[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31, 2016
|
|
Or
|
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
|
Arizona
|
86-0649974
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
20002 North 19th Avenue
Phoenix, Arizona
85027
(Address of Principal Executive Offices)
(Zip Code)
|
||
Registrant's telephone number, including area code:
|
602-269-2000
|
Large accelerated filer [X]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ]
|
Smaller reporting company [ ]
|
Page Number
|
||
PART I – FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements
|
|
1
|
||
3
|
||
4
|
||
5
|
||
7
|
||
Item 2.
|
22
|
|
Item 3.
|
35
|
|
Item 4.
|
36
|
|
Part II – OTHER INFORMATION
|
||
Item 1.
|
37
|
|
Item 1A.
|
37
|
|
Item 2.
|
38
|
|
Item 3.
|
38
|
|
Item 4.
|
38
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Item 5.
|
38
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Item 6.
|
39
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|
40
|
Condensed Consolidated Unaudited Balance Sheets
(in thousands)
|
||||||||
March 31,
2016
|
December 31,
2015
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 21,472 | $ | 8,691 | ||||
Trade receivables, net of allowance for doubtful accounts of $3,034 and $3,106, respectively
|
131,898 | 131,945 | ||||||
Notes receivable, net of allowance for doubtful notes receivable of $245 and $273, respectively
|
554 | 648 | ||||||
Prepaid expenses
|
16,658 | 17,320 | ||||||
Assets held for sale
|
27,100 | 29,327 | ||||||
Other current assets
|
8,362 | 14,215 | ||||||
Income tax receivable
|
27,698 | 41,967 | ||||||
Total current assets
|
233,742 | 244,113 | ||||||
Property and Equipment:
|
||||||||
Revenue equipment
|
862,729 | 866,252 | ||||||
Land and land improvements
|
53,024 | 52,951 | ||||||
Buildings and building improvements
|
141,973 | 139,102 | ||||||
Furniture and fixtures
|
18,910 | 18,363 | ||||||
Shop and service equipment
|
16,307 | 16,729 | ||||||
Leasehold improvements
|
3,669 | 3,061 | ||||||
Gross property and equipment
|
1,096,612 | 1,096,458 | ||||||
Less: accumulated depreciation and amortization
|
(298,604 | ) | (292,815 | ) | ||||
Property and equipment, net
|
798,008 | 803,643 | ||||||
Notes receivable, long-term
|
3,212 | 3,419 | ||||||
Goodwill
|
47,045 | 47,050 | ||||||
Intangible assets, net
|
2,950 | 3,075 | ||||||
Other long-term assets, restricted cash and investments
|
26,690 | 18,932 | ||||||
Total long-term assets
|
877,905 | 876,119 | ||||||
Total assets
|
$ | 1,111,647 | $ | 1,120,232 |
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
Condensed Consolidated Unaudited Balance Sheets (continued)
(in thousands, except par values)
|
||||||||
March 31,
2016
|
December 31,
2015
|
|||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 24,590 | $ | 14,818 | ||||
Accrued payroll and purchased transportation
|
22,389 | 23,776 | ||||||
Accrued liabilities
|
16,701 | 21,609 | ||||||
Claims accrual – current portion
|
20,264 | 19,471 | ||||||
Dividend payable – current portion
|
333 | 349 | ||||||
Total current liabilities
|
84,277 | 80,023 | ||||||
Long-term Liabilities:
|
||||||||
Claims accrual – long-term portion
|
11,963 | 11,508 | ||||||
Long-term dividend payable and other liabilities
|
1,888 | 2,164 | ||||||
Deferred tax liabilities
|
175,056 | 174,165 | ||||||
Long-term debt
|
106,000 | 112,000 | ||||||
Total long-term liabilities
|
294,907 | 299,837 | ||||||
Total liabilities
|
379,184 | 379,860 | ||||||
Commitments and Contingencies (Note 6)
|
||||||||
Shareholders' Equity:
|
||||||||
Preferred stock, $0.01 par value; 50,000 shares authorized; none issued and outstanding
|
- | - | ||||||
Common stock, $0.01 par value; 300,000 shares authorized; 80,116 and 80,967 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively
|
801 | 810 | ||||||
Additional paid-in capital
|
209,489 | 205,648 | ||||||
Accumulated other comprehensive income
|
1,715 | 2,573 | ||||||
Retained earnings
|
518,641 | 529,367 | ||||||
Total Knight Transportation shareholders' equity
|
730,646 | 738,398 | ||||||
Noncontrolling interest
|
1,817 | 1,974 | ||||||
Total shareholders’ equity
|
732,463 | 740,372 | ||||||
Total liabilities and shareholders' equity
|
$ | 1,111,647 | $ | 1,120,232 |
Condensed Consolidated Unaudited Statements of Income
(in thousands, except per share data)
|
||||||||
Three Months Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
REVENUE:
|
||||||||
Revenue, before fuel surcharge
|
$ | 253,583 | $ | 257,214 | ||||
Fuel surcharge
|
18,505 | 33,067 | ||||||
Total revenue
|
272,088 | 290,281 | ||||||
OPERATING EXPENSES:
|
||||||||
Salaries, wages and benefits
|
83,603 | 80,026 | ||||||
Fuel
|
26,771 | 38,089 | ||||||
Operations and maintenance
|
18,010 | 20,128 | ||||||
Insurance and claims
|
8,823 | 8,933 | ||||||
Operating taxes and licenses
|
5,487 | 5,855 | ||||||
Communications
|
1,205 | 1,140 | ||||||
Depreciation and amortization
|
28,402 | 27,160 | ||||||
Purchased transportation
|
57,785 | 59,545 | ||||||
Miscellaneous operating expenses
|
3,275 | 3,101 | ||||||
Total operating expenses
|
233,361 | 243,977 | ||||||
Income from operations
|
38,727 | 46,304 | ||||||
Interest income
|
94 | 132 | ||||||
Interest expense
|
(301 | ) | (283 | ) | ||||
Other income
|
1,286 | 2,464 | ||||||
Income before income taxes
|
39,806 | 48,617 | ||||||
Income tax expense
|
16,783 | 18,675 | ||||||
Net income
|
23,023 | 29,942 | ||||||
Net income attributable to noncontrolling interest
|
(453 | ) | (379 | ) | ||||
Net income attributable to Knight Transportation
|
$ | 22,570 | $ | 29,563 | ||||
Earnings per share:
|
||||||||
Basic
|
$ | 0.28 | $ | 0.36 | ||||
Diluted
|
$ | 0.28 | $ | 0.36 | ||||
Dividends declared per share
|
$ | 0.06 | $ | 0.06 | ||||
Weighted Average Shares Outstanding – Basic
|
80,707 | 82,025 | ||||||
Weighted Average Shares Outstanding – Diluted
|
81,398 | 83,192 |
Three Months Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Net income
|
$ | 23,023 | $ | 29,942 | ||||
Other comprehensive income, net of tax:
|
||||||||
Realized gains from available-for-sale securities reclassified to net income(1)
|
(981 | ) | (1,438 | ) | ||||
Unrealized (loss)/gain from changes in fair value of available-for-sale securities(2)
|
123 | (261 | ) | |||||
Comprehensive income
|
$ | 22,165 | $ | 28,243 | ||||
Comprehensive income attributable to noncontrolling interest
|
(453 | ) | (379 | ) | ||||
Comprehensive income attributable to Knight Transportation
|
$ | 21,712 | $ | 27,864 |
(1)
|
Net of current income tax expense of $(614) and $(908), respectively.
|
(2)
|
Net of deferred income tax expense/(benefit) of $76 and $(243), respectively.
