0001564590-21-041321.txt : 20210805 0001564590-21-041321.hdr.sgml : 20210805 20210805120304 ACCESSION NUMBER: 0001564590-21-041321 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 40 CONFORMED PERIOD OF REPORT: 20210630 FILED AS OF DATE: 20210805 DATE AS OF CHANGE: 20210805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLD DOMINION FREIGHT LINE, INC. CENTRAL INDEX KEY: 0000878927 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 560751714 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19582 FILM NUMBER: 211147125 BUSINESS ADDRESS: STREET 1: 500 OLD DOMINION WAY CITY: THOMASVILLE STATE: NC ZIP: 27360 BUSINESS PHONE: 3368895000 MAIL ADDRESS: STREET 1: 500 OLD DOMINION WAY CITY: THOMASVILLE STATE: NC ZIP: 27360 FORMER COMPANY: FORMER CONFORMED NAME: OLD DOMINION FREIGHT LINE INC/VA DATE OF NAME CHANGE: 19930328 10-Q 1 odfl-10q_20210630.htm FORM 10-Q odfl-10q_20210630.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

 

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________ .

 

Commission File Number: 0-19582

 

OLD DOMINION FREIGHT LINE, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

Virginia

 

56-0751714

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

 

 

500 Old Dominion Way

Thomasville, North Carolina

 

27360

(Address of principal executive offices)

 

(Zip Code)

(336) 889-5000

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock ($0.10 par value)

ODFL

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of August 3, 2021 there were 115,810,083 shares of the registrant’s Common Stock ($0.10 par value) outstanding.

 


 

INDEX

 

Part I – FINANCIAL INFORMATION

 

 

 

 

Item 1

Financial Statements

1

 

Condensed Balance Sheets – June 30, 2021 and December 31, 2020

1

 

Condensed Statements of Operations – For the three and six months ended June 30, 2021 and 2020

3

 

Condensed Statements of Changes in Shareholders’ Equity - For the three and six months ended June 30, 2021 and 2020

4

 

Condensed Statements of Cash Flows – For the six months ended June 30, 2021 and 2020

5

 

Notes to the Condensed Financial Statements

6

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

9

Item 3

Quantitative and Qualitative Disclosures about Market Risk

17

Item 4

Controls and Procedures

17

 

 

Part II – OTHER INFORMATION

 

 

 

 

Item 1

Legal Proceedings

18

Item 1A

Risk Factors

18

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

18

Item 6

Exhibits

18

 

 

Exhibit Index

19

Signatures

20

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

OLD DOMINION FREIGHT LINE, INC.

CONDENSED BALANCE SHEETS

 

 

 

June 30,

 

 

 

 

 

 

 

2021

 

 

December 31,

 

(In thousands, except share and per share data)

 

(Unaudited)

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

484,204

 

 

$

401,430

 

Short-term investments

 

 

165,254

 

 

 

330,274

 

Customer receivables, less allowances of $9,915 and $8,979, respectively

 

 

548,749

 

 

 

444,653

 

Other receivables

 

 

51,307

 

 

 

9,569

 

Prepaid expenses and other current assets

 

 

61,601

 

 

 

57,413

 

Total current assets

 

 

1,311,115

 

 

 

1,243,339

 

 

 

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

 

 

 

Revenue equipment

 

 

1,991,845

 

 

 

1,885,649

 

Land and structures

 

 

2,297,101

 

 

 

2,218,290

 

Other fixed assets

 

 

493,870

 

 

 

475,264

 

Leasehold improvements

 

 

12,904

 

 

 

12,226

 

Total property and equipment

 

 

4,795,720

 

 

 

4,591,429

 

Accumulated depreciation

 

 

(1,796,993

)

 

 

(1,677,398

)

Net property and equipment

 

 

2,998,727

 

 

 

2,914,031

 

 

 

 

 

 

 

 

 

 

Other assets

 

 

224,604

 

 

 

212,040

 

Total assets

 

$

4,534,446

 

 

$

4,369,410

 

 

Note: The Condensed Balance Sheet at December 31, 2020 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

1


OLD DOMINION FREIGHT LINE, INC.

