FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 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)
REGISTRANT'S TELEPHONE NUMBER (336) 889-5000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK ($.10 PAR VALUE)
(Title of class)
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
registrant as of March 3, 2000, was $13,959,876.
As of March 3, 2000, the registrant had 8,312,840 outstanding shares of Common
Stock ($.10 par value).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders are incorporated by reference into Part III.
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Old Dominion Freight Line, Inc. ("Old Dominion", the "Company" or the
"Registrant", as appropriate for this report) is an inter-regional and
multi-regional motor carrier transporting primarily less-than-truckload ("LTL")
shipments of general commodities, including consumer goods, textiles and capital
goods to a diversified customer base. LTL shipments are defined as shipments
weighing less than 10,000 pounds. In 1999, 97.3% of the Company's shipments and
88.9% of the Company's operating revenue were generated from LTL shipments. The
Company serves regional markets in the Southeast, South Central, Northeast,
Midwest and West regions of the country. Old Dominion connects these geographic
regions with high quality inter-regional service.
Old Dominion's operating strategy is to provide high quality and timely service,
including time definite and expedited delivery services, at competitive prices,
while maintaining low operating costs. Along key inter-regional lanes, Old
Dominion maintains published service standards that generally provide for
delivery time schedules that are faster than those of its principal national
competitors, in part, because of its more efficient service center network. The
Company's service standards provide for delivery times of between two and three
days along key inter-regional lanes between 500 and 1,500 miles. The Company
generally provides for one or two-day delivery along regional lanes of less than
500 miles, which Old Dominion believes is highly competitive.
The Company seeks to reduce unit operating costs and improve service by building
freight volume, or density, in its markets. Increasing density reduces unloading
and reloading at breakbulk facilities, resulting in faster transit times,
reduced cargo claims and more efficient equipment utilization. Old Dominion also
lowers its cost structure and reduces cargo claims by using twin 28-foot
trailers exclusively in its linehaul operations. Use of twin 28-foot trailers
permits the Company to transport freight directly from its point of origin to
destination with minimal unloading and reloading, and permits more freight to be
hauled behind a tractor than could be hauled if the Company used one larger
trailer. Approximately 56% of the Company's LTL tonnage moves directly from the
origination service center to its destination without being reloaded to another
trailer at a breakbulk facility, with a substantial majority of the remaining
tonnage experiencing no more than one breakbulk handling per shipment. Further,
management believes that it gains an operating advantage by maintaining a
flexible work force, which permits service center employees to perform several
functions that result in reliable deliveries and a higher level of customer
satisfaction.
The Company also transports shipping containers between several port cities and
inland points, primarily in its core southeastern service area. For the year
ended December 31, 1999, container services accounted for 2.3% of the Company's
operating revenue. Old Dominion also provides assembly and distribution services
primarily to its retail customers.
THE LTL INDUSTRY
LTL companies are generally categorized as regional, inter-regional or national
motor carriers based upon length of haul. Carriers with average lengths of haul
less than 500 miles are referred to as regional carriers. Carriers with average
lengths of haul between 500 and 1,000 miles are referred to as inter-regional
carriers. National carriers generally have average lengths of haul that exceed
1,000 miles. For the year ended December 31, 1999, Old Dominion had an average
length of haul of 844 miles.
In the motor carrier industry, revenue is primarily a function of weight, length
of haul and commodity class, and is frequently described in terms of revenue per
hundredweight. The Company tracks revenue per hundredweight as a measure of
pricing, commodity mix and rate trends.
LTL carriers can improve profitability by increasing lane and service center
density. Increased lane density lowers unit operating costs and improves
service. Increased service center density, by
2
<PAGE>
increasing the amount of freight handled at a given service center location,
improves utilization of assets and other fixed costs.
In recent years, many shippers have attempted to simplify their transportation
requirements by reducing the number of carriers they use by establishing
service-based, long-term relationships with a small group of preferred or "core
carriers" or by the use of third party logistics providers. This trend toward
the use of "core carriers" and third party logistics offers significant growth
opportunities for carriers that possess financial stability and can provide both
regional and inter-regional, high quality service with low costs. The Company
believes that this trend has created an opportunity for it to increase lane and
service center density along key inter-regional lanes in which a relatively
small number of carriers offer high quality service. Old Dominion's strategy is
to continue to capitalize on its ability to build its market share in key
inter-regional and regional lanes. From time to time, certain national carriers
have sought to compete in selected inter-regional markets and along selected
inter-regional lanes and may seek to do so in the future as national markets
mature, but the Company believes that it holds a key competitive advantage over
its principal national competitors due to its more efficient service center
network.
REVENUE EQUIPMENT AND MAINTENANCE
At December 31, 1999, the Company operated 2,243 tractors. The Company uses new
tractors in linehaul operations for approximately three to five years and then
transfers those tractors to pickup and delivery operations for the remainder of
their useful lives. In a number of Company service centers, tractors perform
pickup and delivery functions during the day and linehaul functions at night to
maximize tractor utilization.
At December 31, 1999, the Company operated a fleet of 9,060 trailers. As the
Company has expanded and its needs for equipment have increased, the Company has
purchased new trailers as well as trailers meeting its specifications from other
trucking companies that have ceased operations. These purchases of pre-owned
equipment, though providing an excellent value, have the effect of increasing
the trailer fleet's average age; however, the Company believes the age of its
trailer fleet compares favorably with its competitors.
The Company develops certain specifications for revenue equipment, the
production and purchase of which are negotiated with several manufacturers.
These purchases are planned well in advance of anticipated delivery dates in
order to accommodate manufacturers' production schedules. The Company believes
that there is sufficient capacity among suppliers to ensure an uninterrupted
flow of equipment.
The table below reflects, as of December 31, 1999, the average age of Old
Dominion's revenue equipment:
Type of Equipment Number
(Categorized by Primary Use) of Units Average Age
- ---------------------------- -------- -----------
Linehaul tractors 1,677 3.0 years
Pickup and delivery tractors 566 7.3 years
Pickup and delivery trucks 23 5.0 years
Linehaul trailers 7,341 6.9 years
Pickup and delivery trailers 1,719 12.0 years
The Company currently has major maintenance operations at its service centers in
Atlanta, Georgia; Dallas, Texas; Des Plaines, Illinois; Harrisburg,
Pennsylvania; Jersey City, New Jersey; Morristown and Memphis, Tennessee; Los
Angeles, California; Columbus, Ohio; and Greensboro, North Carolina. In
addition, six other service center locations are equipped to perform routine and
preventive maintenance checks and repairs on the Company's equipment.
The Company has an established scheduled maintenance policy and procedure that
is administered by the Vice President - Equipment and Maintenance. Linehaul
tractors are routed to appropriate maintenance facilities at designated mileage
intervals ranging from 12,500 to 25,000 miles, depending
3
<PAGE>
upon how the equipment was utilized. Pickup and delivery tractors and trailers
are scheduled for maintenance every 90 days.
The table below sets forth the Company's capital expenditures for certain
revenue equipment during 1999, 1998 and 1997:
Year Service Centers Tractors Trailers Total
- ---- --------------- -------- -------- -----
1999 $ 17,015,000 $ 7,886,000 $ 4,360,000 $ 29,261,000
1998 $ 12,115,000 $ 21,400,000 $ 15,165,000 $ 48,680,000
1997 $ 6,371,000 $ 17,529,000 $ 4,889,000 $ 28,789,000
SERVICE CENTER OPERATIONS
At December 31, 1999, Old Dominion conducted operations through 102 service
center locations, of which it owns 34 and leases 68. The Company operates major
breakbulk facilities in Atlanta, Georgia; Columbus, Ohio; Des Plaines, Illinois;
Morristown, Tennessee; Jersey City, New Jersey; Los Angeles, California; and
Greensboro, North Carolina, while using some smaller service centers for limited
breakbulk activity. Old Dominion's service centers are strategically located to
permit the Company to provide the highest quality service and minimize freight
rehandling costs.
Each service center is responsible for the pickup and delivery of freight for
its own service area. All inbound freight received by the service center in the
evening or at night is scheduled for local delivery the next business day,
unless a customer requests a different delivery schedule. Each service center
loads the freight by destination the day it is picked up. Management reviews the
productivity and service performance of each service center on a daily basis in
order to ensure quality service.
The Company also has established primary responsibility for customer service at
the local level. Service center employees trace freight movements using the
Company's automated tracing system, which provides for immediate response to
customer requests for delivery information. While the Company maintains primary
accountability for customer service at the local service center, the Company has
established a customer service function at the corporate offices to offer
additional customer support.
The Company plans to expand capacity at existing service centers as well as
expand the number of service centers geographically as opportunities arise that
provide for profitable growth and fit the needs of its customers.
LINEHAUL TRANSPORTATION
The Company's Transportation Department is responsible for directing the
movement of freight among the Company's service centers. Linehaul dispatchers
control the movement of freight among service centers with an on-line automated
dispatch system. The Company's senior management continuously monitors freight
movements, transit times, load factors and other productivity measurements to
ensure the Company maintains its highest levels of service and efficiency.
The Company uses scheduled dispatches, and schedules additional dispatches as
necessary, to meet its published service standards. The Company uses twin
trailers exclusively in its linehaul operations to reduce breakbulk handling and
to increase linehaul productivity.
