[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
[
]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Nevada
|
88-0320154
|
|
(State
or other jurisdiction of incorporation
|
(I.R.S.
Employer Identification No.)
|
|
or
organization)
|
||
400
Birmingham Hwy.
|
||
Chattanooga,
TN
|
37419
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Yes
[ X ]
|
No
[ ]
|
Large
accelerated filer [ ]
|
Accelerated
filer [ X ]
|
Non-accelerated
filer [ ]
|
Yes
[ ]
|
No
[ X ]
|
PART
I
FINANCIAL
INFORMATION
|
||
Page
Number
|
||
Item
1.
|
Financial
Statements
|
|
Consolidated
Condensed Balance Sheets as of June 30, 2006 (Unaudited) and December
31,
2005
|
||
Consolidated
Condensed Statements of Operations for the three and six months ended
June
30, 2006 and 2005 (Unaudited)
|
||
Consolidated
Condensed Statements of Stockholders' Equity and Comprehensive Loss
for
the six months ended June 30, 2006 (Unaudited)
|
||
Consolidated
Condensed Statements of Cash Flows for the six months ended June
30, 2006
and 2005 (Unaudited)
|
||
Notes
to Consolidated Condensed Financial Statements (Unaudited)
|
||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
|
Item
4.
|
Controls
and Procedures
|
|
PART
II
OTHER
INFORMATION
|
||
Page
Number
|
||
Item
1.
|
Legal
Proceedings
|
|
Item
1A.
|
Risk
Factors
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
|
Item
6.
|
Exhibits
|
|
COVENANT
TRANSPORT, INC. AND SUBSIDIARIES
CONSOLIDATED
CONDENSED BALANCE SHEETS
(In
thousands, except share data)
|
|||||||
June
30, 2006
|
December
31, 2005
|
||||||
ASSETS
|
(unaudited)
|
||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
2,583
|
$
|
3,618
|
|||
Accounts
receivable, net of allowance of $1,938 in 2006 and
$2,200 in 2005
|
69,678
|
77,969
|
|||||
Drivers
advances and other receivables
|
6,693
|
3,932
|
|||||
Inventory
and supplies
|
4,656
|
4,661
|
|||||
Prepaid
expenses
|
12,585
|
16,199
|
|||||
Assets
held for sale
|
9,820
|
3,204
|
|||||
Deferred
income taxes
|
16,763
|
16,158
|
|||||
Income
taxes receivable
|
6,008
|
7,559
|
|||||
Total
current assets
|
128,786
|
133,300
|
|||||
Property
and equipment, at cost
|
278,029
|
295,433
|
|||||
Less
accumulated depreciation and amortization
|
(74,950
|
)
|
(84,275
|
)
|
|||
Net
property and equipment
|
203,079
|
211,158
|
|||||
Other
assets
|
23,825
|
26,803
|
|||||
Total
assets
|
$
|
355,690
|
$
|
371,261
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Securitization
facility
|
$
|
47,781
|
$
|
47,281
|
|||
Accounts
payable
|
7,217
|
8,457
|
|||||
Accrued
expenses
|
17,613
|
17,088
|
|||||
Current
portion of insurance and claims accrual
|
16,932
|
18,529
|
|||||
Total
current liabilities
|
89,543
|
91,355
|
|||||
Long-term
debt
|
24,000
|
33,000
|
|||||
Insurance
and claims accrual, net of current portion
|
19,941
|
23,272
|
|||||
Deferred
income taxes
|
33,494
|
33,910
|
|||||
Total
liabilities
|
166,978
|
181,537
|
|||||
Commitments
and contingent liabilities
|
-
|
-
|
|||||
Stockholders'
equity:
|
|||||||
Class
A common stock, $.01 par value; 20,000,000 shares authorized;
13,469,090 and 13,447,608 shares issued; 11,650,690 and
