-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ID46JsPEN2dWzwCHckAxk1zU1QsRqtBJNqLql1TscypNacA0SaQiDVfWTKyfGCM3 3Ap2rWp4eFKoSBh2XrCoYA== 0000950147-97-000519.txt : 19970812 0000950147-97-000519.hdr.sgml : 19970812 ACCESSION NUMBER: 0000950147-97-000519 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SWIFT TRANSPORTATION CO INC CENTRAL INDEX KEY: 0000863557 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 860666860 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18605 FILM NUMBER: 97655509 BUSINESS ADDRESS: STREET 1: 1455 HUDA WAY CITY: SPARKS STATE: NV ZIP: 89431 BUSINESS PHONE: 6022699700 MAIL ADDRESS: STREET 1: 2200 SOUTH 75TH AVENUE CITY: PHOENIX STATE: AZ ZIP: 85043 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 __________________________________ Form 10-Q (Mark One) ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-18605 Swift Transportation Co., Inc. (Exact name of registrant as specified in its charter) Nevada 86-0666860 (State or other jurisdiction of (I.R.S. employer identification incorporation or organization) number) 2200 South 75th Avenue Phoenix, AZ 85043 (602) 269-9700 (Address, including zip code, and telephone number, including area code, of registrant's principal executive office) 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 the filing requirements for at least the past 90 days. YES X NO --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (August 7, 1997) Common stock, $.001 par value: 28,246,236 shares Exhibit Index at page 17 Total pages 21 PART I FINANCIAL INFORMATION Page Number Item 1. Financial statements Condensed consolidated balance sheets as of June 30, 1997 (unaudited) and December 31, 1996 3 - 4 Condensed consolidated statements of earnings (unaudited) for the three and six month periods ended June 30, 1997 and 1996 5 Condensed consolidated statements of cash flows (unaudited) for the six month periods ended June 30, 1997 and 1996 6 - 7 Notes to condensed consolidated financial statements 8 - 9 Item 2. Management's discussion and analysis of financial condition and results of operations 10 - 16 PART II OTHER INFORMATION Items 1, 2, 3 and 5. Not applicable Item 4. Submission of Matters to a Vote of Security Holders 17 Item 6. Exhibits and Reports on Form 8-K 17 2 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed consolidated balance sheets (dollars in thousands)
June 30, December 31, 1997 1996 -------- -------- (unaudited) Assets ------- Current assets: Cash $ 854 $ 1,210 Accounts receivable, net 92,819 77,918 Equipment sales receivables 4,854 362 Inventories and supplies 3,318 3,997 Prepaid taxes, licenses and insurance 10,195 3,274 Assets held for sale 5,458 5,453 Deferred tax asset 5,099 3,690 -------- -------- Total current assets 122,597 95,904 -------- -------- Property and equipment, at cost: Revenue and service equipment 347,952 297,744 Land 7,351 7,351 Facilities and improvements 57,133 53,109 Furniture and office equipment 13,534 12,242 -------- -------- Total property and equipment 425,970 370,446 Less accumulated depreciation and amortization 100,602 95,597 -------- -------- Net property and equipment 325,368 274,849 Other assets 2,032 417 Goodwill 9,057 9,435 -------- -------- $459,054 $380,605 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed consolidated balance sheets (continued) (dollars in thousands, except share and per share amounts)
June 30, December 31, 1997 1996 -------- -------- (unaudited) Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Accounts payable $ 20,686 $ 16,779 Accrued liabilities 27,660 17,202 Claims accruals 15,606 14,668 Current portion of long-term debt 7,143 10,317 -------- -------- Total current liabilities 71,095 58,966 -------- -------- Borrowings under line of credit 61,500 16,500 Long-term debt, less current portion 20,224 23,784 Claims accruals 19,731 16,689 Deferred income taxes 41,437 38,000 Stockholders' equity: Preferred stock, par value $.001 per share Authorized 1,000,000 shares; none issued -- -- Common stock, par value $.001 per share Authorized 75,000,000 shares; issued 28,460,936 and 28,134,684 shares at June 30, 1997 and December 31, 1996, respectively 28 28 Additional paid-in capital 111,913 110,291 Retained earnings 136,542 119,763 -------- -------- 248,483 230,082 Less treasury stock, at cost (220,700 shares) 3,416 3,416 -------- -------- Net stockholders' equity 245,067 226,666 -------- -------- Commitments and contingencies -------- -------- $459,054 $380,605 ======== ========
See accompanying notes to condensed consolidated financial statements. 4 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed consolidated statements of earnings (unaudited) (in thousands, except per share amounts)
