What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-02-24 · 73 added, 70 removed, 464 unchanged (24% of the section changed)

7 unchanged sentences

Customer receivables, less allowances of $ 9,855 and $ 8,979 , respectively

Income taxes receivable

Other receivables

24 unchanged sentences

Shareholders’ equity

Common stock - $ 0.10 par value, 280,000,000 shares authorized, 117,057,696 shares outstanding at December 31, 2020 and 140,000,000 shares authorized, 119,532,534 shares outstanding at December 31, 2019

Common stock - $ 0.10 par value, 280,000,000 shares authorized, 115,011,172 and 117,057,696 shares outstanding at December 31, 2021 and December 31, 2020, respectively.

Capital in excess of par value

37 unchanged sentences

Cash dividends declared

Share-based compensation and restricted share

issuances, net of forfeitures

Reclassification of liability for modified equity awards

Share-based compensation and share issuances, net of

Taxes paid in exchange for shares withheld

2 unchanged sentences

Cash dividends declared

Reclassification of liability for modified equity awards

Share-based compensation and restricted share

issuances, net of forfeitures

Cash paid for fractional shares

Share-based compensation and share issuances, net of

Taxes paid in exchange for shares withheld

1 unchanged sentence

Share repurchases

Forward contract for accelerated share repurchases

Cash dividends declared

Cash paid for fractional shares

Share-based compensation and restricted share

issuances, net of forfeitures

Share-based compensation and share issuances, net of

Taxes paid in exchange for shares withheld

9 unchanged sentences

Noncash lease expense

Loss on disposal of property and equipment

(Gain) loss on disposal of property and equipment

Deferred income taxes

21 unchanged sentences

Payments for share repurchases

Forward contract for accelerated share repurchases

Other financing activities, net

Net cash used in financing activities

(Decrease) increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

3 unchanged sentences

Capitalized interest

Supplemental disclosure of noncash investing and financing activities:

Noncash purchases of property

The accompanying notes are an integral part of these financial statements.

45 unchanged sentences

The Company’s investments in certificates of deposit, U.S.

government securities, and commercial paper with an original maturity of greater than three months have been classified and accounted for as trading securities, and are reported in “Short-term investments” on our Balance Sheet.

These investments are measured at fair value each reporting period, with gains or losses recorded in “Non-operating expense (income)” on our Statement of Operations.

These investments are measured at fair value each reporting period, with gains or losses recorded in “Non-operating expense (income)” on our Statements of Operations.

Property and Equipment

18 unchanged sentences

We periodically review our risk exposure and insurance coverage applicable to those risks and believe that we maintain sufficient insurance coverage.

Claims and insurance accruals reflect the estimated cost of claims for cargo loss and damage, BIPD, workers’ compensation, group health and group dental.

Claims and insurance accruals reflect the Company’s estimated cost of claims for cargo loss and damage, BIPD, workers’ compensation, group health and group dental.

These accruals include amounts for future claims development and claims incurred but not reported, which are primarily based on historical claims development experience.

11 unchanged sentences

We remeasure the liability for the outstanding awards at the end of each reporting period and the compensation cost is based on the change in fair market value for each reporting period.

As of December 31, 2021 and 2020, there were no unsettled phantom stock awards accounted for as a liability under the Phantom Plans, as defined in Note 8.

In December 2019, we modified our employee and director phantom stock plans to permit the settlement of outstanding phantom stock awards in shares of the Company’s common stock in lieu of cash settlement.

9 unchanged sentences

Advertising costs charged to expense totaled $ 28.1 million, $ 19.0 million and $ 28.3 million for 2021, 2020 and 2019, respectively.

Common Stock Split

On February 21, 2020, we announced that our Board of Directors approved a three-for-two split of our common stock for shareholders of record as of the close of business on the record date of March 10, 2020.

On March 24, 2020, those shareholders received one additional share of common stock for every two shares owned.

In lieu of fractional shares, shareholders received a cash payment based on the average of the high and low sales prices of our common stock on the record date.