|
Condensed Consolidated Unaudited Statements of Cash Flows
(in thousands)
|
||||||||
Three Months Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net income
|
$ | 23,023 | $ | 29,942 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
28,402 | 27,160 | ||||||
Gain on sale of equipment
|
(3,195 | ) | (4,690 | ) | ||||
Gain from sale of available-for-sale securities
|
(1,595 | ) | (2,346 | ) | ||||
Loss (income) from investment in Transportation Resource Partners III
|
308 | (117 | ) | |||||
Provision for doubtful accounts and notes receivable
|
28 | 605 | ||||||
Excess tax benefits related to stock-based compensation
|
(447 | ) | (2,481 | ) | ||||
Stock-based compensation expense, net
|
780 | 2,153 | ||||||
Deferred income taxes
|
1,431 | (4,648 | ) | |||||
Changes in operating assets and liabilities:
|
||||||||
Trade receivables
|
28 | 9,563 | ||||||
Other current assets
|
5,853 | 668 | ||||||
Prepaid expenses
|
662 | (347 | ) | |||||
Income tax receivable
|
14,269 | 19,143 | ||||||
Other long-term assets
|
(149 | ) | (2,366 | ) | ||||
Accounts payable
|
4,151 | (6,348 | ) | |||||
Accrued liabilities and claims accrual
|
(5,960 | ) | (7,619 | ) | ||||
Net cash provided by operating activities
|
67,589 | 58,272 | ||||||
Cash Flows From Investing Activities:
|
||||||||
Purchases of property and equipment
|
(34,783 | ) | (26,715 | ) | ||||
Proceeds from sale of equipment/assets held for sale
|
23,065 | 20,957 | ||||||
Proceeds from notes receivable
|
412 | 237 | ||||||
Change in restricted cash and investments
|
(16 | ) | (15 | ) | ||||
Proceeds from sale of available-for-sale securities
|
2,852 | 3,146 | ||||||
Cash payments to Transportation Resource Partners
|
(10,974 | ) | - | |||||
Cash proceeds from Transportation Resource Partners
|
423 | 60 | ||||||
Net cash used in investing activities
|
(19,021 | ) | (2,330 | ) |
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
Condensed Consolidated Unaudited Statements of Cash Flows (continued)
(in thousands)
|
||||||||
Three Months Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Cash Flows From Financing Activities:
|
||||||||
Dividends paid
|
$ | (5,129 | ) | $ | (5,244 | ) | ||
Payments to repurchase company stock
|
(27,111 | ) | - | |||||
Payments on line of credit borrowings, net
|
(6,000 | ) | (56,000 | ) | ||||
Excess tax benefits related to stock-based compensation
|
447 | 2,481 | ||||||
Cash distribution to noncontrolling interest holder
|
(610 | ) | (316 | ) | ||||
Proceeds from exercise of stock options
|
2,616 | 4,909 | ||||||
Net cash used in financing activities
|
(35,787 | ) | (54,170 | ) | ||||
Net increase in Cash and Cash Equivalents
|
12,781 | 1,772 | ||||||
Cash and Cash Equivalents, beginning of period
|
8,691 | 17,066 | ||||||
Cash and Cash Equivalents, end of period
|
$ | 21,472 | $ | 18,838 | ||||
Supplemental Disclosures:
|
||||||||
Non-cash investing and financing transactions:
|
||||||||
Equipment acquired included in accounts payable
|
$ | 9,840 | $ | 14,514 | ||||
Transfer from property and equipment to assets held for sale
|
$ | 12,857 | $ | 8,411 | ||||
Financing provided to independent contractors for equipment sold
|
$ | 87 | $ | 285 | ||||
Net dividend accrued for restricted stock units
|
$ | 33 | $ | 52 | ||||
Cash flow information:
|
||||||||
Income taxes paid
|
$ | 616 | $ | 1,717 | ||||
Interest expense paid
|
$ | 306 | $ | 316 |
Three Months Ended
March 31,
(in thousands)
|
||||||||
2016
|
2015
|
|||||||
Stock compensation expense for options, net of forfeitures
|
$ | 371 | $ | 166 | ||||
Stock compensation expense for restricted stock units and performance restricted stock units, net of forfeitures
|
409 | 1,987 | ||||||
Stock compensation expense
|
$ | 780 | $ | 2,153 |
Option Totals
|
Weighted Average Exercise
Price Per Share
|
|||||||
Outstanding as of December 31, 2015
|
2,008,872 | $ | 21.41 | |||||
Granted
|
569,480 | 24.23 | ||||||
Exercised
|
(144,825 | ) | 18.38 | |||||
Forfeited
|
(34,090 | ) | 25.80 | |||||
Outstanding as of March 31, 2016
|
2,399,437 | $ | 22.20 |
Three Months Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Dividend yield (1)
|
0.99 | % | 0.84 | % | ||||
Expected volatility (2)
|
27.91 | % | 25.79 | % | ||||
Risk-free interest rate (3)
|
0.90 | % | 0.89 | % | ||||
Expected term (4)
|
2.74 years
|
2.74 years
|
||||||
Weighted-average fair value of options granted
|
$ | 4.28 | $ | 4.72 |
(1)
|
Dividend yield – the dividend yield is based on our historical experience and future expectation of dividend payouts.
|
(2)
|
Expected volatility – we analyzed the volatility of our stock using historical data.
|
(3)
|
Risk-free interest rate – the risk-free interest rate assumption is based on U.S. Treasury securities at a constant maturity with a maturity period that most closely resembles the expected term of the stock option award.
|
(4)
|
Expected term – the expected term of employee stock options represents the weighted-average period the stock options are expected to remain outstanding and has been determined based on an analysis of historical exercise behavior.
|
Number of
Restricted
Stock Unit
Awards
|
Weighted Average Grant Date
Fair Value
|
|||||||
Unvested as of December 31, 2015
|
879,173 | $ | 16.45 | |||||
Granted
|
350 | 24.23 | ||||||
Vested
|
(151,967 | ) | 16.73 | |||||
Cancelled
|
(5,240 | ) | 16.43 | |||||
Unvested as of March 31, 2016
|
722,316 | $ | 16.40 |
Number of Performance
Restricted
Stock Unit
Awards
|
Weighted Average Grant Date
Fair Value
|
|||||||
Unvested as of December 31, 2015
|
341,782 | $ | 26.46 | |||||
Granted
|
177,741 | 23.89 | ||||||
Shares earned above target
|
2,516 | 23.85 | ||||||
Vested
|
(5,391 | ) | 23.85 | |||||
Cancelled
|
(1,238 | ) | 23.89 | |||||
Unvested as of March 31, 2016
|
515,410 | $ | 25.59 |
Three Months Ended
March 31, 2016
|
||||
Dividend yield(1)
|
0.99 | % | ||
Expected volatility(2)
|
27.95 | % | ||
Average peer volatility(2)
|
34.37 | % | ||
Average peer correlation coefficient(3)
|
0.6022 | |||
Risk-free interest rate(4)
|
0.89 | % | ||
Expected term(5)
|
2.84 | |||
Weighted average fair value of PRSUs granted
|
$ | 23.89 |
(1)
|
The dividend yield, used to project stock price to the end of the performance period, is based on our historical experience and future expectation of dividend payouts. Total shareholder return is determined assuming that dividends are reinvested in the issuing entity over the performance period, which is mathematically equivalent to utilizing a 0% dividend yield.
|
(2)
|
We (or peer company) estimated volatility using our (or their) historical share price performance over the remaining performance period as of the grant date.
|
(3)
|
The correlation coefficients are used to model the way in which each entity tends to move in relation to each other; the correlation assumptions were developed using the same stock price data as the volatility assumptions.
|
(4)
|
The risk-free interest rate assumption is based on U.S. Treasury securities at a constant maturity with a maturity period that most closely resembles the expected term of the performance award.
|
(5)
|
Since the Monte Carlo simulation valuation is an open form model that uses an expected life commensurate with the performance period, the expected life of the PRSUs was assumed to be the period from the grant date to the end of the performance period.
|
Three Months Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Weighted-average common shares outstanding – basic
|
80,707 | 82,025 | ||||||
Dilutive effect of stock options and unvested restricted stock units
|
691 | 1,167 | ||||||
Weighted-average common shares outstanding – diluted
|
81,398 | 83,192 | ||||||
Net income attributable to Knight Transportation
|
$ | 22,570 | $ | 29,563 | ||||
Basic earnings per share
|
$ | 0.28 | $ | 0.36 | ||||
Diluted earnings per share
|
$ | 0.28 | $ | 0.36 |
Three Months Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Number of anti-dilutive shares
|
1,017,093 | 26,970 |
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
|||||||||||||||
Revenues:
|
$ | % | $ | % | ||||||||||||
Trucking Segment
|
$ | 217,956 | 80.1 | % | $ | 235,290 | 81.1 | % | ||||||||
Logistics Segment
|
58,609 | 21.5 | 57,848 | 19.9 | ||||||||||||
Subtotal
|
276,565 | 293,138 | ||||||||||||||
Intersegment Eliminations Trucking
|
(38 | ) | 0.0 | (18 | ) | 0.0 | ||||||||||
Intersegment Eliminations Logistics
|
(4,439 | ) | (1.6 | ) | (2,839 | ) | (1.0 | ) | ||||||||
Total
|
$ | 272,088 | 100 | % | $ | 290,281 | 100 | % | ||||||||
Operating Income:
|
||||||||||||||||
Trucking Segment
|
$ | 35,922 | 92.8 | % | $ | 42,147 | 91.0 | % | ||||||||
Logistics Segment
|
2,805 | 7.2 | 4,157 | 9.0 | ||||||||||||
Total
|
$ | 38,727 | 100 | % | $ | 46,304 | 100 | % |
GAAP Presentation:
|
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
||||||||||||||
Trucking Segment
|
$ | % | $ | % | ||||||||||||
Revenue
|
$ | 217,956 | $ | 235,290 | ||||||||||||
Operating expenses
|
182,034 | 83.5 | % | 193,143 | 82.1 | % | ||||||||||
Operating income
|
$ | 35,922 | $ | 42,147 |
Non-GAAP Presentation(1):
|
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
||||||||||||||
Trucking Segment
|
$ | % | $ | % | ||||||||||||
Revenue
|
$ | 217,956 | $ | 235,290 | ||||||||||||
Less: Trucking fuel surcharge revenue
|
(18,505 | ) | (33,067 | ) | ||||||||||||
Less: Intersegment transactions
|
(38 | ) | (18 | ) | ||||||||||||
Revenue, net of fuel surcharge and intersegment transactions
|
199,413 | 202,205 | ||||||||||||||
Operating expenses
|
182,034 | 193,143 | ||||||||||||||
Less: Trucking fuel surcharge revenue
|
(18,505 | ) | (33,067 | ) | ||||||||||||
Less: Intersegment transactions
|
(38 | ) | (18 | ) | ||||||||||||
Operating expenses, net of fuel surcharge and intersegment transactions
|
163,491 | 82.0 | % | 160,058 | 79.2 | % | ||||||||||
Operating income
|
$ | 35,922 | $ | 42,147 |
(1)
|
These items represent non-GAAP financial measures and are not substitutes for, or superior to, and should be considered in addition to, the GAAP financial measures presented in the previous table. Although we believe that this non-GAAP presentation of our operating ratio can make an evaluation of our operating performance more consistent because it removes items that, in our opinion, do not reflect our core operating performance, other companies in the transportation industry may define the non-GAAP operating ratio differently. As a result, it may be difficult to use non-GAAP measures that other companies may use to compare the performance of those companies to our performance.