Three months Six months ended June 30, ended June 30, 1997 1996 1997 1996 --------- --------- --------- --------- Operating revenue $ 180,855 $ 137,210 $ 336,929 $ 261,734 Operating expenses: Salaries, wages and employee benefits 63,760 49,037 119,042 95,532 Operating supplies and expenses 14,861 12,035 29,140 24,255 Fuel and fuel taxes 23,098 18,607 45,466 36,330 Purchased transportation 23,239 16,713 43,585 31,570 Rental expense 11,839 6,427 23,389 14,493 Insurance and claims 6,079 4,945 11,143 9,470 Depreciation and amortization 9,383 8,608 17,889 16,859 Communication and utilities 2,674 1,973 5,067 3,952 Operating taxes and licenses 6,943 4,904 12,115 9,596 --------- --------- --------- --------- Total operating expenses 161,876 123,249 306,836 242,057 --------- --------- --------- --------- Operating income 18,979 13,961 30,093 19,677 --------- --------- --------- --------- Other (income) expenses: Interest expense 1,326 1,953 2,139 3,439 Interest income (20) (6) (85) (39) Other (63) (83) (170) (281) --------- --------- --------- --------- Other (income) expenses, net 1,243 1,864 1,884 3,119 --------- --------- --------- --------- Earnings before income taxes 17,736 12,097 28,209 16,558 Income taxes 7,180 5,325 11,430 7,215 --------- --------- --------- --------- Net earnings $ 10,556 $ 6,772 $ 16,779 $ 9,343 ========= ========= ========= ========= Net earnings per common and equivalent share $ .37 $ .27 $ .58 $ .37 ========= ========= ========= ========= Shares used in per share calculations 28,817 25,495 28,736 25,452 ========= ========= ========= =========
See accompanying notes to condensed consolidated financial statements. 5 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed consolidated statements of cash flows (unaudited) (in thousands)
Six months ended June 30, 1997 1996 -------- --------- Cash flows from operating activities: Net earnings $ 16,779 $ 9,343 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 17,960 16,859 Deferred income taxes 2,028 1,665 Provision for losses on accounts receivable 164 120 Amortization of deferred compensation 55 37 Change in assets and liabilities: Increase in accounts receivable (15,065) (9,680) (Increase) decrease in inventories and supplies 679 (1,108) Increase in prepaid expenses (6,741) (4,594) Increase in other assets (700) (9) Increase in accounts payable, accrued liabilities and claims accruals 18,345 20,670 -------- -------- Net cash provided by operating activities 33,504 33,303 -------- -------- Cash flows from investing activities: Proceeds from sale of property and equipment 10,391 10,419 Capital expenditures (80,737) (61,680) Cash expended for purchase of DTI assets (3,749) Payments received on contracts receivable 402 107 -------- -------- Net cash used in investing activities (73,693) (51,154) -------- --------
See accompanying notes to condensed consolidated financial statements 6 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed consolidated statements of cash flows (continued) (unaudited) (in thousands)
Six months ended June 30, 1997 1996 -------- -------- Cash flows from financing activities: Repayments of long-term debt $ (6,734) $(12,699) Proceeds from issuance of long-term debt 15,026 Increase in borrowings under line of credit 45,000 15,500 Proceeds from issuance of common stock under stock option and stock purchase plans 1,567 977 -------- -------- Net cash provided by financing activities 39,833 18,804 -------- -------- Net increase (decrease) in cash (356) 953 Cash at beginning of period 1,210 2,627 -------- -------- Cash at end of period $ 854 $ 3,580 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 1,838 $ 3,070 Income taxes $ 9,243 $ 3,608 Supplemental schedule of noncash investing and financing activities: Equipment sales receivables $ 4,866 $ 7,133
See accompanying notes to condensed consolidated financial statements 7 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Notes to condensed consolidated financial statements (unaudited) Note 1 Basis of Presentation The condensed consolidated financial statements include the accounts of Swift Transportation Co., Inc., a Nevada holding company, and its wholly-owned subsidiaries (the Company). All significant intercompany balances and transactions have been eliminated. The financial statements have been prepared in accordance with generally accepted accounting principles, pursuant to rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying financial statements include all adjustments which are necessary for a fair presentation