Acquisition

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Acquisition

Note 4 - Acquisition

On July 8, 2011, the Company acquired substantially all of the operations of the Significant Agent’s truck agent business. This principally consisted of the future revenue stream generated by independent agents, customers and owner-operators already under contract with and operating under the authorities and licenses of the Company, which were managed by the Significant Agent and for which the Significant Agent received 100% of the net revenue earned. The purchase price totaled approximately $10 million and principally consisted of an unconditional release and discharge of the Significant Agent from approximately $9.4 million of indebtedness due to the Company plus the assumption of certain liabilities. Goodwill recognized in this transaction amounted to $9.8 million and other intangible assets, primarily non-competition agreements, amounted to $0.2 million. The increase in goodwill in 2012 of $96,000 resulted from the finalization of certain liabilities assumed in connection with the acquisition.

Prior to the acquisition, and since 2007, the Significant Agent was an independent agent to which the Company provided agent support services, including loans and advances. The Company received interest on the loans and advances extended to the Significant Agent at rates ranging from 8% to 20% and was entitled to receive a fee equal to 25% of the Significant Agent’s pre-tax income, if any. However, no pre-tax income was generated during the periods preceding July 2011. Pursuant to the Acquisition Agreement, all previous contractual arrangements between the Company and the Significant Agent were terminated, including the option to convert a portion of outstanding loans into a 25% equity ownership interest in the Significant Agent’s business. However, the Company agreed to continue to provide the Significant Agent with certain support services for its retained businesses through December 31, 2011 and entered into a brokerage agent agreement with the Significant Agent. In November 2011, the Significant Agent terminated its brokerage agent agreement with the Company simultaneously entering into a new credit facility. In connection with the termination of the brokerage agent agreement, the Company sold to the Significant Agent approximately $11 million of accounts receivable and the Significant Agent assumed approximately $6 million of related liabilities. The net proceeds of approximately $5 million were used by the Company to reduce the outstanding borrowings under its credit facility with Regions Bank.

The following pro forma consolidated statement of income for the year ended December 31, 2011 gives effect to the acquisition as of January 1, 2011:

	As previously reported		Pro Forma adjustments				Pro Forma
Gross revenues
Transportation services	$	318,080,000	$	(65,042,000	)	(g)	$	253,038,000
Agent support services		1,890,000		(986,000	)	(a)		904,000
Total revenues		319,970,000		(66,028,000	)			253,942,000
Purchased transportation		259,493,000		(56,451,000	)	(g)		203,042,000
Purchased equipment for resale		566,000						566,000
Commissions		41,371,000		(1,545,000	)	(b)
				(8,225,000	)	(g)		31,601,000
Operating expenses		12,108,000		532,000		(c) (d) (e)
				(366,000	)	(g)		12,274,000
		313,538,000		(66,055,000	)			247,483,000
Income from operations		6,432,000		27,000				6,459,000
Interest expense		520,000						520,000
Income before income taxes		5,912,000		27,000				5,939,000
Income taxes		2,274,000		10,000		(f)		2,284,000
Net income	$	3,638,000		17,000			$	3,655,000
Net income per share:
Basic	$	.11					$	.11
Diluted	$	.10					$	.10
Weighted average number of common shares:
Basic		33,908,000						33,908,000
Diluted		35,396,000						35,396,000

Footnotes to Pro Forma Statement of Income:

(a) Interest income on debt component of consideration discharged to acquire Truck Agent Business Unit.

(b) Commissions paid to the Significant Agent pursuant to Agent Agreement.

(c) $512,000 represents direct operating expenses, primarily payroll and related expenses, of Truck Agent Business Unit acquired.

(d) $5,000 represents an increase in management compensation based upon an increase in income from operations.

(e) $15,000 represents amortization of acquired identifiable intangible assets.

(f) Represent an increase in federal and state taxes on income.

(g) Represents the impact of the loss of the Significant Agent’s brokerage division business, as follows:

Revenues	$	65,042,000
Cost of transportation		56,451,000
Commissions		8,225,000
Operating expenses		366,000