|
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
|||||||||||||||
Logistics
|
$ | % | $ | % | ||||||||||||
Revenue
|
$ | 58,609 | $ | 57,848 | ||||||||||||
Operating expenses
|
55,804 | 95.2 | % | 53,691 | 92.8 | % | ||||||||||
Operating income
|
$ | 2,805 | $ | 4,157 |
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
|||||||||||||||
Logistics
|
$ | % | $ | % | ||||||||||||
Revenue
|
$ | 58,609 | $ | 57,848 | ||||||||||||
Less: Intersegment transactions
|
(4,439 | ) | (2,839 | ) | ||||||||||||
Revenue excluding intersegment transactions
|
54,170 | 55,009 | ||||||||||||||
Operating expenses
|
55,804 | 53,691 | ||||||||||||||
Less: Intersegment transactions
|
(4,439 | ) | (2,839 | ) | ||||||||||||
Operating expenses excluding intersegment transactions
|
51,365 | 94.8 | % | 50,852 | 92.4 | % | ||||||||||
Operating income
|
$ | 2,805 | $ | 4,157 |
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
|||||||
Combined Brokerage and Intermodal gross margin percent(1)
|
18.7 | % | 16.0 | % |
(1)
|
Gross margin percentage is based on revenue net of intersegment elimination.
|
Three Months Ended
March 31, 2016
|
||||
Goodwill at beginning of period
|
$ | 47,050 | ||
Amortization relating to deferred tax assets
|
(5 | ) | ||
Goodwill at end of period
|
$ | 47,045 |
March 31,
2016
|
December 31,
2015
|
|||||||
Gross carrying amount
|
$ | 3,700 | $ | 3,700 | ||||
Accumulated amortization
|
(750 | ) | (625 | ) | ||||
Intangible assets, net
|
$ | 2,950 | $ | 3,075 |
Three Months Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Realized gains
|
||||||||
Sales proceeds
|
$ | 2,852 | $ | 3,146 | ||||
Cost of securities sold
|
1,257 | 800 | ||||||
Realized gain
|
$ | 1,595 | $ | 2,346 | ||||
Realized gains, net of taxes
|
$ | 981 | $ | 1,438 |
Total
|
Total
|
Level One
|
Level Two
|
Level Three
|
||||||||||||||||||||||||||||
Balance at
March 31,
2016
|
Balance at
December 31,
2015
|
Balance at
March 31,
2016
|
Balance at
December 31,
2015
|
Balance at
March 31,
2016
|
Balance at
December 31,
2015
|
Balance at
March 31,
2016
|
Balance at
December 31,
2015
|
|||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||||||||||
Equity securities - common shares
|
$ | 4,445 | $ | 7,101 | $ | 4,445 | $ | 7,101 | - | - | - | - | ||||||||||||||||||||
Restricted cash and investments:
|
||||||||||||||||||||||||||||||||
Money market funds
|
$ | 1,204 | $ | 1,003 | $ | 1,204 | $ | 1,003 | - | - | - | - | ||||||||||||||||||||
Trading securities:
|
||||||||||||||||||||||||||||||||
Debt securities - municipal securities
|
$ | 2,095 | $ | 2,279 | - | - | $ | 2,095 | $ | 2,279 | - | - |
March 31,
2016
|
December 31,
2015
|
|||||||
Notes receivable from independent contractors
|
$ | 636 | $ | 794 | ||||
Notes receivable from third parties
|
3,375 | 3,546 | ||||||
Gross notes receivable
|
4,011 | 4,340 | ||||||
Allowance for doubtful notes receivable
|
(245 | ) | (273 | ) | ||||
Total notes receivable, net of allowance
|
3,766 | 4,067 | ||||||
Current portion, net of allowance
|
554 | 648 | ||||||
Long-term portion
|
$ | 3,212 | $ | 3,419 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
Cautionary Note Regarding Forward-Looking Statements
|
●
|
Total Revenue decreased 6.3%, to $272.1 million from $290.3 million;
|
●
|
Revenue, before fuel surcharge, decreased 1.4%, to $253.6 million from $257.2 million;
|
●
|
Net income attributable to Knight decreased 23.7%, to $22.6 million from $29.6 million; and
|
●
|
Net earnings attributable to Knight per diluted share decreased to $0.28 per share from $0.36 per share.
|
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
|||||||||||||||
Revenues:
|
$ | % | $ | % | ||||||||||||
Trucking Segment
|
$ | 217,956 | 80.1 | % | $ | 235,290 | 81.1 | % | ||||||||
Logistics Segment
|
58,609 | 21.5 | 57,848 | 19.9 | ||||||||||||
Subtotal
|
276,565 | 293,138 | ||||||||||||||
Intersegment Eliminations Trucking
|
(38 | ) | 0.0 | (18 | ) | 0.0 | ||||||||||
Intersegment Eliminations Logistics
|
(4,439 | ) | (1.6 | ) | (2,839 | ) | (1.0 | ) | ||||||||
Total
|
$ | 272,088 | 100 | % | $ | 290,281 | 100 | % | ||||||||
Operating Income:
|
||||||||||||||||
Trucking Segment
|
$ | 35,922 | 92.8 | % | $ | 42,147 | 91.0 | % | ||||||||
Logistics Segment
|
2,805 | 7.2 | 4,157 | 9.0 | ||||||||||||
Total
|
$ | 38,727 | 100 | % | $ | 46,304 | 100 | % |
GAAP Presentation:
|
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
||||||||||||||
Trucking Segment
|
$ | % | $ | % | ||||||||||||
Revenue
|
$ | 217,956 | $ | 235,290 | ||||||||||||
Operating expenses
|
182,034 | 83.5 | % | 193,143 | 82.1 | % | ||||||||||
Operating income
|
$ | 35,922 | $ | 42,147 |
Non-GAAP Presentation(1):
|
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
||||||||||||||
Trucking Segment
|
$ | % | $ | % | ||||||||||||
Revenue
|
$ | 217,956 | $ | 235,290 | ||||||||||||
Less: Trucking fuel surcharge revenue
|
(18,505 | ) | (33,067 | ) | ||||||||||||
Less: Intersegment transactions
|
(38 | ) | (18 | ) | ||||||||||||
Revenue, net of fuel surcharge and intersegment transactions
|
199,413 | 202,205 | ||||||||||||||
Operating expenses
|
182,034 | 193,143 | ||||||||||||||
Less: Trucking fuel surcharge revenue
|
(18,505 | ) | (33,067 | ) | ||||||||||||
Less: Intersegment transactions
|
(38 | ) | (18 | ) | ||||||||||||
Operating expenses, net of fuel surcharge and intersegment transactions
|
163,491 | 82.0 | % | 160,058 | 79.2 | % | ||||||||||
Operating income
|
$ | 35,922 | $ | 42,147 |
(1)
|
These items represent non-GAAP financial measures and are not substitutes for, and should be considered in addition to, the GAAP financial measures presented in the previous table.
|
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
|||||||
Average revenue per tractor(1)
|
$ | 42,528 | $ | 42,436 | ||||
Average length of haul (miles)
|
496 | 500 | ||||||
Non-paid empty mile percent
|
12.7 | % | 11.5 | % | ||||
Average tractors in operation during period
|
4,689 | 4,765 | ||||||
Average trailers in operation during period
|
11,967 | 11,393 |
(1)
|
Average revenue per tractor is based on trucking revenue, net of intersegment elimination, and does not include fuel surcharge revenue.
|
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
|||||||||||||||
Logistics
|
$ | % | $ | % | ||||||||||||
Revenue
|
$ | 58,609 | $ | 57,848 | ||||||||||||
Operating expenses
|
55,804 | 95.2 | % | 53,691 | 92.8 | % | ||||||||||
Operating income
|
$ | 2,805 | $ | 4,157 |
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
|||||||||||||||
Logistics
|
$ | % | $ | % | ||||||||||||
Revenue
|
$ | 58,609 | $ | 57,848 | ||||||||||||
Less: Intersegment transactions
|
(4,439 | ) | (2,839 | ) | ||||||||||||
Revenue excluding intersegment transactions
|
54,170 | 55,009 | ||||||||||||||
Operating expenses
|
55,804 | 53,691 | ||||||||||||||
Less: Intersegment transactions
|
(4,439 | ) | (2,839 | ) | ||||||||||||
Operating expenses excluding intersegment transactions
|
51,365 | 94.8 | % | 50,852 | 92.4 | % | ||||||||||
Operating income
|
$ | 2,805 | $ | 4,157 |
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
|||||||
Combined Brokerage and Intermodal gross margin percent(1)
|
18.7 | % | 16.0 | % |
(1)
|
Gross margin percentage is based on revenue net of intersegment elimination.