of the results for the interim periods presented. Certain information and footnote disclosures have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year. Note 2. Contingencies The Company is involved in certain claims and pending litigation arising from the normal course of business. Based on the knowledge of the facts and, in certain cases, opinions of outside counsel, management believes the resolution of claims and pending litigation will not have a material adverse effect on the financial condition of the Company. Note 3. Line of Credit On January 17, 1997, the Company entered into an agreement with four major banks for an unsecured line of credit with maximum borrowings of $110 million which matures on January 16, 2001 (the Credit Agreement). Interest on outstanding borrowings is based upon one of two options which the Company selects at the time of borrowing: the bank's prime rate or the London Interbank Offered Rate (LIBOR) plus applicable margins, as defined in the Credit Agreement. The unused portion of the line of credit is subject to a commitment fee. The Credit Agreement includes financing for letters of credit. The Credit Agreement requires the Company to meet certain covenants with respect to debt to equity and debt coverage ratios. The Credit agreement also requires the Company to maintain unencumbered assets of not less than 120% of unsecured indebtedness (as defined). 8 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Notes to condensed consolidated financial statements (unaudited) Note 4. Acquisition On April 8, 1997, the Company completed its acquisition of certain assets of Direct Transit, Inc. ("DTI"), a Debtor- In- Possession in United States Bankruptcy Court. DTI was a dry van carrier based in North Sioux City, South Dakota and operated predominantly in the eastern two-thirds of the United States. Swift acquired inventory, furniture and office equipment, computer equipment and miscellaneous assets from DTI for $2.7 million. Also, Swift paid $1 million to the principal shareholder of DTI in exchange for a covenant not to compete. Separately, Swift acquired 565 tractors and 1,622 trailers from various lessors. Certain of the revenue equipment was purchased for $31 million and new lease agreements were negotiated on $11 million of revenue equipment. The Company used working capital and borrowings under its existing line of credit to acquire the assets described above and for payments under the covenant not to compete. 9 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements This Report on Form 10-Q contains forward-looking statements. The words "believe," "expect," "anticipate," and "project," and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may include, but are not limited to, projections of revenues, income, or loss, capital expenditures, plans for future operations, financing needs or plans, the impact of inflation and plans relating to the foregoing. Statements in Exhibit 99 to this Quarterly Report on Form 10-Q and in the Company's Annual Report on Form 10-K, including Notes to the Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations," describe factors, among others, that could contribute to or cause such differences. Additional factors that could cause actual results to differ materially from those expressed in such forward-looking statements are set forth in "Business" and "Market for the Registrant's Common Stock and Related Stockholder Matters" in the Company's Annual Report on Form 10-K. Overview Although the trend in the truckload segment of the motor carrier industry over the past several years has been towards consolidation, the truckload industry remains highly fragmented. Management believes the industry trend towards financially stable "core carriers" will continue and result in continued industry consolidation. In response to this trend, the Company continues to expand its fleet with 5,624 tractors as of June 30, 1997 compared to 4,362 tractors as of June 30, 1996. This net fleet growth was accomplished through a combination of internal growth and acquisitions. In September 1996, the acquisition of substantially all of the operating assets utilized in the dry freight van division of Navajo Shippers, Inc., and two of its wholly-owned subsidiaries, Digby Leasing and Digby-Ringsby Truck Line, Inc. (collectively, "Navajo Shippers") added 287 tractors including 30 owner operators. In April 1997, 565 tractors were acquired from various lessors of DTI. The owner operator portion of the Company's fleet increased to 798 as of June 30, 1997 from 612 as of June 30, 1996. 