11,629,208
outstanding as of June 30, 2006 and December 31, 2005,
respectively
|
135
|
134
|
|||||
Class
B common stock, $.01 par value; 5,000,000 shares authorized;
2,350,000 shares issued and outstanding as of June 30, 2006 and
December 31, 2005
|
24
|
24
|
|||||
Additional
paid-in-capital
|
91,823
|
91,553
|
|||||
Treasury
stock at cost; 1,818,400 shares as of June 30, 2006 and December
31, 2005,
respectively
|
(21,582
|
)
|
(21,582
|
)
|
|||
Retained
earnings
|
118,312
|
119,595
|
|||||
Total
stockholders' equity
|
188,712
|
189,724
|
|||||
Total
liabilities and stockholders' equity
|
$
|
355,690
|
$
|
371,261
|
Three
months ended
June
30,
(unaudited)
|
Six
months ended
June
30,
(unaudited)
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Revenue:
|
|||||||||||||
Freight
revenue
|
$
|
139,344
|
$
|
138,736
|
$
|
268,788
|
$
|
262,306
|
|||||
Fuel
surcharges
|
30,018
|
18,077
|
52,109
|
32,433
|
|||||||||
Total
revenue
|
$
|
169,362
|
$
|
156,813
|
$
|
320,887
|
$
|
294,739
|
|||||
Operating
expenses:
|
|||||||||||||
Salaries,
wages, and related expenses
|
64,421
|
60,967
|
123,063
|
114,913
|
|||||||||
Fuel
expense
|
50,301
|
39,905
|
92,217
|
73,395
|
|||||||||
Operations
and maintenance
|
8,774
|
8,444
|
17,271
|
15,672
|
|||||||||
Revenue
equipment rentals and purchased transportation
|
15,458
|
15,049
|
30,136
|
30,409
|
|||||||||
Operating
taxes and licenses
|
3,465
|
3,604
|
6,767
|
6,943
|
|||||||||
Insurance
and claims
|
8,187
|
9,603
|
16,414
|
18,437
|
|||||||||
Communications
and utilities
|
1,527
|
1,601
|
3,117
|
3,240
|
|||||||||
General
supplies and expenses
|
5,740
|
4,314
|
10,044
|
8,464
|
|||||||||
Depreciation
and amortization, including net gains on
disposition of equipment
|
8,536
|
10,284
|
18,555
|
19,948
|
|||||||||
Total
operating expenses
|
166,409
|
153,771
|
317,584
|
291,421
|
|||||||||
Operating
income
|
2,953
|
3,042
|
3,303
|
3,318
|
|||||||||
Other
(income) expenses:
|
|||||||||||||
Interest
expense
|
1,075
|
1,038
|
2,199
|
1,652
|
|||||||||
Interest
income
|
(122
|
)
|
(57
|
)
|
(259
|
)
|
(101
|
)
|
|||||
Other
|
(22
|
)
|
(94
|
)
|
(75
|
)
|
(330
|
)
|
|||||
Other
expenses, net
|
931
|
887
|
1,865
|
1,221
|
|||||||||
Income
before income taxes
|
2,022
|
2,155
|
1,438
|
2,097
|
|||||||||
Income
tax expense
|
2,420
|
1,503
|
2,721
|
2,094
|
|||||||||
Net
income (loss)
|
$
|
(398
|
)
|
$
|
652
|
$ |
(1,283
|
)
|
$
|
3
|
|||
Net
income (loss) per share:
|
|||||||||||||
Basic
earnings (loss) per share:
|
$ |
(0.03
|
)
|
$
|
0.05
|
$
|
(0.09
|
)
|
$
|
0.00
|
|||
Diluted
earnings (loss) per share:
|
$ |
(0.03
|
)
|
$
|
0.05
|
$
|
(0.09
|
)
|
$
|
0.00
|
|||
|
|||||||||||||
Basic
weighted average shares outstanding
|
13,997
|
14,100
|
13,991
|
14,375
|
|||||||||
Diluted
weighted average shares outstanding
|
13,997
|
14,182
|
13,991
|
14,533
|
|||||||||
Common
Stock
Class
Class
A
B
|
Additional
Paid-In
Capital
|
Treasury
Stock
|
Retained
Earnings
|
Total
Stockholders'
Equity
|
Comprehensive
Loss
|
|||||||||||||||||
Balances
at December 31, 2005
|
$
|
134
|
$
|
24
|
$
|
91,553
|
$
|
(21,582
|
)
|
$
