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Forward Air Corporation Reports Third Quarter 2009 Results

  Forward Air Corporation Reports Third Quarter 2009 Results  Business Wire  GREENEVILLE, Tenn. -- October 21, 2009  Forward Air Corporation (NASDAQ:FWRD) today reported revenue, operating income, net income and diluted earnings per share for the third quarter and nine months ended September 30, 2009.  Operating revenue for the quarter ended September 30, 2009 decreased 15.1% to $103.1 million from $121.5 million for the same quarter in 2008. Income from operations was $6.7 million, compared with $19.3 million in the prior-year quarter. As a percent of operating revenue, income from operations decreased to 6.5% from 15.9% for the same quarter last year. Net income during the period was $3.8 million compared to $12.1 million in the prior-year quarter. Income per diluted share from operations for the third quarter of 2009 was $0.13 compared with $0.42 in the prior-year quarter.  Operating revenue for the nine months ended September 30, 2009 decreased 14.7% to $299.4 million from $351.0 million for the same period in 2008. Income from operations, which includes a first quarter non-cash, pre-tax charge of $7.2 million primarily for goodwill impairment related to the Company’s Forward Air Solutions segment, was $6.5 million, compared with $56.2 million in the prior-year period. Including the impact of the goodwill impairment, the Company’s net income for the nine months ended September 30, 2009, was $3.5 million, compared with $34.2 million in the prior-year period. Net income per diluted share for the first nine months of 2009 was $0.12 compared with $1.18 in the prior-year period.  “It came as no surprise that our results continued to be negatively impacted in the third quarter as a result of the global economic recession,” said Bruce A. Campbell, Chairman, President and CEO. “The pricing environment, which began to deteriorate late in the first quarter, has remained extremely challenging but has shown signs of stabilization. In key areas of our Forward Air, Inc. business segment we did have cause for some guarded optimism. The final weeks of the quarter saw a sequential firming up of our airport-to-airport network tonnage that has continued thus far into October. Within airport-to-airport our Forward Air Complete pick-up and delivery offering continued to gain traction. During the quarter an average of 14.4% of our linehaul shipments had a pick-up and or delivery attached compared to 9.4% in the third quarter of 2008. Lastly, our TLX truckload brokerage group which saw revenue declines in the second quarter appears to have curtailed that slide with September revenues coming in flat compared to last year.”  Commenting further, Mr. Campbell said, “The third quarter proved to be more challenging than originally anticipated for our Solutions business segment. After a tremendous amount of work getting the right cost structure as well as achieving new business wins, the peak retail season did not occur in September as forecasted by our customers. However, in the first weeks of October volumes would indicate the beginning of a somewhat normalized fourth quarter. Again we will monitor this trend with cautious optimism.”  Continuing, Mr. Campbell said, “Every day it seems some expert declares the recovery has begun. We see signs that are encouraging and we do feel the worst is over, but now is not the time to let down our guard. Our people will continue to vigilantly control costs ensuring our rapid return to the margins and returns that our shareholders have historically come to expect of Forward Air.”  In closing, Mr. Campbell said, “We are pleased to report that for a second consecutive year and for 10 of the past 11 years Forward Air has been named by Forbes magazine as one of the “200 Best Small Companies” in America. Congratulations and thank you to all of the Forward Air employees and independent contractors who made this honor possible.”  Commenting further on the quarter, Rodney L. Bell, Senior Vice President and CFO, said, “Cash flow from operations was $9.3 million for the quarter and $30.7 million year-to-date compared to $20.9 and $38.0 respectively for last year. We ended the period with just over $27 million in cash and $39.5 million available on our line of credit. With the completion of our Dallas facility in July we have no meaningful capital expenditure needs for the balance of 2009 and anticipate 2010 capital expenditures to be approximately $10 million providing ample free cash flow and flexibility.”  Commenting further, Mr. Bell said, “Assuming current trends remain stable, for the fourth quarter of 2009, we anticipate a year-over-year decline in revenue in the range of 10 to 15% and expect income per diluted share to be between $0.15 and $0.21 per share.”  Review of Financial Results  Forward Air will hold a conference call to discuss third quarter 2009 results on Thursday, October 22, 2009 at 10:00 a.m. EDT. The Company’s conference call will be available online at www.forwardair.com or by dialing 800-841-9385. A replay of the conference call will be available at www.forwardair.com beginning shortly after completion of the live call.  About Forward Air Corporation  Forward Air Corporation operates two business segments, Forward Air, Inc. and Forward Air Solutions, Inc.  Forward Air, Inc. is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of 84 terminals located on or near major airports in the United States and Canada. It provides these services as a cost-effective alternative to air transportation of cargo that must be delivered at a specific time but is relatively less time-sensitive than traditional air freight or when air transportation is not economical.  Forward Air Solutions, Inc. is a provider of pool distribution services. Pool distribution involves the consolidation and shipment of several smaller less-than-truckload shipments to a common area or region. Once at the regional destination, the loads are deconsolidated, then grouped with other shipments with common delivery points, and delivered in a very precise, time-sensitive manner. Our pool distribution network consists of 19 terminals within the mid-Atlantic, Southeast, Midwest and Southwestern United States.  