4
<PAGE>
MARKETING AND CUSTOMERS
At December 31, 1999, the Company had a sales staff of 263 employees. The
Company compensates its sales force, in part, based upon revenue generated,
Company and service center profitability and on-time service performance, which
the Company believes helps to motivate those employees.
The Company utilizes a computerized freight costing model to determine the price
level at which a particular shipment of freight will be profitable. Elements of
this freight costing model may be modified, as necessary, to simulate the actual
conditions under which the freight will be moved. From time to time, the Company
also competes for business by participating in bid solicitations. Customers
generally solicit bids for relatively large numbers of shipments for a period of
from one to two years and typically choose to enter into a contractual
arrangement with a limited number of motor carriers based upon price and
service.
For the year ended December 31, 1999, Old Dominion's largest 20, 10, and 5
customers accounted for approximately 14.1%, 10.6% and 7.6%, respectively, of
the Company's operating revenue. The Company's largest customer for 1999
accounted for approximately 2.7% of operating revenue. While the Company is not
dependent upon one customer, a reduction or termination of services provided by
the Company to a large group of customers could have an adverse effect on the
Company's business and operating results.
COMPETITION
The transportation industry is highly competitive on the basis of both price and
service. Old Dominion competes with regional, inter-regional and national LTL
and truckload carriers and, to a lesser extent, with air freight carriers and
railroads, a number of which have greater financial resources, operate more
equipment and have larger freight capacity than the Company. The Company
believes that it is able to compete effectively in its markets by providing high
quality and timely service at competitive prices.
SAFETY AND INSURANCE
The Company's Vice President - Safety and Personnel and Vice President - Quality
and Field Services implement and monitor its safety and loss prevention programs
with the assistance of 18 field supervisors. As a result of the Company's
emphasis on safety, the accident frequency, as defined by the National Safety
Council (including minor and unavoidable accidents), has decreased from 12.5
accidents per million miles for the year ended December 31, 1989, to 7.3
accidents per million miles for the year ended December 31, 1999.
The Company is self-insured for bodily injury and property damage claims up to
$250,000 per occurrence and for cargo claims up to $50,000 per occurrence. The
Company also is self-insured for workers' compensation in certain states and has
first dollar or high deductible plans in the other states. The Company believes
that its policy of self-insuring up to set limits, together with its safety and
loss prevention programs, is an effective means of managing insurance costs.
Old Dominion believes that its current insurance coverage is adequate to cover
its liability risks.
FUEL AVAILABILITY AND COST
The motor carrier industry is dependent upon the availability of diesel fuel.
Increases in fuel prices and fuel taxes, to the extent not offset by rate
increases or fuel surcharges to customers, shortages of fuel or rationing of
petroleum products could have a material adverse effect on the operations and
profitability of the Company. The Company has not experienced difficulties in
maintaining a consistent and ample supply of fuel. In periods of extreme price
increases, the Company has implemented a fuel surcharge, which is consistent
with other competitors. Management believes that the Company's operations and
financial condition are susceptible to the same fuel price increases or fuel
shortages as those of its competitors. Fuel costs normally fluctuate between
three and five percent of operating revenue. Fuel expense was 3.7% of revenue in
1999.
5
<PAGE>
EMPLOYEES AND DRIVERS
At December 31, 1999, the Company employed 5,559 individuals in the following
categories:
Number of
Category Employees
- -------- ---------
Drivers 2,733
Platform 1,037
Mechanics 161
Sales 263
Salaried, clerical and other 1,365
At December 31, 1999, the Company employed 1,201 road drivers and 1,532 city
drivers. All drivers hired by the Company are selected based upon driving
records and experience. Drivers are required to pass drug tests at employment
and are later required to take such tests periodically, by random selection.
Competition for drivers is intense within the trucking industry, and the Company
periodically experiences difficulties in attracting and retaining qualified
drivers. There can be no assurance that the Company's operations will not be
affected by a shortage of qualified drivers in the future which could result in
temporary under-utilization of revenue equipment, difficulty in meeting shipper
demands and increased compensation levels for drivers. Difficulty in attracting
or retaining qualified drivers could require the Company to limit growth and
have a material adverse effect on the Company's operations.
To help fulfill driver needs, the Company offers employees and their spouses the
opportunity to become drivers through the "Old Dominion Driver Training
Program". Since its inception in 1988, 785 individuals have graduated from that
program. The Company has experienced an annual turnover rate of approximately 6%
for those employees, which the Company believes compares favorably with industry
experience of driver retention. In management's opinion, driver qualification
programs, which are required to be taken by all drivers, have been important
factors in improving the Company's safety record. Drivers with safe driving
records are rewarded with bonuses of up to $1,000 annually. Driver safety
bonuses paid for 1999 were approximately $496,000.
Management believes that relations with employees are excellent. However, there
can be no assurance that a substantial number of the Company's employees will
not unionize in the future, which could increase the Company's operating costs
and force it to alter its operating methods, the result of which, could have a
materially adverse effect on the Company's operating results.
REGULATION
The Surface Transportation Board, an independent entity within the United States
Department of Transportation ("DOT"), regulates and monitors certain activities
within the motor carrier industry. The Company is also regulated by various
state agencies. These regulatory authorities have broad powers, generally
governing matters such as authority to engage in motor carrier operations,
rates, certain mergers, consolidations and acquisitions, and periodic financial
reporting. The motor carrier industry is subject to regulatory and legislative
changes that can affect the economics of the industry by requiring changes in
operating practices or influencing the demand and costs of providing services to
shippers.
Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. Such matters as weight and dimensions of equipment are
also subject to federal and state regulation. The Company is subject to federal,
state and local environmental laws and regulations, particularly relating to
underground fuel storage tanks ("USTs"). The Company believes it is in
compliance with applicable environmental laws and regulations, including those
relating to USTs, and does not believe that the cost of future compliance should
have a material adverse effect on the Company's operations or financial
condition.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth information regarding the executive officers of
the Company:
6
<PAGE>
Name and Age Positions and Offices with the Company
- ------------ --------------------------------------
Earl E. Congdon (69) Chairman of the Board of Directors and Chief
Executive Officer
John R. Congdon (67) Vice Chairman of the Board of Directors
David S. Congdon (43) President, Chief Operating Officer
John B. Yowell (48) Executive Vice President
J. Wes Frye (52) Sr. Vice President - Finance, Treasurer, Chief
Financial Officer and Assistant Secretary
Joel B. McCarty, Jr. (62) Sr. Vice President, General Counsel and Secretary
Earl E. Congdon has been employed by the Company since 1950 and has served as
Chairman of the Board and Chief Executive Officer since 1985 and as a director
since 1952. He is a son of E. E. Congdon, one of the founders of Old Dominion.
John R. Congdon joined the Company in 1953, was appointed a director in 1955 and
has served as Vice Chairman of the Board since 1985. He is also the Chairman of
Old Dominion Truck Leasing, Inc., a North Carolina corporation that is engaged
in the full service leasing of tractors, trailers and other equipment, to which
he devotes more than half of his time. He is a son of E. E. Congdon, one of the
founders of Old Dominion, and the brother of Earl E. Congdon.
David S. Congdon has been employed by the Company since 1978 and, since May
1997, has served as President and Chief Operating Officer. He has held various
positions in the Company including Vice President - Quality and Field Services,
Vice President - Quality, Vice President - Transportation, President - Dominion
Furniture Xpress (a former division of Old Dominion that specialized in
furniture transportation) and has held other positions in operations and
engineering. He is the son of Earl E. Congdon.
John B. Yowell joined the Company in February 1983 and was promoted to Executive
Vice President in May 1997. He has held the position of Vice President -
Corporate Services, Vice President - Central Region, Assistant to the President
and Vice President - Management Information Systems. He is a son-in-law of Earl
E. Congdon.
J. Wes Frye has served as Sr. Vice President - Finance since May 1997. He has
been Chief Financial Officer and Treasurer since joining the Company in February
1985 and has held the position of Assistant Secretary since December 1987. Mr.
Frye served as the Vice President of Finance of Builders Transport, Inc., from
1982 to 1985, and in various positions, including Vice President - Controller,
with Johnson Motor Lines from 1975 to 1980. Mr. Frye is a Certified Public
Accountant.
Joel B. McCarty, Jr., has been a Sr. Vice President since May 1997 and has
served as General Counsel and Secretary since joining the Company in June 1987.
Before joining Old Dominion, he was Assistant General Counsel of McLean Trucking
Company and was in private law practice prior to 1985.
7
<PAGE>
ITEM 2. PROPERTIES
The Company owns its general offices located in High Point, North Carolina,
consisting of a four-story office building of approximately 56,500 square feet
on 10.3 acres and an office building of approximately 15,000 square feet located
near the general office. The Company also owns service center facilities in
Birmingham, Alabama; Los Angeles, California; South Windsor, Connecticut;
Atlanta, Georgia; Orlando, Jacksonville and Tampa, Florida; Des Plaines,
Illinois; Kansas City, Kansas; Baltimore, Maryland; Minneapolis, Minnesota;
Tupelo, Mississippi; Syracuse, New York; Asheville, Charlotte, Fayetteville,
Hickory, Wilmington and Wilson, North Carolina; Cincinnati and Columbus, Ohio;
Columbia and Greenville, South Carolina; Chattanooga, Memphis, Morristown and
Nashville, Tennessee; Dallas and Houston, Texas; Richmond, Manassas,
Martinsville and Norfolk, Virginia; and Milwaukee, Wisconsin.
