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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


FORM 10-Q


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

[  ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-24908



TRANSPORT CORPORATION OF AMERICA, INC.
(Exact name of registrant as specified in its charter)



Minnesota   41-1386925  
(State or other jurisdiction  (I.R.S. Employer 
of incorporation or organization)  Identification No.) 

1715 Yankee Doodle Road
Eagan, Minnesota 55121
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (651) 686-2500

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days:   YES _X_ NO

As of August 9, 2002, the Company had outstanding 7,256,191 shares of Common Stock, $.01 par value.



This Form 10-Q consists of 17 pages.

 

TRANSPORT CORPORATION OF AMERICA, INC.
Quarterly Report on Form 10-Q

Table of Contents


Part I. FINANCIAL INFORMATION


Item 1. Financial Statements

  Consolidated Balance Sheets as of
June 30, 2002 and December 31, 2001		  
Page 3

  Consolidated Statements of Operations for the
three and six months ended June 30, 2002 and 2001		  
Page 4

  Consolidated Statements of Cash Flows for the
six months ended June 30, 2002 and 2001		  
Page 5

  Notes to Consolidated Financial Statements Page 6

Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations		  
Page 8

Item 3. Quantitative and Qualitative Disclosure about
Market Risk		  
Page 14

Part II. OTHER INFORMATION


Item 4. Submission of Matters to a Vote of Security Holders Page 15

Item 6. Exhibits and Reports on Form 8-K Page 15

2

Item 1. Financial Statements

Transport Corporation of America, Inc.
Consolidated Balance Sheets
(In thousands)

Assets June 30,
2002
 December 31,
2001
(Unaudited) *
Current assets:            
     Cash and cash equivalents   $ 165   $ 1,107  
     Trade accounts receivable, net    31,746    26,864  
     Other receivables    3,396    1,590  
     Operating supplies - inventory    1,180    1,196  
     Deferred income tax benefit    4,070    3,474  
     Prepaid expenses    3,859    1,801  
Total current assets    44,416    36,032  
Property and equipment:  
     Land, buildings, and improvements    17,889    17,860  
     Revenue equipment    211,690    227,149  
     Other equipment    24,884    24,162  
       Total property and equipment    254,463    269,171  
       Less accumulated depreciation    (107,978 )  (100,203 )
        Property and equipment, net    146,485    168,968  
Other assets  
     Other assets, net    2,501    2,030  
     Goodwill, net    0    24,366  
Total other assets, net    2,501    26,396  
Total assets   $ 193,402   $ 231,396  
Liabilities and Shareholders’ Equity  
Current liabilities:  
     Current maturities of long-term debt   $ 10,322   $ 14,111  
     Current maturities of capital lease obligations    5,896    4,244  
     Accounts payable    5,591    5,873  
     Checks issued in excess of cash balances    2,542    1,118  
     Due to independent contractors    1,813    1,496  
     Accrued expenses    15,552    14,495  
Total current liabilities    41,716    41,337  
 
Long-term debt, less current maturities    44,479    51,077  
Capital lease obligations, less current maturities    19,266    23,019  
Deferred income taxes    26,532    35,516  
Shareholders’ equity:  
     Common stock    72    72  
     Additional paid-in capital    30,476    30,205  
     Retained earnings    30,861    50,170  
Total shareholders’ equity    61,409    80,447  
Total liabilities and shareholders’ equity   $ 193,402   $ 231,396  
* Based upon audited financial statements
See accompanying notes to consolidated financial statements

3

Transport Corporation of America, Inc.
Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)

Three months ended
June 30,
 Six months ended
June 30,
2002
 2001
 2002
 2001
Operating revenues     $ 69,004   $ 69,395   $ 135,052   $ 135,502  

Operating expenses:		  
     Salaries, wages, and benefits    20,161    20,359    40,658    39,623  
     Fuel, maintenance, and other expenses    9,779    10,100    19,110    19,987  
     Purchased transportation    23,110    22,470    43,677    44,531  
     Revenue equipment leases    268    18    331    32  
     Depreciation and amortization    6,933    7,490    14,110    15,074  
     Insurance, claims and damage    2,768    2,227    6,095    4,589  
     Taxes and licenses    1,205    1,319    2,586    2,501  
     Communications    684    726    1,379    1,344  
     Other general and administrative expenses    2,289    2,292    4,273    4,622  
     Impairment of revenue equipment    0    0    4,741    0  
     (Gain) loss on sale of property and equipment    (9 )  10    (8 )  59  
Total operating expenses    67,188    67,011    136,952    132,362  
Operating income (loss)    1,816    2,384    (1,900 )  3,140  

