FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission File Number: 0-19582
OLD DOMINION FREIGHT LINE, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 56-0751714
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1730 Westchester Drive
High Point, NC 27262
(Address of principal executive offices)
Telephone Number (336) 889-5000
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 [ ].
As of August 4, 1999, there were 8,312,196 shares of the registrant's
Common Stock ($.10 par value) outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------- ---------------------------
June 30, June 30, June 30, June 30,
(In thousands, except share and per 1999 1998 1999 1998
share data) (Unaudited)(Unaudited) (Unaudited) (Unaudited)
- ------------------------------------------------ ---------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue from operations $ 106,195 $95,640 $ 205,541 $ 184,334
Operating expenses:
Salaries, wages and benefits 64,444 56,253 125,322 109,527
Purchased transportation 3,327 4,266 6,646 8,421
Operating supplies and expenses 8,570 8,014 16,581 15,748
Depreciation and amortization 6,303 5,152 12,617 9,817
Building and office equipment rents 1,829 1,780 3,683 3,578
Operating taxes and licenses 4,478 4,094 8,904 7,841
Insurance and claims 2,398 2,866 4,946 5,754
Communications and utilities 1,783 1,706 3,708 3,391
General supplies and expenses 4,236 3,834 7,991 7,563
Miscellaneous expenses 1,124 897 1,952 1,827
-------- -------- -------- ---------
Total operating expenses 98,492 88,862 192,350 173,467
-------- -------- -------- ---------
Operating income 7,703 6,778 13,191 10,867
Other deductions:
Interest expense, net 829 960 2,090 1,873
Other (income) expense, net (4) 85 241 176
-------- -------- ------- ---------
Total other deductions 825 1,045 2,331 2,049
-------- -------- ------- ---------
Income before income taxes 6,878 5,733 10,860 8,818
Provision for income taxes 2,614 2,179 4,127 3,351
-------- -------- ------- ---------
Net income $ 4,264 $ 3,554 $ 6,733 $ 5,467
======== ======== ======= =========
Basic and diluted earnings per share: $ 0.51 $ 0.43 $ 0.81 $ 0.66
Weighted average shares outstanding:
Basic 8,312,196 8,312,108 8,312,196 8,311,352
Diluted 8,315,254 8,329,460 8,315,156 8,327,669
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1999 1998
(In thousands, except share data) (Unaudited) (Audited)
- -------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 645 $ 659
Customer receivables, less allowances
of $5,855 and $5,702, respectively 49,891 48,612
Other receivables 908 2,567
Tires on equipment 6,170 6,325
Prepaid expenses 4,357 9,413
Deferred income taxes 2,213 2,213
--------- ---------
Total current assets 64,184 69,789
Property and equipment:
Revenue equipment 173,945 172,783
Land and structures 54,460 51,803
Other equipment 33,568 27,739
Leasehold improvements 4,241 4,144
--------- ---------
Total property and equipment 266,214 256,469
Less accumulated depreciation and
amortization (107,122) (97,471)
--------- ---------
Net property and equipment 159,092 158,998
Other assets 14,470 13,012
--------- ---------
Total assets $ 237,746 $ 241,799
========= =========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
June 30, December 31,
1999 1998
(In thousands, except share data) (Unaudited) (Audited)
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,316 $ 21,350
Compensation and benefits 15,353 8,929
Claims and insurance accruals 12,166 11,961
Other accrued liabilities 2,355 2,649
Income taxes payable 242 499
Current maturities of long-term debt 11,753 9,093
--------- ---------
Total current liabilities 57,185 54,481
Long-term debt 46,385 61,496
Other non-current liabilities 10,501 9,636
Deferred income taxes 20,305 19,549
--------- ---------
Total long-term liabilities 77,191 90,681
Stockholders' equity:
Common stock - $.10 par value, 25,000,000 shares
authorized, 8,312,196 shares outstanding 831 831
Capital in excess of par value 23,907 23,907
Retained earnings 78,632 71,899
--------- ---------
Total stockholders' equity 103,370 96,637
Commitments and contingencies - -
--------- ---------
Total liabilities and stockholders'
equity $237,746 $241,799
========= =========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
------------------------
1999 1998
(In thousands) (Unaudited) (Unaudited)
- -------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 6,733 $ 5,467
