30, 2007 and 2006 3
Consolidated Statements of Stockholders' Equity
for the Nine Months Ended September 30, 2007 4
Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 2007 and 2006 5
Notes to Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
Item 4. Controls and Procedures 16
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults upon Senior Securities 17
Item 4. Submission of Matters to a Vote of
Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17-18
Signatures 19-22
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2007 2006
-------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,369,305 $ 8,458,882
Short-term investments 161,572,944 322,829,306
Trade receivables, net of allowance
for doubtful accounts of $775,000 49,159,158 43,499,482
Prepaid tires and tubes 5,236,026 5,075,566
Other prepaid expenses 4,030,127 1,635,077
Income taxes receivable 397,927 -
Deferred income taxes 29,585,000 29,177,000
------------ ------------
Total current assets 255,350,487 410,675,313
------------ ------------
PROPERTY AND EQUIPMENT
Land and land improvements 17,142,433 12,016,344
Buildings 25,246,844 18,849,412
Furniture and fixtures 2,184,449 1,113,565
Shop and service equipment 4,619,428 2,838,934
Revenue equipment 321,038,624 309,505,597
------------ ------------
370,231,778 344,323,852
Less accumulated depreciation 120,167,508 96,293,111
------------ ------------
Property and equipment, net 250,064,270 248,030,741
------------ ------------
GOODWILL 4,814,597 4,814,597
OTHER ASSETS 5,727,689 5,549,061
------------ ------------
$515,957,043 $669,069,712
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
1
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2007 2006
------------ -------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 17,876,958 $ 15,075,647
Compensation and benefits 14,849,451 15,028,378
Income taxes payable - 21,418,610
Insurance accruals 59,433,331 56,651,853
Other accruals 7,913,602 8,248,415
------------ ------------
Total current liabilities 100,073,342 116,422,903
------------ ------------
LONG-TERM LIABILITIES
Income taxes payable 36,945,099 --
Deferred income taxes 50,773,000 57,623,000
------------ ------------
Total long-term liabilities 87,718,099 57,623,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred, $0.01 par value; authorized
5,000,000 share; none issued -- --
Common, $0.01 par value; authorized
395,000,000 shares; issued and
outstanding: 96,956,833 shares in 969,569 982,519
2007 and 98,251,889 shares in 2006
Additional paid-in capital 438,701 376,029
Retained earnings 326,757,332 493,665,261
------------ ------------
328,165,602 495,023,809
------------ ------------
$515,957,043 $669,069,712
============= ============
The accompanying notes are an integral part of these consolidated financial
statements.
2
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
Operating revenue $146,574,527 $147,057,490 $439,106,979 $425,115,417
------------ ------------ ------------ ------------
Operating expenses:
Salaries, wages, and benefits $ 48,095,554 $ 47,925,921 $147,059,870 $140,337,273
Rent and purchased transportation 5,252,239 6,093,688 16,117,409 19,065,664
Fuel 40,746,953 38,971,251 117,257,161 109,721,660
Operations and maintenance 3,253,233 3,324,149 9,956,593 9,629,849
Operating taxes and licenses 2,551,510 2,259,227 7,170,128 6,530,121
Insurance and claims 2,826,087 2,620,921 14,103,817 11,543,703
Communications and utilities 995,708 912,515 2,864,650 2,807,947
Depreciation 12,365,139 12,446,339 35,945,848 33,805,611
Other operating expenses 4,472,108 4,757,332 13,036,265 13,113,338
Gain on disposal of property and equipment (493,197) (4,788,227) (10,271,348) (17,571,767)
------------ ------------ ------------ ------------
120,065,334 114,523,116 353,240,393 328,983,399
------------ ------------ ------------ ------------
Operating income 26,509,193 32,534,374 85,866,586 96,132,018
Interest income 1,741,202 3,141,022 7,962,969 8,553,942
------------ ------------ ------------ ------------
Income before income taxes 28,250,395 35,675,396 93,829,555 104,685,960
Income taxes 11,105,619 12,664,766 34,290,332 37,163,518
------------ ------------ ------------ ------------
Net income $ 17,144,776 $ 23,010,630 $ 59,539,223 $ 67,522,442
============ ============ ============ ============
Earnings per share $ 0.18 $ 0.23 $ 0.61 $ 0.69
============ ============ ============ ============
Weighted average shares outstanding 97,498,975 98,330,636 97,998,160 98,395,579
============ ============ ============ ============
Dividends declared per share $ 0.020 $ 0.020 $ 2.065 $ 0.055
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
3
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
Capital Additional
Stock, Paid-In Retained
Common Capital Earnings Total
--------- --------- ------------ ------------
Balance, December 31, 2006 $ 982,519 $ 376,029 $493,665,261 $495,023,809
Adoption of FIN 48 -- -- (4,798,017) (4,798,017)
Net income -- -- 59,539,223 59,539,223
Dividends on common stock, $2.065 per share -- -- 202,372,990) (202,372,990)
Stock Repurchase (12,950) -- (19,276,145) (19,289,095)
Amortization of unearned stock compensation -- 62,672 -- 62,672
--------- --------- ------------ ------------
