Delaware | 001-35007 | 20-5589597 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
2200 South 75th Avenue, Phoenix, Arizona |
85043 |
|
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit | |||
Number | Description | ||
Exhibit 99.1 | News release dated July 21, 2011, issued by Swift Transportation Company |
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Exhibit 99.2 | Swift Transportation Company Financial Condition Summary and Other Data |
SWIFT TRANSPORTATION COMPANY |
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By: | /s/ Virginia Henkels | |||
Name: | Virginia Henkels | |||
Title: | Executive Vice President and Chief Financial Officer |
Exhibit | |||
Number | Description | ||
Exhibit 99.1 | News release dated July 21, 2011, issued by Swift Transportation Company |
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Exhibit 99.2 | Swift Transportation Company Financial Condition Summary and Other Data |
| Operating Revenue Increases $114.3 Million or 15.5%, over 2010 Second Quarter |
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| Operating Income Increases $11.4 Million, or 18.6%, from 2010 Second Quarter |
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| Operating Ratio Improves 20 basis points, while Adjusted Operating Ratio* Improves
100 basis points from 2010 Second Quarter |
Three Months Ended June 30, | ||||||||||||
2011 | 2010 | Change | ||||||||||
(Unaudited) | ||||||||||||
($ in millions, except per share data) | ||||||||||||
Operating revenue |
$ | 850,470 | $ | 736,185 | 15.5 | % | ||||||
Revenue excluding fuel surcharge revenue |
$ | 672,154 | $ | 624,082 | 7.7 | % | ||||||
Operating Ratio |
91.5 | % | 91.7 | % | 20 | bps | ||||||
Adjusted Operating Ratio |
89.2 | % | 90.2 | % | 100 | bps | ||||||
Diluted EPS |
$ | 0.14 | $ | (0.38 | ) | $ | 0.52 | |||||
Adjusted EPS |
$ | 0.18 | $ | (0.08 | ) | $ | 0.26 |
2
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Unaudited) | ||||||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||||||
Operating revenue |
$ | 850,470 | $ | 736,185 | $ | 1,609,359 | $ | 1,391,015 | ||||||||
Operating expenses: |
||||||||||||||||
Salaries, wages and employee benefits |
202,556 | 186,918 | 398,032 | 364,721 | ||||||||||||
Operating supplies and expenses |
58,766 | 54,221 | 115,870 | 102,051 | ||||||||||||
Fuel |
168,537 | 115,494 | 318,818 | 221,576 | ||||||||||||
Purchased transportation |
223,680 | 197,789 | 417,717 | 373,491 | ||||||||||||
Rental expense |
19,224 | 19,493 | 37,213 | 38,396 | ||||||||||||
Insurance and claims |
27,876 | 29,479 | 50,601 | 49,686 | ||||||||||||
Depreciation and amortization of
property and equipment |
51,553 | 48,403 | 101,911 | 108,422 | ||||||||||||
Amortization of intangibles |
4,617 | 5,199 | 9,344 | 10,677 | ||||||||||||
Impairments |
| | | 1,274 | ||||||||||||
Gain on disposal of property and
equipment |
(700 | ) | (1,757 | ) | (2,955 | ) | (3,205 | ) | ||||||||
Communication and utilities |
6,335 | 6,132 | 12,795 | 12,554 | ||||||||||||
Operating taxes and licenses |
15,459 | 13,625 | 30,717 | 26,990 | ||||||||||||
Total operating expenses |
777,903 | 674,996 | 1,490,063 | 1,306,633 | ||||||||||||
Operating income |
72,567 | 61,189 | 119,296 | 84,382 | ||||||||||||
Other (income) expenses: |
||||||||||||||||
Interest expense |
36,631 | 62,768 | 74,132 | 125,364 | ||||||||||||
Derivative interest expense |
4,003 | 18,292 | 8,683 | 42,006 | ||||||||||||
Interest income |
(471 | ) | (283 | ) | (938 | ) | (503 | ) | ||||||||
Other |
(664 | ) | (1,469 | ) | (1,175 | ) | (1,840 | ) | ||||||||
Total other (income) expenses, net |
39,499 | 79,308 | 80,702 | 165,027 | ||||||||||||
Income (loss) before income taxes |
33,068 | (18,119 | ) | 38,594 | (80,645 | ) | ||||||||||
Income tax expense (benefit) |