CONDENSED BALANCE SHEETS

(CONTINUED)

 

 

 

June 30,

 

 

 

 

 

 

 

2021

 

 

December 31,

 

(In thousands, except share and per share data)

 

(Unaudited)

 

 

2020

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

90,956

 

 

$

68,511

 

Compensation and benefits

 

 

245,762

 

 

 

191,303

 

Claims and insurance accruals

 

 

55,620

 

 

 

53,092

 

Other accrued liabilities

 

 

89,680

 

 

 

51,513

 

Income taxes payable

 

 

 

 

 

8,711

 

Total current liabilities

 

 

482,018

 

 

 

373,130

 

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

99,939

 

 

 

99,931

 

Other non-current liabilities

 

 

329,901

 

 

 

349,851

 

Deferred income taxes

 

 

220,210

 

 

 

220,210

 

Total long-term liabilities

 

 

650,050

 

 

 

669,992

 

Total liabilities

 

 

1,132,068

 

 

 

1,043,122

 

 

 

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common stock - $0.10 par value, 280,000,000 shares authorized, 115,810,083 and 117,057,696 shares outstanding at June 30, 2021 and December 31, 2020, respectively

 

 

11,581

 

 

 

11,706

 

Capital in excess of par value

 

 

160,204

 

 

 

226,451

 

Retained earnings

 

 

3,230,593

 

 

 

3,088,131

 

Total shareholders’ equity

 

 

3,402,378

 

 

 

3,326,288

 

Total liabilities and shareholders’ equity

 

$

4,534,446

 

 

$

4,369,410

 

 

Note: The Condensed Balance Sheet at December 31, 2020 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

2


OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands, except share and per share data)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue from operations

 

$

1,319,409

 

 

$

896,210

 

 

$

2,445,924

 

 

$

1,883,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

611,518

 

 

 

460,906

 

 

 

1,157,177

 

 

 

985,389

 

Operating supplies and expenses

 

 

137,577

 

 

 

75,412

 

 

 

261,733

 

 

 

183,105

 

General supplies and expenses

 

 

34,427

 

 

 

25,881

 

 

 

65,595

 

 

 

59,489

 

Operating taxes and licenses

 

 

33,256

 

 

 

27,043

 

 

 

64,522

 

 

 

56,357

 

Insurance and claims

 

 

14,983

 

 

 

10,910

 

 

 

27,905

 

 

 

20,760

 

Communications and utilities

 

 

8,390

 

 

 

7,262

 

 

 

16,586

 

 

 

15,453

 

Depreciation and amortization

 

 

63,947

 

 

 

65,735

 

 

 

127,934

 

 

 

131,170

 

Purchased transportation

 

 

43,927

 

 

 

18,983

 

 

 

78,641

 

 

 

39,783

 

Miscellaneous expenses, net

 

 

5,340

 

 

 

4,912

 

 

 

10,130

 

 

 

9,732

 

Total operating expenses

 

 

953,365

 

 

 

697,044

 

 

 

1,810,223

 

 

 

1,501,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

366,044

 

 

 

199,166

 

 

 

635,701

 

 

 

382,336

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

465

 

 

 

765

 

 

 

972

 

 

 

865

 

Interest income

 

 

(196

)

 

 

(231

)

 

 

(482

)

 

 

(1,479

)

Other expense (income), net

 

 

1,387

 

 

 

(373

)

 

 

1,515

 

 

 

3,244

 

Total non-operating expense

 

 

1,656

 

 

 

161

 

 

 

2,005

 

 

 

2,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

364,388

 

 

 

199,005

 

 

 

633,696

 

 

 

379,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

94,812

 

 

 

51,200

 

 

 

164,761

 

 

 

98,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

269,576

 

 

$

147,805

 

 

$

468,935

 

 

$

280,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.33

 

 

$

1.26

 

 

$

4.04

 

 

$

2.37

 

Diluted

 

$

2.31

 

 

$

1.25

 

 

$

4.01

 

 

$

2.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

115,820,522

 

 

 

117,610,178

 

 

 

116,157,336

 

 

 

118,330,176

 

Diluted

 

 

116,561,242

 

 

 

118,359,884

 

 

 

116,906,572

 

 

 

119,082,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.20

 

 

$

0.15

 

 

$

0.40

 

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

3


OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

(In thousands)

2021

 

 

2020

 

 

2021

 

 

2020

 

Common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

$

11,596

 

 

$

11,813

 

 

$

11,706

 

 

$

11,953

 

Share repurchases

 

(16

)

 

 

(80

)

 

 

(129

)

 

 

(223

)

Share-based compensation and share issuances

 

1

 

 

 

1

 

 

 

6

 

 

 

7

 

Taxes paid in exchange for shares withheld

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Cash paid for fractional shares

 