Balance, September 30, 2007 $ 969,569 $ 438,701 $326,757,332 $328,165,602
========= ========= ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
4
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
2007 2006
------------ ------------
OPERATING ACTIVITIES
Net income $ 59,539,223 $ 67,522,442
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 35,954,163 33,820,614
Deferred income taxes 1,555,000 4,166,000
Amortization of unearned compensation 62,672 282,022
Gain on disposal of property and equipment (10,271,348) (17,571,767)
Changes in certain working capital items:
Trade receivables (5,659,676) (3,544,132)
Prepaid expenses (2,477,197) (4,802,241)
Accounts payable, accrued liabilities,
and accrued expenses 5,286,016 6,224,368
Accrued income taxes 1,517,545 2,027,385
------------ ------------
Net cash provided by operating activities 85,506,398 88,124,691
------------ ------------
INVESTING ACTIVITIES
Proceeds from sale of property and equipment 13,221,044 1,841,998
Purchases of property and equipment,
net of trades (41,200,972) (47,439,440)
Net sale (purchases) of municipal bonds 161,256,362 (16,598,076)
Change in other assets (186,943) (764,927)
------------ ------------
Net cash provided by (used in)
investing activities 133,089,491 (62,960,445)
------------ ------------
FINANCING ACTIVITIES
Cash dividends (202,396,371) (4,919,171)
Stock repurchase (19,289,095) (2,545,364)
------------ ------------
Net cash used in financing activities (221,685,466) (7,464,535)
------------ ------------
Net (decrease) increase in cash and
cash equivalents (3,089,577) 17,699,711
CASH AND CASH EQUIVALENTS
Beginning of period 8,458,882 5,366,929
------------ ------------
End of period $ 5,369,305 $ 23,066,640
============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes, net $ 31,217,787 $ 30,970,133
Non-cash investing and financing
activities:
Fair value of revenue equipment traded $ 6,429,000 $ 43,166,700
Purchased revenue equipment in
accounts payable $ 1,882,000 $ 3,705,580
Common stock dividends declared
but not yet paid $ 1,954,627 $ 1,977,320
The accompanying notes are an integral part of these consolidated financial
statements.
5
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. and subsidiaries (the "Company") have been prepared in accordance
with U.S. 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 U.S. 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 unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements for the year ended December 31, 2006 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. Use of Estimates
The preparation of the unaudited consolidated financial statements in
conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Note 3. Segment Information
The Company has ten 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 4. Cash and Cash Equivalents
Cash equivalents are short-term, highly liquid investments with
insignificant interest rate risk and original maturities of three months or
less. Restricted and designated cash and short-term investments totaling $5.7
million at September 30, 2007 and $5.5 million at December 31, 2006 are included
in other assets. The restricted funds represent those required for
self-insurance purposes and designated funds represent those earmarked for a
specific purpose not for general business use.
Note 5. Short-term Investments
The Company investments are primarily in the form of tax free municipal
bonds with interest reset provisions or short-term municipal bonds. The
investments typically have a put option of 28 or 35 days. At the reset date the
Company has the option to roll the investment over or sell. The Company receives
the par value of the investment on the reset date if sold. The cost approximates
fair value due to the nature of the investment. Therefore, accumulated other
comprehensive income (loss) has not been recognized as a separate component of
6
stockholders' equity. Investment income is accrued as earned and is generally
exempt from federal income taxes.
Note 6. Property, Equipment, and Depreciation
Property and equipment are stated at cost, net of accumulated depreciation,
while maintenance and repairs are charged to operations as incurred.
Note 7. Earnings Per Share
Earnings per share are based upon the weighted average common shares
outstanding during each period. Heartland Express has no common stock
equivalents; therefore, diluted earnings per share are equal to basic earnings
per share.
Note 8. Dividends
The Company paid a special dividend of $2.00 per common share,
approximately $196.5 million, on May 30, 2007 to stockholders of record on May
24, 2007. In addition, the Company paid a regular quarterly dividend of $0.02
per common share, approximately $2.0 million, on May 30, 2007, to stockholders
of record on May 24, 2007. On September 7, 2007, the Company's Board of
Directors declared a regular quarterly dividend of $0.02 per common share,
approximately $1.9 million, payable October 2, 2007, to stockholders of record
on September 20, 2007.
Future payment of cash dividends and the amount of such dividends will
depend upon financial conditions, results of operations, cash requirements, tax
treatment, and certain corporate law requirements, as well as factors deemed
relevant by our Board of Directors.