Forward Air Corporation Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)                                                                                        Three months ended          Nine months ended                          September     September     September     September                          30,           30,           30,           30,                          2009          2008          2009          2008 Operating revenue: Forward Air    Airport-to-airport    $ 66,667      $ 85,901      $ 194,908     $ 257,147    Logistics               13,172        15,597        38,645        42,688    Other                   5,596         6,487         16,975        18,464 Forward Air Solutions    Pool distribution      17,644       13,499       48,864       32,685 Total operating            103,079       121,484       299,392       350,984 revenue                                                                               Operating expenses: Purchased transportation Forward Air    Airport-to-airport      28,025        33,388        82,008        98,432    Logistics               10,329        11,227        30,127        31,224    Other                   1,387         1,764         3,681         4,941 Forward Air Solutions    Pool distribution      3,747        2,505        9,774        5,743 Total purchased            43,488        48,884        125,590       140,340 transportation Salaries, wages and        28,591        28,504        86,834        84,355 employee benefits Operating leases           6,631         6,183         20,440        16,918 Depreciation and           5,006         4,134         14,687        11,830 amortization Insurance and claims       2,045         1,816         6,984         5,690 Fuel expense               1,880         3,052         5,199         8,466 Other operating            8,767         9,583         25,983        27,146 expenses Impairment of goodwill and other intangible      --           --           7,157        -- assets Total operating           96,408       102,156      292,874      294,745 expenses Income from operations     6,671         19,328        6,518         56,239                                                                               Other (expense) income:    Interest expense        (177    )     (210    )     (469    )     (839    )    Other, net             51           115          50           325 Total other expense       (126    )    (95     )    (419    )    (514    ) Income before income       6,545         19,233        6,099         55,725 taxes Income taxes              2,766        7,136        2,581        21,519 Net income               $ 3,779       $ 12,097      $ 3,518       $ 34,206                                                                               Net income per share: Basic                    $ 0.13        $ 0.42        $ 0.12        $ 1.19 Diluted                  $ 0.13        $ 0.42        $ 0.12        $ 1.18 Weighted average shares outstanding: Basic                      28,942        28,871        28,924        28,782 Diluted                    29,026        29,139        28,978        29,067                                                                               Dividends per share:     $ 0.07        $ 0.07        $ 0.21        $ 0.21  Forward Air Corporation Condensed Consolidated Balance Sheets (Dollars in thousands) (Unaudited)                                                                                                                  September 30,   December 31,                                                   2009            2008 (a) Assets Current assets:         Cash                                      $   27,230      $  22,093         Accounts receivable, net                      52,993         57,206         Other current assets                         14,145        12,290   Total current assets                                  94,368         91,589                                                                       Property and equipment                                203,383        186,377 Less accumulated depreciation and amortization       72,976        63,401   Total property and equipment, net                     130,407        122,976 Goodwill and other acquired intangibles:         Goodwill                                      43,332         50,230         Other acquired intangibles, net              36,997        40,708   Total goodwill and other acquired intangibles         80,329         90,938 Other assets                                         1,582         2,024    Total assets                                      $   306,686     $  307,527                                                                        Liabilities and Shareholders’ Equity Current liabilities:         Accounts payable                          $   8,509       $  11,633         Accrued expenses                              16,057         12,927         Current portion of debt and capital          1,072         1,602            lease obligations Total current liabilities                             25,638         26,162                                                                       Long-term debt and capital lease obligations,         52,404         53,035 less current portion Other long-term liabilities                           3,749          3,055 Deferred income taxes                                 6,136          8,841                                                                       Shareholders’ equity:         Common stock                                  289            289         Additional paid-in capital                    15,139         10,249         Retained earnings                            203,331       205,896  Total shareholders’ equity                           218,759       216,434  Total liabilities and shareholders’ equity        $   306,686     $  307,527                                                                        (a) Taken from audited financial statements, which are not presented in their entirety.  