10 Results of Operations Three Months Ended June 30, 1997 compared to Three Months ended June 30, 1996 - ----------------------------------------------------------------------------- Operating revenue increased $43.6 million or 31.8% to $180.9 million for the three months ended June 30, 1997 from $137.2 million for the corresponding period of 1996. The increase in operating revenue is primarily the result of the expansion of the Company's fleet, including the DTI revenue equipment beginning in April 1997, and rate increases. The Company's operating ratio (operating expenses expressed as a percentage of operating revenue) for the second quarter of 1997 was 89.5% compared to 89.9% in the comparable period of 1996. The Company's operating revenue and operating ratio for the three months ended June 30, 1997 improved as a result of improved shipper demand. The Company's empty mile factor for linehaul operations was 14.4% and 14.3% and average loaded linehaul revenue per mile was $1.31 and $1.28 in the second quarter of 1997 and 1996, respectively. Significant differences in the components of operating expenses as a percentage of operating revenue are explained below. Salaries, wages and employee benefits represented 35.3% of operating revenue for the three months ended June 30, 1997 compared with 35.7% in 1996. The decrease is due primarily to expansion of the Company's owner operator fleet (see discussion of purchased transportation below) offset in part by driver retention bonuses. From time to time the industry has experienced shortages of qualified drivers. If such a shortage were to occur over a prolonged period and increases in driver pay rates were to occur in order to attract and retain drivers, the Company's results of operations would be negatively impacted to the extent that corresponding rate increases were not obtained. Fuel as a percentage of operating revenue was 12.8% for the second quarter of 1997 versus 13.6% in 1996. The decrease is due primarily to an increase in the number of owner operators who are responsible for their own fuel. Increases in fuel costs (including fuel taxes), to the extent not offset by rate increases or fuel surcharges, could have an adverse effect on the operations and profitability of the Company. Management believes the most effective protection against fuel cost increases is to maintain a fuel efficient fleet and to implement fuel surcharges when such option is necessary and available. Therefore, the Company does not use derivative-type hedging products. Purchased transportation as a percentage of operating revenue was 12.8% for the three months ended June 30, 1997 compared to 12.2% in 1996. The increase is due to the growth of the owner operator fleet to 798 as of June 30, 1997 from 612 as of June 30, 1996. Rental expense as a percentage of operating revenue was 6.5% for the second quarter of 1997 versus 4.7% in 1996. At June 30, 1997 and 1996, leased tractors represented 60% and 49%, respectively, of the total fleet of Company tractors. When it is economically advantageous to do so, the Company will purchase then sell tractors that it currently leases by exercising the purchase option contained 11 in the lease. Gains on these activities are recorded as a reduction of rent expense. The Company recorded no gain during the second quarter of 1997 and $1.7 million in 1996 from the sale of leased tractors. Depreciation and amortization expense as a percentage of operating revenue was 5.2% in the second quarter of 1997 versus 6.3% in 1996. The Company includes gains and losses from the sale of owned revenue equipment in depreciation and amortization expense. During the three month period ended June 30, 1997, net gains from the sale of revenue equipment reduced depreciation and amortization expense by approximately $930,000 compared to approximately $440,000 in the second quarter of 1996. Exclusive of gains, which reduced depreciation and amortization expense, the percentage in the second quarter of 1997 and 1996 to operating revenue was 5.7% and 6.6%, respectively. The decrease in 1997 is due to expansion of the owner operator fleet and the increase in the percentage of leased equipment versus owned equipment as discussed above. The Company continues to replace substantially all of its fleet of double van trailers with 13'-6" high 53 foot trailers to be used in the Eastern United States and 14' high 53 foot trailers to be used in the Western United States. As of June 30, 1997, the Company has replaced approximately 60% of the double van trailer fleet. As previously disclosed, management believes that this conversion to a standardized fleet of 53' trailers