The Company also owns non-operating properties in Jacksonville, Florida; St.
Louis, Missouri; Fayetteville and Hickory, North Carolina; Memphis and
Nashville, Tennessee; and Houston, Texas, all of which are held for lease.
Currently, the Jacksonville property is leased until October 2000; the St. Louis
property is leased until February 2004; the Fayetteville property is leased
until January 2002; the Hickory property is on a month-to-month lease; the
Nashville property is leased through March 2000; and the Houston and Memphis
properties are not under lease.
Old Dominion leases 68 of its 102 service centers. The lengths of the leases
range from month-to-month to a lease that expires in September 2004. The Company
believes that its leased facilities are adequate for its existing needs and
that, as current leases expire, it will be able either to renew them or find
comparable facilities without incurring any material negative impact on service
to customers or its operating results.
The Company believes that all of its properties are in good repair and are
capable of providing the level of service required by current business levels
and customer demands.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Company is a party or of which any of
its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
8
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
COMMON STOCK AND DIVIDEND INFORMATION
The common stock of Old Dominion Freight Line, Inc. is traded on the Nasdaq
Stock Market (National Market) under the symbol ODFL. At March 3, 2000, there
were approximately 680 holders of the common stock, including 128 stockholders
of record. No dividends have been paid on the common stock. The information
concerning restrictions on dividend payments required by Item 5 of Form 10-K
appears in Note 2 of the Notes to Consolidated Financial Statements appearing in
Item 8 of this report.
MARKET PRICES OF COMMON STOCK:
1999
----------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- --------------------------------------------------------------------------------
HIGH $ 12.00 $ 12.875 $ 15.00 $ 14.75
LOW $ 10.375 $ 8.125 $ 11.625 $ 9.75
1998
----------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
High $ 18.25 $ 20.25 $ 17.25 $ 14.875
Low $ 13.75 $ 15.50 $ 10.50 $ 8.00
MARKET MAKERS:
First Union Capital Markets Corp., Inc.; Knight Securities L.P.; ING Baring
Furman Selz LLC; Spear, Leeds & Kellogg; Howe Barnes Investments, Inc.
9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
AND OPERATING STATISTICS) 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue from operations $426,385 $383,078 $328,844 $293,006 $248,079
Operating expenses:
Salaries, wages and benefits 258,900 229,188 193,523 163,490 141,163
Purchased transportation 14,504 15,696 15,494 21,435 18,933
Operating supplies and expenses 36,749 31,485 30,311 30,288 22,945
Depreciation and amortization 25,295 21,887 17,173 16,091 13,630
Building and office equipment rents 7,330 7,285 6,921 6,874 5,991
Operating taxes and licenses 17,699 16,791 13,968 12,867 10,393
Insurance and claims 10,200 12,277 10,033 10,118 8,503
Communications and utilities 7,532 7,011 6,152 5,687 5,014
General supplies and expenses 15,852 15,000 11,976 10,444 10,195
Miscellaneous expenses 4,268 3,881 3,282 2,762 1,671
-------------------------------------------------------------
Total operating expenses 398,329 360,501 308,833 280,056 238,438
-------------------------------------------------------------
Operating income 28,056 22,577 20,011 12,950 9,641
Interest expense, net 4,077 4,331 3,547 2,903 1,510
Other expense, net 522 311 273 137 329
-------------------------------------------------------------
Income before income taxes 23,457 17,935 16,191 9,910 7,802
Provision for income taxes 9,056 6,815 6,153 3,766 2,995
-------------------------------------------------------------
Net income $ 14,401 $ 11,120 $ 10,038 $ 6,144 $ 4,807
-------------------------------------------------------------
EARNINGS PER SHARE:
Basic $ 1.73 $ 1.34 $ 1.21 $ 0.74 $ 0.58
Diluted $ 1.73 $ 1.34 $ 1.21 $ 0.74 $ 0.58
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 8,312 8,312 8,312 8,346 8,354
Diluted 8,316 8,323 8,322 8,347 8,357
OPERATING STATISTICS:
Operating ratio 93.4% 94.1% 93.9% 95.6% 96.1%
LTL revenue per hundredweight $11.82 $11.28 $11.37 $11.00 $10.87
Revenue per intercity mile $ 3.26 $ 3.09 $ 2.99 $ 2.92 $ 2.93
Intercity miles (in thousands) 130,648 123,816 110,120 100,447 84,715
LTL tonnage (in thousands) 1,644 1,527 1,334 1,221 1,037
Shipments (in thousands) 3,140 2,980 2,607 2,388 2,084
Average length of haul (miles) 844 853 869 - -
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA: As of December 31,
-------------------------------------------------------------
1999 1998 1997 1996 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets $ 76,254 $ 69,789 $ 59,860 $ 56,264 $ 50,465
Current liabilities 71,582 54,481 39,084 35,865 31,861
Total assets 257,579 241,799 191,061 170,726 143,346
Long-term debt (including current maturities) 64,870 70,589 47,301 43,141 30,216
Stockholders' equity 111,038 96,637 85,501 74,928 68,784
</TABLE>
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following table sets forth, for the years indicated, expenses and other
items as a percentage of revenue from operations:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue from operations 100.0% 100.0% 100.0%
---------- ---------- ----------
Salaries, wages and benefits 60.7 59.8 58.9
Purchased transportation 3.4 4.1 4.7
Operating supplies and expenses 8.6 8.2 9.2
Depreciation and amortization 5.9 5.7 5.2
Building and office equipment rents 1.7 1.9 2.1
Operating taxes and licenses 4.2 4.4 4.2
Insurance and claims 2.4 3.2 3.1
Communication and utilities 1.8 1.8 1.9
General supplies and expenses 3.7 3.9 3.6
Miscellaneous expenses 1.0 1.1 1.0
---------- ---------- ----------
Total operating expenses 93.4 94.1 93.9
---------- ---------- ----------
Operating income 6.6 5.9 6.1
Interest expense, net 1.0 1.1 1.1
Other expense, net .1 .1 .1
---------- ---------- ----------
Income before income taxes 5.5 4.7 4.9
Provision for income taxes 2.1 1.8 1.8
---------- ---------- ----------
Net income 3.4% 2.9% 3.1%
========== ========== ==========
</TABLE>
RESULTS OF OPERATIONS
1999 COMPARED TO 1998
Revenue from operations for 1999 was $426,385,000, an increase of 11.3%,
compared to $383,078,000 for 1998. This growth was generated by increases in
both volume and pricing, and was achieved through the Company's strategy to
increase market share in its existing geographic areas of operations and service
center network. The Company opened seven new service centers in 1999 and
benefited from a full year of operation of its acquisition of selected assets of
Goggin Truck Line Company, Inc. in August 1998. In addition, in January 1999,
the Company acquired certain assets of Skyline Transportation, Inc. These
acquisitions were less than truckload ("LTL") motor carriers operating primarily
in the southeastern United States.
LTL tonnage increased 7.7% in 1999 due to a 5.5% increase in LTL shipments and a
2.1% increase in LTL weight per shipment. Average revenue per LTL shipment
increased 7.0% to $127.13 from $118.81 for 1998. This increase was due to a 4.8%
increase in LTL revenue per hundredweight to $11.82 from $11.28 and the increase
in LTL weight per shipment. The increase in LTL revenue per shipment was
achieved although the Company's average length of haul decreased 1.1% to 844
miles from 853, 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 markets, which generally is shorter haul than inter-regional markets.
Operating expenses as a percentage of net revenue, the operating ratio, for 1999
improved to 93.4% compared to 94.1% for 1998. The Company experienced
significant reductions in both insurance expense and purchased transportation in
1999. Insurance and claims expense decreased to 2.4% of revenue from 3.2% due to
reductions in cargo, bodily injury and property damage claims. The
11
<PAGE>
Company provides a continuous training process for its dockworkers and monitors
freight movements to prevent cargo loss and damage claims. In addition, Company
drivers undergo continuous safety training to prevent and reduce the frequency
and severity of vehicle accidents. The Company self-insures a portion of these
claims and maintains excess insurance coverage over the self-insured retention.
Due to favorable claims experience, the rates on excess insurance were reduced
by 33.4% in 1999 over the prior year.
Purchased transportation decreased to 3.4% of revenue from 4.1% in 1998 as the
Company continued to replace outside purchased transportation with direct
service by Company personnel and equipment. The focus on increasing market share
in existing areas of operation allowed the Company to improve transit times to
more delivery points in its existing network. As a result, salaries, wages and
benefits increased to 60.7% of revenue from 59.8%. A portion of that increase
was due to an increase in group health expenses to 3.3% of revenue from 2.7%,
consistent with the national trend in increased group health costs per employee
in 1999. Depreciation and amortization expense increased to 5.9% of revenue from
5.7%, primarily due to increases in the Company's equipment fleet, Company owned
service centers and investments in information systems.
