Note 8 - Leases and Commitments

6 Months Ended

Jun. 30, 2014

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

NOTE 8 –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 condensed consolidated balance sheets and are set forth in the table below as of June 30, 2014 for the periods indicated.

	(in thousands)
	Capitalized Costs		Accumulated Amortization		Net Book Value
June 30, 2014	$	79,042	$	23,673	$	55,369
December 31, 2013		84,410		20,942		63,468

Amortization of leased assets is included in depreciation and amortization expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss). 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 condensed consolidated statements of operations and comprehensive income (loss). 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				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Amortization of leased assets	$	3,156	$	2,707	$	6,587	$	5,557
Rent expense under operating leases		1,240		709		2,514		1,622

At June 30, 2014, we have entered into leases with lenders who do not participate in our Revolver. Currently, such leases do not contain cross-default provisions with the Revolver, however, we have had leases in the past that did contain such provisions.

At June 30, 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	$	22,747	$	18,080	$	12,294	$	1,106	$	1,646	$	--
Future rentals under operating leases		1,293		642		520		467		274		166

We entered into three operating leases to finance the acquisition of revenue equipment. Accordingly, this equipment is not recorded on the condensed consolidated balance sheet.

As of June 30, 2014, the remaining minimum capital lease payments were $54 million, which excludes amounts representing interest of $1.9 million. The current portion of net minimum lease payments, including interest, is $21.7 million.

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 June 30, 2014. As of June 30, 2014, for the remainder of 2014, we had approximately $1.2 million in commitments for purchases of non-revenue equipment and commitments for purchases of revenue equipment in the amount of approximately $16.0 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 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 Executive 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.

On April 11, 2014, each participant in the Retention Bonus Plan, who was employed on October 30, 2013, received a percentage of his annualized base salary, determined as of the date of adoption of the Retention Bonus Plan. Mr. John Simone, our President and CEO, who also participates in the plan, received a partial payment of his bonus in December 2013. If a participant in the Retention Bonus Plan voluntarily terminates his employment at any time after receipt of the bonus payment 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.

On September 12, 2013, we entered into an agreement with a firm to act as our financial advisor in connection with our response to the unsolicited proposal made by Knight Transportation, Inc., and certain potential strategic and financial alternatives. The agreement contained provisions for us to pay a retainer fee and certain other fees that would become payable upon the consummation of certain events as defined in the agreement. At June 30, 2014, we have accrued $1.7 million for these fees.