will provide cost reductions such as lower licensing costs, simplified driver training and increased equipment utilization. The conversion to a standardized fleet of 53' trailers will result in the sale of substantially all of the Company's fleet of double van trailers. While the Company believes that the market value of its double van trailer fleet is currently greater than the book value, there can be no assurance the market value of such equipment will not decline or that the sale of such equipment will result in gains. The sale of the Company's double van trailer fleet may result in significant fluctuations in the amount of gains or losses recorded in any given quarter. The amount of such gains or losses recorded in a particular quarter will be dependent upon the quantity of trailers sold and the prevailing market prices for used trailering equipment. Insurance and claims expense represented 3.4% and 3.6% of operating revenue in the second quarter of 1997 and 1996, respectively. The Company's insurance program for liability, physical damage and cargo damage involves self-insurance with varying risk retention levels. Claims in excess of these risk retention levels are covered by insurance in amounts which management considers adequate. The Company accrues the estimated cost of the uninsured portion of pending claims. These accruals are estimated based on management's evaluation of the nature and severity of individual claims and an estimate of future claims development based on historical claims development trends. Interest expense declined to $1.3 million in the second quarter of 1997 from $2.0 million in 1996. This decline is due to a lower debt level which resulted from utilizing the proceeds of the December 1996 common stock offering to reduce outstanding debt and a lower effective borrowing rate. 12 Six Months Ended June 30, 1997 compared to Six Months ended June 30, 1996 - ------------------------------------------------------------------------- Operating revenue increased $75.2 million or 28.7% to $336.9 million for the six months ended June 30, 1997 from $261.7 million for the corresponding period of 1996. The increase in operating revenue is primarily the result of the expansion of the Company's fleet and rate increases. The Company's operating ratio (operating expenses expressed as a percentage of operating revenue) for the first six months of 1997 was 91.1% compared to 92.5% in the comparable period of 1996. The Company's operating revenue and operating ratio for the six months ended June 30, 1997 improved as a result of improved shipper demand. The Company's empty mile factor for linehaul operations was 14.3% and 14.1% and average loaded linehaul revenue per mile was $1.31 and $1.28 in the first six months of 1997 and 1996, respectively. Significant differences in the components of operating expenses as a percentage of operating revenue are explained below. Salaries, wages and employee benefits represented 35.3% of operating revenue for the six months ended June 30, 1997 compared with 36.5% in 1996. The decrease is due primarily to expansion of the Company's owner operator fleet (see discussion of purchased transportation below) offset in part by driver retention bonuses. Fuel as a percentage of operating revenue was 13.5% for the first six months of 1997 versus 13.9% in 1996. Although the Company experienced an increase in fuel costs during the first six months of 1997, such increase was largely offset by an increase in the number of owner operators who are responsible for their own fuel and by fuel surcharges. Actual fuel cost per gallon increased by approximately one cent per gallon in the first six months of 1997 versus the first six months of 1996. Purchased transportation as a percentage of operating revenue was 12.9% for the six months ended June 30, 1997 compared to 12.1% in 1996. The increase is due to the growth of the owner operator fleet to 798 as of June 30, 1997 from 612 as of June 30, 1996. Rental expense as a percentage of operating revenue was 6.9% for the first six months of 1997 versus 5.5% in 1996. At June 30, 1997 and 1996, leased tractors represented 60% and 49%, respectively, of the total fleet of Company tractors. When it is economically advantageous to do so, the Company will purchase then sell tractors that it currently leases by exercising the purchase option contained in the lease. Gains on these activities are recorded as a reduction of rent expense. The Company recorded no gain during the first six months of 1997 and $1.8 million in 1996 from the sale of leased tractors. Depreciation and amortization expense