Operating supplies and expenses increased to 8.6% of revenue from 8.2%. During
the latter half of 1999, the Company experienced sharp increases in diesel fuel
and other petroleum based products. Fuel costs increased to 3.7% of revenue from
3.3% for 1998. In August 1999, the Company implemented a fuel surcharge, which
was recorded in operating revenue, to partially offset the rising cost of fuel.
The Company benefited from reductions in general supplies and expenses, building
and office equipment rents, operating taxes and licenses, and miscellaneous
expenses, which as a group were 10.6% of revenue in 1999 as compared to 11.3% in
1998. These reductions reflect the strategy of leveraging the Company's assets
to provide for more efficient and profitable operations.
Net interest expense decreased to 1.0% of revenue for 1999 from 1.1% due to a
lower average amount of debt outstanding during the year.
Net income was $14,401,000 for the 1999 compared to $11,120,000 for 1998. The
effective tax rate for 1999 was 38.6% compared to 38.0% for 1998.
1998 COMPARED TO 1997
Revenue from operations for 1998 increased 16.5% to $383,078,000 compared to
$328,844,000 for 1997. This revenue growth was a result of increased market
share in existing market areas and the addition of 13 service centers due to
expansion into upstate New York in February 1998 as well as selected asset
purchases of two trucking companies during the year. During the first quarter of
1998, the Company opened four service centers in Albany, Buffalo, Rochester and
Syracuse, New York. Nine additional service centers were opened during the year
as a result of the acquisition of selected assets of Fredrickson Motor Express
Corporation in January 1998 and Goggin Truck Line Company, Inc. in August 1998.
Average less than truckload ("LTL") revenue per shipment decreased .8% to
$118.81 for 1998 from $119.73 for 1997. This decrease was due to a .8% reduction
in revenue per hundredweight. The reduction in revenue per hundredweight was a
direct result of a decrease in the Company's average length of haul to 853 miles
from 869 miles. The decrease in average length of haul was caused by growth in
the Company's short haul revenue that resulted from the acquisition of
Fredrickson and Goggin assets, both of which operated in the southeastern region
of the country. As a result of these acquisitions, the Company's regional
revenue increased 22% during the year compared to the previous year, versus an
inter-regional revenue growth of 14%. Overall inter-regional revenue accounted
for 71% of revenue from operations compared to 29% for regional revenue.
Operating expenses as a percent of revenue, the operating ratio, increased
slightly to 94.1% for 1998 compared to 93.9% for the previous year. The
increased operating ratio was primarily a result of an increase in salaries,
wages and benefits, depreciation and general supplies and expenses. Combined,
these expenses were 1.7 operating points higher than the previous year,
increasing to 69.4% of
12
<PAGE>
revenue from 67.7% for the previous year. These increased costs as a percent of
revenue were offset by decreases in purchased transportation and operating
supplies and expenses. Combined, these costs decreased to 12.3% of revenue for
1998 from 13.9% for 1997, a 1.6 operating point decrease.
Salaries, wages and benefits increased to 59.8% of revenue in 1998 from 58.9% in
1997. The expansion of the service center network in 1998 allowed the Company to
deliver more shipments directly with Company personnel and equipment, which
increased wages and depreciation expense, while decreasing outside purchased
transportation. The planned reduction of purchased transportation, which has
been a trend over the last three years, allows the Company to provide superior
service with less handling and overall delivery costs. Accordingly, purchased
transportation decreased to 4.1% of revenue from 4.7% for the previous year. In
addition, 21 sales personnel were added to service the expanded customer base
and to increase market share in existing markets.
Depreciation increased to 5.7% of revenue in 1998 compared to 5.2% for the
previous year. This increase was due primarily to increased capital expenditures
for the expansion of existing service centers, purchases of new service centers
which were previously leased, investments and upgrades to the Company's
information systems and the acquisition of selected assets of Fredrickson and
Goggin. The conversion to ownership of formerly leased facilities resulted in a
reduction of building and office equipment rents to 1.9% of revenue in 1998 from
2.1% for the previous year.
Operating supplies and expenses decreased to 8.2% of revenue in 1998 from 9.2%
for the previous year. This reduction was primarily due to a 23.9% reduction in
the average price per gallon paid for fuel during 1998 compared to 1997. The
Company's tariffs, however, contain provisions that allow a fuel surcharge to be
assessed should the price per gallon of fuel exceed certain limits. During 1997,
the Company exercised these provisions which were reflected as an increase in
revenue in 1997. On a comparable basis, the cost of fuel, net of the fuel
surcharge, was 3.3% in 1998 compared to 3.6% in 1997.
Net income was $11,120,000 for the year ended December 31, 1998, an increase of
10.8%, compared to $10,038,000 for 1997. The effective tax rate was
approximately 38% in both 1998 and 1997.
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 $34,149,000 during 1999. Cash
flows generated internally were sufficient to fund the required capital
expenditures for the year. At December 31, 1999, long-term debt including
current maturities decreased to $64,870,000 from $70,589,000 at December 31,
1998.
The Company estimates net capital expenditures to be approximately $64,000,000
to $68,000,000 for the year ending December 31, 2000. Of that, approximately
$27,000,000 is planned to be used for purchases of larger replacement service
centers or expansion of existing service centers, $29,000,000 is planned to be
used to purchase revenue equipment, $6,000,000 is planned to be used for
investments in technology and the remaining balance is planned to be used to
purchase other assets. The Company plans to fund these expenditures through cash
flows from operations supplemented by additional borrowings.
During 1999, the Company maintained a $32,500,000 uncollateralized credit
facility that consisted of a $17,500,000 line of credit commitment and a
$15,000,000 letter of credit commitment. Interest on the line of credit was
charged at rates that vary based upon a certain financial performance ratio and
the stated period of time that the borrowings were outstanding. The applicable
interest rate for 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% was charged on
the unused portion of the $32,500,000 line of credit and letter of credit
facility, and a fee of .75% was charged on outstanding letters of credit. At
December 31, 1999, there were $11,575,000 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.
13
<PAGE>
On January 14, 2000, the Company amended its credit facility to consist of a
$22,000,000 line of credit commitment and a $12,500,000 letter of credit
commitment under the same terms and conditions as the previous agreement. The
Company believes that it has sufficient credit lines and capacity to meet
seasonal and long-term financial needs.
The Company has limited exposure to changes in interest rates from its long-term
debt arrangements as approximately 82% 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 initially written
or designed using two digits rather than four to define the applicable year. If
not modified, that software or system was likely to interpret a date using "00"
as the year 1900 rather than the year 2000, which could have resulted in system
failures or miscalculations that could have disrupted the Company's operations.
At year-end 1999, the Company had successfully completed modifications to all
internally generated software at a cost of approximately $500,000. In addition,
all third party software requiring modification was identified and those
modifications were completed by year-end at little or no cost to the Company.
The Company also completed modifications to its IT and non-IT hardware for year
2000 compliance at a cost of approximately $100,000. Most of this expense was
for the replacement of all the Company's older model personal computers.
During 1999, the Company evaluated its customers and suppliers to determine if
they had taken adequate measures to ensure that necessary modifications were
made to their software and hardware prior to the year 2000. Alternate suppliers
were identified to provide goods and services for those vendors who had not
completed their year 2000 modifications. In addition, the Company assisted its
customers in modifying the software they used to communicate with the Company in
the course of business as requested. The Company incurred costs of approximately
$25,000 by year-end 1999 in this evaluation, monitoring and customer assistance
phase of its year 2000 plan.
On January 1, 2000, the Company verified the proper functioning of all major
components of its internally generated and third party software, all significant
IT and non-IT hardware and all communication systems. As of this date, there has
been no measurable impact to the Company resulting from a year 2000 failure by
any software, hardware, vendor or customer. The cost incurred in 2000 to monitor
these systems and correct any problems detected has been less than $5,000. The
total cost incurred to date for year 2000 compliance is approximately $630,000
and the Company does not anticipate any significant future expenditures in 2000.
INFLATION
Most of the Company's expenses are affected by inflation, which generally result
in increased costs. During 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 weather
conditions can also adversely impact the Company's performance by reducing
demand and increasing operating expenses. The second and third quarters are
generally stronger due to increased demand for services during the spring and
summer months.
ENVIRONMENTAL
14
<PAGE>
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 Company's ability to locate and
correct relevant hardware and software year 2000 compliance problems and the
ability of the Company's customers and suppliers to address their year 2000
compliance issues; (9) the Company's ability to purchase, build or lease
facilities suitable for its operations; and (10) other risks and uncertainties
indicated from time to time in the Company's filings with the Securities and
Exchange Commission.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by Item 7A of Form 10-K appears in Item 7 of this
report under the heading "Liquidity and Capital Resources".