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,617 9,817
Deferred income taxes 756 1,675
Loss (gain) on sale of property and
equipment 149 (6)
Changes in assets and liabilities:
Customer and other receivables, net 380 (4,075)
Tires on equipment 155 (277)
Prepaid expenses and other assets 4,471 2,437
Accounts payable (6,034) (6)
Compensation, benefits and other accrued
liabilities 6,130 4,271
Claims and insurance accruals 666 1,885
Income taxes payable (257) 46
Other liabilities 404 143
-------- -------
Net cash provided by operating activities 26,170 21,377
-------- -------
Cash flows from investing activities:
Acquisition of business assets, net (1,100) (1,670)
Purchase of property and equipment (14,527) (27,612)
Proceeds from sale of property and equipment 1,894 573
-------- -------
Net cash used by investing activities (13,733) (28,709)
-------- -------
Cash flows from financing activities:
Proceeds from issuance of long-term debt - 20,990
Principal payments under long-term debt
agreements (4,766) (2,211)
Net payments on revolving line of credit (7,685) (6,730)
Proceeds from conversion of stock options - 16
---------- -----------
Net cash (used in) provided by financing
activities (12,451) 12,065
---------- -----------
(Decrease) increase in cash and cash equivalents (14) 4,733
Cash and cash equivalents at beginning of period 659 674
---------- -----------
Cash and cash equivalents at end of period $ 645 $ 5,407
========== ===========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The consolidated financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. The consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto contained in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998. The results of operations for the quarter
ended June 30, 1999, are not necessarily indicative of the results for the
entire fiscal year ending December 31, 1999.
There have been no significant changes in the accounting policies of the
Company, or significant changes in the Company's commitments and contingencies
as previously described in the 1998 Annual Report to Shareholders and related
annual report to the Securities and Exchange Commission on Form 10-K.
EARNINGS PER SHARE
Net income per share of common stock is based on the weighted average number of
shares outstanding during each period.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations for the Three Months and Six Months Ended June 30, 1999,
Compared to the Three Months and Six Months Ended June 30, 1998
Expenses as a Percentage of Revenue from Operations
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue from operations 100.0% 100.0% 100.0% 100.0%
---------- ---------- ---------- ----------
Operating expenses:
Salaries, wages and benefits 60.7 58.8 61.0 59.4
Purchased transportation 3.1 4.5 3.2 4.6
Operating supplies and expenses 8.1 8.4 8.1 8.5
Depreciation and amortization 5.9 5.4 6.1 5.3
Building and office equipment
rents 1.7 1.9 1.8 1.9
Operating taxes and licenses 4.2 4.3 4.3 4.3
Insurance and claims 2.3 3.0 2.4 3.1
Communications and utilities 1.7 1.8 1.8 1.8
General supplies and expenses 4.0 4.0 3.9 4.1
Miscellaneous expenses 1.0 0.8 1.0 1.1
---------- ---------- ---------- ----------
Total operating expenses 92.7 92.9 93.6 94.1
---------- ---------- ---------- ----------
Operating income 7.3 7.1 6.4 5.9
Interest expense, net .8 1.0 1.0 1.0
Other expense, net - 0.1 0.1 0.1
---------- ---------- ---------- ----------
Income before income taxes 6.5 6.0 5.3 4.8
Provision for income taxes 2.5 2.3 2.0 1.8
---------- ---------- ---------- ----------
Net income 4.0% 3.7% 3.3% 3.0%
========== ========== ========== ==========
</TABLE>
7
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended June 30, 1999, Compared to Three Months Ended June 30, 1998
Net revenue for the second quarter of 1999 was $106,195,000, an increase of
11.0%, compared to $95,640,000 for the second quarter of 1998. Less than
truckload ("LTL") tonnage increased 7.2% during the quarter while LTL shipments
increased 4.9%. These increases were achieved primarily through the Company's
continuing focus in 1999 to build market share in existing areas of operation.
This strategy allows the Company to achieve its revenue growth objectives
without significant additional investments in property and equipment while also
achieving operating synergies that improve profitability.