13,485 | 4,960 | 15,806 | (4,565 | ) | |||||||||||
Net income (loss) |
$ | 19,583 | $ | (23,079 | ) | $ | 22,788 | $ | (76,080 | ) | ||||||
Basic earnings (loss) per share |
$ | 0.14 | $ | (0.38 | ) | $ | 0.16 | $ | (1.27 | ) | ||||||
Diluted earnings (loss) per share |
$ | 0.14 | $ | (0.38 | ) | $ | 0.16 | $ | (1.27 | ) | ||||||
Shares used in per share calculations |
||||||||||||||||
Basic |
139,479 | 60,117 | 138,807 | 60,117 | ||||||||||||
Diluted |
140,716 | 60,117 | 139,812 | 60,117 | ||||||||||||
3
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Diluted earnings (loss) per share |
$ | 0.14 | $ | (0.38 | ) | $ | 0.16 | $ | (1.27 | ) | ||||||
Adjusted for: |
||||||||||||||||
Income tax expense (benefit) |
0.10 | 0.08 | 0.11 | (0.08 | ) | |||||||||||
Income (loss) before income taxes |
0.24 | (0.30 | ) | 0.28 | (1.34 | ) | ||||||||||
Non-cash impairments(b) |
| | | 0.02 | ||||||||||||
Other special non-cash items(c) |
| | | 0.12 | ||||||||||||
Mark-to-market adjustment of interest
rate
swaps(d) |
| 0.09 | | 0.28 | ||||||||||||
Amortization of certain intangibles(e) |
0.03 | 0.08 | 0.06 | 0.17 | ||||||||||||
Amortization of unrealized losses on
interest rate
swaps(f) |
0.03 | | 0.06 | | ||||||||||||
Adjusted income (loss) before income
taxes |
0.29 | (0.13 | ) | 0.40 | (0.75 | ) | ||||||||||
Provision for income tax (benefit)
expense
at normalized effective rate |
0.11 | (0.05 | ) | 0.16 | (0.29 | ) | ||||||||||
Adjusted EPS |
$ | 0.18 | $ | (0.08 | ) | $ | 0.24 | $ | (0.46 | ) | ||||||
(a) | We define Adjusted EPS as (1) income (loss) before income taxes plus (i) amortization of
the intangibles from our 2007 going-private transaction, (ii) non-cash impairments, (iii)
other special non-cash items, (iv) excludable transaction costs, (v) the mark-to-market
adjustment on our interest rate swaps that is recognized in the statement of operations in a
given period, and (vi) the amortization of previous losses recorded in accumulated other
comprehensive income related to the interest rate swaps we terminated upon our IPO and
refinancing transactions in December 2010; (2) reduced by income taxes at 39%, our normalized
effective tax rate; (3) divided by weighted average diluted shares outstanding. We believe the
presentation of financial results excluding the impact of the items noted above provides a
consistent basis for comparing our results from period to period and to those of our peers due
to the non-comparable nature of the intangibles from our going-private transaction, the
historical volatility of the interest rate derivative agreements and the non-operating nature
of the impairment charges, transaction costs and other adjustment items. Adjusted EPS is not
presented in accordance with GAAP and should be considered in addition to, not as a substitute
for, or superior to, measures of financial performance in accordance with GAAP. The numbers
reflected in the above table are calculated on a per share basis and may not foot due to
rounding. |
|
(b) | Revenue equipment with a carrying amount of $3.6 million was written down to its fair value
of $2.3 million, resulting in an impairment charge of $1.3 million in the first quarter of
2010. |
|
(c) | Incremental pre-tax depreciation expense of $7.4 million reflecting managements revised
estimates regarding salvage value and useful lives for approximately 7,000 dry van trailers,
which management decided during the first quarter of 2010 to scrap over the next few years. |
|
(d) | Mark-to-market adjustment of interest rate swaps of $5.7 million and $16.8 million in the
three and six months ended June 30, 2010, respectively, reflects the portion of the change in
fair value of these financial instruments which was recorded in earnings and excludes any
portion recorded in accumulated other comprehensive income under cash flow hedge accounting. |