Interest expense		    1,432    1,769    2,927    3,762  
Interest income    (1 )  (2 )  (5 )  (7 )
Interest expense, net    1,431    1,767    2,922    3,755  
Earnings (loss) before income taxes and cumulative  
     effect of change in accounting principle    385    617    (4,822 )  (615 )

Provision (benefit) for income taxes		    177    241    (2,207 )  (239 )
Earnings (loss) before cumulative effect  
     of change in accounting principle    208    376    (2,615 )  (376 )
Cumulative effect of change in  
     accounting principle, net of tax effect    0    0    16,694    0  
Net earnings (loss)   $ 208   $ 376   $(19,309 ) $ (376 )
Net earnings (loss) per share - basic:  
     Before cumulative effect of change  
        in accounting principle   $ 0.03   $ 0.05   $ (0.36 ) $ (0.05 )
     Cumulative effect of change in  
        accounting principle, net of tax effect    0    0    (2.31 )  0  
     Net earnings (loss) per share   $ 0.03   $ 0.05   $ (2.67 ) $ (0.05 )
Net earnings (loss) per share - diluted  
     Before cumulative effect of change  
        in accounting principle   $ 0.03   $ 0.05   $ (0.36 ) $ (0.05 )
     Cumulative effect of change in  
        accounting principle, net of tax effect    0    0    (2.31 )  0  
     Net earnings earnings (loss) per share   $ 0.03   $ 0.05   $ (2.67 ) $ (0.05 )
Average common shares outstanding:  
     Basic    7,251,013    7,192,032    7,239,232    7,190,698  
     Diluted    7,315,138    7,203,740    7,239,232    7,190,698  

        See accompanying notes to consolidated financial statements

4

Transport Corporation of America, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Six months ended
June 30,
2002
 2001
Operating activities:            
     Net loss   $ (19,309 ) $ (376 )
     Adjustments to reconcile net loss to net cash  
        provided by operating activities:  
           Depreciation and amortization    14,110    15,074  
           Cumulative effect of change in accounting  
              principle, net of tax effect    16,694    0  
           Impairment of revenue equipment    4,741    0  
           Loss (gain) on sale of property and equipment    (8 )  59  
           Deferred income taxes    (1,907 )  (74 )
           Changes in operating assets and liabilities:  
              Trade receivables    (4,882 )  (475 )
              Other receivables    (946 )  76  
              Operating supplies    16    81  
              Prepaid expenses    (2,058 )  (1,405 )
              Accounts payable    (282 )  80  
              Due to independent contractors    317    (497 )
              Accrued expenses    1,056    335  
Net cash provided by operating activities    7,542    12,878  
Investing activities:  
     Purchases of revenue equipment    (2,086 )  (106 )
     Purchases of property and other equipment    (877 )  (883 )
     Decrease in other assets     189    7  
     Proceeds from disposition of equipment    5,083    1,532  
Net cash provided by investing activities    2,309    550  
Financing activities:  
     Proceeds from issuance of common stock,  
        and exercise of options and warrants    271    61  
     Proceeds from issuance of long-term debt    4,091    0  
     Principal payments on long-term debt    (8,529 )  (9,292 )
     Proceeds from issuance of notes payable to bank    24,300    59,100  
     Principal payments on notes payable to bank    (32,350 )  (62,250 )
     Change in net checks issued in excess of cash balances    1,424    (207 )
Net cash used by financing activities    (10,793 )  (12,588 )
Net (decrease) increase in cash    (942 )  840  
Cash and cash equivalents, beginning of period    1,107    234  
Cash and cash equivalents, end of period   $ 165   $ 1,074  
Supplemental disclosure of cash flow information:  
      Lease receivables from disposition of revenue equipment   $ 1,545   $ 0  
     Cash paid during the period for:  
        Interest   $ 2,791   $ 3,609  
        Income taxes    124    114  

        See accompanying notes to consolidated financial statements

5

TRANSPORT CORPORATION OF AMERICA, INC.