Average revenue per LTL shipment increased 6.4% to $124.92 in the current
quarter from $117.46 for the same quarter in 1998. This increase was due to a
4.1% increase in LTL revenue per hundredweight to $11.67 from $11.21 combined
with a 2.3% increase in LTL weight per shipment to 1,071 lbs. from 1,047 lbs.
The Company's average length of haul decreased 2.2% to 838 miles per shipment
from 857 in the second quarter of 1998. Generally, an increase in LTL weight per
shipment and a decrease in the average length of haul would result in a
reduction of LTL revenue per hundredweight; however, the Company was able to
improve its overall pricing by identifying and improving its rates on marginal
and unprofitable traffic. The decrease in average length of haul was a result of
higher growth in the Company's regional markets compared to its longer haul
inter-regional markets. In the second quarter of 1999, regional traffic
accounted for 30% of total revenue compared to 28% in the second quarter of
1998.
Operating expenses as a percentage of net revenue, the operating ratio,
decreased to 92.7% for the second quarter of 1999 from 92.9% for the same period
of 1998. This improvement was due primarily to decreases in purchased
transportation, insurance and claims expense and operating supplies and expenses
as a percent of revenue. Combined, these costs decreased to 13.5% of revenue
compared to 15.9% for the same quarter of 1998. While the operating ratio
improved, the Company experienced increases in salaries, wages and benefits and
depreciation and amortization which, when combined, increased to 66.6% of
revenue from 64.2%
Purchased transportation decreased to 3.1% from 4.5% of revenue due to a 49.9%
decrease in cartage expense, which is third party local pickup and delivery
service. The expansion of the service center network to 92 service centers by
the second quarter of 1999 from 84 in the second quarter of 1998 allowed the
Company to serve more customers directly. Many of these new facilities were
opened in geographic areas where the Company frequently used outside purchased
transportation to supplement its direct service. In addition, by increasing
market share in existing areas of operation, the Company was able to
economically justify the expansion of its direct service to certain remote
delivery points in its existing network.
Insurance and claims expense was reduced to 2.3% from 3.0% of revenue due to
significant reductions in cargo claims expense and to reductions in excess
premiums for cargo, bodily injury and property damage. Operating supplies and
expenses decreased to 8.1% from 8.4% of revenue due to incremental reductions in
various equipment maintenance and linehaul costs.
While replacing purchased transportation with direct service generally improves
transit times, it also increases certain expenses such as direct labor and
equipment costs. Salaries and wages increased to 48.5% from 47.5% of revenue
while benefits increased to 12.2% from 11.3% of revenue. The increase in
benefits is a result of higher group health and workers compensation claims
expense in the second quarter of 1999 over the prior year period.
Depreciation and amortization expense increased to 5.9% of revenue from 5.4% for
the same quarter of 1998. The increase in depreciation was due primarily to
capital expenditures for tractors, trailers and investments in information
systems.
Net interest expense was .8% of revenue for the second quarter of 1999 compared
to 1.0% for the same period of 1998. Interest expense decreased to 1.0% from
1.1% due to a reduction in average outstanding debt between the comparable
quarters and interest income increased to .2% from .1%.
8
<PAGE>
Net income was $4,264,000 for the quarter, an increase of 20.0%, compared to
$3,554,000 for the same quarter of the previous year. The effective tax rate was
38.0% for both periods.
Six Months Ended June 30, 1999, Compared to Six Months Ended June 30, 1998
Net revenue for the six months ended June 30, 1999, was $205,541,000, an
increase of 11.5%, compared to $184,334,000 for the same period of 1998. LTL
tonnage increased 8.0% due to a 6.2% increase in LTL shipments and a 1.6%
increase in LTL weight per shipment. These increases in revenue and tonnage have
been consistent with the Company's growth strategy to increase market share in
its existing geographic area of operations and service center network. This
growth strategy was complemented with the acquisition of certain assets of
Fredrickson Motor Express, Goggin Truck Line and Skyline Transportation in
January 1998, August 1998 and January 1999, respectively. These companies
conducted LTL operations primarily in the southeastern United States, an area
the Company has served for over 65 years.
