Exhibit 99.1 Forward Air Corporation Reports Record Second Quarter 2006 Results; 12.0% Revenue Growth; 22.8% Operating Margin; 10.8% EPS Growth GREENEVILLE, Tenn.--(BUSINESS WIRE)--July 24, 2006--Forward Air Corporation (NASDAQ:FWRD) today reported record results for the second quarter ended June 30, 2006. This is the fourteenth consecutive quarter of record growth for the Company. Operating revenue for the quarter ended June 30, 2006 increased 12.0% to a record $86.8 million from $77.5 million for the same quarter in 2005. Income from operations was $19.8 million, compared with $16.8 million in the prior-year quarter, an increase of 17.7%. As a percent of operating revenue, income from operations improved to 22.8% from 21.7% for the same quarter last year. Net income during the period increased by $1.1 million, or 8.9%, to $13.0 million from $12.0 million in the prior-year quarter. Diluted income per share from operations for the second quarter of 2006 was $0.41 compared with $0.37 in the prior-year quarter, an increase of 10.8%. The second quarter of 2005 included a one-time gain of $0.9 million after-tax income, or $0.03 per diluted share, from the Company's settlement of its lawsuit with the City of Atlanta. Operating revenue for the six months ended June 30, 2006 increased 15.0% to $169.1 million from $147.0 million for the same period in 2005. Income from operations was $36.7 million, compared with $30.2 million in the prior-year period, an increase of 21.7%. As a percent of operating revenue, income from operations expanded to 21.7% for the first six months of 2006 from 20.5% in 2005. Net income during the period increased 16.4% to $24.0 million from $20.6 million in the prior-year period. Diluted income per share from operations for the first six months of 2006 was $0.75 compared with $0.63 in the prior-year period, an increase of 19.0%. Commenting on the Company's second quarter results, Bruce A. Campbell, President and CEO, said, "The results delivered during the second quarter by our team were truly outstanding, highlighted by an industry leading operating margin of 22.8%, and it was especially pleasing to see the 33.7% revenue growth in our logistics segment, which has been a point of emphasis for our company. As anticipated with the one-year anniversary of the XGS acquisition, our system revenue growth slowed but we feel we have positioned this segment for future growth with the implementation of our Forward Air Complete(TM) service offering and, as previously announced, the partnership with DHL Global Forwarding to be their primary ground transportation provider effective July 1, 2006." Commenting further, Rodney L. Bell, Senior Vice President and CFO, said, "The second quarter was another outstanding cash flow quarter for the Company. We generated $13 million of cash flow from operations bringing our year-to-date total to $22 million. Cash and short term investments increased by $11 million during the quarter to a total of $93 million at quarter-end." Review of Financial Results Forward Air will hold a conference call to discuss second quarter 2006 results on Tuesday, July 25, 2006, at 9:00 a.m. EDT. The Company's conference call will be available online at www.forwardair.com or by dialing 800-659-1966. A replay of the conference call will be available at www.forwardair.com beginning shortly after the completion of the live call. About Forward Air Forward Air is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of 81 terminals located on or near major airports in the United States and Canada. The Company 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 CORPORATION Condensed Statements of Income (Unaudited) (In thousands, except per share data) Three months ended Six Months Ended -------------------- --------------------- 6/30/06 6/30/05 (a) 6/30/06 6/30/05 (a) -------- ----------- --------- ----------- Operating revenue $86,779 $77,488 $169,109 $147,021 Operating expenses: Purchased transportation 35,134 31,003 67,570 59,482 Salaries, wages and employee benefits 18,330 16,367 37,123 31,819 Operating leases 3,422 3,376 6,868 6,712 Depreciation and amortization 2,052 1,969 4,451 3,822 Insurance and claims 1,710 1,839 3,191 3,021 Other operating expenses 6,364 6,143 13,183 11,993 ------- -------- -------- --------- Total operating expenses 67,012 60,697 132,386 116,849 ------- -------- -------- -------- Income from operations 19,767 16,791 36,723 30,172 Other income, net 871 2,191 1,480 2,708 ------- -------- -------- ------ Pre-tax income 20,638 18,982 38,203 32,880 Income taxes 7,617 7,028 14,174 12,233 ------- -------- -------- ----------- Net income $13,021 $11,954 $ 24,029 $ 20,647 ======= ======= ======== ======== Income per share: Basic $ 0.41 $ 0.37 $ 0.77 $ 0.64 Diluted $ 0.41 $ 0.37 $ 0.75 $ 0.63 Weighted average shares outstanding: Basic 31,431 32,277 31,354 32,282 Diluted 31,928 32,621 31,852 32,674 FORWARD AIR CORPORATION Condensed Consolidated Balance Sheets (In thousands) 6/30/06 12/31/05 ----------- --------- (Unaudited) Audited (a) Assets: Cash and short-term investments $ 93,317 $ 79,332 Other current assets 56,694 57,402 Property and equipment, net 47,497 47,222 Other assets 28,019 28,644 -------- -------- Total assets $225,527 $212,600 ======== ======== Liabilities and Shareholders' Equity: Current liabilities $ 17,601 $ 25,964 Long-term obligations 8,959 7,820 Shareholders' equity 198,967 178,816 -------- -------- Total liabilities and shareholders' equity $225,527 $212,600 ======== ======== (a) Taken from audited financial statements, which are not presented in their entirety. FORWARD AIR CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six months ended -------------------------- June 30, June 30, 2006 2005 ------------- ------------ Operating activities: Net income $ 24,029 $ 20,647 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,451 3,822 Share-based compensation 580 -- Atlanta condemnation settlement gain -- (1,428) Other non-cash charges -- 274 (Gain) loss on sale of property and equipment (165) 31 Provision for loss (recovery) on receivables 39 (190) Provision for revenue adjustments 1,083 964 Deferred income taxes 1,569 (384) Changes in operating assets and liabilities: Accounts receivable (3,508) (2,657) Inventories (28) (216) Prepaid expenses and other current assets (717) (917) Accounts payable and accrued expenses (6,861) (3,352) Income taxes 2,920 2,634 Tax benefit of stock options exercised (1,423) 588 ---------- --------- Net cash provided by operating activities 21,969 19,816 Investing activities: Proceeds from disposal of property and equipment 3,200 51 Purchases of property and equipment (5,190) (2,114) Proceeds from sales or maturities of available-for-sale securities 114,404 171,869 Purchases of available-for-sale securities (115,699) (146,040) Acquisition of business -- (12,750) Proceeds from Atlanta condemnation settlement/release of amounts held in escrow -- 2,765 Other (13) (17) ---------- ---------- Net cash (used in) provided by investing activities (3,298) 13,764 Financing activities: Payments of capital lease obligations (19) (14) Payments on line of credit (1,504) -- Proceeds from exercise of stock options 4,183 1,219 Payments of cash dividends (4,407) (3,878) Cash paid for fractional shares in 3-for-2 stock split -- (44) Common stock issued under employee stock purchase plan 115 130 Repurchase of common stock (5,772) (22,893) Tax benefit of stock options exercised 1,423 -- ---------- --------- Net cash used in financing activities (5,981) (25,480) ---------- --------- Net increase in cash 12,690 8,100 Cash at beginning of period 332 78 ---------- --------- Cash at end of period $ 13,022 $ 8,178 ---------- --------- Common stock repurchase liabilities included in accounts payable $ -- $ 3,545 ========== ========= Important Information This press release contains "forward-looking statements," as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E 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, Greeneville Rodney L. Bell, 423-636-7000 rbell@forwardair.com