Note 9. Share Based Compensation
On March 7, 2002, the principal shareholder transferred 181,500 of his own
shares establishing a restricted stock plan on behalf of key employees. The
shares generally vest over a five year period or upon death or disability of the
recipient. The shares were valued at the March 7, 2002 market value of
approximately $2.0 million. The market value of $2.0 million was amortized over
a five year period as compensation expense. All unearned compensation cost
related to the restricted stock granted became fully amortized in the first
quarter of 2007. For the nine months ended September 30, 2007 and 2006,
compensation expense of $62,672 and $282,022 is recorded in salaries, wages, and
benefits on the consolidated statement of income with an offsetting entry to
additional paid-in capital. For the three months ended September 30, 2006,
compensation expense of $93,567 was recorded in salaries, wages and benefits on
the consolidated statement of income. All unvested shares are included in the
Company's 97.0 million outstanding shares.
A summary of the Company's non-vested restricted stock as of September 30,
2007, and changes during the nine months ended September 30, 2007 is presented
in the table below:
Grant-date
Shares Fair Value
-------- ----------
Non-vested stock outstanding at January 1, 2007 34,200 $ 11.00
Granted - -
Vested (33,800) 11.00
Forfeited - -
-------- ----------
Non-vested stock outstanding at September 30, 2007 400 $ 11.00
======== ===========
7
The fair value of the shares vested was $540,906 and $575,181 for the nine
months ended September 30, 2007 and 2006, respectively.
Note 10. Income Taxes
In July 2006, the FASB issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109 (FIN48).
The Company was required to adopt the provisions of FIN 48, effective January 1,
2007. This interpretation was issued to clarify the accounting for uncertainty
in income taxes recognized in the financial statements by prescribing a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return.
The Company recognized additional tax liabilities of $4.8 million with a
corresponding reduction to beginning retained earnings as of January 1, 2007 as
a result of the adoption of FIN 48. The total amount of gross unrecognized tax
benefits was $25.2 million as of January 1, 2007, the date of adoption. At
September 30, 2007, the Company had a total of $25.4 million in gross
unrecognized tax benefits. Of this amount, $16.5 million represents the amount
of unrecognized tax benefits that, if recognized, would impact our effective tax
rate. These unrecognized tax benefits relate to the state income tax filing
position for the Company's corporate subsidiaries. The Company does not expect
the aggregate amount of unrecognized tax benefits to change significantly within
the next twelve months. The total amount of accrued interest and penalties for
such unrecognized tax benefits was $12.9 million as of January 1, 2007, the date
of adoption. Interest and penalties related to income taxes are classified as
income tax expense in our financial statements.
The federal statute of limitations remains open for the years 2004 and
forward. Tax years 1996 and forward are subject to audit by state tax
authorities depending on the tax code of each state.
Note 11. Commitments and Contingencies
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.
The Company announced on September 7, 2007 that our Board of Directors
declared a regular quarterly dividend of $0.02 per common share, approximately
$1.9 million, payable October 2, 2007, to stockholders of record on September
20, 2007.
Note 12. Related Party Transactions
The Company previously leased two office buildings and a storage building
from its Chief Executive Officer (CEO) under a lease that provided for monthly
rentals of $27,618 plus the payment of all property taxes, insurance and
maintenance. In the opinion of management, the rates paid were comparable to
those that could be negotiated with a third party. The buildings were sold in
February 2007 to an unrelated third party and the related party lease was
canceled. Rent was paid to the unrelated third party until the new corporate
headquarters was occupied in July 2007.
Rent expense paid to the Company's CEO totaled $82,854 for the three months
ended September 30, 2006. There was no rent expense paid to the Company's CEO
for the three months ended September 30, 2007. Rent expense paid to the
Company's CEO totaled $35,509 and $248,561 for the nine months ended September
30, 2007 and 2006, respectively.
The Company acquired a new corporate headquarters and shop facility from
its CEO on July 12, 2007 for $15.4 million. This amount represents the actual
cost of the facilities. This transaction was consummated to facilitate a
like-kind exchange for the benefit of the Company.
8
Note 13. Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements".
This Statement defines fair value, establishes a framework for measuring fair
value in U.S. generally accepted accounting principles, and expands disclosures
about fair value measurements. The provisions of SFAS No. 157 are effective as
of the beginning of the first fiscal year that begins after November 15, 2007.
As of September 30, 2007, management believes that SFAS No. 157 will have no
effect on the financial position, results of operations, and cash flows of the
Company.