Average revenue per LTL shipment for the first six months of 1999 increased 5.3%
to $125.06 from $118.72 for the comparable period of 1998. This increase was due
to a 3.6% increase in LTL revenue per hundredweight to $11.63 from $11.23 and a
1.6% increase in LTL weight per shipment. The increase in LTL revenue per
shipment was achieved although the Company's average length of haul decreased
1.6% to 838 miles from 852, a trend that generally lowers revenue per shipment.
The reduction in average length of haul is due to the growth of the Company's
regional, or shorter haul, business.
Operating expenses as a percentage of net revenue, the operating ratio, in the
first half of 1999 improved to 93.6% compared with 94.1% for the first half of
1998. By focusing on growth within its existing geographic service center
network, the Company was able to replace outside purchased transportation with
direct service by Company personnel and equipment. As a result, salaries, wages
and benefits increased to 61.0% of revenue from 59.4% for the prior year
comparable period. A portion of that increase was due to an increase in group
health expenses to 3.3% of revenue from 2.6%. Depreciation and amortization
expense increased to 6.1% of revenue from 5.3% primarily due to increases in the
Company's equipment fleet and to investments in information systems.
These increased expenses were offset by decreases in purchased transportation
and insurance and claims expense, which improved on a combined basis to 5.6% of
revenue from 7.7%. Purchased transportation decreased due to a reduction in
cartage expense, or outside local pickup and delivery services, to 1.1% of
revenue from 2.6%. Revenue growth in existing areas of operation and the opening
and operation of eight additional service centers after the second quarter of
1998 allowed the Company to provide more direct service to its customers. The
Company intends to continue this trend of reducing purchased transportation,
which generally results in improvements in on-time service and profitability.
Insurance and claims expense decreased to 2.4% of revenue from 3.1% due to
reductions in cargo claims, bodily injury and property damage expense. The
Company maintains an ongoing focus on cargo claims prevention and provides
extensive safety training to its employees to ensure accidents and losses are
kept at a minimum.
During the first six months of 1999, the Company also benefited from reductions
in operating supplies and expenses, general supplies and expenses, building and
office equipment rents and miscellaneous expenses which as a group were 14.8% of
revenue as compared to 15.6% for the previous comparable period. These
reductions reflect the strategy of leveraging the Company's assets to provide
for more efficient and profitable operations.
Net interest expense was 1.0% of revenue for the first six months of 1999 and
1998. While outstanding debt actually decreased by $1,212,000 at mid-year 1999
from mid-year 1998, the average amount outstanding during the first six months
of 1999 was higher. The Company anticipates both its outstanding debt and
related interest expense will increase slightly in the remaining half of 1999 as
it executes a significant portion of its capital budget for upgrades to its
service centers and equipment fleet.
9
<PAGE>
Net income was $6,733,000 for the six months ended June 30, 1999, an increase of
23.2%, compared to $5,467,000 for the same six-month period the previous year.
The effective tax rate was 38.0% for both periods.
LIQUIDITY AND CAPITAL RESOURCES
Expansion in both the size and number of service center facilities, the planned
tractor and trailer replacement cycle and revenue growth have required continued
investment in property and equipment. In order to support these requirements,
the Company incurred net capital expenditures of $13,733,000 during the first
half of 1999. Cash flows generated internally were sufficient to fund 100% of
the required capital expenditures through the second quarter of the year. At
June 30, 1999, long-term debt including current maturities decreased to
$58,138,000 from $70,589,000 at December 31, 1998.
The Company estimates capital expenditures to be approximately $48,000,000 to
$53,000,000 for the year ending December 31, 1999. Of that, approximately
$28,000,000 will be used for purchases of larger replacement service centers or
expansion of existing service centers, approximately $16,000,000 will be used to
purchase revenue equipment, approximately $4,000,000 will be used for
investments in technology and the remaining balance will be used to purchase
other assets. The Company plans to fund these expenditures through cash flows
from operations supplemented by additional borrowings.