Notes to Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

          The unaudited interim consolidated financial statements contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the interim periods. They have been prepared in accordance with the instructions to Form 10-Q, Article 10 of Regulation S-X and, accordingly, do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

          These financial statements should be read in conjunction with the financial statements and footnotes included in the Company’s most recent annual financial statements on Form 10-K for the year ended December 31, 2001. The critical accounting policies described in that report are used in preparing quarterly reports. Certain balances from prior periods have been reclassified to conform to current presentation.

          The Company’s business is seasonal. Operating results for the three and six-month periods ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.

2. Effect of New Accounting Standards

          In 2001, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually. As a result of its adoption of SFAS No. 142 on January 1, 2002, the Company recorded a $16.7 million impairment charge for goodwill, net of tax benefit of $7.7 million, which has been reported as a cumulative effect of change in accounting principle. The fair value of the Company (single reporting unit) was determined based on quoted market prices for the Company’s common stock.



6

          The following table reflects the consolidated results, adjusted as though the adoption of SFAS No. 142 occurred as of the beginning of the three and six-month periods ended June 30, 2001:

(Dollars in thousands, except per share amounts) Three months ended
June 30,
 Six months ended
June 30,
2002
 2001
 2002
 2001
Net earnings (loss):                    
      As reported   $ 208   $ 376   $ (19,309 ) $ (376 )
      Goodwill amortization, net of tax    —    167    —    334  
Adjusted net loss:   $ 208   $ 543   $ (19,309 ) $ (42 )
Net earnings (loss) per share - basic:  
      As reported   $ 0.03   $ 0.05   $ (2.67 ) $ (0.05 )
      Goodwill amortization, net of tax    —    0.02    —    0.05  
Adjusted basic net loss per share   $ 0.03   $ 0.07   $ (2.67 ) $ —  
Net earnings (loss) per share - diluted:  
      As reported   $ 0.03   $ 0.05   $ (2.67 ) $ (0.05 )
      Goodwill amortization, net of tax    —    0.02    —    0.05  
Adjusted diluted net loss per share   $ 0.03   $ 0.07   $ (2.67 ) $ —  

          A roll-forward of goodwill for the six-month period ended June 30, 2002 is as follows:

(Dollars in thousands)        

Balance as of December 31, 2001		     $ 24,366  
Impairment losses as of March 31, 2002    (24,366 )
Balance as of June 30, 2002   $ —  

          In 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement establishes a single accounting model for the impairment or disposal of long-lived assets. The Company adopted the provisions of SFAS No. 144 on January 1, 2002. There was no impact on the financial statements from the adoption of SFAS No. 144.

          In March 2002 the Company initiated a plan to accelerate the disposal of approximately 260 tractors and 500 trailers. As a result of the change in utilization period and related estimated cash flows, the Company recorded a pre-tax $4.7 million impairment charge on this revenue equipment in the first quarter of 2002. The estimated fair value of the revenue equipment was based on a combination of market quotes and independent appraisals of the equipment.



7


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

          Three Months Ended June 30, 2002 and 2001

          Operating revenues, including fuel surcharges, were $69.0 million for the quarter ended June 2002, compared to $69.4 million for the same quarter of 2001. Excluding fuel surcharges, revenues increased 1.7% when compared to the same period of 2001. Fuel surcharges were $1.1 million and $2.7 million, for the second quarters of 2002 and 2001, respectively, reflecting the effect of lower fuel costs in 2002. Primarily as a result of the mix of customer freight and continued competitive pricing pressure in the market, partially offset by the effect of lower empty miles, revenues per mile, excluding fuel surcharges, were $1.24 per mile for the second quarter of 2002, compared to $1.28 for the same quarter of 2001. Excluding the effect of lower fuel surcharge revenues, equipment utilization, as measured by average revenues per tractor per week, was $2,689 during the second quarter of 2002, compared to $2,529 for the same quarter of 2001. The improved equipment utilization in 2002 reflects higher loaded miles, a lower percentage of empty miles, and a lower number of unseated tractors, when compared to the same period of 2001.