|
(e) | Amortization of certain intangibles reflects the non-cash amortization expense of $4.3
million and $4.9 million for the three months ended June 30, 2011 and 2010, respectively, and
$8.8 million and $10.1 million for the six months ended June 30, 2011 and 2010, respectively,
relating to certain intangible assets identified in the 2007 going-private transaction through
which Swift Corporation acquired Swift Transportation Co. |
|
(f) | Amortization of unrealized losses on interest rate swaps reflects the non-cash amortization
expense of $4.0 million and $8.7 million for the three and six months ended June 30, 2011,
respectively, included in derivative interest expense in the consolidated statements of
operations and is comprised of previous losses recorded in accumulated other comprehensive
income related to the interest rate swaps we terminated upon our IPO and concurrent
refinancing transactions in December 2010. Such losses were incurred in prior periods when
hedge accounting applied to the swaps and are being expensed in relation to the hedged
interest payments through the original maturity of the swaps in August 2012. |
4
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Amounts in thousands) | ||||||||||||||||
Operating revenue |
$ | 850,470 | $ | 736,185 | $ | 1,609,359 | $ | 1,391,015 | ||||||||
Less: Fuel surcharge revenue |
178,316 | 112,103 | 316,133 | 200,919 | ||||||||||||
Revenue excluding fuel
surcharge revenue |
672,154 | 624,082 | 1,293,226 | 1,190,096 | ||||||||||||
Operating expense |
777,903 | 674,996 | 1,490,063 | 1,306,633 | ||||||||||||
Adjusted for: |
||||||||||||||||
Fuel surcharge revenue |
(178,316 | ) | (112,103 | ) | (316,133 | ) | (200,919 | ) | ||||||||
Non-cash impairments |
| | | (1,274 | )(b) | |||||||||||
Other items |
| | | (7,382 | )(c) | |||||||||||
Adjusted operating expense |
599,587 | 562,893 | 1,173,930 | 1,097,058 | ||||||||||||
Adjusted operating income |
$ | 72,567 | $ | 61,189 | $ | 119,296 | $ | 93,038 | ||||||||
Adjusted Operating Ratio (d) |
89.2 | % | 90.2 | % | 90.8 | % | 92.2 | % | ||||||||
Operating Ratio |
91.5 | % | 91.7 | % | 92.6 | % | 93.9 | % |
(a) | We define Adjusted Operating Ratio as (a) total operating expenses, less (i) fuel surcharge
revenue, (ii) non-cash impairment charges, (iii) certain other items, and (iv) excludable
transaction costs, as a percentage of (b) total revenue excluding fuel surcharge revenue. We
believe fuel surcharge is sometimes volatile and eliminating the impact of this source of
revenue (by netting fuel surcharge revenue against fuel expense) affords a more consistent
basis for comparing our results of operations. We also believe excluding impairments and other
special items enhances the comparability of our performance from period to period. Adjusted
Operating Ratio is not a recognized measure under GAAP. Adjusted Operating Ratio should be
considered in addition to, not as a substitute for, or superior to, measures of financial
performance in accordance with GAAP. |
|
(b) | Revenue equipment with a carrying amount of $3.6 million was written down to its fair value
of $2.3 million, resulting in an impairment charge of $1.3 million in the first quarter of
2010. |
|
(c) | Incremental pre-tax depreciation expense of $7.4 million reflecting managements revised
estimates regarding salvage value and useful lives for approximately 7,000 dry van trailers,
which management decided during the first quarter of 2010 to scrap over the next few years. |
|
(d) | We have not included adjustments to Adjusted Operating Ratio to reflect the non-cash
amortization expense of $4.3 million and $4.9 million for the three months ended June 30, 2011
and 2010, respectively, and $8.8 million and $10.1 million for the six months ended June 30,