 

 

 

 

 

 

 

 

 

(1

)

Ending balance

 

11,581

 

 

 

11,734

 

 

 

11,581

 

 

 

11,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital in excess of par value:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

156,126

 

 

 

217,187

 

 

 

226,451

 

 

 

218,462

 

Share-based compensation and share issuances

 

4,078

 

 

 

2,208

 

 

 

7,042

 

 

 

4,275

 

Taxes paid in exchange for shares withheld

 

 

 

 

 

 

 

(4,539

)

 

 

(2,731

)

Forward contract for accelerated share repurchases

 

 

 

 

(37,500

)

 

 

(68,750

)

 

 

(37,500

)

Cash paid for fractional shares

 

 

 

 

 

 

 

 

 

 

(611

)

Ending balance

 

160,204

 

 

 

181,895

 

 

 

160,204

 

 

 

181,895

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

3,024,195

 

 

 

2,787,049

 

 

 

3,088,131

 

 

 

2,850,302

 

Share repurchases

 

(39,984

)

 

 

(128,417

)

 

 

(280,086

)

 

 

(306,568

)

Cash dividends declared

 

(23,194

)

 

 

(17,598

)

 

 

(46,387

)

 

 

(35,877

)

Net income

 

269,576

 

 

 

147,805

 

 

 

468,935

 

 

 

280,982

 

Ending balance

 

3,230,593

 

 

 

2,788,839

 

 

 

3,230,593

 

 

 

2,788,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

$

3,402,378

 

 

$

2,982,468

 

 

$

3,402,378

 

 

$

2,982,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

4


OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Six Months Ended

 

 

 

June 30,

 

(In thousands)

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

468,935

 

 

$

280,982

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

127,942

 

 

 

131,170

 

Loss on disposal of property and equipment

 

 

701

 

 

 

140

 

Other, net

 

 

15,352

 

 

 

(9,118

)

Changes in operating assets and liabilities, net

 

 

(104,639

)

 

 

113,042

 

Net cash provided by operating activities

 

 

508,291

 

 

 

516,216

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(206,109

)

 

 

(120,128

)

Proceeds from sale of property and equipment

 

 

15,512

 

 

 

2,570

 

Purchase of short-term investments

 

 

(89,965

)

 

 

 

Proceeds from maturities of short-term investments

 

 

255,072

 

 

 

 

Net cash used in investing activities

 

 

(25,490

)

 

 

(117,558

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

 

 

 

99,923

 

Payments for share repurchases

 

 

(280,215

)

 

 

(306,791

)

Forward contract for accelerated share repurchases

 

 

(68,750

)

 

 

(37,500

)

Dividends paid

 

 

(46,408

)

 

 

(35,892

)

Other financing activities, net

 

 

(4,654

)

 

 

(3,345

)

Net cash used in financing activities

 

 

(400,027

)

 

 

(283,605

)

 

 

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

 

82,774

 

 

 

115,053

 

Cash and cash equivalents at beginning of period

 

 

401,430

 

 

 

403,571

 

Cash and cash equivalents at end of period

 

$

484,204

 

 

$

518,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

5


 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Significant Accounting Policies

Business

We are one of the largest North American less-than-truckload (“LTL”) motor carriers. We provide regional, inter-regional and national LTL services through a single integrated, union-free organization. Our service offerings, which include expedited transportation, are provided through an expansive network of service centers located throughout the continental United States. Through strategic alliances, we also provide LTL services throughout North America. In addition to our core LTL services, we offer a range of value-added services including container drayage, truckload brokerage and supply chain consulting. We have one operating segment and the composition of our revenue is summarized below:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

LTL services

 

$

1,299,760

 

 

$

884,069

 

 

$

2,409,382

 

 

$

1,858,500

 

Other services

 

 

19,649

 

 

 

12,141

 

 

 

36,542

 

 

 

25,074

 

Total revenue from operations

 

$

1,319,409

 

 

$

896,210

 

 

$

2,445,924

 

 

$

1,883,574

 

Basis of Presentation

The accompanying unaudited, interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and, in management’s opinion, contain all adjustments (consisting of normal recurring items) necessary for a fair presentation, in all material respects, of the financial position and results of operations for the periods presented. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements.

The preparation of condensed financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Our operating results are subject to seasonal trends; therefore, the results of operations for the interim period ended June 30, 2021 are not necessarily indicative of the results that may be expected for the subsequent quarterly periods or the year ending December 31, 2021.