15
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
----------------------------
(IN THOUSANDS, EXCEPT SHARE DATA) 1999 1998
- -----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 781 $ 659
Customer receivables, less allowances of $6,495
and $5,702, respectively 55,077 48,612
Other receivables 1,067 2,567
Tires on equipment 6,428 6,325
Prepaid expenses 10,631 9,413
Deferred income taxes 2,270 2,213
------------ ------------
Total current assets 76,254 69,789
Property and equipment:
Revenue equipment 178,301 172,783
Land and structures 68,972 51,803
Other equipment 31,557 27,739
Leasehold improvements 4,381 4,144
------------ ------------
Total property and equipment 283,211 256,469
Less accumulated depreciation (116,249) (97,471)
------------ ------------
Net property and equipment 166,962 158,998
Other assets 14,363 13,012
------------ ------------
Total assets $ 257,579 $ 241,799
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 22,944 $ 21,350
Compensation and benefits 11,352 8,929
Claims and insurance accruals 12,548 11,961
Other accrued liabilities 2,927 2,649
Income taxes payable - 499
Current maturities of long-term debt 21,811 9,093
------------ ------------
Total current liabilities 71,582 54,481
Long-term debt 43,059 61,496
Other non-current liabilities 11,102 9,636
Deferred income taxes 20,798 19,549
------------ ------------
Total long-term liabilities 74,959 90,681
Stockholders' equity:
Common stock - $.10 par value, 25,000,000 shares
authorized, 8,312,840 and 8,312,196 shares
outstanding, respectively 831 831
Capital in excess of par value 23,907 23,907
Retained earnings 86,300 71,899
------------ ------------
Total stockholders' equity 111,038 96,637
Commitments and contingencies - -
------------ ------------
Total liabilities and stockholders' equity $ 257,579 $ 241,799
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1999 1998 1997
- ------------------------------------------------------------ -------------- --------------- --------------
<S> <C> <C> <C>
Revenue from operations $426,385 $383,078 $328,844
Operating expenses:
Salaries, wages and benefits 258,900 229,188 193,523
Purchased transportation 14,504 15,696 15,494
Operating supplies and expenses 36,749 31,485 30,311
Depreciation and amortization 25,295 21,887 17,173
Building and office equipment rents 7,330 7,285 6,921
Operating taxes and licenses 17,699 16,791 13,968
Insurance and claims 10,200 12,277 10,033
Communications and utilities 7,532 7,011 6,152
General supplies and expenses 15,852 15,000 11,976
Miscellaneous expenses 4,268 3,881 3,282
-------------- --------------- --------------
Total operating expenses 398,329 360,501 308,833
-------------- --------------- --------------
Operating income 28,056 22,577 20,011
Other deductions:
Interest expense, net 4,077 4,331 3,547
Other expense, net 522 311 273
-------------- --------------- --------------
Total other deductions 4,599 4,642 3,820
-------------- --------------- --------------
Income before income taxes 23,457 17,935 16,191
Provision for income taxes 9,056 6,815 6,153
-------------- --------------- --------------
Net income $ 14,401 $ 11,120 $ 10,038
============== =============== ==============
Basic and diluted earnings per share $ 1.73 $ 1.34 $ 1.21
============== =============== ==============
Weighted average shares outstanding:
Basic 8,312,457 8,311,774 8,311,521
Diluted 8,316,329 8,323,240 8,321,547
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital in
Common excess of Retained
(IN THOUSANDS) stock par value earnings Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance as of December 31, 1996 $ 835 $ 23,352 $ 50,741 $ 74,928
Net income - - 10,038 10,038
Exercise of stock options - 24 - 24
Release of common stock under Restricted Stock
Agreement, net of tax charge of $74 (4) 515 - 511
-----------------------------------------------
Balance as of December 31, 1997 831 23,891 60,779 85,501
Net income - - 11,120 11,120
Exercise of stock options - 16 - 16
-----------------------------------------------
Balance as of December 31, 1998 831 23,907 71,899 96,637
NET INCOME - - 14,401 14,401
-----------------------------------------------
BALANCE AS OF DECEMBER 31, 1999 $ 831 $ 23,907 $ 86,300 $111,038
===============================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------
(IN THOUSANDS) 1999 1998 1997
- --------------------------------------------------------------------- -------------- --------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 14,401 $ 11,120 $ 10,038
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 25,295 21,887 17,173
Deferred income taxes 1,192 2,689 3,895
Net effect of restricted stock distribution -- -- 511
Loss (gain) on sale of property and equipment 243 (71) (178)
Changes in assets and liabilities:
Customer and other receivables, net (4,965) (1,094) (4,018)
Tires on equipment (103) (1,273) (538)
Prepaid expenses and other assets (1,923) (1,428) (1,458)
Accounts payable 1,594 7,189 (699)
Compensation, benefits and other accrued liabilities 2,701 335 2,074
Claims and insurance accruals 1,458 4,048 622
Income taxes payable (499) 499 --
Other liabilities 595 370 365
-------- -------- --------
Net cash provided by operating activities 39,989 44,271 27,787
-------- -------- --------
Cash flows from investing activities:
Acquisition of business assets, net (1,100) (16,790) --
Purchase of property and equipment (35,992) (45,079) (34,223)
Proceeds from sale of property and equipment 2,943 2,180 1,573
-------- -------- --------
Net cash used in investing activities (34,149) (59,689) (32,650)
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 553 20,991 9,000
Principal payments under long-term debt agreements (9,537) (7,184) (5,680)
Net proceeds from revolving line of credit 3,265 1,580 840
Proceeds from conversion of stock options -- 16 24
-------- -------- --------
Net cash (used in) provided by financing activities (5,719) 15,403 4,184
-------- -------- --------
Increase (decrease) in cash and cash equivalents 122 (15) (679)
Cash and cash equivalents at beginning of period 659 674 1,353
-------- -------- --------
Cash and cash equivalents at end of period $ 781 $ 659 $ 674
======== ======== ========
</TABLE>
Supplemental disclosure of non-cash financing activities:
The Company released 76,668 shares of common stock in 1997 under a
Restricted Stock Agreement.
Cash paid for interest was approximately $4,802,000, $4,099,000 and $4,565,000
for the years ended December 31, 1999, 1998 and 1997, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The Company is an inter-regional and multi-regional motor carrier transporting
primarily less-than-truckload shipments of general commodities, such as consumer
goods, textiles and capital goods, to a diversified customer base. The Company
serves regional markets in the Southeast, South Central, Northeast, Midwest and
West regions of the country. Old Dominion also serves inter-regional routes
connecting these geographic regions and major metropolitan markets throughout
most of the continental United States.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiary. All significant intercompany balances and transactions are
eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates.
REVENUE AND EXPENSE RECOGNITION
Operating revenue is recognized on a percentage of completion method based on
average transit time. Expenses associated with operating revenue are recognized
when incurred.
CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of customer receivables. Credit risk is
generally diversified due to the large number of entities comprising the
Company's customer base and their dispersion across many different industries
and geographic regions. As noted on the consolidated balance sheets, the Company
maintains an allowance for doubtful accounts to cover estimated credit losses.
CASH AND CASH EQUIVALENTS
The Company considers cash on hand and deposits in banks along with certificates
of deposit and short-term marketable securities with original maturities of
three months or less as cash and cash equivalents for the purpose of the
statements of cash flows.
TIRES ON EQUIPMENT
The cost of tires on equipment is amortized over the estimated tire life of 18
to 24 months.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Major additions and improvements are
capitalized, while maintenance and repairs that do not improve or extend the
lives of the respective assets are charged to expense as incurred.
Depreciation is provided by the straight-line method over the following
estimated useful lives:
Structures 5 to 25 years
Revenue equipment 2 to 12 years
Other equipment 2 to 10 years
Leasehold improvements Lesser of 10 years or life of lease
Depreciation expense was $24,842,000, $21,740,000 and $17,173,000 for 1999, 1998
and 1997, respectively.
20
<PAGE>
INTANGIBLE ASSETS
The excess cost over net assets acquired in connection with acquisitions is
recorded in "Other Assets". These intangible assets are amortized using a
straight-line method over their estimated useful lives of 3 to 25 years.
LONG-LIVED ASSETS
The Company periodically assesses the realizable value of its long-lived assets
and evaluates such assets for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
CLAIMS AND INSURANCE ACCRUALS
Claims and insurance accruals reflect the estimated ultimate cost of claims,
including amounts for claims incurred but not reported, for cargo loss and
damage, bodily injury and property damage, workers' compensation, long-term
disability and group health not covered by insurance. These costs are charged to
insurance and claims expense except for workers' compensation, long-term
disability and group health, which are charged to employee benefits expense.
EARNINGS PER SHARE
Net income per common share is computed using the weighted average number of
common shares outstanding during the period. The effect of dilutive employee
stock options in Note 7 is immaterial to the calculation of diluted earnings per
share for the years ended December 31, 1999, 1998 and 1997.
FAIR VALUES OF FINANCIAL INSTRUMENTS
At December 31, 1999, and 1998, the carrying value of financial instruments such
as cash and cash equivalents, customer and other receivables, trade payables and
long-term debt approximated their fair values. Fair value is determined based on
expected future cash flows, discounted at market interest rates, and other
appropriate valuation methodologies.
STOCK BASED COMPENSATION
Stock based compensation expense for the Company's employee stock option plan is
recognized under the provisions of Accounting Principles Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25"), and related
interpretations. Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized. Pro forma information
regarding net income and earnings per share required by Statement of Financial
Accounting Standards ("SFAS") No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION,
is not significant.
RECENT ACCOUNTING PRONOUNCEMENTS
There were no items of comprehensive income for the years ending December 31,
1999, 1998 and 1997, as defined under SFAS No. 130, REPORTING COMPREHENSIVE
INCOME. The Company operates one business segment, within the continental United
States, and has no customer that exceeds 10% of its operating revenue.