as a percentage of operating revenue was 5.3% in the first six months of 1997 versus 6.4% in 1996. The Company includes gains and losses from the sale of owned revenue equipment in depreciation and amortization expense. During the six month period ended June 30, 1997, net gains from the sale of revenue equipment reduced depreciation 13 and amortization expense by approximately $1.8 million compared to approximately $690,000 in the first six months of 1996. Exclusive of gains, which reduced depreciation and amortization expense, the percentage in the first six months of 1997 and 1996 to operating revenue was 5.8% and 6.7 %, respectively. The decrease in 1997 is due to expansion of the owner operator fleet and the increase in the percentage of leased equipment versus owned equipment as discussed above. Insurance and claims expense represented 3.3% and 3.6% of operating revenue in the first six months of 1997 and 1996, respectively. The Company's insurance program for liability, physical damage and cargo damage involves self-insurance with varying risk retention levels. Claims in excess of these risk retention levels are covered by insurance in amounts which management considers adequate. The Company accrues the estimated cost of the uninsured portion of pending claims. These accruals are estimated based on management's evaluation of the nature and severity of individual claims and an estimate of future claims development based on historical claims development trends. Interest expense declined to $2.1 million in the first six months of 1997 from $3.4 million in 1996. This decline is due to a lower debt level which resulted from utilizing the proceeds of the December 1996 common stock offering to reduce outstanding debt and a lower effective borrowing rate. Liquidity and Capital Resources The continued growth in the Company's business requires significant investment in new revenue equipment, upgraded and expanded facilities, and enhanced computer hardware and software. The funding for this expansion has been from cash provided by operating activities, proceeds from the sale of revenue equipment, long-term debt, borrowings on the Company's line of credit, the use of operating leases to finance the acquisition of revenue equipment and from periodic public offerings of common stock. Net cash provided by operating activities was $33.5 million in the first six months of 1997 compared to $33.3 million in 1996. The increase is primarily attributable to an increase in net earnings offset by an increase in accounts receivable and prepaid expenses and a smaller increase in accounts payable, accrued liabilities and claims accruals. Prepaid expenses increased by $6.9 million from December 31, 1996 to June 30, 1997. The increase is primarily due to significant annual license fees which are prepaid in the first quarter of each year and amortized over the remainder of the year. Net cash used in investing activities increased to $73.7 million in the first six months of 1997 from $51.2 million in 1996. The increase is due primarily to greater capital expenditures primarily for revenue equipment including $35 million for the purchase of certain assets from DTI and its lessors offset in part by capital expenditures in 1996 to complete construction of the Company's new corporate facilities. 14 As of June 30, 1997, the Company had commitments outstanding to acquire replacement and additional revenue equipment for approximately $130 million. The Company has the option to cancel such commitments upon 60 days notice. The Company believes it has the ability to obtain debt and lease financing and generate sufficient cash flows from operating activities to support these acquisitions of revenue equipment. During the first six months of 1997, the Company incurred approximately $4.8 million of non-revenue equipment capital expenditures. These expenditures were primarily for facilities and equipment. The Company anticipates that it will expend approximately $15 million during the remainder of the year for various facilities upgrades and acquisition and development of terminal facilities. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures. The funding for capital expenditures has been and will be from a combination of cash provided by operating activities, amounts available under the Company's line of credit and lease financing. The availability of capital for revenue equipment and other capital expenditures will be affected by prevailing market conditions and the Company's financial condition and results of operations. Net cash provided by financing activities amounted to $39.8 million in the first six months of 1997 compared to $18.8 million in 1996. This increase is primarily due to borrowings including those to affect the purchase of certain assets from DTI and its lessors. On January 17, 1997, the Company entered into an agreement with four major banks for an unsecured line of credit with maximum borrowings of $110 million which matures on January 16, 2001 (the Credit Agreement). Interest on outstanding borrowings is based upon one of two options which the Company selects at the time of borrowing: the bank's prime rate or the London Interbank Offered Rate (LIBOR) plus applicable margins, as defined in the Credit Agreement. The unused portion of the line of credit is subject to a commitment fee. The Credit Agreement includes financing for letters of credit. Management believes it will be able to finance its needs for working capital, facilities improvements and expansion, as well as anticipated fleet growth through a combination of revenue equipment purchases and strategic acquisitions, as opportunities become available, with cash flows from future operations, borrowings available under the line of credit and with long-term debt and operating lease financing believed to be available to finance revenue equipment purchases. Over the long term, the Company will continue to have significant capital requirements, which may require the Company to seek additional borrowings or equity capital. The availability of debt financing or equity capital will depend upon the Company's financial condition and results of operations as well as prevailing market conditions, the market price of the Company's common stock and other factors over which the Company has little or no control. 15 Inflation Inflation can be expected to have an impact on the Company's operating costs. A prolonged period of inflation would cause interest rates, fuel, wages and other costs to increase and would adversely affect the Company's results of operations unless freight rates could be increased correspondingly. However, the effect of inflation has been minimal over the past three years. Seasonality In the transportation industry, results of operations generally show a seasonal pattern as customers reduce shipments after the winter holiday season. The Company's operating expenses also tend to be higher in the winter months primarily due to colder weather which causes higher fuel consumption from increased idle time. 16 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES PART II OTHER INFORMATION Items 1, 2, 3 and 5. Not applicable Item 4: Submission of Matters to a Vote of Security Holders The Company's Annual Meeting of Stockholders was held on May 22, 1997. At the Annual Meeting, the stockholders elected Earl H. Scudder Jr. and Rodney K. Sartor to serve as Directors for three-year terms. Jerry C. Moyes, William F. Riley, Lou A. Edwards and Alphonse E. Frei continued as Directors after the meeting. Robert Cunningham did not continue as a Dirctor because he resigned in May 1997. Additionally, the stockholders approved an amendment to the Stock Option Plan to increase the number of shares authorized for issuance thereunder from 2,300,000 to 2,550,000. Stockholders representing 25,623,928 shares or 91.6% were present in person or by proxy at the Annual Meeting. There were no broker non-votes on these proposals. A tabulation with respect to each nominee and the Stock Option amendment is as follows:
Votes Votes Votes Against or Cast For Withheld Earl H. Scudder, Jr. 25,623,928 25,066,286 557,642 Rodney K. Sartor 25,623,928 25,286,540 337,388 Amendment to Stock Option Plan 25,623,928 20,535,387 5,088,541
Item 6. Exhibits and reports on Form 8-K (a) Exhibit 11 - Schedule of Computation of Net Earnings Per Share Exhibit 27 - Financial Data Schedule Exhibit 99 - Private Securities Litigation Reform Act of 1995 Safe Harbor Compliance Statement for Forward-Looking Statements (b) A Form 8-K was filed on April 23, 1997, pertaining to the acquisition of certain assets from Direct Transit, Inc. and certain of its lessors. 17 SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Swift Transportation Co., Inc. Date: August 11, 1997 /s/ William F. Riley III ----------------------------------- (Signature) William F. Riley III Chief Financial Officer 18 EX-11 2 SCHEDULE OF COMPUTATION OF NET EARNINGS PER SHARE EXHIBIT 11 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Schedule of Computation of Net Earnings Per Share (in thousands, except per share amounts)