All references in this report to shares outstanding, weighted average shares outstanding, earnings per share, and dividends per share amounts have been restated retroactively to reflect this stock split.

Split-adjusted per-share metrics may not recalculate precisely due to rounding .

Fair Value of Financial Instruments

9 unchanged sentences

Stock Repurchase Program

On May 1, 2020, we announced that our Board of Directors had approved a new two-year stock repurchase program authorizing us to repurchase up to an aggregate of $ 700.0 million of our outstanding common stock (the “2020 Repurchase Program”).

The 2020 Repurchase Program became effective upon the termination of our $ 350.0 million repurchase program on May 29, 2020, as of which date $ 21.5 million remained authorized under the prior program.

Under the 2020 Repurchase Program, we may repurchase shares from time to time in open market purchases or through privately negotiated transactions.

On May 1, 2020, we announced that our Board of Directors had approved a two-year stock repurchase program authorizing us to repurchase up to an aggregate of $ 700.0 million of our outstanding common stock (the “2020 Repurchase Program”).

The 2020 Repurchase Program became effective upon the termination of our $ 350.0 million repurchase program on May 29, 2020.

On July 28, 2021, we announced that our Board of Directors had approved a new stock repurchase program authorizing us to repurchase up to an

aggregate of $ 2.0 billion of our outstanding common stock (the “2021 Repurchase Program”).

The 2021 Repurchase Program, which d oes not have an expiration date, began after the completion of the 2020 Repurchase Program in January 2022 .

Under our repurchase programs, we may repurchase shares from time to time in open market purchases or through privately negotiated transactions.

Shares of our common stock repurchased under our repurchase programs are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock.

As of December 31, 2020, we had $ 555.2 million remaining authorized under the 2020 Repurchase Program.

On May 29, 2020, we entered into an accelerated share repurchase agreement (the “May 2020 ASR Agreement”) with a third-party financial institution.

The May 2020 ASR Agreement was settled during the fourth quarter of 2020, with the final number of shares received based on the daily volume-weighted average share price of our common stock over the term of the agreement, less a negotiated discount.

Under the May 2020 ASR Agreement, we repurchased 683,434 shares for $ 125.0 million.

On February 25, 2021, we entered into an accelerated share repurchase agreement (the “February 2021 ASR Agreement”) with a third-party financial institution.

The February 2021 ASR Agreement was settled during the third quarter of 2021, with the final number of shares received based on the daily volume-weighted average share price of our common stock over the term of the agreement, less a negotiated discount.

Under the February 2021 ASR Agreement, we repurchased 1,101,046 shares for $ 275.0 million.

On August 26, 2021, we entered into an accelerated share repurchase agreement (the “August 2021 ASR Agreement”) with a third-party financial institution.

Under the August 2021 ASR Agreement, we paid the third-party financial institution $ 250.0 million and received an initial delivery of 655,365 shares of our common stock for $ 187.5 million, representing approximately 75 % of the total value of shares to be received by us under the August 2021 ASR Agreement.

At December 31, 2021, our repurchase programs had $ 2.02 billion remaining available, including $ 62.5 million that was deferred until final settlement occurred on the August 2021 ASR Agreement, leaving $ 1.96 billion remaining available and uncommitted.

The August 2021 ASR Agreement was settled during January 2022, with the final number of shares received based on the daily volume-weighted average share price of our common stock over the term of the agreement, less a negotiated discount.

Under the August 2021 ASR Agreement, we repurchased 778,775 shares for $ 250.0 million.

The Company’s accelerated share repurchase agreements are each accounted for as a settled treasury stock purchase and a forward stock purchase contract.

The par value of the initial share delivery is recorded as a reduction to common stock, with the excess purchase price recorded as a reduction to retained earnings.

The forward stock purchase contract is accounted for as a contract indexed to our own stock and is classified within capital in excess of par value on our Statements of Changes in Shareholders’ Equity.