|
119,595
|
$
|
189,724
|
|||||||||
Exercise
of employee stock
options
|
1
|
-
|
191
|
-
|
-
|
192
|
||||||||||||||||
Income
tax benefit arising from
the
exercise of stock options
|
-
|
-
|
17
|
-
|
-
|
17
|
||||||||||||||||
SFAS
No. 123R stock-based
employee
compensation cost
|
62
|
62
|
||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(1,283
|
)
|
(1,283
|
)
|
(1,283
|
)
|
||||||||||||
Comprehensive
loss for six
months
ended June 30, 2006
|
$
|
(1,283
|
)
|
|||||||||||||||||||
Balances
at June 30, 2006
|
$
|
135
|
$
|
24
|
$
|
91,823
|
$
|
(21,582
|
)
|
$
|
118,312
|
$
|
188,712
|
|||||||||
Six
months ended June 30,
(unaudited)
|
|||||||
2006
|
2005
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income (loss)
|
$
|
(1,283
|
)
|
$
|
3
|
||
Adjustments
to reconcile net income (loss) to net cash provided by
operating activities:
|
|||||||
Provision
for losses on accounts receivable
|
292
|
510
|
|||||
Depreciation
and amortization
|
20,214
|
20,067
|
|||||
Deferred
income taxes (benefit)
|
(1,021
|
)
|
(10,850
|
)
|
|||
Income
tax benefit from exercise of stock options
|
0
|
50
|
|||||
Net
gain on disposition of property and equipment
|
(1,659
|
)
|
(119
|
)
|
|||
Non-cash
stock compensation
|
62
|
0
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Receivables
and advances
|
8,107
|
8,592
|
|||||
Prepaid
expenses and other assets
|
3,614
|
(7,994
|
)
|
||||
Inventory
and supplies
|
5
|
(559
|
)
|
||||
Insurance
and claims accrual
|
(4,928
|
)
|
(148
|
)
|
|||
Accounts
payable and accrued expenses
|
890
|
371
|
|||||
Net
cash flows provided by operating activities
|
24,293
|
9,924
|
|||||
Cash
flows from investing activities:
|
|||||||
Acquisition
of property and equipment
|
(77,757
|
)
|
(66,975
|
)
|
|||
Proceeds
from building sale leaseback
|
29,630
|
0
|
|||||
Proceeds
from disposition of property and equipment
|
31,090
|
28,230
|
|||||
Net
cash flows used in investing activities
|
(17,037
|
)
|
(38,745
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Exercise
of stock options
|
192
|
418
|
|||||
Excess
income tax benefit arising from the exercise of stock
options
|
17
|
0
|
|||||
Repurchase
of company stock
|
0
|
(11,657
|
)
|
||||
Proceeds
from issuance of debt
|
36,500
|
78,000
|
|||||
Repayments
of debt
|
(45,000
|
)
|
(42,872
|
)
|
|||
Deferred
costs
|
0
|
8
|
|||||
Net
cash provided by (used in) financing activities
|
(8,291
|
)
|
23,898
|
||||
Net
change in cash and cash equivalents
|
(1,035
|
)
|
(4,923
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
3,618
|
5,066
|
|||||
Cash
and cash equivalents at end of period
|
$
|
2,583
|
$
|
143
|
(in
thousands except per share data)
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Numerator:
|
|||||||||||||
Net
earnings (loss)
|
$
|
(398
|
)
|
$
|
652
|
$
|
(1,283
|
)
|
$
|
3
|
|||
Denominator:
|
|||||||||||||
Denominator
for basic earnings per share
-
weighted-average shares
|
13,997
|
14,100
|
13,991
|
14,375
|
|||||||||
Effect
of dilutive securities:
|
|||||||||||||
Employee
stock options
|
0
|
82
|
0
|
158
|
|||||||||
Denominator
for diluted earnings per share