|
Three Months Ended
March 31, 2016
|
Three Months Ended
March 31, 2015
|
%
Change
|
||||||||||||||||||
(Amounts in thousands)
|
$ | % | $ | % |
%
|
|||||||||||||||
Trucking revenue
|
$ | 199,413 | 73.3 | % | $ | 202,205 | 69.7 | % | (1.4 | )% | ||||||||||
Trucking fuel surcharge revenue
|
18,505 | 6.8 | 33,067 | 11.4 | (44.0 | ) | ||||||||||||||
Logistics revenue
|
54,170 | 19.9 | 55,009 | 18.9 | (1.5 | ) | ||||||||||||||
Consolidated Revenue
|
272,088 | 100.0 | 290,281 | 100.0 | (6.3 | ) | ||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Salaries, wages and benefits
|
83,603 | 30.7 | 80,026 | 27.6 | 4.5 | |||||||||||||||
Fuel
|
26,771 | 9.9 | 38,089 | 13.1 | (29.7 | ) | ||||||||||||||
Operations and maintenance
|
18,010 | 6.6 | 20,128 | 6.9 | (10.5 | ) | ||||||||||||||
Insurance and claims
|
8,823 | 3.2 | 8,933 | 3.1 | (1.2 | ) | ||||||||||||||
Operating taxes and licenses
|
5,487 | 2.0 | 5,855 | 2.0 | (6.3 | ) | ||||||||||||||
Communications
|
1,205 | 0.5 | 1,140 | 0.4 | 5.7 | |||||||||||||||
Depreciation and amortization
|
28,402 | 10.5 | 27,160 | 9.3 | 4.6 | |||||||||||||||
Purchased transportation(1)
|
57,785 | 21.2 | 59,545 | 20.5 | (3.0 | ) | ||||||||||||||
Miscellaneous operating expenses
|
3,275 | 1.2 | 3,101 | 1.1 | 5.6 | |||||||||||||||
Total operating expenses
|
233,361 | 85.8 | 243,977 | 84.0 | (4.4 | ) | ||||||||||||||
Operating income
|
38,727 | 14.2 | 46,304 | 16.0 | (16.4 | ) | ||||||||||||||
Interest income
|
94 | 0.0 | 132 | 0.0 | (28.8 | ) | ||||||||||||||
Interest expense
|
(301 | ) | (0.1 | ) | (283 | ) | (0.1 | ) | 6.4 | |||||||||||
Other income
|
1,286 | 0.5 | 2,464 | 0.8 | (47.8 | ) | ||||||||||||||
Total other income (expense)
|
1,079 | 0.4 | 2,313 | 0.7 | (53.4 | ) | ||||||||||||||
Income before income taxes
|
39,806 | 14.6 | 48,617 | 16.7 | (18.1 | ) | ||||||||||||||
Income taxes
|
16,783 | 6.1 | 18,675 | 6.4 | (10.1 | ) | ||||||||||||||
Net income
|
$ | 23,023 | 8.5 | % | $ | 29,942 | 10.3 | % | (23.1 | )% | ||||||||||
Net income attributable to noncontrolling interest
|
(453 | ) | (0.2 | ) | (379 | ) | (0.1 | ) | 19.5 | |||||||||||
Net income attributable to Knight Transportation
|
$ | 22,570 | 8.3 | % | $ | 29,563 | 10.2 | % | (23.7 | )% |
(1)
|
Purchased transportation expense is comprised of (a) payments to independent contractors, which is primarily attributed to our Trucking segment; (b) payments to third-party capacity providers, which is primarily attributed to our Logistics segment; and (c) payments relating to our logistics, freight management and non-trucking services.
|
Seasonality
|
Period
|
(a)
Total Number
of Shares
Purchased
|
(b)
Average
Price Paid
per Share
|
(c)
Total
Number of
Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
|
(d)
Maximum Number
of Shares that May
Yet Be Purchased
Under the Publicly
Announced Plans
or Programs
|
||||||||||||
Jan 1-31, 2016
|
||||||||||||||||
Common Stock Repurchase Program (1)
|
- | - | - | 5,831,766 | ||||||||||||
Other Transactions (2)
|
52,773 | $ | 24.45 | - | - | |||||||||||
Feb 1-29, 2016
|
||||||||||||||||
Common Stock Repurchase Program (1)
|
570,888 | $ | 24.60 | 570,888 | 5,260,878 | |||||||||||
Other Transactions (2)
|
- | - | - | - | ||||||||||||
Mar 1-31, 2016
|
||||||||||||||||
Common Stock Repurchase Program (1)
|
524,739 | $ | 24.91 | 524,739 | 4,736,139 | |||||||||||
Other Transactions (2)
|
1,863 | $ | 26.25 | - | - | |||||||||||
Total
|
1,150,263 | $ | 24.74 | 1,095,627 | 4,736,139 |
(1)
|
In May 2011, our Board of Directors unanimously authorized the repurchase of up to 10.0 million shares of our common stock. The repurchase authorization will remain in effect until the share limit is reached or the program is terminated. See Note 13 to the Condensed Consolidated Unaudited Financial Statements in this Quarterly Report on Form 10-Q for additional information with respect to our share repurchases.
|
(2)
|
Other Transactions include restricted shares of our common stock withheld and used to offset tax withholding obligations that occurred upon vesting and release of restricted shares. The withholding of shares was permitted under the applicable award agreement and was not part of any stock repurchase program.
|
Exhibit No.
|
Description
|
|
Exhibit 3
|
Articles of Incorporation and Bylaws
|
|
(3.1)
|
Second Amended and Restated Articles of Incorporation of the Company. (Incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed April 20, 2007.)
|
|
(3.2)
|
2013 Amended and Restated Bylaws of the Company. (Incorporated by reference to Exhibit 3 to the Company's Report on Form 8-K dated February 7, 2013 and filed on February 13, 2013.)
|
|
Exhibit 4
|
Instruments defining the rights of security holders, including indentures
|
|
(4.1)
|
Articles 4, 10, and 11 of the Second Amended and Restated Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to this Report on Form 10-Q.)
|
|
(4.2)
|
Sections 2 and 5 of the 2013 Amended and Restated Bylaws of the Company. (Incorporated by reference to Exhibit 3.2 to this Report on Form 10-Q.)
|
|
Exhibit 31
|
Section 302 Certifications
|
|
(31.1)*
|
Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by David A. Jackson, the Company's Chief Executive Officer (principal executive officer).
|
|
(31.2)*
|
Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Adam W. Miller, the Company's Chief Financial Officer (principal financial officer).
|
|
Exhibit 32
|
Section 906 Certifications
|
|
(32.1)*
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by David A. Jackson, the Company's Chief Executive Officer.
|
|
(32.2)*
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Adam W. Miller, the Company's Chief Financial Officer.
|
|
Exhibit 101
|
Interactive Data File
|
|
(101.INS)**
|
XBRL Instance Document.
|
|
(101.SCH)**
|
XBRL Taxonomy Extension Schema Document.
|
|
(101.CAL)**
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
(101.DEF)**
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
(101.LAB)**
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
(101.PRE)**
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
*Filed herewith
|
||
**In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be "furnished" and not "filed."
|
KNIGHT TRANSPORTATION, INC.