The condensed financial statements should be read in conjunction with the financial statements and related notes, which appear in our Annual Report on Form 10-K for the year ended December 31, 2020. There have been no significant changes in the accounting principles and policies, long-term contracts or estimates inherent in the preparation of the condensed financial statements of Old Dominion Freight Line, Inc. as previously described in our Annual Report on Form 10-K for the year ended December 31, 2020, other than those disclosed in this Form 10-Q.

Unless the context requires otherwise, references in these Notes to “Old Dominion,” the “Company,” “we,” “us” and “our” refer to Old Dominion Freight Line, Inc.

Stock Repurchase Program

On May 1, 2020, we announced that our Board of Directors had approved a two-year stock repurchase program authorizing us to repurchase up to an aggregate of $700.0 million of our outstanding common stock (the “2020 Repurchase Program”). The 2020 Repurchase Program became effective upon the termination of our $350.0 million repurchase program on May 29, 2020. Under our repurchase programs, we may repurchase shares from time to time in open market purchases or through privately negotiated transactions. Shares of our common stock repurchased under our repurchase programs are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock.

On February 25, 2021, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a third-party financial institution as part of our 2020 Repurchase Program. Under the ASR Agreement, we paid the third-party financial institution $275.0 million and received an initial delivery of 960,330 shares of our common stock for $206.3 million, representing approximately 75% of the total value of shares to be received by us under the ASR Agreement. The remaining shares are expected to settle during the third quarter of 2021. At final settlement, we may receive additional shares of our common stock, or, under certain circumstances, we may be required to provide the third-party financial institution additional shares or may elect to make a cash payment to the third-party financial institution as part of the final settlement. The total shares repurchased will be based on the daily volume-weighted average share price of our common stock during the term of the ASR Agreement, less a negotiated discount.

6


The ASR Agreement was accounted for as a settled treasury stock purchase and a forward stock purchase contract. The par value of the initial share delivery was recorded as a reduction to common stock, with the excess purchase price recorded as a reduction to retained earnings. The forward stock purchase contract is accounted for as a contract indexed to our own stock and is classified within capital in excess of par value on our Condensed Statements of Changes in Shareholders’ Equity. 

During the three and six months ended June 30, 2021, we repurchased 159,485 shares of our common stock for $40.0 million and 1,286,517 shares of our common stock for $280.2 million under our 2020 Repurchase Program, respectively, including shares repurchased under the ASR Agreement. At June 30, 2021, our 2020 Repurchase Program had $275.0 million remaining available, including $68.7 million that is deferred until the third quarter when the final settlement occurs on our current ASR Agreement, leaving $206.3 million remaining available and uncommitted.

On July 28, 2021, we announced that our Board of Directors had approved a new stock repurchase program authorizing us to repurchase up to an aggregate of $2.0 billion of our outstanding common stock. The new repurchase program, which does not have an expiration date, will be effective upon the completion of our 2020 Repurchase Program.

Note 2. Earnings Per Share

Basic earnings per share is computed by dividing net income by the daily weighted average number of shares of our common stock outstanding for the period, excluding unvested restricted stock. Unvested restricted stock is included in common shares outstanding on our Condensed Balance Sheets.

Diluted earnings per share is computed using the treasury stock method. The denominator used in calculating diluted earnings per share includes the impact of unvested restricted stock and other dilutive, non-participating securities under our equity award agreements. The denominator excludes contingently-issuable shares under performance-based award agreements when the performance target has not yet been deemed achieved.

The following table provides a reconciliation of the number of shares of common stock used in computing basic and diluted earnings per share:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Weighted average shares outstanding - basic

 

 

115,820,522

 

 

 

117,610,178

 

 

 

116,157,336

 

 

 

118,330,176

 

Dilutive effect of share-based awards

 

 

740,720

 

 

 

749,706

 

 

 

749,236

 

 

 

752,552

 

Weighted average shares outstanding - diluted

 

 

116,561,242

 

 

 

118,359,884

 

 

 

116,906,572

 

 

 

119,082,728

 

 

Note 3. Long-Term Debt

Long-term debt, net of unamortized debt issuance costs, consisted of the following:

(In thousands)

 

June 30,

2021

 

 

December 31,

2020

 

Senior notes

 

$

99,939

 

 

$

99,931

 

Revolving credit facility

 

 

 

 

 

 

Total long-term debt

 

 

99,939

 

 

 

99,931

 

Less: Current maturities

 

 

 