-
adjusted weighted-average shares and
assumed
conversions
|
13,997
|
14,182
|
13,991
|
14,533
|
|||||||||
Net
income (loss) per share:
|
|||||||||||||
Basic
earnings (loss) per share:
|
$
|
(0.03
|
)
|
$
|
0.05
|
$
|
(0.09
|
)
|
$
|
0.00
|
|||
Diluted
earnings (loss) per share:
|
$
|
(0.03
|
)
|
$
|
0.05
|
$
|
(0.09
|
)
|
$
|
0.00
|
(in
thousands, except per share data)
|
Three
months ended June 30, 2005
|
Six
months ended June 30, 2005
|
|||||
Net
income, as reported:
|
$
|
652
|
$
|
3
|
|||
Deduct:
Total stock-based employee compensation
expense
determined under fair value based method for
all
awards, net of related tax effects
|
(1,349
|
)
|
(1,744
|
)
|
|||
Pro
forma net loss
|
$
|
(697
|
)
|
$
|
(1,741
|
)
|
|
Basic
and diluted earnings (loss) per share:
|
|||||||
As
reported
|
$
|
0.05
|
$
|
0.00
|
|||
Pro
forma
|
$
|
(0.05
|
)
|
$
|
(0.12
|
)
|
|
Number
of
options
(in
thousands)
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
term
|
Aggregate
intrinsic
value
(in
thousands)
|
||||||
|
|||||||||
Outstanding
at beginning of the period
|
1,454
|
$
|
14.33
|
||||||
Options
granted
|
5
|
$
|
13.80
|
||||||
Options
exercised
|
(15)
|
$
|
12.38
|
||||||
Options
forfeited
|
(15)
|
$
|
15.25
|
||||||
Options
expired
|
(178)
|
$
|
15.50
|
||||||
Outstanding
at end of period
|
1,251
|
$
|
14.18
|
5.8
years
|
$
|
$2,312
|
|||
Exercisable
at end of period
|
1,236
|
$
|
14.21
|
5.8
years
|
$
|
$2,264
|
Three
months ended June 30,
|
Six
months ended June 30,
|
|||||||
2006
|
2005
|
2006
|
2005
|
|||||
Expected
volatility
|
37.4%
- 39.5%
|
51.9%
|
37.4%
- 39.5%
|
50.6%
- 51.9%
|
||||
Risk-free
interest rate
|
4.9%
- 5.0%
|
3.9%
|
4.9%
- 5.0%
|
3.8%
- 3.9%
|
||||
Expected
lives (in years)
|
5.0
|
5.0
|
5.0
|
5.0
|
Number
of
stock
awards
|
Weighted
average
grant
date
fair value
|
||||||
Unvested
at January 1, 2006
|
0
|
$
|
0 | ||||
Granted
|
371,985
|
$
|
12.79
|
||||
Vested
|
0
|
-
|
|||||
Forfeited
|
0
|
-
|
|||||
Unvested
at June 30, 2006
|
371,985
|
$
|
12.79
|
(in
thousands)
|
Six
months ended
June
30,
|
||||||
2006
|
2005
|
||||||
Net
liability for derivatives at January 1
|
$
|
(13
|
)
|
$
|
(439
|
)
|
|
Gain
in value of derivative instruments that do not qualify as
hedging
Instruments
|
13
|
273
|
|||||
Net
liability for derivatives at June 30
|
$
|
-
|
$
|
(166
|
)
|
(in
thousands)
|
June
30, 2006
|
December
31, 2005
|
|||||
|
|||||||
Securitization
Facility
|
$
|
47,781
|
$
|
47,281
|
|||
Borrowings
under Credit Agreement
|
$
|
24,000
|
$
|
33,000
|
|||
Less
current maturities
|
-
|
-
|
|||||
Long-term
debt, less current portion
|
$
|
24,000
|
$
|
33,000
|
•
|
Expedited
long haul service. Increased the fleet by approximately 10%, expanded
the
length of haul to reflect a renewed focus on transcontinental loads,
and
increased miles per truck. The team operation is also the main training
ground for new drivers, and improvements in our training have allowed
us
to lower turnover in a difficult driver market. Average freight revenue
per total mile has remained basically flat with last year, although
the
length of haul has expanded about 15%.