Comprehensive Income

1 unchanged sentence

Accordingly, net income equals comprehensive income for all periods presented in this report.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Statements” (Topic 326).

This ASU modified the methodology for establishing a provision against financial assets, including customer receivables, to include an expected future performance component.

We adopted ASU 2016-13 on January 1, 2020.

The adoption did not have a material impact to our financial position, results of operations, or cash flow.

Long-term Debt

5 unchanged sentences

Total maturities due after one year

Senior Note Agreements

Note Agreement

We had an unsecured senior note agreement with a principal amount outstanding of $ 45.0 million at December 31, 2019 (the “Senior Note”).

2 unchanged sentences

(“Prudential”) and certain affiliates and managed accounts of Prudential (the “Note Agreement”).

The Note Agreement, which is uncommitted and subject to Prudential’s sole discretion, provides for the issuance of senior promissory notes with an aggregate principal amount of up to $ 350.0

million through May 4, 2023.

Pursuant to the Note Agreement, we issued $ 100.0 million aggregate principal amount of senior promissory notes (the “Series B Notes”), the proceeds of which are available for capital expenditures, share repurchases, dividends, a cquisitions, or general corporate purposes.

The Note Agreement, which is uncommitted and subject to Prudential’s sole discretion, provides for the issuance of senior promissory notes with an aggregate principal amount of up to $ 350.0 million through May 4, 2023.

Pursuant to the Note Agreement, we issued $ 100.0 million aggregate principal amount of senior promissory notes (the “Series B Notes”) on May 4, 2020.

Borrowing availability under the Note Agreement is reduced by the outstanding amount of the existing Series B Notes, and all other senior promissory notes issued pursuant to the Note Agreement.

1 unchanged sentence

Principal payments are required annually beginning on May 4, 2023 in equal installments of $ 20.0 million through May 4, 2027 .

The Series B Notes are senior unsecured obligations and rank pari passu with our other senior unsecured indebtedness.

The Series B Notes are senior unsecured obligations and rank pari passu with borrowings under our second amended and restated credit agreement with Wells Fargo Bank, National Association serving as administrative agent for the lenders, which we entered into on November 21, 2019 (the “Credit Agreement”) or other senior promissory notes issued pursuant to the Note Agreement.

Credit Agreement

On November 21, 2019, we entered into a second amended and restated credit agreement with Wells Fargo Bank, National Association serving as administrative agent for the lenders (the “Credit Agreement”).

The Credit Agreement provides for a five-year, $ 250.0 million senior unsecured revolving line of credit and a $ 150.0 million accordion feature, which if fully exercised and approved, would expand the total borrowing capacity up to an aggregate of $ 400.0 million.

2 unchanged sentences

(i) LIBOR (including applicable successor provisions) plus an applicable margin (based on our ratio of net debt-to-total capitalization) that ranges from 1.000 % to 1.375 %;

or (ii) a Base Rate plus an applicable margin (based on our ratio of net debt-to-total capitalization) that ranges from 0.000 % to 0.375 %.

or (ii) a Base Rate, as defined in the Credit Agreement, plus an applicable margin (based on our ratio of net debt-to-total capitalization) that ranges from 0.000 % to 0.375 %.

Letter of credit fees equal to the applicable margin for LIBOR loans are charged quarterly in arrears on the daily average aggregate stated amount of all letters of credit outstanding during the quarter.

1 unchanged sentence

For periods covered under the Credit Agreement, the applicable margin on LIBOR loans and letter of credit fees were 1.000 % and commitment fees were 0.100 %.

The Credit Agreement replaced our previous five-year, $ 300.0 million senior unsecured revolving credit agreement dated as of December 15, 2015, as amended on September 9, 2016 (the “Prior Credit Agreement”).

There were $ 39.2 million and $ 42.1 million of outstanding letters of credit at December 31, 2021 and 2020, respectively.