In February 2007, the FASB issued SFAS No. 159. "The Fair Value Option for
Financial Assets and Financial Liabilities--including an amendment of FASB
Statement No. 115". This Statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The fair value
option established by this Statement permits all entities to choose to measure
eligible items at fair value at specified election dates. A business entity
shall report unrealized gains and losses for which the fair value option has
been elected in earnings at each subsequent reporting date. The fair value
option: 1) may be applied instrument by instrument, 2) is irrevocable (unless a
new election date occurs), and 3) is applied only to entire instruments and not
portions of instruments. The provisions of SFAS No. 159 are effective as of the
beginning of the first fiscal year that begins after November 15, 2007. As of
September 30, 2007, management believes that SFAS No. 159 will have no effect on
the financial position, results of operations, and cash flows of the Company.
Note 14. Share Repurchases
In September 2001, the Board of Directors of the Company authorized a
program to repurchase 15.8 million shares, as adjusted for stock splits, of the
Company's common stock in open market or negotiated transactions using available
cash, cash equivalents, and short-term investments. The repurchase program may
be suspended or discontinued at any time without prior notice.
The Company repurchased the following shares of common stock under the
above-described repurchase plan:
Three Months Ended September 30,
--------------------------------
2007 2006
------ ------
Shares of Common Stock Repurchased (in Millions) 1.3 0.2
Value of stock repurchased (in Millions) $19.3 $ 2.5
9
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. The Company provides regional dry van
truckload services from eight regional operating centers plus its corporate
headquarters. The Company's eight regional operating centers accounted for 65.1%
of the third quarter 2007 operating revenues. 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 the availability of late-model equipment
and experienced drivers.
Operating efficiencies and cost controls are achieved through equipment
utilization, operating a fleet of late model equipment, maintaining an industry
leading driver to non-driver employee ratio, and the effective management of
fixed and variable operating costs. At September 30, 2007, the Company's tractor
fleet had an average age of 1.8 years while the trailer fleet had an average age
of 3.5 years. The Company has grown internally by providing quality service to
targeted customers with a high density of freight in the Company's regional
operating areas. In addition to the development of its regional operating
centers, the Company has made five acquisitions since 1987. Future growth is
dependent upon several factors including the level of economic growth and the
related customer demand, the available capacity in the trucking industry,
potential of acquisition opportunities, and the availability of experienced
drivers.
The Company ended the third quarter of 2007 with operating revenues of
$146.6 million, including fuel surcharges, net income of $17.1 million, and
earnings per share of $0.18 on weighted average outstanding shares of 97.5
million. The Company posted an 81.9% operating ratio (operating expenses as a
percentage of operating revenues) and an 11.7% net margin. The Company ended the
quarter with cash, cash equivalents, and short-term investments of $166.9
million and a debt-free balance sheet. The Company had total assets of $516.0
million at September 30, 2007. The Company achieved a return on assets of 13.6%
and a return on equity of 19.3% for the twelve months ended September 30, 2007.
The Company's net cash flow from operating activities of $85.5 million
represented 19.5% of operating revenues for the nine months ended September 30,
2007. Operating income for the three and nine month periods ended September 30,
2007 was negatively impacted by a $4.3 million and $7.3 million decrease,
respectively, in gain on disposal of property and equipment.
The decline in the demand for freight services and an overcapacity of
trucks has negatively impacted the operating results for both the three and nine
months ended September 30, 2007. The soft freight demand has resulted in
10
downward pressures on freight and fuel surcharge rates and has resulted in
higher empty miles and lower equipment utilization. Fuel expense, net of fuel
surcharge recoveries, increased 18.1% and 11.1% during the three and nine month
periods ended September 30, 2007 compared to the 2006 three and nine month
periods.
The Company hires only experienced drivers with safe driving records. In
order to attract and retain experienced drivers who understand the importance of
customer service, the Company increased pay for all drivers by $0.03 per mile
during both the first quarters of 2004 and 2005. Effective October 2, 2004, the
Company began paying all drivers an incremental amount for miles driven in the
upper Northeastern United States. In 2006, the Company implemented additional
pay increases for drivers in selected operations groups and a fleet-wide
incentive for all drivers maintaining a valid hazardous materials endorsement on
their commercial driver's license. The Company has solidified its position as an
industry leader in driver compensation with these aforementioned increases.
The Company has been recognized as one of the Forbes magazine's "200 Best
Small Companies in America" sixteen times in the past twenty-one years and for
the past six consecutive years. The Company has paid cash dividends over the
past seventeen consecutive quarters including a special dividend of $196.5
million in May, 2007. The Company became publicly traded in November, 1986 and
is traded on the NASDAQ National Market under the symbol HTLD.
Results of Operations:
The following table sets forth the percentage relationship of expense items
to operating revenue for the periods indicated.