|
•
|
Refrigerated
service. Increased our combined Southern Refrigerated Transport (“SRT”)
and Covenant Refrigerated fleet by approximately 22%, expanded the
length
of haul, and increased miles per truck slightly. Average freight
revenue
per total mile increased 2.4%, while average length of haul has increased
about 7%. Within this service offering, SRT continues to generate
the best
performance of any part of our company, and Covenant Refrigerated
should
be complimented for taking on more trucks than its business plan
called
for to cover additional trucks coming out of the regional service
offering.
|
•
|
Dedicated
service. Increased the fleet by approximately 39% and expanded the
length
of haul, while miles per truck decreased about 15%. Average freight
revenue per total mile increased 15.7% even with the longer length
of
haul. While we believe the reallocation of trucks from the regional
business to new dedicated business was prudent, the margins on the
new
dedicated business have not reached our long-term targets due to
the quick
expansion of this service offering.
|
•
|
Regional
solo-driver service. Decreased the fleet by approximately 38%, decreased
the length of haul, and increased miles per truck slightly. Average
freight revenue per total mile decreased 5.1%. The freight mix within
our
regional service offering changed substantially. The average truck
count
for the quarter decreased by almost 600 trucks versus the second
quarter
of last year, and we expect the truck count to continue to decrease
over
the remainder of the year, as additional trucks are allocated elsewhere
and the overall size of the company’s fleet is reduced. Within the
regional service offering, average length of haul decreased about
25% to
552 miles in the second quarter of 2006, as we continue to pursue
shorter,
more consistent lanes within defined regions. The process of repositioning
several hundred tractors around freight centers and driver domiciles
has
caused an increase in brokered freight and some lane and customer
turnover
that has temporarily affected the rate structure of this service
offering.
We understand the reasons for the rate decrease and will be working
diligently to correct them within the context of building a successful
regional offering.
|
Three
Months Ended
June
30,
|
Three
Months Ended
June
30,
|
|||||||||
2006
|
2005
|
2006
|
2005
|
|||||||
Total
revenue
|
100.0%
|
100.0%
|
Freight
revenue (1)
|
100.0%
|
100.0%
|
|||||
Operating
expenses:
|
Operating
expenses:
|
|||||||||
Salaries,
wages, and related
expenses
|
38.0
|
38.9
|
Salaries,
wages, and related
expenses
|
46.2
|
43.9
|
|||||
Fuel
expense
|
29.7
|
25.4
|
Fuel
expense (1)
|
14.6
|
15.7
|
|||||
Operations
and maintenance
|
5.2
|
5.4
|
Operations
and maintenance
|
6.3
|
6.1
|
|||||
Revenue
equipment rentals and
purchased
transportation
|
9.1
|
9.6
|
Revenue
equipment rentals and
purchased
transportation
|
11.1
|
10.8
|
|||||
Operating
taxes and licenses
|
2.1
|
2.3
|
Operating
taxes and licenses
|
2.5
|
2.6
|
|||||
Insurance
and claims
|
4.8
|
6.1
|
Insurance
and claims
|
5.9
|
6.9
|
|||||
Communications
and utilities
|
1.0
|
1.0
|
Communications
and utilities
|
1.1
|
1.2
|
|||||
General
supplies and expenses
|
3.4
|
2.8
|
General
supplies and expenses
|
4.1
|
3.1
|
|||||
Depreciation
and amortization
|
5.0
|
6.6
|
Depreciation
and amortization
|
6.1
|
7.4
|
|||||
Total
operating expenses
|
98.3
|
98.1
|
Total
operating expenses
|
97.9
|
97.8
|
|||||
Operating
income
|
1.8
|
1.9
|
Operating
income
|
2.1
|
2.2
|
|||||
Other
expense, net
|
0.6
|
0.6
|
Other
expense, net
|
.7
|
0.6
|
|||||
Income
before income taxes
|
1.2
|
1.4
|
Income
before income taxes
|
1.4
|
1.6
|
|||||
Income
tax expense
|
1.4
|
1.0
|
Income
tax expense
|
1.7
|
1.1
|
|||||
Net
income (loss)
|
(0.2%)
|
0.4%
|
Net
income (loss)
|
(0.3%)
|
0.5%
|
(1)
|
Freight
revenue is total revenue less fuel surcharge revenue. Fuel surcharge
revenue is shown netted against the fuel expense category ($30.0
million
and $18.1 million in the three months ended June 30, 2006 and 2005,
respectively).