2 unchanged sentences

The Credit Agreement and Note Agreement also include a provision limiting our ability to make restricted payments, including dividends and payments for share repurchases, unless, among other conditions, no defaults or events of default are ongoing (or would be caused by such restricted payment).

We lease certain assets under operating leases, which at December 31, 2020 primarily consist of real estate leases for 27 of our 244 service center locations and automotive leases for private passenger vehicles.

We lease certain assets under operating leases, which at December 31, 2021 primarily consist of real estate leases for certain service center locations and automotive leases for private passenger vehicles.

Certain operating leases provide for renewal options, which can vary by lease and are typically offered at their fair rental value.

13 unchanged sentences

(a) Lease payments include lease extensions that are reasonably certain to be exercised.

The weighted average lease term for our operating leases was 9.4 years at each of December 31, 2020 and 2019, respectively.

The weighted average lease term for our operating leases was 9.0 years and 9.4 years at December 31, 2021 and 2020, respectively.

The discount rate used in the calculation of our right-of-use assets and corresponding lease liabilities was determined based on the stated rate within each contract when available, or our collateralized borrowing rate from lending institutions.

35 unchanged sentences

Related Party Transactions

Each of Earl E.

Congdon, David S.

Congdon and John R.

are related to one another and served in various management positions and/or on our Board of Directors during 2020.

Congdon, Jr., a member of our Board of Directors, is the cousin of David S.

Congdon, Executive Chairman of our Board of Directors.

Our employment agreement with David S.

3 unchanged sentences

Defined Contribution Plan

Full-time employees meeting certain eligibility requirements are automatically enrolled in our 401(k) employee retirement plan.

Full-time employees meeting certain eligibility requirements are automatically enrolled in our 401(k) employee retirement plan, unless the employee elects not to defer any compensation.

Employee contributions are limited to a percentage of the employee’s compensation, as defined in the plan.

49 unchanged sentences

Subject to the foregoing, unvested PBRSUs are generally forfeited if minimum threshold performance targets are not achieved or upon termination of employment.

The PBRSUs do not include dividend participation rights.

The unvested PBRSUs do not include voting rights or dividend participation rights.

Compensation cost for PBRSUs is measured at the grant date based on the fair market value per share of our common stock, with consideration given to the probability of achieving performance targets.

At the end of each reporting period, we reassess the probability of achieving performance targets and changes to our initial assessment are reflected in the reporting period in which the change in estimate occurs.

All PBRSUs granted in 2019 were forfeited as the performance metrics were not met.

The following table summarizes our activity for PBRSUs for employees during 2021:

4 unchanged sentences

Unvested at December 31, 2021

(a) Amount represents PBRSUs granted at target.

PBRSUs earned may range from zero to 200 % of the target award.

Actual PBRSUs earned for the 2020 performance period, as determined by the Compensation Committee, were equal to the target amount.

Actual PBRSUs earned for the 2021 performance period, as determined by the Compensation Committee, were equal to 200 % of the target amount.

At December 31, 2021, the Company had $ 3.8 million of unrecognized stock-based compensation cost, net of estimated forfeitures, related to unvested PBRSUs that are expected to be recognized over a weighted average period of 1.9 years.

9 unchanged sentences

On May 16, 2005, our Board of Directors approved, and the Company adopted, the Old Dominion Freight Line, Inc.

Phantom Stock Plan, as amended January 1, 2009, May 18, 2009, May 17, 2011, January 29, 2015 and December 16, 2019 (the “2005 Phantom Stock Plan” and, together with the 2012 Phantom Stock Plan, the “Employee Phantom Plans”).

Phantom Stock Plan, as amended on January 1, 2009, May 18, 2009, May 17, 2011, January 29, 2015 and December 16, 2019 (the “2005 Phantom Stock Plan” and, together with the 2012 Phantom Stock Plan, the “Employee Phantom Plans”).