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
------- ------- ------- -------
Operating revenue 100.0% 100.0% 100.0% 100.0%
------- ------- ------- -------
Operating expenses:
Salaries, wages, and benefits 32.8% 32.6% 33.5% 33.0%
Rent and purchased transportation 3.6 4.1 3.7 4.5
Fuel 27.8 26.5 26.7 25.8
Operations and maintenance 2.2 2.3 2.3 2.3
Operating taxes and licenses 1.7 1.5 1.6 1.5
Insurance and claims 1.9 1.8 3.2 2.7
Communications and utilities 0.7 0.6 0.7 0.6
Depreciation 8.4 8.5 8.2 8.0
Other operating expenses 3.1 3.2 3.0 3.1
Gain on disposal of property and equipment (0.3) (3.3) (2.3) (4.1)
------- ------- ------- -------
Total operating expenses 81.9% 77.9% 80.4% 77.4
------- ------- ------- -------
Operating income 18.1% 22.1% 19.6% 22.6%
Interest income 1.2 2.2 1.8 2.0
------- ------- ------- -------
Income before income taxes 19.3% 24.3% 21.4% 24.6%
Federal and state income taxes 7.6 8.7 7.8 8.7
------- ------- ------- -------
Net income 11.7% 15.6% 13.6% 15.9%
======= ======= ======= =======
The following is a discussion of the results of operations of the three and
nine month period ended September 30, 2007 compared with the same period in
2006.
11
Three Months Ended September 30, 2007 and 2006
Operating revenue decreased $0.5 million (0.3%), to $146.6 million in the
third quarter of 2007 from $147.1 million in the third quarter of 2006.
Operating revenue for both periods was positively impacted by fuel surcharges
assessed to customers. Fuel surcharge revenue decreased $1.7 million, (7.2 %) to
$21.4 million in the third quarter of 2007 from $23.1 million in the third
quarter of 2006.
Salaries, wages, and benefits increased $0.2 million (0.4%), to $48.1
million in the third quarter of 2007 from $47.9 million in the third quarter of
2006. These increases were the result of increased reliance on employee drivers
due to a decrease in the number of independent contractors utilized by the
Company and driver pay increases. The Company increased driver pay by $0.01 per
mile in January 2006 for all drivers maintaining a valid hazardous materials
endorsement on their commercial driver's license and implemented quarterly pay
increases in 2006 for selected operating divisions. These increases to driver
compensation resulted in a cost increase of approximately $0.4 million in the
third quarter of 2007. During the third quarter of 2007, employee drivers
accounted for 95% and independent contractors for 5% of the total fleet miles,
compared with 94% and 6%, respectively, in the third quarter of 2006. Workers'
compensation expense decreased slightly by $0.1 million (7.7%) to $1.3 million
in the quarter ended September 30, 2007 from $1.4 million in for the same period
in 2006. Health insurance expense decreased $0.3 million (14.1%) to $1.8 million
in the third quarter of 2007 from $2.1 million in third quarter of 2006 due to a
decrease in frequency and severity of claims.
Rent and purchased transportation decreased $0.8 million (13.8%), to $5.3
million in the third quarter of 2007 from $6.1 million in the third quarter of
2006. 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. In
the first quarter of 2006, the Company increased the independent contractor base
mileage pay by $0.01 per mile for all independent contractors maintaining a
hazardous materials endorsement on their commercial driver's license, and an
additional $0.01 per mile per quarter in 2006 beginning on April 1, 2006. These
base mileage increases had an insignificant impact on the third quarter of 2007.
Fuel increased $1.7 million (4.6%), to $40.7 million for the three months
ended September 30, 2007 from $39.0 million for the same period of 2006. The
increase is the result of an increase in fuel cost per gallon, an increased
reliance on company-owned tractors, and a decrease in fuel economy associated
with the EPA mandated clean air engines. The Company's fuel cost per
company-owned tractor mile increased 3.8% in third quarter of 2007 compared to
2006. Fuel cost per mile, net of fuel surcharge, increased 18.1% in the third
quarter of 2007 compared to 2006. The Company's third quarter fuel cost per
gallon increased by 2.5% in 2007 compared to 2006.
Operations and maintenance remained constant at $3.3 million during both
compared periods.
Operating taxes and licenses increased $0.3 million (12.9%), to $2.6
million in the third quarter of 2007 from $2.3 million in the third quarter of
2006 due an increase in the property taxes associated with new facilities in
Phoenix, Arizona and North Liberty, Iowa and an increase in fuel taxes paid.
Insurance and claims increased $0.2 million (7.8%), to $2.8 million in the
third quarter of 2007 from $2.6 million in the third quarter of 2006 due to an
increase in the frequency of larger claims and development increases on existing
liability claims.
Depreciation remained constant at $12.4 million during both compared periods.
Other operating expenses decreased $0.3 million (6.0%), to $4.5 million in
the third quarter of 2007 from $4.8 million in the third quarter of 2006. Other
operating expenses consists of costs incurred for advertising expense, freight
handling, highway tolls, driver recruiting expenses, and administrative costs.