|
Six
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||
2006
|
2005
|
2006
|
2005
|
|||||||
Total
revenue
|
100.0%
|
100.0%
|
Freight
revenue (2)
|
100.0%
|
100.0%
|
|||||
Operating
expenses:
|
Operating
expenses:
|
|||||||||
Salaries,
wages, and related
expenses
|
38.4
|
39.0
|
Salaries,
wages, and related
expenses
|
45.8
|
43.8
|
|||||
Fuel
expense
|
28.7
|
24.9
|
Fuel
expense (2)
|
14.9
|
15.6
|
|||||
Operations
and maintenance
|
5.4
|
5.3
|
Operations
and maintenance
|
6.4
|
6.0
|
|||||
Revenue
equipment rentals and purchased transportation
|
9.4
|
10.3
|
Revenue
equipment rentals and purchased transportation
|
11.2
|
11.6
|
|||||
Operating
taxes and licenses
|
2.1
|
2.4
|
Operating
taxes and licenses
|
2.5
|
2.6
|
|||||
Insurance
and claims
|
5.1
|
6.3
|
Insurance
and claims
|
6.1
|
7.0
|
|||||
Communications
and utilities
|
1.0
|
1.1
|
Communications
and utilities
|
1.2
|
1.2
|
|||||
General
supplies and expenses
|
3.1
|
2.9
|
General
supplies and expenses
|
3.7
|
3.2
|
|||||
Depreciation
and amortization
|
5.8
|
6.8
|
Depreciation
and amortization
|
6.9
|
7.6
|
|||||
Total
operating expenses
|
99.0
|
98.9
|
Total
operating expenses
|
98.8
|
98.7
|
|||||
Operating
income
|
1.0
|
1.1
|
Operating
income
|
1.2
|
1.3
|
|||||
Other
expense, net
|
0.6
|
0.4
|
Other
expense, net
|
0.7
|
0.5
|
|||||
Income
before income taxes
|
0.4
|
0.7
|
Income
before income taxes
|
0.5
|
0.8
|
|||||
Income
tax expense
|
0.8
|
0.7
|
Income
tax expense
|
1.0
|
0.8
|
|||||
Net
income (loss)
|
(0.4%)
|
0.0%
|
Net
income (loss)
|
(0.5%)
|
0.0%
|
(2)
|
Freight
revenue is total revenue less fuel surcharge revenue. Fuel surcharge
revenue is shown netted against the fuel expense category ($52.1
million
and $32.4 million in the six months ended June 30, 2006 and 2005,
respectively).
|
PART
II
OTHER
INFORMATION
|
|
LEGAL
PROCEEDINGS
From
time to time we are a party to ordinary, routine litigation arising
in the
ordinary course of business, most of which involves claims for personal
injury and property damage incurred in connection with the transportation
of freight. We maintain insurance to cover liabilities arising from
the
transportation of freight for amounts in excess of certain self-insured
retentions.
Reference
is made in our Form 10-Q for the quarterly period ended March 31,
2006
regarding a lawsuit against us relating to a 2003 vehicular
accident.
|
|
RISK
FACTORS
While
we attempt to identify, manage, and mitigate risks and uncertainties
associated with our business, some level of risk and uncertainty
will
always be present. Our Form 10-K for the year ended December 31,
2005, in
the section entitled Item
1A. Risk Factors,
describes some of the risks and uncertainties associated with our
business. These risks and uncertainties have the potential to materially
affect our business, financial condition, results of operations,
cash
flows, projected results, and future prospects. We do not believe
that
there have been any material changes to the risk factors previously
disclosed in our 2005 Form 10-K.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
|
The
Annual Meeting of Stockholders of Covenant Transport, Inc. was held
on May
23, 2006, for the purpose of (a) electing seven directors for one-year
terms, and (b) approving the adoption of our 2006 Omnibus Incentive
Plan.