Forward Air Corporation Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)                                                                                                             Three months ended                                                September 30,     September 30,                                                2009              2008 Operating activities: Net income                                     $    3,779        $  12,097 Adjustments to reconcile net income to net cash provided by operating activities      Depreciation and amortization                  5,006           4,134      Share-based compensation                       1,607           1,451      (Gain) loss on sale or disposal of             (1       )      15      property and equipment      Provision for loss on receivables              217             131      Provision for revenue adjustments              548             1,369      Deferred income taxes                          (466     )      (793     )      Tax benefit for stock options exercised        (1       )      (69      )      Changes in operating assets and      liabilities:                Accounts receivable                  (3,721   )      2,209                Prepaid expenses and other           382             439                current assets                Accounts payable and accrued        1,962          (116     )                expenses Net cash provided by operating activities           9,312           20,867                                                                               Investing activities: Proceeds from disposal of property and              14              13 equipment Purchases of property and equipment                 (3,803   )      (7,325   ) Acquisition of businesses                           --              (10,653  ) Other                                              49             (74      ) Net cash used in investing activities               (3,740   )      (18,039  )                                                                               Financing activities: Payments of debt and capital lease                  (390     )      (302     ) obligations Borrowings on line of credit                        --              15,000 Payments on line of credit                          --              -- Proceeds from exercise of stock options             8               947 Payments of cash dividends                          (2,028   )      (2,026   ) Common stock issued under employee stock            --              -- purchase plan Cash settlement of share-based awards for           (5       )      (7       ) minimum tax withholdings Tax benefit for stock options exercised            1              69 Net cash (used in) provided by financing           (2,414   )     13,681 activities Net increase in cash                                3,158           16,509 Cash at beginning of period                        24,072         1,082 Cash at end of period                          $    27,230       $  17,591  Forward Air Corporation Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)                                                                                                             Nine months ended                                                September 30,     September 30,                                                2009              2008 Operating activities: Net income                                     $   3,518         $  34,206 Adjustments to reconcile net income to net cash provided by operating activities      Depreciation and amortization                 14,687           11,830      Impairment of goodwill and other              7,157            --      intangible assets      Share-based compensation                      5,022            4,571      (Gain) loss on sale or disposal of            (13       )      36      property and equipment      Provision for (recovery) loss on              (74       )      245      receivables      Provision for revenue adjustments             1,916            3,273      Deferred income taxes                         (3,009    )      635      Tax benefit for stock options exercised       (1        )      (1,148   )      Changes in operating assets and      liabilities:                Accounts receivable                 2,370            (16,092  )                Prepaid expenses and other          (1,567    )      (1,932   )                current assets                Accounts payable and accrued       701             2,398                expenses Net cash provided by operating activities          30,707           38,022                                                                               Investing activities: Proceeds from disposal of property and             231              46 equipment Purchases of property and equipment                (18,828   )      (12,680  ) Acquisition of businesses                          --               (29,299  ) Other                                             405             (167     ) Net cash used in investing activities              (18,192   )      (42,100  )                                                                               Financing activities: Payments of debt and capital lease                 (1,163    )      (1,172   ) obligations Borrowings on line of credit                       --               45,000 Payments on line of credit                         --               (25,000  ) Proceeds from exercise of stock options            8                3,085 Payments of cash dividends                         (6,081    )      (6,062   ) Common stock issued under employee stock           99               145 purchase plan Repurchase of common stock                         (242      )      -- Cash settlement of share-based awards for          --               (384     ) minimum tax withholdings Tax benefit for stock options exercised           1               1,148 Net cash (used in) provided by financing          (7,378    )     16,760 activities Net increase in cash                               5,137            12,682 Cash at beginning of period                       22,093          4,909 Cash at end of period                          $   27,230        $  17,591  Forward Air Corporation Segment Information (In millions) (Unaudited)                                                                                     Three months ended                  September   Percent   September   Percent               Percent                  30,         of        30,         of                  2009        Revenue   2008        Revenue   Change      Change Operating revenue Forward Air      $ 85.7      83.1  %   $ 108.6     89.4  %   $ (22.9 )   (21.1  ) % FASI               17.8      17.3        13.6      11.2        4.2       30.9 Intercompany      (0.4  )   (0.4  )    (0.7  )   (0.6  )    0.3       (42.9  ) Eliminations Total             103.1     100.0      121.5     100.0      (18.4 )   (15.1  )                                                                                    Purchased transportation Forward Air        39.8      46.4        46.5      42.8        (6.7  )   (14.4  ) FASI               4.0       22.5        3.1       22.8        0.9       29.0 Intercompany      (0.3  )   75.0       (0.7  )   100.0      0.4       (57.1  ) Eliminations Total             43.5      42.2       48.9      40.2       (5.4  )   (11.0  )                                                                                    Salaries, wages and employee benefits Forward Air        20.6      24.0        23.0      21.2        (2.4  )   (10.4  ) FASI              8.0       44.9       5.5       40.5       2.5       45.5 Total             28.6      27.7       28.5      23.5       0.1       0.4                                                                                    Operating leases Forward Air        4.6       5.4         4.7       4.3         (0.1  )   (2.1   ) FASI              2.0       11.2       1.5       11.0       0.5       33.3 Total             6.6       6.4        6.2       5.1        0.4       6.5                                                                                    Depreciation and amortization Forward Air        4.1       4.8         3.6       3.3         0.5       13.9 FASI              0.9       5.1        0.5       3.7        0.4       80.0 Total             5.0       4.9        4.1       3.4        0.9       22.0                                                                                    Insurance and claims Forward Air        1.6       1.9         1.7       1.6         (0.1  )   (5.9   ) FASI              0.4       2.2        0.1       0.7        0.3       300.0 Total             2.0       1.9        1.8       1.5        0.2       11.1                                                                                    Fuel expense Forward Air        0.8       0.9         1.6       1.5         (0.8  )   (50.0  ) FASI              1.1       6.2        1.5       11.0       (0.4  )   (26.7  ) Total             1.9       1.8        3.1       2.5        (1.2  )   (38.7  )                                                                                    Other operating expenses Forward Air        7.0       8.2         8.2       7.5         (1.2  )   (14.6  ) FASI               1.9       10.7        1.4       10.3        0.5       35.7 Intercompany      (0.1  )   25.0       --        --         (0.1  )   (100.0 ) Eliminations Total             8.8       8.6        9.6       7.9        (0.8  )   (8.3   )                                                                                    Income (loss) from operations Forward Air        7.2       8.4         19.3      17.8        (12.1 )   (62.7  ) FASI              (0.5  )   (2.8  )    --        --         (0.5  )   (100.0 ) Total            $ 6.7       6.5   %   $ 19.3      15.9  %   $ (12.6 )   (65.3  ) %  Forward Air Corporation Segment Information (In millions) (Unaudited)                                                                                     Nine months ended                  September   Percent   September   Percent               Percent                  30,         of        30,         of                  2009        Revenue   2008        Revenue   Change      Change Operating revenue Forward Air      $ 251.2     83.9  %   $ 319.8     91.1  %   $ (68.6 )   (21.5   ) % FASI               49.2      16.4        32.8      9.4         16.4      50.0 Intercompany      (1.0  )   (0.3  )    (1.6  )   (0.5  )    0.6       (37.5   ) Eliminations Total             299.4     100.0      351.0     100.0      (51.6 )   (14.7   )                                                                                     Purchased transportation Forward Air        116.1     46.2        134.6     42.1        (18.5 )   (13.7   ) FASI               10.4      21.1        7.3       22.3        3.1       42.5 Intercompany      (0.9  )   90.0       (1.6  )   100.0      0.7       (43.8   ) Eliminations Total             125.6     42.0       140.3     40.0       (14.7 )   (10.5   )                                                                                     Salaries, wages and employee benefits Forward Air        63.1      25.1        70.3      22.0        (7.2  )   (10.2   ) FASI              23.7      48.2       14.1      43.0       9.6       68.1 Total             86.8      29.0       84.4      24.1       2.4       2.8                                                                                     Operating leases Forward Air        14.1      5.6         13.6      4.2         0.5       3.7 FASI              6.3       12.8       3.3       10.0       3.0       90.9 Total             20.4      6.8        16.9      4.8        3.5       20.7                                                                                     Depreciation and amortization Forward Air        12.0      4.8         10.6      3.3         1.4       13.2 FASI              2.7       5.5        1.2       3.6        1.5       125.0 Total             14.7      4.9        11.8      3.4        2.9       24.6                                                                                     Insurance and claims Forward Air        5.6       2.2         5.1       1.6         0.5       9.8 FASI              1.4       2.8        0.6       1.8        0.8       133.3 Total             7.0       2.3        5.7       1.6        1.3       22.8                                                                                     Fuel expense Forward Air        2.3       0.9         4.8       1.5         (2.5  )   (52.1   ) FASI              2.9       5.9        3.7       11.3       (0.8  )   (21.6   ) Total             5.2       1.7        8.5       2.4        (3.3  )   (38.8   )                                                                                     Other operating expenses Forward Air        21.0      8.4         23.7      7.4         (2.7  )   (11.4   ) FASI               5.1       10.4        3.5       10.7        1.6       45.7 Intercompany      (0.1  )   10.0       --        --         (0.1  )   (100.0  ) Eliminations Total             26.0      8.7        27.2      7.7        (1.2  )   (4.4    )                                                                                     Impairment of goodwill and other intangible assets Forward Air        0.2       0.1         --        --          0.2       100.0 FASI              7.0       14.2       --        --         7.0       100.0 Total             7.2       2.4        --        --         7.2       100.0                                                                                     Income (loss) from operations Forward Air        16.8      6.7         57.1      17.9        (40.3 )   (70.6   ) FASI              (10.3 )   (20.9 )    (0.9  )   (2.7  )    (9.4  )   1,044.4 Total            $ 6.5       2.2   %   $ 56.2      16.0  %   $ (49.7 )   (88.4   ) %  Forward Air Corporation Forward Air Inc. Operating Statistics                                                                                                                                                                                                                      Three months ended                      Nine months ended                       September     September     Percent     September 30,   September 30,   Percent                       30,           30,                       2009          2008          Change      2009            2008            Change                                                                                                        Operating ratio         91.6    %     82.2    %   (11.4 ) %     93.3      %     82.1      %   (13.6 ) %                                                                                                        Business days           64.0          64.0        --            191.0           192.0         (0.5  ) Business weeks          12.8          12.8        --            38.2            38.4          (0.5  )                                                                                                                                                                                                               Airport-to-airport: Tonnage Total pounds¹           357,768       441,269     (18.9 )       1,054,048       1,336,801     (21.2 ) Average weekly          27,951        34,474      (18.9 )       27,593          34,813        (20.7 ) pounds¹                                                                                                        Linehaul shipments Total linehaul          511,959       568,031     (9.9  )       1,529,233       1,746,828     (12.5 ) Average weekly          39,997        44,377      (9.9  )       40,032          45,490        (12.0 )                                                                                                        Forward Air             73,696        53,161      38.6          194,694         145,452       33.9 Complete shipments As a percentage of      14.4    %     9.4     %   53.8          12.7      %     8.3       %   53.0 linehaul shipments                                                                                                        Average linehaul        699           777         (10.0 )       689             765           (9.9  ) shipment size                                                                                                        Revenue per pound² Linehaul yield          15.91         16.39       (2.4  )       16.14           16.56         (2.2  ) Fuel surcharge          0.93          2.15        (6.2  )       0.79            1.81          (5.3  ) impact Forward Air             1.83          1.17        3.3           1.60            0.95          3.4 Complete impact Total airport-to-airport      18.67         19.71       (5.3  )       18.53           19.32         (4.1  ) yield                                                                                                                                                                                                               Logistics: Miles Owner operator¹         6,111         4,812       27.0          17,916          13,432        33.4 Third party¹            2,288         3,618       (36.8 )       6,709           11,055        (39.3 ) Total Miles             8,399         8,430       (0.4  )       24,625          24,487        0.6                                                                                                        Revenue per mile      $ 1.58        $ 1.80        (12.2 )     $ 1.58          $ 1.74          (9.2  )                                                                                                        Cost per mile         $ 1.23        $ 1.33        (7.5  ) %   $ 1.22          $ 1.25          (2.4  ) %                                                                                                        ¹ - In thousands ² - In cents per pound; percentage change is expressed as a percent of total yield.  Important Information  This press release contains “forward-looking statements,” as defined in Section27A of the Securities Act of 1933, as amended, and Section21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance. Some forward-looking statements may be identified by use of such terms as “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or “expects.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, our inability to maintain our historical growth rate because of a decreased volume of freight moving through our network or decreased average revenue per pound of freight moving through our network, increasing competition and pricing pressure, surplus inventories, loss of a major customer, the creditworthiness of our customers and their ability to pay for services rendered, our ability to secure terminal facilities in desirable locations at reasonable rates, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, claims for property damage, personal injuries or workers’ compensation, employment matters including rising health care costs, enforcement of and changes in governmental regulations, environmental and tax matters, the handling of hazardous materials, the availability and compensation of qualified independent owner-operators and freight handlers needed to serve our transportation needs and our inability to successfully integrate acquisitions. As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Contact:  Forward Air Corporation Rodney L. Bell, 423-636-7000 rbell@forwardair.com  
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