Three months Six months ended June 30, ended June 30, 1997 1996 1997 1996 ------- ------- ------- ------- Net earnings $10,556 $ 6,772 $16,779 $ 9,343 ======= ======= ======= ======= Weighted average shares: Common shares outstanding 28,201 24,810 28,074 24,734 Common equivalent shares issuable upon exercise of employee stock options (1) 616 685 662 718 ------- ------- ------- ------- Total weighted average shares - primary 28,817 25,495 28,736 25,452 Incremental common equivalent shares (calculated using the higher of the end of period or average fair market value (2) 9 10 14 ------- ------- ------- ------- Total weighted average shares - fully diluted 28,817 25,504 28,746 25,466 ======= ======= ======= ======= Net earnings per common and equivalent share $ .37 $ .27 $ .58 $ .37 ======= ======= ======= ======= Net earnings per common share - assuming full dilution $ .37 $ .27 $ .58 $ .37 ======= ======= ======= =======
Notes: (1) Amount calculated using the treasury stock method and average fair market values. (2) The calculation is submitted in accordance with Regulation S-K Item 601(b) (11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%. 19 EX-27 3 FDS -- 2ND QUARTER 10Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS AS OF June 30,1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS 0000863557 SWIFT TRANSPORTATION CO., INC. 1,000 US DOLLARS 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1 854 0 97,673 0 3,318 122,597 425,970 100,602 459,054 71,095 0 0 0 28 245,039 459,054 336,929 336,929 0 306,836 (255) 0 2,139 28,209 11,430 16,779 0 0 0 16,779 .58 .58
EX-99 4 PRIVATE SECURITIES LITIGATION REFORM ACT OF 1955 EXHIBIT 99 Private Securities Litigation Reform Act of 1995 Safe Harbor Compliance Statement for Forward-Looking Statements In passing the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), Congress encouraged public companies to make "forward-looking statements"1 by creating a safe-harbor to protect companies from securities law liability in connection with forward-looking statements. Swift Transportation Co., Inc. ("Swift") intends to qualify both its written and oral forward-looking statements for protection under the PSLRA. To qualify oral forward-looking statements for protection under the PSLRA, a readily available written document must identify important factors that could cause actual results to differ materially from those in the forward-looking statements. Swift provides the following information in connection with its continuing effort to qualify forward-looking statements for the safe harbor protection of the PSLRA. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, the following: (i) excess capacity in the trucking industry; (ii) significant increases or rapid fluctuations in fuel prices, interest rates, fuel taxes, tolls, license and registration fees and insurance premiums, to the extent not offset by increases in freight rates or fuel surcharges; (iii) difficulty in attracting and retaining qualified drivers and owner operators, especially in light of the current shortage of qualified drivers and owner operators; (iv) recessionary economic cycles and downturns in customers' business cycles, particularly in market segments and industries (such as retail and paper products) in which the Company has a significant concentration of customers; (v) seasonal factors such as harsh weather conditions that increase operating costs; (vi) increases in driver compensation to the extent not offset by increases in freight rates; (vii) gains or losses resulting from sales of the Company's double van trailer fleet; (viii) the inability of the Company to continue to secure acceptable financing arrangements; (ix) the successful assimilation of the assets acquired from Direct Transit, Inc. and lessors of Direct Transit, Inc. into the Company's operations; (x) the ability of the Company to continue to identify acquisition candidates that will result in successful combinations; (xi) an unanticipated increase in the number of claims for which the Company is self insured; and (xii) a significant reduction in or termination of the Company's trucking services by a key customer. Forward-looking statements express expectations of future events. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected. Due to these inherent uncertainties, the investment community is urged not to place undue reliance on forward-looking statements. In addition, Swift undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to projections over time. - -------- 1 "Forward-looking statements" can be identified by use of words such as "expect," "believe," "estimate," "project," "forecast," "anticipate," "plan," and similar expressions. 21 -----END PRIVACY-ENHANCED MESSAGE-----