          At June 2002 and 2001, respectively, the Company’s fleet included 1,177 and 1,259 Company-owned tractors, and 785 and 732 tractors provided by independent contractors.

          Salaries, wages, and benefits, as a percentage of operating revenues, were 29.2% for the second quarter of 2002, compared to 29.4% for the same quarter of 2001. The percentage decrease in 2002 is primarily a result of a lower proportion of miles driven by employee drivers, partially offset by higher employee medical claim and workers’ compensation expenses when compared to the same period of 2001. Efficiency, as measured by average annualized revenues per non-driver employee, was $597,000 for the second quarter of 2002, compared to $561,000 for the same quarter of 2001. The increase reflects reductions of non-driver personnel beginning in the first quarter of 2001.

          Fuel, maintenance, and other expenses, as a percentage of operating revenues, were 14.2%, compared to 14.6% for the same quarter of 2001. The decrease in 2002 primarily reflects lower fuel costs and a lower proportion of miles driven by employee drivers, partially offset by higher maintenance and other fleet operating costs, when compared to the same period of 2001.



8

          Purchased transportation, as a percentage of operating revenues, was 33.5% for the second quarter of 2002, compared to 32.4% for the same quarter of 2001. The increase in 2002 reflects a higher proportion of miles driven by independent contractors, partially offset by a lower pass-through of fuel surcharge revenues to independent contractors as a reflection of lower fuel costs.

          Revenue equipment leases, as a percentage of operating revenues, was 0.4% for the second quarter of 2002, compared to 0.0% for the same quarter of 2001. The increase reflects the Company’s use of operating leases for certain tractors acquired in 2002.

          Depreciation and amortization, as a percentage of operating revenues, was 10.1% of operating revenues for the second quarter of 2002, compared to 10.8% for the same quarter of 2001. The decrease is primarily a result of the adoption of SFAS No. 142, “Goodwill and Other Intangible Assets,” under which goodwill was entirely written off in the first quarter of 2002. Amortization of goodwill in the year-ago quarter was $274,000.

          Insurance, claims and damage expense, as a percentage of operating revenues, was 4.0% for the second quarter of 2002, compared to 3.2% for the same quarter of 2001. The increase is primarily a result of higher liability insurance premium expense and higher accident and claims expense in 2002.

          Taxes and licenses, as a percentage of operating revenues, was 1.7% for the second quarter of 2002, compared to 1.9% for the same quarter of 2001. The decrease is primarily a result of a lower proportion of miles driven by company drivers, partially offset by a greater proportion of license fees paid on behalf of independent contractors in 2002, when compared to the same period of 2001.

          Communication expense, as a percentage of operating revenues, was 1.0% for the second quarters of both 2002 and 2001.

          Other general and administrative expense, as a percentage of operating revenues, was 3.3% for the second quarters of both 2002 and 2001.

          Gain on the disposition of equipment was $9,000 for the second quarter of 2002, compared to a loss of $10,000 for the same quarter of 2001.

          Net interest expense, as a percentage of operating revenues, was 2.0% for the second quarter of 2002, compared to 2.5% for the same quarter of 2001. The decrease primarily reflects lower average debt balances in 2002.



9

          The effective tax rate, as a percentage of operating revenues, was 46.0% for the second quarter of 2002, compared to 39.0% for the same quarter of 2001. The higher effective rate in 2002, compared to 2001, primarily reflects the effect of non-deductible items for tax purposes in relation to lower pre-tax earnings.

          As a result of the items discussed above, the Company’s operating ratio (operating expenses as a percentage of operating revenues), was 97.4% for the second quarter of 2002, compared to 96.6% for the same quarter of 2001.

          Net earnings were $208,000 for the second quarter of 2002, compared to net earnings of $376,000 for the same quarter of 2001.