 

 

 

Total maturities due after one year

 

$

99,939

 

 

$

99,931

 

Senior Note Agreement

On May 4, 2020, we entered into a Note Purchase and Private Shelf Agreement with PGIM, Inc. (“Prudential”) and certain affiliates and managed accounts of Prudential (the “Note Agreement”). The Note Agreement, which is uncommitted and subject to Prudential’s sole discretion, provides for the issuance of senior promissory notes with an aggregate principal amount of up to $350.0 million through May 4, 2023. Pursuant to the Note Agreement, we issued $100.0 million aggregate principal amount of senior promissory notes (the “Series B Notes”), the proceeds of which are available for capital expenditures, share repurchases, dividends, acquisitions, or general corporate purposes. Borrowing availability under the Note Agreement is reduced by the outstanding amount of the existing Series B Notes, and all other senior promissory notes issued pursuant to the Note Agreement.

The Series B Notes bear interest at 3.10% per annum and mature on May 4, 2027, unless prepaid. Principal payments are required annually beginning on May 4, 2023 in equal installments of $20.0 million through May 4, 2027. The Series B Notes are senior unsecured obligations and rank pari passu with borrowings under our Credit Agreement or Note Agreement.

7


Credit Agreement

On November 21, 2019, we entered into a second amended and restated credit agreement with Wells Fargo Bank, National Association serving as administrative agent for the lenders (the “Credit Agreement”). The Credit Agreement provides for a five-year, $250.0 million senior unsecured revolving line of credit and a $150.0 million accordion feature, which if fully exercised and approved, would expand the total borrowing capacity up to an aggregate of $400.0 million. Of the $250.0 million line of credit commitments under the Credit Agreement, up to $100.0 million may be used for letters of credit.

At our option, borrowings under the Credit Agreement bear interest at either: (i) LIBOR (including applicable successor provisions) plus an applicable margin (based on our ratio of net debt-to-total capitalization) that ranges from 1.000% to 1.375%; or (ii) a Base Rate, as defined in the Credit Agreement, plus an applicable margin (based on our ratio of net debt-to-total capitalization) that ranges from 0.000% to 0.375%. Letter of credit fees equal to the applicable margin for LIBOR loans are charged quarterly in arrears on the daily average aggregate stated amount of all letters of credit outstanding during the quarter. Commitment fees ranging from 0.100% to 0.175% (based upon the ratio of net debt-to-total capitalization) are charged quarterly in arrears on the aggregate unutilized portion of the Credit Agreement.

For periods covered under the Credit Agreement, the applicable margin on LIBOR loans and letter of credit fees were 1.000% and commitment fees were 0.100%. 

There were $39.2 million and $42.1 million of outstanding letters of credit at June 30, 2021 and December 31, 2020, respectively.

General Debt Provisions

The Credit Agreement and Note Agreement contain customary covenants, including financial covenants that require us to observe a maximum ratio of debt to total capital and a minimum fixed charge coverage ratio. The Credit Agreement and Note Agreement also include a provision limiting our ability to make restricted payments, including dividends and payments for share repurchases, unless, among other conditions, no defaults or events of default are ongoing (or would be caused by such restricted payment).

Note 4. Commitments and Contingencies

We are involved in or addressing various legal proceedings and claims, governmental inquiries, notices and investigations that have arisen in the ordinary course of our business and have not been fully adjudicated, some of which may be covered in whole or in part by insurance. Certain of these matters include collective and/or class-action allegations. We do not believe that the resolution of any of these matters will have a material adverse effect upon our financial position, results of operations or cash flows.

Note 5. Fair Value Measurements

Short-term Investments

A summary of the fair value of our short-term investments as of June 30, 2021 is shown in the table below.

(In thousands)

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Certificates of deposit

 

$

45,062

 

 

$

 

 

$

45,062

 

 

$

 

U.S. government securities

 

 

50,211

 

 

 

50,211

 

 

 

 

 

 

 

Commercial paper

 

 

69,981

 

 

 

 

 

 

69,981

 

 

 

 

Total

 

$

165,254

 

 

$

50,211

 

 

$

115,043

 

 

$

 

Our certificates of deposit are measured at carrying value including accrued interest, which approximates fair value due to their short-term nature. Our commercial paper is valued using broker quotes that utilize observable market inputs.

Long-term Debt

8


The carrying value of our total long-term debt was $99.9 million at June 30, 2021 and December 31, 2020. The estimated fair value of our total long-term debt