Accordingly, no disclosures are required under SFAS No. 131, DISCLOSURES ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which is required
to be adopted in fiscal years beginning after June 15, 2000. Under the
statement, all derivatives will be required to be recognized on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If the derivative is a hedge, depending on the nature of
the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. Under the statement, any ineffective
portion of a derivative's change in fair value must be immediately recognized in
earnings. The Company has not yet determined what the effect of SFAS No. 133
will have on the earnings and financial position of the Company.
RECLASSIFICATIONS
Certain amounts in prior years have been reclassified to conform with the
current period presentation.
21
<PAGE>
NOTE 2. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
(IN THOUSANDS) 1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Senior Notes $47,500 $49,000
Revolving credit facility 11,575 8,310
Equipment obligations, principal payable in monthly installments
plus interest ranging from 4.5% to 8.55% 5,795 13,279
---------------------
64,870 70,589
Less current maturities 21,811 9,093
---------------------
$43,059 $61,496
=====================
</TABLE>
Senior Notes consist of four individual debt agreements with interest rates
ranging from 6.35% to 7.59%. The notes call for periodic principal payments with
maturities ranging from 2002 to 2008.
In 1999, the Company maintained a $32,500,000 uncollateralized committed credit
agreement that consisted of a $17,500,000 line of credit facility and a
$15,000,000 letter of credit facility, expiring in June 2000. On January 14,
2000, this credit agreement was increased to $34,500,000 by increasing the line
of credit to $22,000,000 and decreasing the letter of credit facility to
$12,500,000. 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 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 line of
credit and letter of credit facility, and a fee of .75% is charged on
outstanding letters of credit. At December 31, 1999, there was $11,385,000
outstanding on the letter of credit facility, which is statutorily required for
self-insured retention reserves for bodily injury, property damage and workers'
compensation claims.
Both the Company's Senior Notes and credit agreement limit the amount of
dividends that may be paid to stockholders pursuant to certain financial ratios,
necessary corporate action and all applicable laws. At December 31, 1999, the
Company's debt instruments limited the amount of dividends that could be paid to
stockholders to $16,840,000. The Company did not declare or pay a dividend on
its common stock in 1999 and has no plans to declare or pay a dividend in 2000.
Equipment and capitalized lease obligations are collateralized by property and
equipment with a net book value book value of $8,912,000 at December 31, 1999.
22
<PAGE>
As of December 31, 1999, aggregate maturities of long-term debt are as follows:
(IN THOUSANDS)
- ---------------------------------------------------------------------------
2000 $ 10,236
2001 8,513
2002 7,618
2003 6,107
2004 7,107
Thereafter 13,714
---------
53,295
Borrowings outstanding under the revolving credit agreement 11,575
---------
$ 64,870
=========
NOTE 3. LEASES
The Company leases certain revenue equipment under capital leases. These assets
are included in property and equipment as follows:
December 31,
----------------------
(IN THOUSANDS) 1999 1998
- ---------------------------------------------------------------
Revenue equipment $ 605 $ 4,281
Less accumulated amortization (136) (1,217)
----------------------
$ 469 $ 3,064
======================
Future minimum annual lease payments as of December 31, 1999, are as follows:
<TABLE>
<CAPTION>
Capital Operating
(IN THOUSANDS) Lease Leases Total
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
2000 $ 155 $ 9,709 $ 9,864
2001 155 6,245 6,400
2002 103 2,446 2,549
2003 - 1,403 1,403
2004 - 652 652
Thereafter - 154 154
---------------------------------
Total minimum lease payments 413 $ 20,609 $ 21,022
=========== ===========
Less amount representing interest (45)
------
Present value of capitalized lease obligations $ 368
======
</TABLE>
Aggregate expense under operating leases approximated $11,891,000, $10,358,000
and $9,093,000 for 1999, 1998 and 1997, respectively.
23
<PAGE>
NOTE 4. INCOME TAXES
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------
(IN THOUSANDS) 1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $7,382 $3,899 $2,116
State 482 227 142
------------------------------------
7,864 4,126 2,258
Deferred:
Federal 1,005 2,264 3,307
State 187 425 588
------------------------------------
1,192 2,689 3,895
------------------------------------
Total provision for income taxes $9,056 $6,815 $6,153
====================================
</TABLE>
Net cash paid for income taxes during 1999, 1998 and 1997 aggregated $8,586,000,
$2,856,000 and $2,972,000, respectively.
A reconciliation of the statutory federal income tax rates with the Company's
effective income tax rates for 1999, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------
(IN THOUSANDS) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax provision at statutory rate on income before income taxes $8,210 $6,277 $5,505
State income taxes, net of federal benefit 435 424 476
Meals and entertainment disallowance 319 291 257
Other, net 92 (177) (85)
----------------------------------
Total provision for income taxes $9,056 $6,815 $ 6,153
==================================
</TABLE>
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
December 31,
------------------------
(IN THOUSANDS) 1999 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Claims and insurance reserves $ 8,425 $ 7,857
Allowance for doubtful accounts 2,533 2,224
Accrued vacation 1,530 1,301
Other 1,013 748
------------------------
13,501 12,130
Deferred tax liabilities:
Depreciation 25,122 23,321
Tires on equipment 2,723 2,769
Employee benefits 2,083 1,756
Other 2,101 1,620
------------------------
32,029 29,466
------------------------
Net deferred tax liability $ 18,528 $ 17,336
========================
</TABLE>
24
<PAGE>
NOTE 5. RELATED PARTY TRANSACTIONS
The Company leases revenue equipment and a service center facility from certain
stockholders, employees and affiliates under operating leases. Future minimum
lease commitments to affiliates at December 31, 1999, are as follows:
Operating
(IN THOUSANDS) Leases
- ---------------------------------------------------------------
2000 $ 454
Thereafter -
------------
Total minimum lease payments $ 454
============
Lease payments to affiliates of the Company were $773,000, $739,000 and $775,000
in 1999, 1998 and 1997, respectively.
The Company purchased fuel, equipment repairs and other services from an
affiliate for which it paid $197,000, $310,000 and $365,000 in 1999, 1998 and
1997, respectively. Charges to the affiliate for rent, equipment repairs, fuel
and other services provided by the Company aggregated $32,000, $207,000 and
$480,000 during 1999, 1998 and 1997, respectively.
NOTE 6. EMPLOYEE RETIREMENT PLAN CONTRIBUTION EXPENSE
Substantially all employees meeting certain service requirements are eligible to
participate in the Company's 401(k) employee retirement plan. Employee
contributions are limited to a percentage of their compensation, as defined in
the plan. The Company makes contributions based upon the greater of a percentage
of employee contributions or ten percent of net income. Company contributions
for 1999, 1998 and 1997 were $1,440,000, $1,112,000, and $1,004,000,
respectively.
NOTE 7. STOCK OPTIONS
In 1991, the Board of Directors and stockholders adopted the 1991 Employee Stock
Option Plan ("Plan") under which 250,000 shares of common stock are reserved for
stock option grants to certain officers and employees. Options granted under the
Plan may be incentive stock options or nonqualified stock options. The Plan
provides that options may be granted at prices not less than the fair market
value on the date the option is granted, which means the closing price of a
share of common stock as reported on the Nasdaq Stock Market (National Market)
on such day or the preceding day if the shares are not traded in the Nasdaq
system on the grant day. On the date the option is granted, the Stock Option
Plan Committee of the Board of Directors determines the period during which the
option may be exercised; however, under the terms of the Plan, the option period
cannot extend more than ten years from the date on which the option is granted.
Options may not be granted under the Plan after August 31, 2001. A summary of
the changes in the number of common shares under option during the years ended
December 31, 1999, 1998 and 1997 follows:
25
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PER SHARE WEIGHTED AVERAGE
OPTIONS OPTION PRICE EXERCISE PRICE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance as of December 31, 1996 181,500 $10.00 - $19.25 $16.26
Granted - - -
Exercised (2,400) $10.00 $10.00
Canceled - - -
-----------------------------------------------
Balance as of December 31, 1997 179,100 $10.00 - $19.25 $16.34
Granted - - -
Exercised (1,600) $10.00 $10.00
Canceled - - -
-----------------------------------------------
Balance as of December 31, 1998 177,500 $10.00 - $19.25 $16.40
GRANTED - - -
EXERCISED (2,000) $10.00 $10.00
CANCELED - - -
-----------------------------------------------
BALANCE AS OF DECEMBER 31, 1999 175,500 $10.00 - $19.25 $16.47
========
</TABLE>
At December 31, 1999, there were 55,500 options reserved for future grant and
170,600 options exercisable. The weighted average remaining contractual life of
outstanding options is 3.5 years.
NOTE 8. RESTRICTED STOCK
In 1991, the Board of Directors and stockholders approved a Restricted Stock
Agreement with an officer of the Company. Pursuant to that agreement, 153,336
shares of the Company's common stock were issued and reserved for release to the
officer in four equal, biannual installments originally scheduled for January 1,
1994, 1996, 1998 and 2000. On January 28, 1997, the Board of Directors
authorized the release of 76,668 shares, the total remaining unreleased shares
under the agreement. Compensation expense was determined by the value of the
shares on the award date and was recognized ratably over the vesting period,
adjusted for accelerations of release dates by the Board of Directors.