12
Gain on the disposal of property and equipment decreased $4.3 million
(89.7%), to $0.5 million during the third quarter of 2007 from $4.8 million in
the third quarter of 2006. The decline is attributable to a substantial decrease
in the number of tractors and trailers traded during the 2007 period. The
Company expects the gain on disposal of property and equipment to be lower in
the fourth quarter of 2007 than the third quarter of 2007.
Interest income decreased $1.4 million (44.6%), to $1.7 million in the
third quarter of 2007 compared to $3.1 million from the 2006 period because of
the decrease in cash, cash equivalents, and investments associated with the
payment of the special dividend in May 2007.
The Company's effective tax rate was 39.3% and 35.5%, respectively, in the
third quarter of 2007 and 2006. The increase is primarily attributable to the
reduced tax benefit of tax exempt interest income for 2007 and the change in
unrecognized tax benefits, which are recorded as discretive events in 2007.
As a result of the foregoing, the Company's operating ratio (operating
expenses as a percentage of operating revenue) was 81.9% during the third
quarter of 2007 compared with 77.9% during the third quarter of 2006. Net income
decreased $5.9 million (25.5%), to $17.1 million during the third quarter of
2007 from $23.0 million during the third quarter of 2006.
Nine Months Ended September 30, 2007 and 2006
Operating revenue increased $14.0 million (3.3%), to $439.1 million in the
nine months ending September 30, 2007 from $425.1 million in the 2006 period.
The increase in revenue resulted from the Company's expansion of its fleet and
improved freight rates. Operating revenue for both periods was positively
impacted by fuel surcharges assessed to customers. Fuel surcharge revenue
decreased $1.2 million, (2.0%) to $60.6 million in the nine months ended
September 30, 2007 from $61.8 million in the compared 2006 period. The fuel
surcharge decrease is attributable to downward rate pressures resulting from a
decrease in demand for freight services and the related overcapacity of
available trucks in the industry.
Salaries, wages, and benefits increased $6.8 million (4.8%), to $147.1
million in the nine months ended September 30, 2007 from $140.3 million in the
2006 period. These increases were the result of increased reliance on employee
drivers due to a decrease in the number of independent contractors utilized by
the Company and driver pay increases. The Company increased driver pay by $0.01
per mile in January 2006 for all drivers maintaining a valid hazardous materials
endorsement on their commercial driver's license and implemented quarterly pay
increases in 2006 for selected operating divisions. The cumulative impact of the
quarterly increases to driver compensation in 2006 resulted in a cost increase
of approximately $2.0 million in the nine months ended September 30, 2007.
During the first nine months of 2007, employee drivers accounted for 95% and
independent contractors for 5% of the total fleet miles, compared with 93% and
7%, respectively, in the first nine months of 2006. Workers' compensation
expense increased $0.8 million (21.3%) to $4.4 million in the nine months ended
September 30, 2007 from $3.6 million in for the same period in 2006 due to an
increase in frequency and severity of claims. Health insurance expense decreased
$0.5 million (7.8%) to $5.8 million in the nine months ended September 30, 2007
from $6.3 million in the same period of 2006 due to a decrease in frequency and
severity of claims.
Rent and purchased transportation decreased $3.0 million (15.5%), to $16.1
million in the first nine months of 2007 from $19.1 million in the compared
period of 2006. 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. In
the first quarter of 2006, the Company increased the independent contractor base
mileage pay by $0.01 per mile for all independent contractors maintaining a
hazardous materials endorsement on their commercial driver's license, and an
additional $0.01 per mile per quarter in 2006 beginning on April 1, 2006. These
base mileage pay increases resulted in a cost increase of approximately $0.2
million in the third quarter of 2007.
13
Fuel increased $7.6 million (6.9%), to $117.3 million for the first nine
months of 2007 from $109.7 million for the same period of 2006. The increase is
the result of an increase in fuel cost per gallon, an increased reliance on
company-owned tractors, and a decrease in fuel economy associated with the EPA
mandated clean air engines. The Company's fuel cost per company-owned tractor
mile increased 2.7% in first nine months of 2007 compared to 2006. Fuel cost per
mile, net of fuel surcharge, increased 11.1% in the first nine months of 2007
compared to 2006. The Company's fuel cost per gallon increased slightly in 2007
compared to 2006.
Operations and maintenance increased $0.4 million (3.4%), to $10.0 million
in the nine months ended September 30, 2007 from $9.6 million for the compared
2006 period due to an increase in preventative maintenance and parts
replacement.
Operating taxes and licenses increased $0.7 million (9.8), to $7.2million
in the nine months ended September 30, 2007 from $6.5 million in the compared
2007 period due an increase in the property taxes associated with new facilities
in Phoenix, Arizona and North Liberty, Iowa and an increase in fuel taxes paid.