          Six Months Ended June 30, 2002 and 2001

          Operating revenues, including fuel surcharges, were $135.1 million for the six months ended June 30, 2002, compared to $135.5 million for the same period of 2001. Excluding fuel surcharges, revenues increased 2.8% when compared to the same period of 2001. Fuel surcharges were $1.4 million and $5.5 million, for the first six months of 2002 and 2001, respectively, reflecting the effect of lower fuel costs in 2002. Primarily as a result of the mix of customer freight and competitive pricing pressure in the market, revenues per mile, excluding fuel surcharges, were $1.24 per mile for the first six months of 2002, compared to $1.27 for the same period of 2001. Excluding the effect of lower fuel surcharge revenues, equipment utilization, as measured by average revenues per tractor per week, was $2,641 during the first six months of 2002, compared to $2,454 for the same period of 2001. The improved equipment utilization in 2002 primarily reflects higher loaded miles, fewer unseated tractors and a lower percentage of empty miles, when compared to the same period of 2001.

          Salaries, wages, and benefits, as a percentage of operating revenues, were 30.2% for the first six months of 2002, compared to 29.3% for the same period of 2001. The percentage increase is primarily a reflection of a higher proportion of miles driven by employee drivers and higher employee medical claim and workers’ compensation expenses, partially offset by lower non-driver compensation expense, when compared to the same period of 2001. Efficiency, as measured by average annualized revenues per non-driver employee, was $579,000 for the first six months of 2002, compared to $533,000 for the same period of 2001. The increase reflects reductions of non-driver personnel starting in the first quarter of 2001.

          Fuel, maintenance, and other expenses, as a percentage of operating revenues, were 14.2%, compared to 14.8% for the same period of 2001. The decrease in 2002 primarily reflects lower fuel costs in the current period,



10

  partially offset by a higher proportion of miles driven by employee drivers and higher maintenance and other fleet operating costs.

          Purchased transportation, as a percentage of operating revenues, was 32.3% for the first six months of 2002, compared to 32.9% for the same period of 2001. The decrease in 2002 reflects a lower pass-through of fuel surcharge revenues to independent contractors as a reflection of lower fuel costs and a lower proportion of miles driven by independent contractors.

          Revenue equipment leases, as a percentage of operating revenues, was 0.2% for the first six months of 2002, compared to 0.0% for the same period of 2001. The increase reflects the Company’s use of operating leases for certain tractors acquired in 2002.

          Depreciation and amortization, as a percentage of operating revenues, was 10.4% of operating revenues for the first six months of 2002, compared to 11.1% for the same period of 2001. The decrease is primarily a result of the adoption in the first quarter of 2002 of SFAS No. 142, “Goodwill and Other Intangible Assets,” under which goodwill was entirely written off in the first quarter of 2002. Amortization of goodwill in the same period of 2001 was $548,000.

          Insurance, claims and damage expense, as a percentage of operating revenues, was 4.5% for the first six months of 2002, compared to 3.4% for the same period of 2001. The increase is primarily a result of higher liability insurance premium expense and higher accident and claims expense in 2002.

          Taxes and licenses, as a percentage of operating revenues, was 1.9% for the first six months of 2002, compared to 1.8% for the same period of 2001. The increase is primarily a result of the higher proportion of miles driven by company drivers and a higher proportion of license fees paid on behalf of independent contractors in 2002, when compared to the same period of 2001.

          Communication expense, as a percentage of operating revenues, was 1.0% for the first six-month periods of both 2002 and 2001.

          Other general and administrative expense, as a percentage of operating revenues, was 3.2% for the first six months of 2002, compared to 3.4% for the same period of 2001. The decrease is primarily a result of cost control initiatives implemented in the first quarter of 2001.

          Impairment of revenue equipment was $4.7 million, or 3.5% of operating revenues, in the first six months of 2002. In the first quarter of 2002 the Company identified a group of 260 tractors and approximately 500 trailers for disposition within the next year. Accordingly, these assets were



11

  written down to their estimated fair value under the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The tractors identified for accelerated disposition represent over-the-road units not covered by manufacturer guaranteed residual value programs. The trailers to be disposed were identified as being in excess of the Company’s needs. Disposition programs for this equipment are under way.

          Gain on the disposition of equipment was $8,000 for the first six months of 2002, compared to a loss of $59,000 for the same period of 2001, reflecting fewer equipment dispositions in 2002.

          Net interest expense, as a percentage of operating revenues, was 2.2% for the first six months of 2002, compared to 2.8% for the same period of 2001. The decrease primarily reflects lower average debt balances in 2002.