|
||
Date: May 6, 2016
|
By:
|
/s/ David A. Jackson
|
David A. Jackson
|
||
Chief Executive Officer and President, in his capacity as such and on behalf of the registrant
|
||
Date: May 6, 2016
|
By:
|
/s/ Adam W. Miller
|
Adam W. Miller
|
||
Chief Financial Officer, in his capacity as such and on behalf of the registrant
|
Date: May 6, 2016
|
By:
|
/s/ David A. Jackson
|
David A. Jackson
|
||
Chief Executive Officer (principal executive officer)
|
Date: May 6, 2016
|
By:
|
/s/ Adam W. Miller
|
Adam W. Miller
|
||
Chief Financial Officer (principal financial officer)
|
CERTIFICATION PURSUANT TO
|
18 U.S.C. SECTION 1350,
|
AS ADOPTED PURSUANT TO
|
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
May 6, 2016
|
By:
|
/s/ David A. Jackson
|
David A. Jackson
|
||
Chief Executive Officer
|
CERTIFICATION PURSUANT TO
|
18 U.S.C. SECTION 1350,
|
AS ADOPTED PURSUANT TO
|
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
May 6, 2016
|
By:
|
/s/ Adam W. Miller
|
Adam W. Miller
|
||
Chief Financial Officer
|
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Apr. 30, 2016 |
|
Entity Registrant Name | KNIGHT TRANSPORTATION INC | |
Entity Central Index Key | 0000929452 | |
Trading Symbol | knx | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Common Stock, Shares Outstanding (in shares) | 80,209,489 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Unaudited Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Allowance for doubtful accounts | $ 3,034 | $ 3,106 |
Allowance for doubtful notes receivable | $ 245 | $ 273 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 80,116,000 | 80,967,000 |
Common stock, shares outstanding (in shares) | 80,116,000 | 80,967,000 |
Condensed Consolidated Unaudited Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
||||||
Net income | $ 23,023 | $ 29,942 | |||||
Other comprehensive income, net of tax: | |||||||
Realized gains from available-for-sale securities reclassified to net income(1) | [1] | (981) | (1,438) | ||||
Unrealized (loss)/gain from changes in fair value of available-for-sale securities(2) | [2] | 123 | (261) | ||||
Comprehensive income | 22,165 | 28,243 | |||||
Comprehensive income attributable to noncontrolling interest | (453) | (379) | |||||
Comprehensive income attributable to Knight Transportation | $ 21,712 | $ 27,864 | |||||
|
Condensed Consolidated Unaudited Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Net of current income taxes | $ (614) | $ (908) |
Net of deferred income taxes | $ 76 | $ (243) |
Note 1 - Financial Information |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 | |||
Notes to Financial Statements | |||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
References in this Report on Form 10-Q to "we," "us," "our," "Knight," or the "Company" or similar terms refer to Knight Transportation, Inc. and its consolidated subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. The accompanying condensed consolidated unaudited financial statements of Knight Transportation, Inc. and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America and Regulation S-X, instructions to Form 10-Q, and other relevant rules and regulations of the Securities and Exchange Commission (the "SEC"), as applicable to the preparation and presentation of interim financial information. Certain information and footnote disclosures have been omitted or condensed pursuant to such rules and regulations. We believe all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Results of operations in interim periods are not necessarily indicative of results for a full year. These condensed consolidated unaudited financial statements and notes thereto should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015. |
Note 2 - Stock-based Compensation |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
In May 2015, our shareholders approved the Amended and Restated 2015 Omnibus Incentive Plan (the “2015 Plan”). This plan combines into a single plan the Company’s 2005 Executive Cash Bonus Plan (the “2005 Plan”) and the 2012 Equity Compensation Plan (the “2012 Plan”) and allows for future grants under the 2015 Plan. Grants outstanding under the 2005 Plan and 2012 Plan will continue in force and effect and continue to be governed solely by the terms and conditions of the instrument evidencing such grants, and will be interpreted under the terms of the 2005 Plan and the 2012 Plan, as applicable. Since approval of the 2015 Plan in May 2015, all grants of stock-based compensation are made under the 2015 Plan. Stock-based compensation expense for the three months ended March 31, 2016, and 2015, are as follows:
Our policy is to recognize compensation cost on a straight-line basis over the requisite service period for the entire award. As of March 31, 2016, we have approximately $4.7 million of unrecognized compensation expense related to unvested options. This cost is expected to be recognized over a weighted-average period of 2.1 years and a total period of 3.9 years. We have approximately $10.0 million of unrecognized compensation expense related to restricted stock unit awards, which is anticipated to be recognized over a weighted-average period of 3.6 years and a total period of 6.8 years. We also have approximately $9.2 million of unrecognized compensation cost related to unvested performance awards. That cost is expected to be recognized over a weighted-average period of 3.8 years, and a total period of 3.1 years. A total of 569,480 stock options were granted during the first three months of 2016 and 31,000 stock options were granted during the first three months of 2015. We received approximately $2.6 million in cash from the exercise of stock options during the three months ended March 31, 2016, compared to $4.9 million for the same period in 2015. A summary of the option award activity under our equity compensation plan as of March 31, 2016, and changes during the three months is presented below:
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model. Listed below are the weighted-average assumptions used for the fair value computation:
A total of 350 and 7,700 restricted stock unit awards were granted during the first three months of 2016 and 2015, respectively. A summary of the restricted stock unit award activity under our equity compensation plans as of March 31, 2016, and changes during the three months is presented below:
The fair value of each restricted stock unit is based on the closing market price on the date of grant. Beginning in 2014, we issued performance restricted stock units (“PRSUs”) to selected key employees that may be earned based on revenue growth and return on assets, and may then be modified based on our total shareholder return, as defined in the instrument evidencing the grant, over a three-year period. The primary award adjustment may range from 0 percent to 150 percent of the initial grant, based upon performance achieved over the three-year period. The primary award modifier, which would multiply the adjusted primary award by 75 percent to 125 percent, is measured by determining the percentile rank of the total shareholder return, as defined in the instrument evidencing the grant, of Knight common stock in relation to the total shareholder return of a peer group for the three-year period. The final award will be based on performance achieved in accordance with the scale set forth in the plan agreement. Performance restricted stock units do not earn dividend equivalents. A total of 177,741 PRSUs were granted during the three months ended March 31, 2016, and none were granted during the three months ended March 31, 2015. A summary of the performance restricted stock unit award activity for the three months ended March 31, 2016, is presented below:
The number of granted shares, cancelled shares, and unvested shares are included in the table above based on the performance target established at the initial grant date. The performance period for the awards granted during the three months ended March 31, 2016, is January 1, 2016 to December 31, 2018. These awards will vest January 31, 2020, or thirteen months following the expiration of the performance period. The fair value of each PRSU grant is estimated on the date of grant using the Monte Carlo Simulation valuation model. Listed below are the weighted-average assumptions used for the fair value computation:
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Note 3 - Earnings Per Share |
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Earnings Per Share [Text Block] |
A reconciliation of the basic and diluted earnings per share computations for the three months ended March 31, 2016 and 2015, respectively, is as follows (dollars in thousands except per share data):
Certain shares of options, restricted stock units, and PRSUs (collectively, “equity awards”) were excluded from the computation of diluted earnings per share because the equity award’s exercise prices were greater than the average market price of the common shares and the sum total of assumed proceeds resulted in fewer shares repurchased than the weighted equity awards outstanding hypothetically exercised per the treasury method. The number of anti-dilutive shares are:
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Note 4 - Segment Information |
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Segment Reporting Disclosure [Text Block] |
We have two operating segments: (i) the Trucking segment comprised of three operating units (Dry Van, Refrigerated, and Drayage), and (ii) the Logistics segment comprised of two operating units (Brokerage and Intermodal). We also provide logistics, freight management and other non-trucking services through our Logistics businesses. Through our Trucking and Logistics segment capabilities, we are able to transport, or can arrange for the transportation of, general commodities for customers throughout the United States and parts of Canada and Mexico. In determining our reportable operating segments, we focus on financial information such as operating revenues and expenses, operating income, operating ratios, and other key operating statistics common in the industry. The chief operating decision makers also use this information to evaluate segment performance and allocate resources to our operations. Our segments provide transportation and related services for one another. Such services are billed at cost, and no profit is earned. Such intersegment revenues and expenses are eliminated in our consolidated results. The following table sets forth revenue and operating income between the Trucking and Logistics segments for the three months ended March 31, 2016 and 2015 (dollars in thousands).
Trucking Segment Information The Trucking segment operates large, modern, company-owned tractor fleets and use independent contractors to provide various transportation solutions, including multiple stop pick-ups and deliveries, dedicated equipment and personnel, on-time expedited pick-ups and deliveries, specialized driver training and other truckload services. Revenues are generally set at a predetermined rate per mile or per load for the Trucking services. In addition, revenue streams are also generated by charging for tractor and trailer detention, loading and unloading activities, dedicated services, and other specialized services, as well as through the collection of fuel surcharges to mitigate the impact of increases in the cost of fuel. The primary measurement we use to evaluate the profitability of the Trucking segment is the operating ratio, measured both on a GAAP basis (operating expenses expressed as a percentage of revenue) and non-GAAP basis used by many in our industry (operating expenses, net of Trucking fuel surcharge revenue, expressed as a percentage of Trucking revenue, excluding Trucking fuel surcharge revenue). We believe the second method allows us to more effectively compare periods while excluding the potentially volatile effect of changes in fuel prices. Non-GAAP operating ratio is not a substitute for, or superior to, and should be considered in addition to, GAAP operating ratio. Pursuant to the requirements of the SEC's Regulation G, the tables below compare our operating ratio using both methods. The following table sets forth the Trucking segment operating ratio on a GAAP basis (dollars in thousands).
The following table sets forth the Trucking segment operating ratio as if fuel surcharges are excluded from total revenue and instead reported as a reduction of operating expenses, excluding intersegment activity (dollars in thousands).
Our Trucking segment requires substantial capital expenditures for purchases of new revenue equipment. Total depreciation and amortization expense for the Trucking segment was approximately $27.4 million and $26.2 million for the three months ended March 31, 2016 and 2015, respectively. Logistics Segment Information Logistics revenue is generated primarily by the Brokerage and Intermodal operating units, which charge a predetermined rate per mile or per load for arranging freight transportation for our customers. We also provide logistics, freight management and other non-trucking services through our Logistics business. Additional revenue is generated by offering specialized logistics solutions (including, but not limited to, origin management, surge volumes, disaster relief, special projects, and other logistics needs). Logistics revenue is mainly affected by the rates we are able to negotiate with customers, the freight volumes that are shipped through third-party capacity providers, and our ability to secure qualified third-party capacity providers to transport customer freight. The following table sets forth the Logistics segment revenue, operating expenses, and operating income (dollars in thousands).
The following table sets forth the Logistics segment revenue, operating expenses, and operating income, excluding intersegment transactions (dollars in thousands).
We primarily measure the Logistics segment's profitability by reviewing the gross margin percentage (revenue, net of intersegment elimination), less purchased transportation expense, expressed as a percentage of revenue (net of intersegment elimination) and the operating income percentage. The gross margin percentage can be affected by customer rates and the costs of securing third-party capacity providers. Our third-party capacity providers are generally not subject to long-term or predetermined contracted rates, and the operating results could be affected if the availability of third-party capacity providers or the rates for such providers change in the future. The following table lists the gross margin percentage for our Brokerage and Intermodal businesses combined.