The Company maintains a $32,500,000 uncollateralized credit facility that
consists of a $17,500,000 line of credit commitment and a $15,000,000 letter of
credit commitment. Interest on the line of credit is charged at rates that vary
based upon a certain financial performance ratio and the stated period of time
that the borrowings are outstanding. The applicable interest rate for the first
half of 1999 was based upon LIBOR plus .75% for periods of 30-180 days and prime
minus 1% for periods less than 30 days. A fee of .25% is charged on the unused
portion of the $32,500,000 line of credit and letter of credit facility, and a
fee of .75% is charged on outstanding letters of credit. At June 30, 1999, there
were $625,000 outstanding borrowings on the line of credit and $11,385,000
outstanding on the letter of credit facility. Letters of credit are primarily
issued as collateral for self-insured reserves for bodily injury, property
damage and workers' compensation claims. The Company believes that it has
sufficient credit lines and capacity to meet seasonal and long-term financial
needs.
The Company has minimal exposure to changes in interest rates from its long-term
debt arrangements as approximately 99% of that debt has fixed interest rates.
The Company does not currently use interest rate derivative instruments to
manage exposure to interest rate changes. Also, the Company is not using any
fuel hedging instruments as its tariff provisions generally allow for fuel
surcharges to be implemented in the event that fuel prices exceed stipulated
levels.
IMPACT OF THE YEAR 2000
Some of the Company's internally generated software, third party software,
information technology ("IT") systems and non-IT systems were written or
designed using two digits rather than four to define the applicable year. As a
result, that software or system is likely to interpret a date using "00" as the
year 1900 rather than the year 2000. This could possibly cause a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in normal business activities.
The Company has completed an assessment of its software to ensure that its
computer systems will function properly with respect to dates in the year 2000
and thereafter. The Company has successfully completed modifications to all
internally generated software and is currently utilizing the modified software
in production. The total cost to complete this phase of the year 2000 project
was approximately $500,000. All third party software requiring modification has
been identified and those modifications have been successfully completed, tested
and placed into production. Each software vendor performed the necessary
modifications to the third party software for year 2000 compliance and the costs
were included in the annual maintenance fees charged to the Company. Actual
costs to the Company were minimal.
During 1998, the Company successfully completed modifications to its IT hardware
for year 2000 compliance at a cost of approximately $100,000. Most of this
expense was for the replacement of all the
10
<PAGE>
Company's older model personal computers. While this hardware was tested to the
extent possible and is currently being used in production, failure of one or
large groups of these personal computers would not have a critical impact on the
Company.
Old Dominion is approximately 75% complete in its evaluation of non-IT systems,
such as telephone switches and security systems, to identify systems that
require modification. As each system or component is identified, a plan to make
appropriate modifications is initiated. The Company believes there is minimal
risk in this area, and the cost of these modifications or upgrades, if any, is
expected to be less than $50,000. These evaluations and subsequent modifications
to non-IT hardware are scheduled to be completed by October 31, 1999.
The Company is currently 65% complete in its evaluation phase of its major
customers and suppliers to determine if they have taken adequate measures to
ensure that necessary modifications are made to their software and hardware
prior to the year 2000. The completion of the supplier evaluation phase, which
is scheduled for September 30, 1999, will determine the actions the Company will
take in securing alternate suppliers by year-end 1999. The Company is actively
assisting customers in achieving year 2000 compliance in their electronic data
interchange applications that are used to communicate with the Company in their
normal course of business. If these systems fail, the Company plans to convert
to traditional methods of communication such as mail, phone and fax, which it
currently uses with the majority of its customer base. In addition, the
Company's existing systems could be used to provide customers with freight
tracing and documentation requirements if their systems fail. The process of
monitoring customers and suppliers for year 2000 compliance may well extend
until 2000, as those companies execute their year 2000 plans. The Company's
largest customer in 1998 accounted for only 2.8% of revenue; therefore, the
Company is not dependent on any one customer. Critical supplies such as fuel and
parts are generally available from multiple sources and the Company's physical
locations are not dependent on one provider of utilities. However, failure by
any large groups of suppliers or customers to make necessary year 2000
modifications could result in a material adverse impact on the Company. The
Company has incurred approximately $15,000 to date in monitoring customer and
supplier compliance and expects to incur an additional $5,000 by year-end 1999.