2011 and 2010, respectively, relating to certain intangible assets identified in the 2007
going-private transaction through which Swift Corporation acquired Swift Transportation Co. |
5
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Trucking revenue (1,2) |
$ | 602,268 | $ | 551,644 | $ | 1,156,989 | $ | 1,055,151 | ||||||||
Weekly trucking revenue per tractor (2) |
$ | 3,051 | $ | 2,910 | $ | 2,957 | $ | 2,812 | ||||||||
Deadhead miles percentage |
11.76 | % | 11.90 | % | 11.94 | % | 12.06 | % | ||||||||
Average loaded length of haul (miles) |
428 | 436 | 429 | 437 | ||||||||||||
Average tractors available for dispatch |
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Company |
11,151 | 10,783 | 11,128 | 10,765 | ||||||||||||
Owner Operator |
4,032 | 3,798 | 4,002 | 3,747 | ||||||||||||
Total |
15,183 | 14,581 | 15,130 | 14,512 | ||||||||||||
(1) | In thousands. |
|
(2) | Excludes fuel surcharge, rail, third party carrier, leasing, and other shop and miscellaneous
revenue. |
6
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Amounts in thousands) | ||||||||||||||||
Net income (loss) |
$ | 19,583 | $ | (23,079 | ) | $ | 22,788 | $ | (76,080 | ) | ||||||
Adjusted for: |
||||||||||||||||
Depreciation and amortization of property and
equipment |
51,553 | 48,403 | 101,911 | 108,422 | ||||||||||||
Amortization of intangibles |
4,617 | 5,199 | 9,344 | 10,677 | ||||||||||||
Interest expense |
36,631 | 62,768 | 74,132 | 125,364 | ||||||||||||
Derivative interest expense |
4,003 | 18,292 | 8,683 | 42,006 | ||||||||||||
Interest income |
(471 | ) | (283 | ) | (938 | ) | (503 | ) | ||||||||
Income tax expense (benefit) |
13,485 | 4,960 | 15,806 | (4,565 | ) | |||||||||||
Earnings before interest, taxes,
depreciation and amortization (EBITDA) |
$ | 129,401 | $ | 116,260 | $ | 231,726 | $ | 205,321 | ||||||||
Non-cash equity compensation (b) |
2,319 | | 4,743 | | ||||||||||||
Non-cash impairments (c) |
| | | 1,274 | ||||||||||||
Adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA) |
$ | 131,720 | $ | 116,260 | $ | 236,469 | $ | 206,595 | ||||||||
(a) | We define Adjusted EBITDA as net income (loss) plus (i) depreciation and amortization, (ii)
interest and derivative interest expense, including other fees and charges associated with
indebtedness, net of interest income, (iii) income tax expense (benefit), (iv) non-cash equity
compensation expense, (v) non-cash impairments, (vi) other special non-cash items, and (vii)
excludable transaction costs. We believe that Adjusted EBITDA is a relevant measure for
estimating the cash generated by our operations that would be available to cover capital
expenditures, taxes, interest and other investments and that it enhances an investors
understanding of our financial performance. We use Adjusted EBITDA for business planning
purposes and in measuring our performance relative to that of our competitors. Our method of
computing Adjusted EBITDA is consistent with that used in our senior secured credit agreement
for covenant compliance purposes and may differ from similarly titled measures of other
companies. Adjusted EBITDA is not a recognized measure under GAAP. Adjusted EBITDA should be
considered in addition to, not as a substitute for or superior to, net income, cash flow from
operations, operating income or any other performance measures derived in accordance with GAAP
as measures of operating performance or operating cash flows as a measure of liquidity. |
|
(b) | Represents recurring non-cash equity compensation expense following our IPO, on a pre-tax
basis. In accordance with the terms of our senior credit agreement, this expense is added back
in the calculation of Adjusted EBITDA for covenant compliance purposes. |
|
(c) | Revenue equipment with a carrying amount of $3.6 million was written down to its fair value
