Note 2 - Restatement - Accounting for Leases

3 Months Ended

Sep. 30, 2011

Capital Leases in Financial Statements of Lessee Disclosure [Text Block]

2. Restatement ‒ Accounting for Leases

The Company has restated most of its revenue equipment operating leases as capital leases based upon certain provisions included in the lease agreements. Specifically, the leases have certain default clauses, including material adverse change, cross-default provisions, and other provisions which are not objectively determinable or do not represent pre-defined criteria at the inception of the lease. As a result, the maximum consideration the Company could be required to pay the lessor in the event of a default is included in the lease payments for lease classification purposes at the inception of the lease. For these leases, the maximum consideration usually approximates or exceeds the cost of the revenue equipment at the inception of the lease and, when included in minimum lease payments for purposes of applying ASC 840-10-25-1(d) (i.e., the 90% test), results in capital lease classification, in accordance with the guidance for default covenants related to non-performance as discussed in ASC 840-10-25-14.

As a result of the restatement, the Company has recorded additional capital lease assets and related capital lease obligations on the consolidated balance sheets. The Company also adjusted its deferred income tax liability to take into account the temporary differences created to reflect the capital lease obligations and assets for financial reporting purposes. Lease payments related to this revenue equipment are now recognized as principal reductions in the capital lease obligations and interest expense, rather than as revenue equipment rent expense. The consolidated statements of income also include depreciation on the capital lease assets over the terms of the respective leases.

In addition, the Company has reclassified the rental payments received for equipment rented to third parties from a reduction in the revenue equipment rental classification to freight revenue as part of the restatement. The reclassification of rents has no impact on net income.

The restatement also impacted opening stockholders equity and the classification of cash flows from operating, investing and financing activities; however, there was no impact on the net increase or decrease in cash and cash equivalents reported in the consolidated statements of cash flows.

The adjustment to net income for the three months ended September 30, 2011 and 2010, is summarized below (amounts in thousands):

	For the three months ended September 30,
	2011			2010
Net income as previously reported:	$	5,372		$	4,421
Freight revenue		2,481			2,229
Revenue equipment rentals		4,937			7,123
Operations and maintenance		---			96
Depreciation and amortization		(5,938	)		7,699
Interest expense		(1,340	)		(1,796	)
Tax effect on restatement adjustment		(54	)		18
Net income, as restated	$	5,458		$	4,392

The impact of the restatement on the consolidated financial statements is summarized below (amounts in thousands except per share amounts):

	30-Sep-11				30-Jun-11
Consolidated Balance Sheets	As		As		As		As
	Previously Reported		Restated		Previously Reported		Restated
Property and equipment	$	230,558	$	431,182	$	213,222	$	418,698
Less accumulated depreciation and amortization		78,781		135,005		80,592		141,584
Net property and equipment		151,777		296,177		132,630		277,114
Total assets		274,577		418,977		272,182		416,666

Current maturities of capital lease obligations		358		67,958		354		75,521
Total current liabilities		63,336		130,936		66,001		141,168
Capital lease obligations, net of current maturities		1,648		79,434		1,740		72,182
Deferred income taxes		30,971		30,700		31,740		31,416
Retained earnings		87,294		86,579		82,367		81,566
Total stockholders' equity		173,889		173,174		172,701		171,900
Total liabilities and stockholders' equity		274,577		418,977		272,182		416,666

	Three months ended September 30,				Three months ended September 30,
	2011				2010
Consolidated Statements of Income	As		As		As		As
	Previously Reported		Restated		Previously Reported		Restated
Freight revenue	$	112,297	$	114,778	$	119,470	$	121,699
Total revenue		141,479		143,960		140,289		142,518
Revenue equipment rentals		5,910		973		7,453		330
Operations and maintenance		9,802		9,802		10,190		10,094
Depreciation and amortization		5,594		11,532		7,527		15,226
Total operating expenses		132,551		133,552		132,208		132,688
Operating income		8,928		10,408		8,081		9,830
Interest expense		42		1,382		463		2,259
Income before income taxes		9,180		9,320		7,701		7,654
Provision for income taxes		3,808		3,862		3,280		3,262
Net income	$	5,372	$	5,458	$	4,421	$	4,392
Diluted income per common share	$	0.24	$	0.24	$	0.20	$	0.19
Basic income per common share	$	0.24	$	0.25	$	0.20	$	0.20

	Three months ended September 30,						Three months ended September 30,
	2011						2010
	As			As			As			As
	Previously Reported			Restated			Previously Reported			Restated
Consolidated Statements of Cash Flows:
Net income	$	5,372		$	5,458		$	4,421		$	4,392
Depreciation and amortization expense		6,744			12,682			7,529			15,188
Deferred income taxes		(909	)		(856	)		(491	)		(473	)
Net cash provided by operating activities		2,630			8,259			8,822			16,470
Purchase of property and equipment		(42,128	)		(27,942	)		(16,285	)		(10,094	)
Net cash used in investing activities		(31,803	)		(17,169	)		(8,115	)		(1,924	)
Principal payments under capital lease obligations		(87	)		(20,350	)		(7,776	)		(21,615	)
Net cash provided by (used in) financing activities		4,680			(15,583	)		(7,808	)		(21,647	)
Interest paid in cash during the period		42			1,382			499			2,295
Lease obligation incurred in the purchase of equipment		---			20,228			---			5,060