Insurance and claims increased $2.6 million (22.2%), to $14.1 million in
the nine months ended September 30, 2007 from $11.5 million in the same period
of 2006 due to an increase in the frequency of larger claims and development
increases on existing liability claims.
Depreciation increased $2.1 million (6.3%), to $35.9 million during the
first nine months of 2007 from $33.8 million in the compared 2006 period. This
increase is attributable to the growth of our company-owned tractor and trailer
fleet, and an increased cost of new tractors and trailers relative to the costs
of those units being replaced. Our tractor and trailer fleet have grown
approximately 10.3% and 8.6% respectively in comparison to the same period in
2006. The depreciable basis of new tractor units are approximately 12% higher
than replaced units while new trailers are approximately 10.0% more costly than
units purchased in 2006.
Other operating expenses decreased $0.1 million (0.6%), to $13.0 million
during the nine months ended September 30, 2007 from $13.1 million in the same
period of 2006. Other operating expenses consists of costs incurred for
advertising expense, freight handling, highway tolls, driver recruiting
expenses, and administrative costs.
Gain on the disposal of property and equipment decreased $7.3 million
(41.5%), to $10.3 million during the nine months ended September 30, 2007 from
$17.6 million in the same period of 2006. The decline is attributable to a
substantial decrease in the number of tractors and trailers traded during the
2007 period. A tractor fleet upgrade was completed in December 2006. During 2007
the Company sold real estate in Columbus, Ohio, Coralville, Iowa, and Dubois,
Pennsylvania recording total gains of approximately $6.8 million. The proceeds
received from these sales were used in the financing of the new corporate
headquarters.
Interest income decreased $0.6 million (6.9%), to $8.0 million in the nine
months ended September 30, 2007 from $8.6 million in the same period of 2006
because of the decrease in cash, cash equivalents, and investments associated
with the payment of the special dividend in May 2007 offset by improved rate of
return on cash, cash equivalents, and short-term investments.
The Company's effective tax rate was 36.5% and 35.5%, respectively, in the
nine months ended September 30, 2007 and 2006. The increase is primarily
attributable to the reduced tax benefit of tax exempt interest income for 2007.
As a result of the foregoing, the Company's operating ratio (operating
expenses as a percentage of operating revenue) was 80.4% during the first nine
months of 2007 compared with 77.4% during the first nine months of 2006. Net
income decreased $8.0 million (11.8%), to $59.5 million during the first nine
months of 2007 from $67.5 million during the compared 2006 period.
14
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 nine months ended September 30,
2007, was net cash provided by operating activities of $85.5 million compared to
$88.1 million in the corresponding 2006 period primarily attributable to changes
in working capital.
Capital expenditures for property and equipment totaled $41.2 million for
the first nine months of 2007 compared to $47.4 million in the compared 2006.
Capital expenditures for revenue equipment, net of trade-ins, totaled $21.9
million for the first nine months of 2007 compared to $45.1 million for the same
period in 2006. The Company completed the construction of new operations and
shop facilities in Phoenix, Arizona during the second quarter of 2007. The total
capitalized cost of these facilities, including the cost of land, was $6.2
million of which $3.2 million was capitalized in 2007. The Company purchased a
new corporate headquarters and shop facility in North Liberty, Iowa during the
third quarter of 2007. Capital expenditures for these facilities including land
and furniture were $15.7 million during the quarter. The Company currently
anticipates capital expenditures of $2.4 million, primarily for new trailers,
during the remainder of 2007. Capital expenditures have been historically funded
by cash flows from operations.
The Company paid regular cash dividends of $5.9 million and $4.9 million
during the first nine months of 2007 and 2006, respectively. In addition to the
quarterly cash dividend, the Company paid a special dividend of $2.00 per share,
$196.5 million in total, on May 30, 2007 to shareholders' of record at May 24,
2007. The special dividend was funded from the sale of short-term investments
and from cash flow from operations. The Company began paying cash dividends in
the third quarter of 2003 and has paid a quarterly dividend for seventeen
consecutive quarters.
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 short-term investments. The Company ended the quarter with
$166.9 million in cash, cash equivalents, and short-term 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.
Off-Balance Sheet Transactions
There are no material off-balance sheet transactions that will affect the
Company's financial condition, results of operations, or liquidity.
Risk Factors
You should refer to Item 1A of our annual report (Form 10-K) for the year
ended December 31, 2006, under the caption "Risk Factors" for specific details
on the following factors that are not within the control of the Company and
could affect our financial results.
o Our business is subject to general economic and business factors
that are largely out of our control.
o Our growth may not continue at historic rates.
o Increased prices, reduced productivity, and restricted
availability of new revenue equipment may adversely affect our
earnings and cash flow.
o If fuel prices increase significantly, our results of operations
could be adversely affected.
o Difficulty in driver and independent contractor recruitment and
retention may have a materially adverse effect on our business.