Our Logistics segment does not require significant capital expenditures and is not asset-intensive like the Trucking segment. Total Logistics segment depreciation and amortization expense is primarily attributed to equipment leased to third parties, which was approximately $1.0 million for both the three months ended March 31, 2016, and 2015. No segmental asset or liability information is provided as we do not prepare balance sheets by segment, and the chief operating decision makers do not review segment assets to make operating decisions. |
Note 5 - Joint Ventures |
3 Months Ended | ||
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Mar. 31, 2016 | |||
Notes to Financial Statements | |||
Joint Venture [Text Block] |
In July 2014, we formed an Arizona limited liability company, Kool Trans, LLC, for the purpose of expanding our refrigerated trucking business. In October 2015, we amended the Articles of Organization to change the company name to Kold Trans, LLC. We are entitled to 80% of the profits of the entity and have effective control over the management of the entity. In accordance with ASC 810-10-15-8, Consolidation , we consolidate the financial activities of this entity into these condensed consolidated financial statements. The noncontrolling interest for this entity is presented as a separate component of the condensed consolidated financial statements.In 2010, we partnered with a non-related investor to form an Arizona limited liability company for the purpose of sourcing commercial vehicle parts. We contributed $26,000 to acquire 52% ownership of this entity. In accordance with ASC 810-10-15-8, Consolidation , we consolidate the financial activities of this entity into the condensed consolidated financial statements. The noncontrolling interest for this entity is presented as a separate component of the condensed consolidated financial statements. |
Note 6 - Commitments and Contingencies |
3 Months Ended | ||
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Mar. 31, 2016 | |||
Notes to Financial Statements | |||
Commitments and Contingencies Disclosure [Text Block] |
We are a party to certain claims and pending litigation arising in the normal course of business. These proceedings primarily involve claims for personal injury, property damage, physical damage, and cargo loss incurred in the transportation of freight or for personnel matters, as well as certain class action litigation in which plaintiffs allege failure to provide meal and rest breaks, unpaid wages, unauthorized deductions, and other items. We are insured against auto liability (“AL”) claims under a primary self-insured retention ("SIR") policy with retention ranging from $1.0 million to $3.0 million per occurrence and in some years, depending on the applicable policy year, we have been responsible for aggregate losses up to $1.5 million within the primary AL layer. For the policy periods March 1, 2016 to March 1, 2017, and March 1, 2015 to March 1, 2016, the SIR is $2.5 million with no additional aggregate limits or deductibles within the primary AL policy. We have secured excess liability coverage up to $130.0 million per occurrence for the policy period March 1, 2016 to March 1, 2017. For policy period March 1, 2015 to March 1, 2016, our excess liability coverage limit was $105.0 million per occurrence. We also carry a $2.5 million aggregate deductible for any loss or losses within the excess coverage layer. We are self-insured for workers' compensation coverage. On March 31, 2016, the self-retention level was increased from a maximum $500,000 per occurrence to a maximum $1,000,000 per occurrence. We also maintain primary and excess coverage for employee medical expenses and hospitalization, with self-insured retention of $240,000 per claimant in 2016, and $225,000 per claimant in 2015. Based on claims resolved in 2015, and our present knowledge of the facts and in certain cases, advice of outside counsel, management believes the resolution of open claims and pending litigation, taking into account existing reserves, is not likely to have a materially adverse effect on our consolidated financial statements. |
Note 7 - Property and Equipment |
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Mar. 31, 2016 | |||
Notes to Financial Statements | |||
Property, Plant and Equipment Disclosure [Text Block] |
To ensure that our facilities remain modern and efficient, we periodically have facility upgrades, or new construction, in process at our various service center or corporate headquarters locations. Until these projects are completed, we consider these to be assets not yet placed in service and they are not depreciated. Once they are placed into service, we depreciate them according to our depreciation policy. At March 31, 2016 and December 31, 2015, we had approximately $9.2 million and $17.5 million, respectively, of facility construction in process assets included under "Buildings and building improvements” on the accompanying condensed consolidated balance sheets. |
Note 8 - Goodwill and Intangibles, Net |
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Goodwill and Intangible Assets Disclosure [Text Block] |
Goodwill represents the excess of the purchase price of our acquisitions over the fair value of the net assets acquired. The tax benefit from the recognition on the tax return of the amortization of the excess tax goodwill over book goodwill is treated as a reduction in the book basis of goodwill. The changes in the carrying amounts of goodwill were as follows (dollars in thousands):
In conjunction with our acquisitions, identifiable intangible assets subject to amortization have been recorded at fair value and are being amortized over a weighted-average amortization period of 7.6 years. Intangible asset balances were as follows (dollars in thousands):
Amortization expense associated with these intangible assets was $0.1 million in both the three months ended March 31, 2016, and 2015, and is included in “Depreciation and amortization” on the accompanying condensed consolidated statements of income. Future amortization expense for intangible assets is estimated at $0.4 million for the remainder of 2016, $0.5 million for each of the years 2017 through 2019, and $0.4 million in 2020 and 2021. |
Note 9 - Investments and Related Commitments |
3 Months Ended | ||
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Mar. 31, 2016 | |||
Notes to Financial Statements | |||
Investment [Text Block] |
In 2003, we signed a partnership agreement with Transportation Resource Partners ("TRP"), a company that makes privately negotiated equity investments. Per the original partnership agreement, we committed to invest $5.0 million in TRP. In 2006, we increased the commitment amount to $5.5 million. No gain or loss was recognized in the three months ended March 31, 2016 or 2015, from TRP investment activity. The carrying value of our investment in TRP was $300,000 at March 31, 2016 and December 31, 2015. Our investment in TRP is accounted for using the cost method, and the balance is included within "Other long-term assets, restricted cash, and investments" on our accompanying condensed consolidated balance sheets. In the fourth quarter of 2008, we formed Knight Capital Growth, LLC and committed $15.0 million to invest in a new partnership managed and operated by the managers and principals of TRP. The new partnership, Transportation Resource Partners III, LP ("TRP III"), is focused on investment opportunities similar to TRP. As of March 31, 2016, we have contributed approximately $11.0 million to TRP III, leaving an outstanding commitment of $4.0 million. Our investment in TRP III is accounted for using the equity method. For the three months ended March 31, 2016, we recorded a loss of approximately $300,000, for our investment in TRP III, and income of approximately $117,000 for the three months ended March 31, 2015. The carrying value of our investment in TRP III was $5.0 million and $5.8 million as of March 31, 2016 and December 31, 2015, respectively, and included within "Other long-term assets, restricted cash, and investments" on our accompanying condensed consolidated balance sheets. In 2015, we committed to invest in a new partnership, TRP Capital Partners, LP (“TRP IV”). The new partnership is managed and operated by the managers and principals of TRP and TRP III, and is focused on similar investment opportunities. We committed to contribute a total of $4.9 million to the new partnership, and have contributed approximately $1.0 million leaving an outstanding commitment of approximately $3.9 million as of March 31, 2016. Our investment in TRP IV is accounted for using the cost method, and the balance is included within "Other long-term assets, restricted cash, and investments" on our accompanying condensed consolidated balance sheets. In 2016, we committed to invest in another TRP partnership, TRP CoInvest Partners, (NTI) I, LP (“TRP Coinvestment”). The new partnership is managed and operated by the managers and principals of the other TRP partnerships, and is focused on similar investment opportunities. We committed to contribute, and have paid a total of $10.0 million to the new partnership, leaving no outstanding commitment as of March 31, 2016. Our investment in TRP Coinvestment is accounted for using the equity method, and the carrying value at March 31, 2016 was $10.0 million and is included within "Other long-term assets, restricted cash, and investments" on our accompanying condensed consolidated balance sheets. |
Note 10 - Marketable Equity Securities |
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Cash, Cash Equivalents, and Marketable Securities [Text Block] |
We have certain marketable equity securities classified as available-for-sale securities, which are recorded at fair value with unrealized gains and losses, net of tax, as a component of "Accumulated other comprehensive income" in shareholders' equity on the accompanying condensed consolidated balance sheets. Realized gains and losses on available-for-sale securities are included in the determination of net income. We use specific identification to determine the cost of securities sold, or amounts reclassified out of accumulated other comprehensive income into earnings and included in “Other income” on the accompanying condensed consolidated statements of income. The following table shows the Company’s realized gains during the three months ended March 31, 2016 and 2015, on certain securities that were held as available-for-sale (dollars in thousands).