Proxies for the meeting were solicited pursuant to Section 14(a)
of the
Exchange Act, and there was no solicitation in opposition to the
Board’s
proposals. Each of the nominees for director as listed in the Definitive
Proxy Statement filed with the Securities and Exchange Commission
on April
17, 2006 (File No. 000-24960) was elected.
|
|
The
voting tabulation on the election of directors was as
follows:
|
Votes "FOR"
|
Votes
Withheld
|
|
David
R. Parker
|
14,917,914
|
419,654
|
Mark
A. Scudder
|
14,583,074
|
754,494
|
William
T. Alt
|
14,663,228
|
674,340
|
Hugh
O. Maclellan, Jr
|
14,737,622
|
599,946
|
Robert
E. Bosworth
|
14,893,771
|
443,797
|
Bradley
A. Moline
|
14,394,913
|
942,655
|
Niel
B. Nielson
|
14,887,230
|
450,338
|
The
2006 Omnibus Incentive Plan was approved with 10,509,911 “FOR”; 3,772,744
“AGAINST”; 4,270 abstentions; and 1,050,643 broker
non-votes. |
|
EXHIBITS
|
|
Exhibit
Number
|
Reference
|
Description
|
3.1
|
(1)
|
Restated
Articles of Incorporation
|
3.2
|
(1)
|
Amended
Bylaws dated September 27, 1994
|
4.1
|
(1)
|
Restated
Articles of Incorporation
|
4.2
|
(1)
|
Amended
Bylaws dated September 27, 1994
|
10.18
|
(2)
|
Purchase
and Sale Agreement dated April 3, 2006, between Covenant Transport,
Inc.,
a Tennessee corporation, and CT Chattanooga TN, LLC
|
10.19
|
(2)
|
Lease
Agreement dated April 3, 2006, between Covenant Transport, Inc.,
a
Tennessee corporation, and CT Chattanooga TN, LLC
|
10.20
|
(2)
|
Lease
Guaranty dated April 3, 2006, by Covenant Transport, Inc., a Nevada
corporation, for the benefit of CT Chattanooga TN, LLC
|
10.21
|
(3)
|
Covenant
Transport, Inc. 2006 Omnibus Incentive Plan
|
10.22
|
#
|
Form
of Restricted Stock Award Notice under the Covenant Transport, Inc.
2006
Omnibus Incentive Plan
|
10.23
|
#
|
Form
of Restricted Stock Special Award Notice under the Covenant Transport,
Inc. 2006 Omnibus Incentive Plan
|
10.24
|
#
|
Form
of Incentive Stock Option Award Notice under the Covenant Transport,
Inc.
2006 Omnibus Incentive Plan
|
10.25
|
#
|
Amendment
No. 2 to Amended and Restated Credit Agreement dated March 3, 2006,
among
Covenant Asset Management, Inc., Covenant Transport, Inc., a Nevada
corporation, Bank of America, N.A., as agent, the lenders signatories
thereto, and the guarantors signatories thereto
|
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 R. Parker,
the
Company's Chief 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 Joey B. Hogan,
the
Company's Chief Financial Officer
|
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 R. Parker, 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 Joey B. Hogan, the Company's Chief
Financial Officer
|
References:
|
||
(1)
|
Incorporated
by reference to Form S-1, Registration No. 33-82978, effective October
28,
1994.
|
|
(2)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed April 7,
2006, File No. 000-24960.
|
|
(3)
|
Incorporated
by reference to Appendix A to the Company’s Definitive Proxy Statement
filed April 17, 2006, File No. 000-24960.
|
|
#
|
Filed
herewith.
|
COVENANT
TRANSPORT, INC.
|
||
Date:
August 9, 2006
|
By:
|
/s/
Joey B. Hogan
|
Joey
B. Hogan
|
||
Executive
Vice President and Chief Financial Officer,
|
||
in
his capacity as such and on behalf of the
issuer.
|