The 2005 Phantom Stock Plan expired in May 2012;

1 unchanged sentence

Each share of phantom stock awarded to eligible employees under the 2005 Phantom Stock Plan represents a contractual right to receive an amount in cash or common stock equal to the fair market value of a share of our common stock on the settlement date, which generally is the earlier of the eligible employee’s (i) termination from the Company after reaching 55 years of age (with respect to the cash settlement option), (ii) death, or (iii) total disability.

Awards are settled in cash after the required vesting period has been satisfied and upon termination of employment.

Awards are settled in cash or common stock after the required vesting period has been satisfied and upon termination of employment.

Awards under the 2005 Phantom Stock Plan vest upon the earlier to occur of the following:

1 unchanged sentence

(ii) the fifth anniversary of the grant date of the award, provided the participant is employed by us on that date;

date of the participant’s death while employed by us;

(iii) the date of the participant’s death while employed by us;

(iv) the date of the participant’s total disability;

or (v) with respect to the cash settlement option, the date the participant attains the age of 65 while employed by us.

or (v) with respect to the cash

settlement option, the date the participant attains the age of 65 while employed by us.

Awards that are not vested upon terminatio n of employment are forfeited .

The 2005 Phantom Stock Plan does, however, provide the Board of Directors with discretionary authority to modify and/or accelerate the vesting of awards.

On December 16, 2019, our Board of Directors approved, and the Company adopted, amendments to the Employee Phantom Plans.

On December 16, 2019, our Board of Directors approved, and the Company adopted, certain amendments to the Employee Phantom Plans.

The amendments permit settlement of outstanding phantom stock awards in shares of the Company’s common stock in lieu of cash settlement, among other administrative changes.

2 unchanged sentences

On May 28, 2008, our Board of Directors approved, and the Company adopted, the Old Dominion Freight Line, Inc.

Director Phantom Stock Plan, as amended April 1, 2011, February 20, 2014, August 7, 2014, February 25, 2016 and December 16, 2019 (the “Director Phantom Stock Plan” and together with the Employee Phantom Plans, the “Phantom Plans”).

Director Phantom Stock Plan, as amended on April 1, 2011, February 20, 2014, August 7, 2014, February 25, 2016 and December 16, 2019 (the “Director Phantom Stock Plan” and together with the Employee Phantom Plans, the “Phantom Plans”).

Under the Director Phantom Stock Plan, each eligible non-employee director was granted an annual award of phantom shares.

1 unchanged sentence

For each vested phantom share, participants are entitled to an amount in cash or common stock equal to the fair market value of the award on the date that service as a director terminates for any reason.

All Director Phantom Stock Plan awards are fully vested.

Our shareholders approved the Stock Incentive Plan at our 2016 Annual Meeting of Shareholders;

as a result, no phantom shares have been granted under the Phantom Plans since such approval.

Director Phantom Stock Plan awards vest upon the earlier to occur of the following:

(i) the one-year anniversary of the grant date;

(ii) the date of the first annual meeting of shareholders that occurs after the grant date provided the participant is still in service as a director;

(iii) the date of a change of control in our ownership provided that the participant is still in service as a director;

or (iv) the date of the participant’s death or total disability while still in service as a director.

Awards that are not vested upon termination of service as a director are forfeited.

On December 16, 2019, our Board of Directors approved, and the Company adopted, an amendment to the Director Phantom Stock Plan.

The amendment permits settlement of outstanding phantom stock awards in shares of the Company’s common stock in lieu of cash settlement, among other administrative changes.

On December 16, 2019, our Board of Directors approved, and the Company adopted, certain amendments to the Director Phantom Stock Plan.

The amendments permit settlement of outstanding phantom stock awards in shares of the Company’s common stock in lieu of cash settlement, among other administrative changes.

Accounting Impact

3 unchanged sentences

A summary of the changes in the number of outstanding phantom stock awards during the year ended December 31, 2021 for the Phantom Plans is provided below.

There were no shares granted, settled or forfeited during 2021.