As of March 31, 2016, our available-for-sale equity investments included in "Other long-term assets and restricted cash and investments" on the accompanying condensed consolidated balance sheets, was approximately $4.4 million, including gross unrealized gains of approximately $2.8 million, or $1.7 million (net of tax). As of December 31, 2015, our available-for-sale investment balance was approximately $7.1 million, including gross unrealized gains of approximately $4.2 million, or $2.6 million (net of tax). |
Note 11 - Assets Held for Sale |
3 Months Ended | ||
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Mar. 31, 2016 | |||
Notes to Financial Statements | |||
Other Assets Disclosure [Text Block] |
Revenue equipment that is not utilized in continuing operations and is held for sale is classified as "Assets held for sale" on the accompanying condensed consolidated balance sheets. Assets held for sale at March 31, 2016 and December 31, 2015, totaled $27.1 million and $29.3 million, respectively. Assets held for sale are no longer subject to depreciation, and are recorded at the lower of depreciated carrying value or fair market value less selling costs. We expect to sell these assets and replace them with new assets within twelve months of being classified as "Assets held for sale." |
Note 12 - Income Taxes |
3 Months Ended | ||
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Mar. 31, 2016 | |||
Notes to Financial Statements | |||
Income Tax Disclosure [Text Block] |
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. For interim reporting purposes, our income tax provisions are recorded based on the estimated annual effective tax rate. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial operations. A valuation allowance for deferred tax assets has not been deemed necessary due to our profitable operations. We recognize a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. We file federal and state income tax returns with varying statutes of limitations. The 2011 through 2015 tax years remain subject to examination by federal and state tax authorities. As of March 31, 2016, cumulative gross unrecognized tax benefits were $0.7 million. We had no unrecognized tax benefits as of December 31, 2015. All unrecognized tax benefits, if recognized, would affect the effective tax rate. With the exception of the unrecognized tax benefits discussed above, we believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our consolidated financial position, results of operations and cash flows. Our policy is to recognize interest and penalties related to unrecognized tax benefits as income tax expense. No interest or penalties related to unrecognized tax benefits has been recognized as of March 31, 2016 or December 31, 2015, because the Company has not yet received the refunds related to the uncertain tax benefits. None of the unrecognized tax benefits are expected to reverse in the next 12 months. |
Note 13 - Company Share Repurchase Programs |
3 Months Ended | ||
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Mar. 31, 2016 | |||
Notes to Financial Statements | |||
Treasury Stock [Text Block] |
In May 2011, our Board of Directors unanimously authorized the repurchase of 10.0 million shares of our common stock. The repurchase authorization is intended to afford flexibility to acquire shares opportunistically in future periods and does not indicate an intention to repurchase any particular number of shares within a definite timeframe. Any repurchases would be effected based upon share price and market conditions. The Company’s share repurchase program does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. Under the share repurchase program, we repurchased 1.1 million shares for $27.1 million in the three months ended March 31, 2016, and no repurchases were made in the three months ended March 31, 2015. As of March 31, 2016, there were 4.7 million shares remaining for future purchases under our repurchase program. The repurchase authorization will remain in effect until the share limit is reached or the program is terminated. |
Note 14 - Fair Value Measurements |
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Fair Value Disclosures [Text Block] |
Our assets and liabilities measured at fair value are based on principles set forth in ASC 820-10, Fair Value Measurements and Disclosure , for recurring and non-recurring fair value measurements of financial and non-financial assets and liabilities. This standard defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and expands disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to us while unobservable inputs are generally developed internally, utilizing management's estimates, assumptions, and specific knowledge of the nature of the assets or liabilities and related markets. The three levels are defined as follows:Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). Level 3 – Unobservable inputs, only used to the extent that observable inputs are not available, reflect our assumptions about the pricing of an asset or liability. In accordance with the fair value hierarchy described above, the following table shows the fair value of our financial assets and liabilities that are required to be measured at fair value as of March 31, 2016 and December 31, 2015 (dollars in thousands).
Our other financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, long term debt, and capital lease obligations. At March 31, 2016, the fair value of these instruments were approximated by their carrying values. |
Note 15 - Notes Receivable |
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Notes Receivable [Text Block] |
We provide financing to independent contractors and third parties on equipment sold or leased under our equipment sale program. Most of the notes are collateralized and are due in weekly installments, including principal and interest payments generally ranging from 2% to 20%. The notes receivable balances are classified separately between current and long-term on the condensed consolidated balance sheets. The current and long-term balance of our notes receivable at March 31, 2016 and December 31, 2015, are as follows (dollars in thousands):
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Note 16 - Line of Credit |
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Long-term Debt [Text Block] |
We maintain a revolving line of credit which permits revolving borrowings and letters of credit. The line of credit is maintained at $300.0 million and matures December 1, 2017. We incur interest on borrowings under the line of credit at the prime rate or LIBOR plus 0.625%, determined by us at the time of borrowing. We had $106.0 million outstanding under the line of credit as of March 31, 2016, compared to $112.0 million as of December 31, 2015. The weighted average variable annual percentage rate ("APR") for amounts borrowed during the three months ended March 31, 2016 was 1.04%. Borrowings under the line of credit are recorded in the "Long-term debt" line of the accompanying condensed consolidated balance sheets. As of March 31, 2016, we also utilized $27.4 million of the line of credit for letters of credit issued to various regulatory authorities in connection with our self-insurance programs. With the outstanding letters of credit and debt borrowed, we have $166.6 million available for future borrowings as of March 31, 2016. After consideration of fees incurred for the unused portion of our line of credit, our weighted average variable APR for the three months ended March 31, 2016 was 1.18%. We are obligated to comply with certain financial and other covenants under the line of credit agreement and were in compliance with such covenants at March 31, 2016 and December 31, 2015. |
Note 17 - Recent Accounting Pronouncements |
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Description of New Accounting Pronouncements Not yet Adopted [Text Block] |
In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting . The objective of this update is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the new guidance to determine the impact it may have on our condensed consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Rep orting Revenue Gross versus Net). This update clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which is not yet effective. The effective date for the amendments in this update is the same as the effective date of ASU 2014-09 which will be effective for reporting periods beginning after December 15, 2017. We are currently evaluating the effect that this guidance will have on our condensed consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update seeks to increase the transparency and comparability among entities by requiring public entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. To satisfy the standard’s objective, a lessee will recognize a right-of-use asset representing its right to use the underlying asset for the lease term and a lease liability for the obligation to make lease payments. Both the right-of-use asset and lease liability will initially be measured at the present value of the lease payments, with subsequent measurement dependent on the classification of the lease as either a finance or an operating lease. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. Accounting by lessors will remain mostly unchanged from current U.S. GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that companies may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The transition guidance also provides specific guidance for sale and leaseback transactions, build-to-suit leases, leveraged leases, and amounts previously recognized in accordance with the business combinations guidance for leases. The new standard is effective for public companies for annual periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. We are currently evaluating the effect that adopting this standard will have on our condensed consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall (Subtopic 825-10). This update was issued to enhance the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. The update (i) requires equity investments (except those accounted for under the equity method or that are consolidated) to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost; (iv) requires an entity to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and (v) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. These provisions are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. The standard is to be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. We are currently evaluating the effect that adopting this standard will have on our condensed consolidated financial statements.In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This update requires noncurrent classification of all deferred tax assets and liabilities for all public entities for annual periods beginning after December 15, 2016. The update provides for early adoption for all entities as of the beginning of an annual period. For the year ended December 31, 2015, we early adopted ASU 2015-17 and present all deferred tax assets and liabilities as non-current on a prospective basis. In June 2014, the FASB issued ASU 2014-12, Stock Compensation - Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendments in this update require performance targets that could be achieved after the requisite service period be treated as performance conditions that affect the vesting of the award. We adopted this amendment as of January 1, 2016, and do not expect the adoption to have an impact on our condensed consolidated financial statements.In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . The main objective of this update is to require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. The guidance in this update supersedes virtually all present U.S. GAAP guidance on revenue recognition. The amendments to the standard require the use of more estimates and judgments than the present standards and require additional disclosures. In July 2015, the FASB deferred the effective date for the revenue recognition standard. The accounting standard will now be effective for reporting periods beginning after December 15, 2017. We are currently evaluating this standard and our existing revenue recognition policies to determine which of our customer arrangements in the scope of the guidance will be affected by the new requirements and what impact they would have on our condensed consolidated financial statements upon adoption of this standard. |
Note 2 - Stock-based Compensation (Tables) |
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Note 3 - Earnings Per Share (Tables) |