          The effective tax rate as a percentage of operating revenues was 45.8% for the first six months of 2002, compared to 38.9% for the same period of 2001. The higher effective rate in 2002, compared to 2001, primarily reflects the effect of non-deductible items for tax purposes in relation to lower pre-tax earnings.

          As a result of the items discussed above, the Company’s operating ratio (operating expenses as a percentage of operating revenues), including the $4.7 million impairment loss, was 101.4% for the first six months of 2002, compared to 97.7% for the same period of 2001. Loss before the effect of a change of accounting principle, was $2.6 million, or 1.9% of operating revenues, for the first six months of 2002, compared to a net loss of $0.4 million, or 0.3% of operating revenues, for the same period of 2001.

          Upon its adoption of SFAS No. 142, “Goodwill and Other Intangible Assets,” the Company recorded a goodwill impairment charge of $16.7 million, net of tax benefit of $7.7 million, as a cumulative effect of change in accounting principle. At December 31, 2001, the carrying value of goodwill, net of amortization, was $24.4 million.

          Net loss, including the cumulative effect of a change in accounting principle in the first six months of 2002, was $19.3 million, compared to a net loss of $0.4 million for the same period of 2001.



12

          Liquidity and Capital Resources

          Net cash provided by operating activities for the first six months of 2002 was $7.5 million. The net change of operating assets and liabilities consumed $6.8 million, including $1.2 million for receivables associated with equipment dispositions, $1.1 million for income taxes receivable, $1.1 million for seasonal payments of annual operating license fees, and $4.9 million for increased trade receivables.

          Investing activities for the first six months of 2002 provided net cash of $2.3 million. Proceeds from sales of equipment exceeded expenditures for revenue and other equipment during the first six months of 2002. In the first six months of 2002, the Company financed approximately $4.7 million of revenue equipment as operating leases.

          Financing activities for first six months of 2002 consumed net cash of $10.8 million, including net repayments of the Company’s credit facility and scheduled principal payments on long-term debt of $8.1 million and $8.5 million, respectively. As of June 30, 2002, the Company had outstanding non-cancelable commitments of approximately $19.2 million for the purchase of revenue equipment, which will be partially offset by anticipated proceeds from used equipment dispositions and trade-in amounts. The Company has obtained financing for these purchase commitments.

          Working capital was $2.7 million at June 30, 2002, compared to negative $5.3 million at December 31, 2001. The Company relies primarily on its operating cash flows and available credit facility to satisfy its short-term capital and debt-service requirements. At June 30, 2002, the company had additional amounts available under its credit facility of $26.1 million.

          The Company has a credit agreement for a secured credit facility with maximum combined borrowings and letters of credit of $40 million. Amounts actually available under the credit facility are limited by the Company’s accounts receivable and certain unencumbered revenue equipment. The credit facility is used to meet working capital needs, purchase revenue equipment and other assets, and to satisfy letter of credit requirements associated with the Company’s self-insured retention arrangements. At June 30, 2002, there were outstanding borrowings and letters of credit of $11.0 million and $2.9 million, respectively. The Company was in compliance with the financial covenants under the credit facility as of June 30, 2002. The Company expects to continue to fund its liquidity needs and anticipated capital expenditures with cash flows from operations, the credit facility, and other financing arrangements related to revenue equipment purchases.



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          Forward-looking Statements

          Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Annual Report, elsewhere in this Report, in future filings by the Company with the SEC, in the Company’s press releases, and in oral statements made with the approval of an authorized executive officer which are not historical or current facts, are forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. The following important factors, among other things, in some cases have affected and in the future could affect the Company’s actual results and could cause the Company’s actual financial performance to differ materially from that expressed in any forward-looking statement: (1) the highly competitive conditions that currently exist in the Company’s market and the Company’s ability to compete, (2) the Company’s ability to recruit, train, and retain qualified drivers, (3) increases in fuel prices, and the Company’s ability to recover these costs from its customers, (4) changes in governmental regulations applicable to the Company’s operations, (5) adverse weather conditions, (6) accidents, (7) the market for used revenue equipment, (8) changes in interest rates, (9) cost of liability insurance coverage, and (10) downturns in general economic conditions affecting the Company and its customers. The foregoing list should not be construed as exhaustive, and the Company disclaims any obligation subsequently to revise or update any previously made forward-looking statements. Unanticipated events are likely to occur.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

          The Company is exposed to certain market risks with its $40 million credit agreement, of which $11.0 million was outstanding at June 30, 2002. The agreement bears interest at a variable rate, which was 4.5% at June 30, 2002. Consequently, the Company is exposed to the risk of greater borrowing costs if interest rates increase. Although the Company does not currently employ derivatives or similar instruments to hedge against increases in fuel prices, fuel surcharge provisions enable the Company to reduce the effects of price increases.