Compensation expense recognized pursuant to this agreement was $697,000 for
1997.
NOTE 9. ACQUISITIONS OF BUSINESS ASSETS
On January 12, 1999, Old Dominion acquired selected assets of Skyline
Transportation, Inc.'s LTL operations for $1,100,000. In addition, the Company
acquired selected assets of two LTL trucking companies in 1998, Fredrickson
Motor Express Corporation and Goggin Truck Line Company, Inc. The 1998
acquisitions consisted of the purchase of assets with an estimated fair value of
$18,247,000 and the assumption of liabilities of $8,942,000.
These acquisitions have been accounted for as purchase transactions and the
results of operations have been included in the Company's financial statements
beginning on the date the acquisitions were consummated. The aggregate pro forma
impact on the Company's revenue from operations, operating income and earnings
per share is not material to the consolidated results of operations.
NOTE 10. COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal proceedings and claims that have arisen
in the ordinary course of its business that have not been fully adjudicated.
Many of these are covered in whole or in part by insurance. These actions, when
finally concluded and determined, will not, in the opinion of management, have
an adverse effect upon the financial position or results of operations of the
Company.
26
<PAGE>
NOTE 11. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Quarter
-------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) First Second Third Fourth Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999
REVENUE $99,346 $106,195 $108,527 $112,317 $426,385
OPERATING INCOME 5,488 7,703 7,857 7,008 28,056
NET INCOME 2,469 4,264 4,219 3,449 14,401
NET INCOME PER SHARE:
BASIC AND DILUTED 0.30 0.51 0.51 0.41 1.73
1998
Revenue $88,694 $95,640 $99,266 $99,478 $383,078
Operating income 4,089 6,778 6,735 4,975 22,577
Net income 1,913 3,554 3,422 2,231 11,120
Net income per share:
Basic and diluted 0.23 0.43 0.41 0.27 1.34
</TABLE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Old Dominion Freight Line, Inc.
We have audited the accompanying consolidated balance sheets of Old Dominion
Freight Line, Inc. and subsidiary as of December 31, 1999 and 1998, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1999. Our audits also included the financial statement schedule of Old Dominion
Freight Line, Inc. and subsidiary listed in Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Old Dominion
Freight Line, Inc. and subsidiary as of December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Winston-Salem, North Carolina
January 27, 2000
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
27
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the Company's directors required by Item 10 of Form
10-K is incorporated by reference to the Company's proxy statement for the 2000
Annual Meeting of its Stockholders under the caption's "Election of Directors"
and "Principal Stockholders - Section 16 Beneficial Ownership Reporting
Compliance", reference to which is hereby made, and the information there is
incorporated herein by reference.
The information concerning the Company's executive officers required by Item 10
of Form 10-K appears in Item 1 of this report under the heading "Executive
Officers of the Company".
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 of Form 10-K appears in the Company's proxy
statement for the 2000 Annual Meeting of its Stockholders under the caption
"Executive Compensation", reference to which is hereby made, and the information
there is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 of Form 10-K appears in the Company's proxy
statement for the 2000 Annual Meeting of its Stockholders under the captions
"Election of Directors" and "Principal Stockholders", reference to which is
hereby made, and the information there is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 of Form 10-K appears in the Company's proxy
statement for the 2000 Annual Meeting of its Stockholders under the caption
"Executive Compensation - Compensation Committee Interlocks and Insider
Participation", reference to which is hereby made, and the information there is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements.
The following consolidated financial statements of Old Dominion Freight
Line, Inc. are included in Item 8:
Consolidated Balance Sheets - December 31, 1999, and December 31, 1998
Consolidated Statements of Operations - Years ended December 31, 1999,
December 31, 1998, and December 31, 1997
Consolidated Statements of Changes in Stockholders' Equity - Years
ended December 31, 1999, December 31, 1998, and December 31, 1997
Consolidated Statements of Cash Flows - Years ended December 31, 1999,
December 31, 1998, and December 31, 1997
28
<PAGE>
Notes to the Consolidated Financial Statements
(a)(2) Financial Statement Schedules.
The following financial statement schedule of Old Dominion Freight
Line, Inc., is included in response to Item 14(d):
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the instructions or are inapplicable and, therefore,
have been omitted.
The documents listed below are filed under subsection (d) of Item 14:
(a)(3) Exhibits Filed. The exhibits listed in the accompanying Exhibit Index
are filed as a part of this report.
(b) Reports on Form 8-K. None filed during the last quarter of the period
covered by this report.
(c) Exhibits. See Exhibit Index.
(d) Financial Statement Schedules.
SCHEDULE II
OLD DOMINION FREIGHT LINE, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
----------------------------------------------------------
ADDITIONS AMOUNTS
BEGINNING CHARGED WRITTEN ENDING
DESCRIPTION BALANCE TO EXPENSE OFF BALANCE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended
December 31, 1997 $ 5,699,000 $2,852,000 $ 3,588,000 $ 4,963,000
Year ended
December 31, 1998 $ 4,963,000 $3,035,000 $ 2,296,000 $ 5,702,000
YEAR ENDED
DECEMBER 31, 1999 $ 5,702,000 $ 2,840,000 $ 2,047,000 $ 6,495,000
</TABLE>
29
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 16, 2000 By: EARL E. CONGDON
---------------
Earl E. Congdon
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Name and Signature Position Date
EARL E. CONGDON Chairman of the Board and March 16, 2000
- ------------------ Chief Executive Officer
Earl E. Congdon
JOHN R. CONGDON Vice Chairman of the Board March 16, 2000
- ------------------ and Director
John R. Congdon
JOHN A. EBELING Director March 16, 2000
- ------------------
John A. Ebeling
JOHN R. CONGDON, JR. Director March 16, 2000
- --------------------
John R. Congdon, Jr.
HAROLD G. HOAK Director March 16, 2000
- ------------------
Harold G. Hoak
FRANZ F. HOLSCHER Director March 16, 2000
- ------------------
Franz F. Holscher
DAVID S. CONGDON President and Chief Operating Officer March 16, 2000
- ------------------
David S. Congdon
J. WES FRYE Senior Vice President - Finance March 16, 2000
- ------------------ (Principal Financial Officer)
J. Wes Frye
JOHN P. BOOKER III Vice President - Controller March 16, 2000
- ------------------ (Principal Accounting Officer)
John P. Booker III
30
<PAGE>
EXHIBIT INDEX
TO ANNUAL REPORT ON FORM 10-K
OLD DOMINION FREIGHT LINE, INC.
FOR YEAR ENDED DECEMBER 31, 1999
Exhibit No. Description
- ----------- -----------------------------------------------------------------
3.1.1(a) Articles of Incorporation (as amended and restated September 18,
1991)
3.2(a) Bylaws of Old Dominion Freight Line, Inc.
4.1(a) Specimen certificate of Common Stock
4.4(b) Credit Agreement between First Union National Bank of North
Carolina and Old Dominion Freight Line, Inc., dated June 14, 1995
4.4.1(b) Form of note issued by Company pursuant to the Credit Agreement
between First Union National Bank of North Carolina and Old
Dominion Freight Line, Inc., dated June 14, 1995
4.4.2(c) First Amendment to Credit Agreement between First Union National
Bank of North Carolina and Old Dominion Freight Line, Inc., dated
February 2, 1996
4.4.3(d) Second Amendment to the Credit Agreement between Old Dominion
Freight Line, Inc. and First Union National Bank of North
Carolina, dated April 29, 1996
4.4.4(d) Third Amendment to the Credit Agreement between Old Dominion
Freight Line, Inc. and First Union National Bank of North
Carolina, dated June 15, 1996
4.4.5(f) Fourth Amendment to the Credit Agreement between Old Dominion
Freight Line, Inc. and First Union National Bank of North
Carolina, dated April 22, 1997
4.4.6 Fifth Amendment to the Credit Agreement between Old Dominion
Freight Line, Inc. and First Union National Bank of North
Carolina, dated January 14, 2000
4.5(d) Note Purchase Agreement between Nationwide Life Insurance
Company, New York Life Insurance Company and Old Dominion Freight
Line, Inc., dated June 15, 1996
4.5.1(d) Forms of notes issued by Company pursuant to Note Purchase
Agreement between Nationwide Life Insurance Company, New York
Life Insurance Company and Old Dominion Freight Line, Inc., dated
June 15, 1996
4.6(g) Note Purchase Agreement between Nationwide Life Insurance
Company, New York Life Insurance Company and Old Dominion Freight
Line, Inc., dated February 25, 1998
4.6.1(g) Forms of notes issued by Company pursuant to Note Purchase
Agreement between Nationwide Life Insurance Company, New York
Life Insurance Company and Old Dominion Freight Line, Inc., dated
February 25, 1998
10.1(a) Employment Agreement between Old Dominion Freight Line, Inc., and
John A. Ebeling (as amended April 7, 1988)
10.3(a) Restricted Stock Agreement between Old Dominion Freight Line,
Inc., and John A. Ebeling, dated August 19, 1991
10.4(a) 1991 Employee Stock Option Plan of Old Dominion Freight Line,
Inc.