of $2.3 million, resulting in an impairment charge of $1.3 million in the first quarter of
2010. |
2
June 30, 2011 | December 31, 2010 | |||||||
(Amounts in thousands) | ||||||||
Cash and cash equivalents |
$ | 44,656 | $ | 47,494 | ||||
Restricted cash |
96,294 | 84,568 | ||||||
Accounts receivable, net |
332,312 | 276,879 | ||||||
Property and equipment, net |
1,317,835 | 1,339,638 | ||||||
Intangible assets, net |
359,400 | 368,744 | ||||||
Goodwill |
253,256 | 253,256 | ||||||
Other assets |
187,857 | 197,316 | ||||||
Total assets |
$ | 2,591,610 | $ | 2,567,895 | ||||
Total debt and capital lease obligations (1) |
1,688,460 | 1,774,100 | ||||||
Securitization of accounts receivable |
176,000 | 171,500 | ||||||
Other liabilities |
712,850 | 705,466 | ||||||
Total liabilities |
2,577,310 | 2,651,066 | ||||||
Stockholders equity (deficit) |
14,300 | (83,171 | ) | |||||
Total liabilities and stockholders equity
(deficit) |
$ | 2,591,610 | $ | 2,567,895 | ||||
(1) | Total debt and capital lease obligations as of June 30, 2011 includes $999.6 million
net carrying value of senior secured first lien term loan, $490.7 million net carrying
value of senior second priority secured notes, $11.0 million of unsecured floating rate
notes, $15.6 million of unsecured fixed rate notes, and $171.6 million of other secured
indebtedness and capital lease obligations. Total debt and capital lease obligations as of
December 31, 2010 includes $1,059.4 million net carrying value of senior secured first lien
term loan, $490.0 million net carrying value of senior second priority secured notes, $11.0
million of unsecured floating rate notes, $15.6 million of unsecured fixed rate notes, and
$198.1 million of other secured indebtedness and capital lease obligations. |
3
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
(Amounts in thousands) | ||||||||
Net income (loss) |
$ | 22,788 | $ | (76,080 | ) | |||
Adjustments to reconcile net income (loss) to net cash
provided by operating activities |
141,917 | 117,318 | ||||||
Decrease in cash resulting from changes in
Accounts receivable, inventories, other assets,
accounts payable, accrued liabilities and other liabilities |
(42,492 | ) | (7,986 | ) | ||||
Net cash provided by operating activities |
$ | 122,213 | $ | 33,252 | ||||
Capital expenditures, net of disposal proceeds |
$ | (94,801 | ) | $ | (43,214 | ) | ||
Increase in restricted cash |
(11,726 | ) | (35,326 | ) | ||||
Other investing activities |
5,029 | 3,192 | ||||||
Net cash used in investing activities |
$ | (101,498 | ) | $ | (75,348 | ) | ||
Proceeds from issuance of common stock, net of
fees and costs of issuance (1) |
$ | 62,994 | $ | | ||||
Repayment of long term debt and capital lease obligations |
(87,872 | ) | (35,689 | ) | ||||
Net change in accounts receivable securitization obligation |
4,500 | (11,000 | ) | |||||
Other financing activities |
(3,175 | ) | 228 | |||||
Net cash used in financing activities |
$ | (23,553 | ) | $ | (46,461 | ) | ||
Net decrease in cash and cash equivalents |
(2,838 | ) | (88,557 | ) | ||||
Cash and cash equivalents at beginning of period |
47,494 | 115,862 | ||||||
Cash and cash equivalents at end of period |
$ | 44,656 | $ | 27,305 | ||||
(1) | On January 20, 2011, we issued an additional 6,050,000 shares of our Class A common
stock to the underwriters of our IPO at the IPO price of $11.00 per share, less the
underwriters discount, and received proceeds of $63.2 million in cash, prior to expenses
of such issuance, pursuant to the over-allotment option in the underwriting agreement. Of
these proceeds, $60.0 million were used in January 2011 to pay down the first lien term
loan and $3.2 million were used in February 2011 to pay down our prior accounts receivable
securitization facility. |
4