Note 12 - Leases and Commitments

3 Months Ended

Mar. 31, 2014

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

Note 12 – LEASES AND Commitments

LEASES

We lease certain revenue equipment under capital leases with terms of 15 to 60 months. Balances related to these capitalized leases are included in property and equipment in the accompanying consolidated balance sheets and are set forth in the table below as of March 31, 2014 for the periods indicated.

	(in thousands)
	Capitalized Costs		Accumulated Amortization		Net Book Value
March 31, 2014	$	78,197	$	20,661	$	57,536
December 31, 2013		84,410		20,942		63,468

Amortization of leased assets is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Rent expense relating to operating leases for facilities and certain revenue equipment is included in operations and maintenance expense and rent expense relating to operating leases for office equipment is included in other operating expenses and costs. The total rent expense incurred is included in the accompanying consolidated statements of operations. Amortization of leased assets and rent expense under operating leases are reflected in the table below for the periods indicated.

	(in thousands)
	Three Months Ended March 31,
	2014		2013
Amortization of leased assets	$	3,431	$	2,851
Rent expense under operating leases		1,275		912

We have entered into leases with lenders who participate in the Revolver. Those leases contain cross-default provisions with the Revolver. We have also entered into leases with other lenders who do not participate in our Revolver. Multiple leases with lenders who do not participate in our Revolver generally contain cross-default provisions.

At March 31, 2014, the future minimum payments under capitalized leases with initial terms of one year or more and future rentals under operating leases for certain facilities, office equipment and revenue equipment with initial terms of one year or more were as follows for the years indicated.

	(in thousands)
	2014		2015		2016		2017		2018		Thereafter
Future minimum payments	$	21,392	$	19,949	$	16,228	$	1,089	$	1,915	$	--
Future rentals under operating leases		993		358		288		240		85		168

We entered into three fair market value leases to finance the acquisition of revenue equipment. These leases are deemed to be operating leases and accordingly this equipment is not recorded on the balance sheet.

As of March 31, 2014, the remaining minimum capital lease payments were $58.1 million, which excludes amounts representing interest of $2.5 million. The current portion of net minimum lease payments, including interest, is $21.4 million.

We routinely monitor our equipment acquisition needs and adjust our purchase schedule from time to time based on our analysis of factors such as new equipment prices, the condition of the used equipment market, demand for our freight services, prevailing interest rates, technological improvements, fuel efficiency, equipment durability, equipment specifications, our operating performance and the availability of qualified drivers.

OTHER COMMITMENTS

In February 2014, the Board of Directors authorized the use of up to $20.0 million in new capital leases under existing facilities through 2014 and we have not utilized any of this authorization as of March 31, 2014. As of March 31, 2014, for the remainder of 2014, we had approximately $1.3 million in commitments for purchases of non-revenue equipment and commitments for purchases of revenue equipment in the amount of approximately $31.8 million. We anticipate taking delivery of these purchases throughout the remainder of 2014.

In October 2013, the Executive Compensation Committee of the Board of Directors (the “Compensation Committee”) approved a retention bonus plan (the “Retention Bonus Plan”) and a change in control/severance plan (the “Management Severance Plan”) for certain of our officers and members of our management team. The Compensation Committee determined that it was appropriate to adopt the Retention Bonus Plan and the Management Severance Plan as a means of assuring the continued focus of the new and expanded management team that is critical to the successful execution of our turnaround strategy, and mitigating any uncertainty regarding future employment resulting from Knight Transportation, Inc.’s unsolicited proposal to acquire the Company and its efforts to disrupt our turnaround.

Each participant in the Retention Bonus Plan, with the exception of Mr. John Simone, our President and CEO, is eligible to receive a one-time, cash bonus that is equal to a percentage of the participant’s annualized base salary determined as of the date of adoption of the Retention Bonus Plan. The percentages range from 6.25% to 25% of annualized base salary. Mr. Simone is eligible to receive a retention bonus equal to 25% of his annualized base salary plus an additional $150,000, of which $50,000 was paid to him in December 2013. All other payments under the Retention Bonus Plan were paid on or about April 11, 2014 (the “Payment Date”) to those plan participants employed as of October 30, 2013, that remain employed with us through and as of the Payment Date. If a participant in the Retention Bonus Plan voluntarily terminates his employment at any time after receipt of a payment under the Retention Bonus Plan and before the one-year anniversary of the adoption of the Retention Bonus Plan, or October 30, 2014, the plan participant will be required to repay his or her retention bonus award to the Company.

The Management Severance Plan provides that the plan participants will enter into substantially identical Change in Control/Severance Agreements with the Company (each, a “Severance Agreement”) and will be entitled to certain severance benefits thereunder if (i) following adoption of the Management Severance Plan, a participant is terminated by us without “cause” (as defined in the Severance Agreement) other than in connection with or following a “change in control” (as defined in the Severance Agreement) (the “Severance Benefit”) or (ii) in the event of and for the twelve-month period following a “change in control,” we or our successor terminates a participant’s employment without “cause” or the participant is subject to a “constructive termination” (as defined in the Severance Agreement) (the “Change-in-Control Benefit”). The Management Severance Plan provides that the Severance Benefit and the Change-in-Control Benefit are mutually exclusive and a plan participant would not be entitled to both benefits.

With respect to the Severance Benefit, plan participants will be entitled to receive a monthly severance payment equal to the participant’s base monthly salary at the time of termination without “cause” for a fixed period of time ranging from six months to twelve months.