10.5(a) Stock Option Agreement pursuant to the 1991 Employee Stock Option
Plan of Old Dominion Freight Line, Inc. (included in Exhibit
10.4)
31
<PAGE>
10.9(a) E & J Enterprises Trailer Lease Agreement, effective August 1,
1991
10.9.1(e) Extension of E & J Trailer Lease Agreement, effective August 1,
1996
10.9.2(h) Extension of E & J Trailer Lease Agreement, effective August 1,
1999
10.15(c) Lease Agreement between Robert A. Cox, Jr., Trustee, and Old
Dominion Freight Line, Inc., dated as of October 31, 1995
23.1 Consent of Ernst & Young LLP
27 Financial Data Schedule
- --------------------------------------------------
(a) Incorporated by reference to the exhibit of the same number contained in
the Company's registration statement on Form S-1 filed under the Securities
Act of 1933 (SEC File: 33- 42631)
(b) Incorporated by reference to the exhibit contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995
(c) Incorporated by reference to the exhibit of the same number contained in
the Company's Annual Report on Form 10-K for the year ended December 31,
1995
(d) Incorporated by reference to the exhibit of the same number contained in
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1996
(e) Incorporated by reference to the exhibit of the same number contained in
the Company's Annual Report on Form 10-K for the year ended December 31,
1996
(f) Incorporated by reference to the exhibit of the same number contained in
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997
(g) Incorporated by reference to the exhibit of the same number contained in
the Company's Annual Report on Form 10-K for the year ended December 31,
1997
(h) Incorporated by reference to the exhibit of the same number contained in
the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1999
32
EXHIBIT 4.4.6
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated this
14th day of January, 2000, is made by and between OLD DOMINION FREIGHT LINE,
INC., a Virginia corporation (the "Borrower"), and FIRST UNION NATIONAL BANK
(formerly known as First Union National Bank of North Carolina), a national
banking association (the "Bank"), to the Credit Agreement, dated June 14, 1995,
as amended by First Amendment thereto, dated February 2, 1996, by Second
Amendment thereto, dated April 29, 1996, by Third Amendment thereto, dated as of
June 15, 1996, and by Fourth Amendment thereto, dated April 22, 1997 (the Credit
Agreement as amended, modified, restated or supplemented from time to time,
being called the "Credit Agreement"). All capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the Credit
Agreement.
RECITALS
A. Pursuant to the Credit Agreement, the Bank has made available to the
Borrower a Revolving Line of Credit in the amount of $17,500,000 and a Letter of
Credit Facility in the amount of $15,000,000.
B. The Borrower has requested that the Bank (i) increase the amount of
the Revolving Line of Credit Commitment from the sum of $17,500,000 to the sum
of $22,000,000, and (ii) decrease the amount of the Letter of Credit Facility
Commitment from the sum of $15,000,000 to the sum of $12,500,000.
C. The Bank has agreed to such requests, and the Borrower and the Bank
have therefore agreed to amend the Credit Agreement as set forth herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the Borrower and the Bank hereby agree as follows:
ARTICLE I
AMENDMENTS TO CREDIT AGREEMENT
Effective as of the date hereof, and subject to the satisfaction of the
conditions precedent set forth below, the Credit Agreement is amended as
follows:
1.1 Recitals. The third recital of the Credit Agreement is amended in
its entirety to read as follows:
"WHEREAS, Bank has agreed to extend financial accommodations
for such purposes to Borrower in the form of a (a) $22,000,000
revolving line of credit, which may be increased as evidenced by
additional notes executed or to be executed by Borrower to the order of
Bank, and (b) $12,500,000 standby letter of credit facility to be made
in accordance with, and subject to, the terms and conditions set forth
below;".
1.2 Defined Terms. Section 1.1 of the Credit Agreement is amended by
deleting the definitions of "Letter of Credit Facility Commitment" and
"Revolving Line of Credit Commitment" in their entirety and by substituting in
lieu thereof the following:
"Letter of Credit Facility Commitment" shall mean $12,500,000.
33
<PAGE>
"Revolving Line of Credit Commitment" shall mean $22,000,000.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Bank that:
2.1 Acknowledgment of Obligations. As of the close of business on
January 7, 2000, the aggregate principal amount of Revolving Loans owing by
Borrower under the $25,000,000 Amended and Restated Revolving Credit Note, dated
February 2, 1996, is in the sum of $16,550,000, and the aggregate amount of
Letter of Credit Obligations owing by the Borrower is in the sum of $11,384,500,
and all such Obligations are owing by the Borrower to the Bank without any
defense, deduction, offset or counterclaim of any nature.
2.2 Compliance with Credit Agreement. As of the date of the execution
of this Amendment, the Borrower is in compliance with all of the terms and
provisions set forth in the Loan Documents to be observed or performed by the
Borrower.
2.3 Representations in Credit Agreement. The representations and
warranties of the Borrower set forth in the Credit Agreement are true and
correct in all material respects.
2.4 No Event of Default. No Default or Event of Default exists.
ARTICLE III
MODIFICATION OF LOAN DOCUMENTS
3.1 Loan Documents. Any individual or collective reference to any of
the Loan Documents shall hereafter mean such Loan Document as amended by this
Amendment, and as further amended, restated and supplemented or modified from
time to time, including, without limitation, all references to the Credit
Agreement, which shall mean the Credit Agreement as amended hereby and as
further amended from time to time.
ARTICLE IV
GENERAL
4.1 Full Force and Effect. Except as expressly amended hereby, the
Credit Agreement and the other Loan Documents shall continue in full force and
effect in accordance with the provisions thereof. As used in the Credit
Agreement and the other Loan Documents, "hereinafter", "hereto", "hereof", or
words of similar import, shall mean the Credit Agreement or the other Loan
Documents, as the case may be, as amended by this Amendment.
4.2 Applicable Law. This Amendment shall be governed by and construed
in accordance with the internal laws and judicial decisions of the State of
North Carolina.
4.3 Headings. The headings of this Amendment are for the purpose of
reference only and shall not effect the construction of this Amendment.
4.4 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWER AND THE BANK EACH WAIVE THE RIGHT TO A JURY TRIAL IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE CREDIT
AGREEMENT OR THE OTHER LOAN DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered under seal by their duly authorized officers to be
effective as of the date first above written.
34
<PAGE>
ATTEST: OLD DOMINION FREIGHT LINE, INC.
JOEL B. McCARTY, JR. By: J. WES FRYE
- ----------------------------- ---------------------------------
Secretary Title: Treasurer and Chief
Financial Officer
[CORPORATE SEAL]
FIRST UNION NATIONAL BANK (formerly known
as First Union National Bank of North
Carolina)
By: RICHARD J. RIZZO, JR.
------------------------------------
Title: Senior Vice President and
Director
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITOR
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-44137 and 33-44139) pertaining to the Old Dominion Freight
Line, Inc. Restricted Stock Agreement and 1991 Employee Stock Option Plan of Old
Dominion Freight Line, Inc. of our report dated January 27, 2000, with respect
to the consolidated financial statements and schedule of Old Dominion Freight
Line, Inc. included in the Annual Report (Form 10-K) for the year ended December
31, 1999.
ERNST & YOUNG LLP
Winston-Salem, North Carolina
March 16, 2000
35
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999 DEC-31-1999 DEC-31-1999 DEC-31-1999
<PERIOD-START> JAN-01-1999 APR-01-1999 JUL-01-1999 OCT-01-1999 JAN-01-1999
<PERIOD-END> MAR-31-1999 JUN-30-1999 SEP-30-1999 DEC-31-1999 DEC-31-1999
<CASH> 663 645 618 781 781
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 58,421 56,654 62,227 62,639 62,639
<ALLOWANCES> (5,639) (5,855) (6,229) (6,495) (6,495)
<INVENTORY> 0 0 0 0 0
<CURRENT-ASSETS> 67,487 64,184 69,867 76,254 76,254
<PP&E> 255,549 266,214 273,850 283,211 283,211
<DEPRECIATION> (101,519) (107,122) (110,572) (116,249) (116,249)
<TOTAL-ASSETS> 235,933 237,746 247,760 257,579 257,579
<CURRENT-LIABILITIES> 48,762 57,185 63,373 71,582 71,582
<BONDS> 0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
<COMMON> 831 831 831 831 831
<OTHER-SE> 98,275 102,539 106,758 110,207 110,207
<TOTAL-LIABILITY-AND-EQUITY> 235,933 237,746 247,760 257,579 257,579
<SALES> 99,346 106,195 108,527 112,317 426,385
<TOTAL-REVENUES> 99,346 106,195 108,527 112,317 426,385
<CGS> 0 0 0 0 0
<TOTAL-COSTS> 93,858 98,492 100,670 105,309 398,329
<OTHER-EXPENSES> 245 (4) (35) 316 522
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 1,261 829 1,087 900 4,077
<INCOME-PRETAX> 3,982 6,878 6,805 5,792 23,457
<INCOME-TAX> 1,513 2,614 2,586 2,343 9,056
<INCOME-CONTINUING> 2,469 4,264 4,219 3,449 14,401
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 2,469 4,264 4,219 3,449 14,401
<EPS-BASIC> 0.30 .51 .51 .41 1.73
<EPS-DILUTED> 0.30 .51 .51 .41 1.73
</TABLE>