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PART II OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders:

          On May 28, 2002 the Company held its Annual Meeting of Shareholders. At the meeting, the following actions were taken:

    (a) The following persons were elected to the Company's Board of Directors:

Votes for
 Votes Withheld
William D. Slattery  6,694,816  105,442 
Michael J. Paxton  6,536,673  263,585 
Anton J. Christianson  6,700,511  99,747 
William P. Murnane  6,700,306  99,952 
Kenneth J. Roering  6,696,511  103,747 

    (b) The Company’s shareholders approved the amendment to the Transport America 1995 Stock Plan to increase the number of shares reserved for issuance under the Plan by a vote of 6,375,902 in favor, and 399,372 shares against, and 24,984 shares abstaining.

Item 6.           Exhibits and Reports on Form 8-K:

      (a) Exhibits:

          Exhibit
        Number                 Description

      3.1 Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 33-84140) as declared effective by the Commission on November 3, 1994 (the "1994 S-1")).

      3.2 Bylaws (incorporated by reference to Exhibit 3.2 to the 1994 S-1).

      4.1 Rights Agreement by and between the Company and Wells Fargo Bank Minnesota, N.A. (formerly Norwest Bank Minnesota, N.A.) dated February 25, 1997 (incorporated by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A, as amended, filed with the SEC on February 27, 1997; to Exhibit 1 to the Company's Registration Statement on Form 8-K/A, filed with the SEC on June 29, 1998; and to Exhibit 1 to the Company's Registration Statement on Form 8-A/A, filed with the SEC on January 21, 2000).

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      10.1 Amended and Restated Credit Agreement dated as of October 5, 2001, among LaSalle Bank, N.A., Firstar Bank, N.A. and the Company (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).

      10.2 1986 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.2 to the Company's Form 10-K for the year ended December 31, 1996).

      10.3 401(k) Retirement Plan (incorporated by reference to Exhibit 10.3 to the 1994 S-1).

      10.4 Master Lease, dated as of April 9, 1999, between the Company and ABN/AMBRO Leasing, Inc. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1999).

      10.5 Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999).

      10.6 Form of Vehicle Lease and Independent Contractor Agreement (incorporated by reference to Exhibit 10.11 to the Company's Form 10-K for the year ended December 31, 1996).

      10.7 Description of the terms of employment of Michael J. Paxton (incorporated by reference to Exhibit 1071 to the Company's Form 10-K for the year ended December 31, 2001).

      10.8 Supplement to Employment Offer and Change in Control Agreement between the Company and Keith R. Klein, dated December 31, 2001 (incorporated by reference to Exhibit 10.8 to the Company's Form 10-K for the year ended December 31, 2001).

      10.9 Severance Agreement between the Company and Robert J. Meyers, dated January 31, 2002 (incorporated by reference to Exhibit 10.9 to the Company's Form 10-K for the year ended December 31, 2001).

      10.10 Employment Letter and Addendum for Richard Lane.

      10.12 2001 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.12 to the company's form 10-K for the year ended December 31, 2000).

      10.13 1995 Stock Plan, as amended (Incorporated by reference to Form S-8, as filed with the SEC on June 6, 2002).

      11.1 Statement re: Computation of Net Earnings per Share.

      99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

      99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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      (b) Reports on Form 8-K

        No reports on Form 8-K were filed during the quarter ended June 30, 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

        TRANSPORT CORPORATION OF AMERICA, INC.  
  
Date:       August 13, 2002       /s/ Michael J. Paxton 
      Michael J. Paxton 
      Chairman, President and Chief Executive Officer 
      (Principal Executive Officer) 
        
           /s/ Keith R. Klein 
      Keith R. Klein 
      Chief Financial Officer and Chief Information Officer 
      (Principal Financial and Accounting Officer) 





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