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Note 4 - Segment Information (Tables) |
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Note 8 - Goodwill and Intangibles, Net (Tables) |
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Note 10 - Marketable Equity Securities (Tables) |
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Schedule of Realized Gain (Loss) [Table Text Block] |
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Note 14 - Fair Value Measurements (Tables) |
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Fair Value Measurements, Nonrecurring [Table Text Block] |
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Note 15 - Notes Receivable (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] |
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Note 2 - Stock-based Compensation Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Employee Stock Option [Member] | ||
Stock compensation expense | $ 371 | $ 166 |
RSU and Performance Shares [Member] | ||
Stock compensation expense | 409 | 1,987 |
Stock compensation expense | $ 780 | $ 2,153 |
Note 2 - Summary of Option Award Activity under Equity Compensation Plan (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Outstanding as of December 31, 2015 (in shares) | 2,008,872 | |
Outstanding as of December 31, 2015 (in dollars per share) | $ 21.41 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 569,480 | 31,000 |
Granted (in dollars per share) | $ 24.23 | |
Exercised (in shares) | (144,825) | |
Exercised (in dollars per share) | $ 18.38 | |
Forfeited (in shares) | (34,090) | |
Forfeited (in dollars per share) | $ 25.80 | |
Outstanding as of March 31, 2016 (in shares) | 2,399,437 | |
Outstanding as of March 31, 2016 (in dollars per share) | $ 22.20 |
Note 2 - Stock Option Fair Value Assumptions (Details) - Stock Compensation Plan [Member] - $ / shares |
3 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
||||||||||
Dividend yield(1) | [1] | 0.99% | 0.84% | ||||||||
Expected volatility(2) | [2] | 27.91% | 25.79% | ||||||||
Risk-free interest rate(4) | [3] | 0.90% | 0.89% | ||||||||
Expected term(5) | [4] | 2 years 270 days | 2 years 270 days | ||||||||
Weighted-average fair value of options granted (in dollars per share) | $ 4.28 | $ 4.72 | |||||||||
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Note 2 - Summary of Restricted Stock Unit Award Activity under Compensation Plan (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Unvested as of December 31, 2015 (in shares) | 879,173 | |
Unvested as of December 31, 2015 (in dollars per share) | $ 16.45 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 350 | 7,700 |
Granted (in dollars per share) | $ 24.23 | |
Vested (in shares) | (151,967) | |
Vested (in dollars per share) | $ 16.73 | |
Cancelled (in shares) | (5,240) | |
Cancelled (in dollars per share) | $ 16.43 | |
Unvested as of March 31, 2016 (in shares) | 722,316 | |
Unvested as of March 31, 2016 (in dollars per share) | $ 16.40 |
Note 2 - Summary of Award Activities (Details) - Performance Shares [Member] - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Unvested as of December 31, 2015 (in shares) | 341,782 | |
Unvested as of December 31, 2015 (in dollars per share) | $ 26.46 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 177,741 | 0 |
Granted (in dollars per share) | $ 23.89 | |
Shares earned above target (in shares) | 2,516 | |
Shares earned above target (in dollars per share) | $ 23.85 | |
Vested (in shares) | (5,391) | |
Vested (in dollars per share) | $ 23.85 | |
Cancelled (in shares) | (1,238) | |
Cancelled (in dollars per share) | $ 23.89 | |
Unvested as of March 31, 2016 (in shares) | 515,410 | |
Unvested as of March 31, 2016 (in dollars per share) | $ 25.59 |
Note 2 - Fair Value Assumptions, Performance Shares (Details) - Performance Shares [Member] |
3 Months Ended | |||||||||||
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Mar. 31, 2016
$ / shares
| ||||||||||||
Dividend yield(1) | 0.99% | [1] | ||||||||||
Expected volatility(2) | 27.95% | [2] | ||||||||||
Average peer volatility(2) | 34.37% | [2] | ||||||||||
Average peer correlation coefficient(3) | 0.6022% | [3] | ||||||||||
Risk-free interest rate(4) | 0.89% | [4] | ||||||||||
Expected term(5) | 2 years 306 days | [5] | ||||||||||
Granted (in dollars per share) | $ 23.89 | |||||||||||
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Note 3 - Reconciliation of Basic and Diluted Earnings Per Share Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Weighted-average common shares outstanding – basic (in shares) | 80,707 | 82,025 |
Dilutive effect of stock options and unvested restricted stock units (in shares) | 691 | 1,167 |
Weighted-average common shares outstanding – diluted (in shares) | 81,398 | 83,192 |
Net income attributable to Knight Transportation | $ 22,570 | $ 29,563 |
Basic earnings per share (in dollars per share) | $ 0.28 | $ 0.36 |
Diluted earnings per share (in dollars per share) | $ 0.28 | $ 0.36 |
Note 3 - Summary of Anti-dilutive Common Shares (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Number of anti-dilutive shares (in shares) | 1,017,093 | 26,970 |
Note 4 - Segment Information (Details Textual) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
|
Logistics Segment [Member] | ||
Depreciation, Depletion and Amortization | $ 1,000 | $ 1,000 |
Number of Operating Units | 2 | |
Trucking Segment [Member] | ||
Depreciation, Depletion and Amortization | $ 27,400 | 26,200 |
Number of Operating Units | 3 | |
Depreciation, Depletion and Amortization | $ 28,402 | $ 27,160 |
Number of Operating Segments | 2 |
Note 4 - Reconciliation of Revenue from Segments to Consolidated, Logistics (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Operating Segments [Member] | Logistics Segment [Member] | ||
Revenues | $ 58,609 | $ 57,848 |
Operating expenses | $ 55,804 | $ 53,691 |
Operating expenses | 95.20% | 92.80% |
Operating income | $ 2,805 | $ 4,157 |
Operating Segments [Member] | ||
Revenues | 276,565 | 293,138 |
Intersegment Eliminations [Member] | Logistics Segment [Member] | ||
Revenues | (4,439) | (2,839) |
Logistics Segment [Member] | ||
Revenues | 54,170 | 55,009 |
Operating expenses | $ 51,365 | $ 50,852 |
Operating expenses | 94.80% | 92.40% |
Operating income | $ 2,805 | $ 4,157 |
Revenues | 272,088 | 290,281 |
Operating expenses | 233,361 | 243,977 |
Operating income | $ 38,727 | $ 46,304 |
Note 4 - Gross Margin Percentage of Segments (Details) |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|||
Brokerage and Intermodal [Member] | ||||
Combined Brokerage and Intermodal gross margin percent(1) | [1] | 18.70% | 16.00% | |
|
Note 5 - Joint Ventures (Details Textual) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2010 |
Oct. 31, 2015 |
|
Kool Trans, LLC [Member] | ||
Joint Venture, Percentage of Profits Entitled to Reporting Entity | 80.00% | |
Non-related Investor [Member] | ||
Payments to Acquire Interest in Joint Venture | $ 26,000 | |
Joint Venture, Ownership Interest | 52.00% |
Note 6 - Commitments and Contingencies (Details Textual) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Policy Period, March 1, 2015 to March 1, 2016 [Member] | ||
Self Insurance Retention | $ 2,500,000 | |
Self Insurance, Aggregate Losses | 0 | |
Excess Personal Injury and Property Damage Liability Insurance | 105,000,000 | |
Policy Period, March 1, 2016 to March 1, 2017 [Member] | ||
Self Insurance Retention | 2,500,000 | |
Self Insurance, Aggregate Losses | 0 | |
Excess Personal Injury and Property Damage Liability Insurance | 130,000,000 | |
Minimum [Member] | ||
Self Insurance Retention | 1,000,000 | |
Self Insurance Retention, Workers Compensation Claims per Occurrence | 500,000 | |
Maximum [Member] | ||
Self Insurance Retention | 3,000,000 | |
Self Insurance, Aggregate Losses | 1,500,000 | |
Self Insurance Retention, Workers Compensation Claims per Occurrence | 1,000,000 | |
Insurance, Aggregate Deductible, Amount | 2,500,000 | |
Self Retention for Employee Medical Health | $ 240,000 | $ 225,000 |
Note 7 - Property and Equipment (Details Textual) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Building and Building Improvements, Gross [Member] | ||
Construction in Progress, Gross | $ 9.2 | $ 17.5 |
Note 8 - Goodwill and Intangibles, Net (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years 219 days | |
Amortization of Intangible Assets | $ 0.1 | $ 0.1 |
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | 0.4 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 0.5 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 0.5 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 0.5 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 0.4 | |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | $ 0.4 |
Note 8 - Changes in Carrying Amount of Goodwill (Details) |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Goodwill at beginning of period | $ 47,050,000 |
Amortization relating to deferred tax assets | (5,000) |
Goodwill at end of period | $ 47,045,000 |
Note 8 - Intangible Asset (Details) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Gross carrying amount | $ 3,700,000 | $ 3,700,000 |
Accumulated amortization | (750,000) | (625,000) |
Intangible assets, net | $ 2,950,000 | $ 3,075,000 |
Note 10 - Marketable Equity Securities (Details Textual) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Available-for-sale Securities | $ 4.4 | $ 7.1 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | 2.8 | 4.2 |
Available for Sale Securities, Accumulated Gross Unrealized Gain (Loss), Net of Tax | $ 1.7 | $ 2.6 |
Note 10 - Realized Gains on Available-for-Sale Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Sales proceeds | $ 2,852 | $ 3,146 |
Cost of securities sold | 1,257 | 800 |
Realized gain | 1,595 | 2,346 |
Realized gains, net of taxes | $ 981 | $ 1,438 |
Note 11 - Assets Held for Sale (Details Textual) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Disposal Group, Including Discontinued Operation, Assets | $ 27.1 | $ 29.3 |
Note 12 - Income Taxes (Details Textual) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
State and Local Jurisdiction [Member] | Earliest Tax Year [Member] | ||
Open Tax Year | 2011 | |
State and Local Jurisdiction [Member] | Latest Tax Year [Member] | ||
Open Tax Year | 2015 | |
Unrecognized Tax Benefits | $ 700,000 | $ 0 |
Unrecognized Tax Benefits, Income Tax Penalties Accrued | 0 | $ 0 |
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 0 |
Note 13 - Company Share Repurchase Programs (Details Textual) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
May. 31, 2011 |
|
Treasury Stock, Shares, Acquired | 1,100,000 | 0 | |
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 10,000,000 | ||
Treasury Stock, Value, Acquired, Cost Method | $ 27.1 | ||
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased | 4,700,000 |
Note 14 - Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Inputs, Level 1 [Member] | ||
Equity securities - common shares | $ 4,445 | $ 7,101 |
Money market funds | 1,204 | 1,003 |
Fair Value, Inputs, Level 2 [Member] | ||
Debt securities - municipal securities | 2,095 | 2,279 |
Equity securities - common shares | 4,445 | 7,101 |
Money market funds | 1,204 | 1,003 |
Debt securities - municipal securities | $ 2,095 | $ 2,279 |
Note 15 - Notes Receivable (Details Textual) |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Interest on Note Receivable, Minimum | 2.00% |
Interest on Note Receivable, Maximum | 20.00% |
Note 15 - Current and Long-term Balance of Notes Receivable (Details) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Notes receivable from independent contractors | $ 636,000 | $ 794,000 |
Notes receivable from third parties | 3,375,000 | 3,546,000 |
Gross notes receivable | 4,011,000 | 4,340,000 |
Allowance for doubtful notes receivable | (245,000) | (273,000) |
Total notes receivable, net of allowance | 3,766,000 | 4,067,000 |
Current portion, net of allowance | (554,000) | (648,000) |
Long-term portion | $ 3,212,000 | $ 3,419,000 |
Note 16 - Line of Credit (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.625% | |
Revolving Credit Facility [Member] | Unused Portion Fees [Member] | ||
Line of Credit Facility, Interest Rate During Period | 1.18% | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 300.0 | |
Long-term Line of Credit | $ 106.0 | $ 112.0 |
Line of Credit Facility, Interest Rate During Period | 1.04% | |
Letter of Credit [Member] | ||
Long-term Line of Credit | $ 27.4 | |
Line of Credit Facility, Remaining Borrowing Capacity | $ 166.6 |
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