Phantom Plans

Balance of shares outstanding at December 31, 2019

Balance of shares outstanding at December 31, 2020

Balance of shares outstanding at December 31, 2021 and 2020

All phantom shares outstanding at December 31, 2021 relate to modified awards.

2 unchanged sentences

There were no unsettled phantom stock awards accounted for as a liability under the Phantom Plans as of December 31, 2021.

While the Stock Incentive Plan currently serves as our primary equity plan, the terms of the Phantom Stock Plans and related award agreements will continue to govern all awards granted under the Phantom Stock Plans until such awards have been settled, forfeited, canceled or have otherwise expired or terminated.

While the Stock Incentive Plan currently serves as our primary equity plan, the terms of the Phantom Plans and related award agreements will continue to govern all awards granted under the Phantom Plans until such awards have been settled, forfeited, canceled or have otherwise expired or terminated.

Fair Value Measurements

Short-term investments

A summary of the fair value of our short-term investments as of December 31, 2020 is shown in the table below.

A summary of the fair value of our short-term investments as of December 31, 2021 and December 31, 2020 is shown in the tables below.

(In thousands)

December 31, 2021

2 unchanged sentences

Commercial paper

(In thousands)

December 31, 2020

Certificates of deposit

government securities

Commercial paper

Our certificates of deposit are measured at carrying value including accrued interest, which approximates fair value due to their short-term nature.

1 unchanged sentence

Long-term debt

The carrying value of our total long-term debt, including current maturities, was $ 99.9 million and $ 45.0 million at December 31, 2020 and 2019, respectively.

The carrying value of our total long-term debt, including current maturities, was $ 99.9 million at December 31, 2021 and 2020.

The estimated fair value of our total long-term debt, including current maturities, was $ 104.5 million and $ 105.4 million at December 31, 2021 and 2020, respectively.

31 unchanged sentences

The liability for claims and insurance totaled $150.6 million at December 31, 2021, and the majority of this amount represents the self-insurance reserves for BIPD and workers’ compensation claims.

The long-term portion of this liability was $86.5 million, which was included in “Other non-current liabilities”, and the remainder was included in “Claims and insurance accruals” on the Company’s Balance Sheet.

The long-term portion of this liability was $88.7 million, which was included in “Other non-current liabilities”, and the remainder was included in “Claims and insurance accruals” on the Company’s Balance Sheets.

As described in Note 1 to the financial statements, claims and insurance accruals include the estimated cost of claims for BIPD and workers' compensation.

These accruals include estimates for both future claims development on reported claims as well as claims incurred but not yet reported.

The Company uses historical claims experience, known trends and third-party analyses to estimate the liabilities for each of the BIPD and workers’ compensation reserves.

The Company uses historical claims experience, known trends and third-party actuarial estimates to determine the liabilities for each of the BIPD and workers’ compensation reserves.

These analyses are complex and require significant judgment as the models utilize multiple valuation methods and reflect subjective assumptions, including 1) the weighting of such methods, 2) the loss ratio, 3) the loss trend factor, and 4) the loss development factor, among other assumptions.

How We Addressed the Matter in Our Audit

We identified and tested internal controls over management’s review of the estimate for self-insurance reserves for BIPD and workers’ compensation claims, including controls over the completeness and accuracy of data inputs used in the Company’s third-party calculations, the assumptions and reserve calculations, as well as management’s evaluation of service organization controls and user controls over the Company’s claims data managed by its third-party administrator.

We identified and tested internal controls over management’s review of the estimate for self-insurance reserves for BIPD and workers’ compensation claims, including controls over the completeness and accuracy of data inputs used in the Company’s third-party calculations, the assumptions and reserve calculations, as well as management’s evaluation of service organization controls and user controls over certain of the Company’s claims data that is managed by a third-party administrator.

To test the self-insurance reserves for BIPD and workers’ compensation claims balances, our audit procedures included, among others, evaluating the methodologies used and the significant assumptions discussed above, as well as performing procedures with respect to underlying data and calculations used in the Company’s third-party analyses.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data