15
o We operate in a highly regulated industry, and increased costs of
compliance with, or liability for violation of, existing
regulations could have a materially adverse effect on our
business.
o Our operations are subject to various environmental laws and
regulations, the violations of which could result in substantial
fines or penalties.
o We may not make acquisitions in the future, or if we do, we may
not be successful in integrating the acquired company, either of
which could have a materially adverse effect on our business.
o If we are unable to retain our key employees or find, develop,
and retain service center managers, our business, financial
condition, and results of operations could be adversely affected.
o We are highly dependent on a few major customers, the loss of one
or more of which could have a materially adverse effect on our
business.
o Seasonality and the impact of weather affect our operations
profitability.
o Ongoing insurance and claims expenses could significantly reduce
our earnings.
o We are dependent on computer and communications systems, and a
systems failure could cause a significant disruption to our
business.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company purchases only high quality, liquid investments. The large
majority of investments as of September 30, 2007 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 had no debt outstanding as of September 30, 2007 and therefore,
had no market risk related to debt.
Volatile fuel prices will continue to impact us significantly. A
significant increase in fuel costs, or a shortage of diesel fuel, could
materially and adversely affect our results of operations. In February 2007, the
Board of Directors authorized the Company to begin hedging activities related to
commodity fuels. In the event of hedging activities, the Company will implement
the provisions of SFAS No. 133 "Accounting for Derivative Instruments and
Hedging Activities" and contract with an unrelated third party to transact the
hedge. It is expected any such transactions will be accounted for on a
mark-to-market with changes reflected in the statement of income as a component
of fuel costs. As of September 30, 2007, the Company did not have any long-term
fuel purchase contracts, and had not entered into any other material hedging
arrangements that protect against fuel price increases. As of September 30,
2007, the Company has entered into short-term fuel contracts to facilitate a
fixed fuel surcharge agreement with a customer. These contracts have no material
effect on the Company's operating results and financial position.
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.
16
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to ordinary, routine litigation and administrative
proceedings incidental to its business. These proceedings primarily involve
claims for personal injury, property damage, and workers' compensation
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
Purchases of Equity Securities
Total number
of shares Maximum number
purchased of shares
as part that may yet be
Total Average of publicly purchased
number price announced under the plans
of shares paid plans or or programs
Period Purchased per share programs (in millions)
---------------------- --------- --------- ------------- --------------
July 1, 2007 -
July 31, 2007 172,200 $ 14.49 172,200 13.8
August 1, 2007 -
August 31, 2007 1,115,756 $ 14.93 1,115,756 12.7
September 1, 2007 -
September 30, 2007 7,100 $ 14.50 7,100 12.7
--------- -------------
1,295,056 1,295,056
========= =============
In September 2001, the Board of Directors of the Company authorized a
program to repurchase 15.8 million shares of the Company's common stock adjusted
for stock splits in open market or negotiated transactions using available cash,
cash equivalents, and short-term investments. The repurchase program may be
suspended or discontinued at any time without prior notice. During the third
quarter of 2007, we repurchased 1.3 million shares for $19.3 million under the
program described in this paragraph. The transactions occurred in open market
purchases and pursuant to a trade plan under Rule 10b5-1.
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
Exchange Act, as amended.
17
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 July 20, 2007, announcing the
Company's financial results for the quarter ended June 30,
2007.
2. Report on Form 8-K, dated September 7, 2007, announcing the
declaration of a quarterly cash dividend.
No other information is required to be filed under Part II of the form.
18
SIGNATURE
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: November 8, 2007 BY: /S/ John P Cosaert
------------------
John P. Cosaert
Executive Vice President-Finance,
Chief Financial Officer and Treasurer
(Principal accounting and financial officer)
19
Exhibit No. 31.1
Certification
I, Russell A. Gerdin, Chairman 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 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 most recent calendar 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
functions):
a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; 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: November 8, 2007 By: /s/ Russell A. Gerdin
---------------------------
Russell A. Gerdin
Chairman and Chief Executive Officer
20
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 most recent calendar 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
functions):
(a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; 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: November 8, 2007 By: /s/ John P. Cosaert
-----------------------------
John P. Cosaert
Executive Vice President-Finance
Chief Financial Officer
and Treasurer
(Principal accounting and
financial officer)
21
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
September 30, 2007 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: November 8, 2007 By: /s/ Russell A. Gerdin
---------------------
Russell A. Gerdin
Chairman 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 September
30, 2007 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: November 8, 2007 By: /s/ John P. Cosaert
---------------------
John P. Cosaert
Executive Vice President
and Chief Financial Officer
22