In order to avoid problems that could arise in the year 2000, all modifications
to internally generated software were simulated in a year 2000 test environment
and subjected to comprehensive quality standards prior to being placed into
production. Similar IT hardware testing, to the extent possible, has been
performed. The Company's contingency plan, in the event hardware or software
failures occur in early 2000, is to have its internal IT staff and external IT
support resources available to address these potential problems as they are
identified. The Company believes today that the most likely worst case scenario
would involve (1) malfunctions in computer software at the corporate
headquarters, (2) temporary disruptions in the delivery of services and products
to the Company, primarily communications, utilities and fuel, and (3) temporary
disruptions in payments from customers. The Company expects that these events
would result in increased expense and lost revenue, and would adversely affect
the Company's cash flow.
The total cost incurred to date for year 2000 compliance is approximately
$615,000 and the Company may incur an additional $55,000 by year-end 1999.
The cost of the project and the date on which the Company believes it will
complete the year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer code, the ability of the Company's customers
and suppliers to address their year 2000 compliance problems and similar
uncertainties.
11
<PAGE>
INFLATION
Most of the Company's expenses are affected by inflation, which will generally
result in increased costs. During the second quarter and for the six months
ending June 30, 1999, the effect of inflation on the Company's results of
operations was minimal.
SEASONALITY
The Company's operations are subject to seasonal trends common in the motor
carrier industry. Operating results in the first and fourth quarters are
normally lower due to reduced shipments during the winter months. Harsh winter
weather can also adversely impact the Company's performance by reducing demand
and increasing operating expenses. The second and third quarters are stronger
due to increased demand for services during the spring and summer months.
ENVIRONMENTAL
The Company is subject to federal, state and local environmental laws and
regulations, particularly relative to underground storage tanks ("UST's"). The
Company believes it is in compliance with applicable environmental laws and
regulations, including those relating to UST's, and does not believe that the
cost of future compliance will have a material adverse effect on the Company's
operations or financial condition.
FORWARD-LOOKING INFORMATION
Forward-looking statements in this report, including, without limitation,
statements relating to future events or the future financial performance of the
Company appear in the preceding Management's Discussion and Analysis of
Financial Condition and Results of Operations and in other written and oral
statements made by or on behalf of the Company, including, without limitation,
statements relating to the Company's goals, strategies, expectations,
competitive environment, regulation and availability of resources. Such
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that such forward-looking statements involve risks and uncertainties that could
cause actual events and results to be materially different from those expressed
or implied herein, including, but not limited to, the following: (1) changes in
the Company's goals, strategies and expectations, which are subject to change at
any time at the discretion of the Company; (2) the Company's ability to maintain
a nonunion, qualified work force; (3) the competitive environment with respect
to industry capacity and pricing; (4) the availability and cost of fuel,
additional revenue equipment, service centers and other significant resources;
(5) the impact of regulatory bodies; (6) various economic factors such as
insurance costs, liability claims, interest rate fluctuations, the availability
of qualified drivers or owner-operators, fluctuations in the resale value of
revenue equipment, increases in fuel or energy taxes, economic recessions and
downturns in customers' business cycles and shipping requirements; (7) the
Company's inability to raise capital or borrow funds on satisfactory terms,
which could limit growth and require the Company to operate its revenue
equipment for longer periods of time; (8) the availability and cost of personnel
trained in year 2000 compliance issues, the Company's ability to locate and
correct relevant IT and non-IT problems and the ability of the Company's
customers and suppliers to address their year 2000 compliance problems; and (9)
other risks and uncertainties indicated from time to time in the Company's
filings with the Securities and Exchange Commission.
Item 3. Quantitative and Qualitative Disclosure of Market Risk
The information called for by this item is provided under the caption "Liquidity
and Capital Resources" under Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.
12
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
Exhibit No. Description
---------- ---------------------------------------------
27 Financial Data Schedule
b) Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter ended June 30, 1999.
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.
OLD DOMINION FREIGHT LINE, INC.
DATE: August 6, 1999 J. WES FRYE
----------------- --------------------------------
J. Wes Frye
Sr. V.P. - Finance and Chief
Financial Officer
(Principal Financial Officer)
DATE: August 6, 1999 JOHN P. BOOKER III
---------------- ------------------------------
John P. Booker III
V.P. - Controller (Principal
Accounting Officer)
13
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