-----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, K5xUejc4FXpAPeE1m1CF4QjyUQVnWoWVO7xss8pQb5rSJNP3P5aZypnuwfHKN0gY y7SlSn9Mx/3MK/oCcvylyw== 0000950147-97-000758.txt : 19971107 0000950147-97-000758.hdr.sgml : 19971107 ACCESSION NUMBER: 0000950147-97-000758 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971106 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: SEC FILE NUMBER: 000-18605 FILM NUMBER: 97709062 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 September 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 (November 5, 1997) Common stock, $.001 par value: 28,248,236 shares Exhibit Index at page 17 Total pages 20 PART I FINANCIAL INFORMATION Page Number Item 1. Financial statements Condensed consolidated balance sheets as of September 30, 1997 (unaudited) and December 31, 1996 3 - 4 Condensed consolidated statements of earnings (unaudited) for the three and nine month periods ended September 30, 1997 and 1996 5 Condensed consolidated statements of cash flows (unaudited) for the nine month periods ended September 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, 4 and 5. Not applicable Item 6. Exhibits and Reports on Form 8-K 17 2 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed consolidated balance sheets (in thousands)
September 30, December 31, 1997 1996 ------------ ----------- (unaudited) Assets ------ Current assets: Cash $ 10,087 $ 1,210 Accounts receivable, net 94,573 77,918 Equipment sales receivables 5,324 362 Inventories and supplies 3,580 3,997 Prepaid taxes, licenses and insurance 7,121 3,274 Assets held for sale 5,468 5,453 Deferred tax asset 6,190 3,690 -------- -------- Total current assets 132,343 95,904 -------- -------- Property and equipment, at cost: Revenue and service equipment 349,808 297,744 Land 7,520 7,351 Facilities and improvements 59,010 53,109 Furniture and office equipment 13,419 12,242 -------- -------- Total property and equipment 429,757 370,446 Less accumulated depreciation and amortization 105,202 95,597 -------- -------- Net property and equipment 324,555 274,849 Other assets 1,977 417 Goodwill 8,868 9,435 -------- -------- $467,743 $380,605 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed consolidated balance sheets (continued) (in thousands, except share and per share amounts)
September 30, December 31, 1997 1996 ------------ ----------- (unaudited) Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Accounts payable $ 17,226 $ 16,779 Accrued liabilities 31,145 17,202 Claims accruals 14,550 14,668 Current portion of long-term debt 7,147 10,317 -------- -------- Total current liabilities 70,068 58,966 -------- -------- Borrowings under line of credit 57,500 16,500 Long-term debt, less current portion 18,444 23,784 Claims accruals 19,586 16,689 Deferred income taxes 44,100 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 28,468,436 and 28,134,684 shares at September 30, 1997 and December 31, 1996 28 28 Additional paid-in capital 112,026 110,291 Retained earnings 149,407 119,763 -------- -------- 261,461 230,082 Less treasury stock, at cost (220,700 shares) 3,416 3,416 -------- -------- Net stockholders' equity 258,045 226,666 -------- -------- Commitments and contingencies $467,743 $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 Nine months ended September 30, ended September 30, 1997 1996 1997 1996 --------- --------- --------- --------- Operating revenue $ 188,071 $ 146,739 $ 524,999 $ 408,473 Operating expenses: Salaries, wages and employee benefits 64,677 49,539 183,718 145,071 Operating supplies and expenses 17,652 13,575 46,807 37,830 Fuel and fuel taxes 22,118 18,846 67,584 55,176 Purchased transportation 25,638 18,968 69,224 50,538 Rental expense 11,809 7,295 35,198 21,788 Insurance and claims 4,721 5,416 15,863 14,886 Depreciation and amortization 9,858 8,680 27,748 25,539 Communication and utilities 2,848 2,100 7,915 6,052 Operating taxes and licenses 5,921 4,592 18,036 14,188 --------- --------- --------- --------- Total operating expenses 165,242 129,011 472,093 371,068 --------- --------- --------- --------- Operating income 22,829 17,728 52,906 37,405 --------- --------- --------- --------- Other (income) expenses: Interest expense 1,330 1,830 3,470 5,269 Interest income (52) (9) (138) (48) Other (101) (119) (271) (400) --------- --------- --------- --------- Other (income) expenses, net 1,177 1,702 3,061 4,821 --------- --------- --------- --------- Earnings before income taxes 21,652 16,026 49,845 32,584 Income taxes 8,770 6,575 20,200 13,790 --------- --------- --------- --------- Net earnings $ 12,882 $ 9,451 $ 29,645 $ 18,794 ========= ========= ========= ========= Net earnings per common and equivalent share $ .45 $ .37 $ 1.03 $ .74 ========= ========= ========= ========= Shares used in per share calculations 28,843 25,556 28,773 25,488 ========= ========= ========= =========
See accompanying notes to condensed consolidated financial statements. 5 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed consolidated statements of cash flows (unaudited) (in thousands)
Nine months ended September 30, 1997 1996 -------- -------- Cash flows from operating activities: Net earnings $ 29,645 $ 18,794 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 27,815 25,539 Deferred income taxes 3,600 (1,260) Provision for losses on accounts receivable 180 180 Amortization of deferred compensation 90 18 Change in assets and liabilities: Increase in accounts receivable (16,835) (16,862) (Increase) decrease in inventories and supplies 417 (1,871) Increase in prepaid expenses (3,667) (1,777) Increase in other assets (689) (424) Increase in accounts payable, accrued liabilities and claims accruals 17,169 30,147 -------- -------- Net cash provided by operating activities 57,725 52,484 -------- -------- Cash flows from investing activities: Proceeds from sale of property and equipment 17,727 22,994 Capital expenditures (97,351) (93,979) Cash expended for purchase of DTI assets (1997) and Navajo Shippers (1996) (3,749) (5,148) Payments received on contracts receivable 390 106 -------- -------- Net cash used in investing activities (82,983) (76,027) -------- --------
See accompanying notes to condensed consolidated financial statements 6 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed consolidated statements of cash flows (continued) (unaudited) (in thousands)
Nine months ended September 30, 1997 1996 -------- -------- Cash flows from financing activities: Repayments of long-term debt $(23,510) $(18,902) Proceeds from issuance of long-term debt 15,026 Increase in borrowings under line of credit 56,000 28,250 Proceeds from issuance of common stock under stock option and stock purchase plans 1,645 1,158 -------- -------- Net cash provided by financing activities 34,135 25,532 -------- -------- Net increase in cash 8,877 1,989 Cash at beginning of period 1,210 2,627 -------- -------- Cash at end of period $ 10,087 $ 4,616 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 3,391 $ 5,085 Income taxes $ 13,079 $ 5,150 Supplemental schedule of noncash investing and financing activities: Equipment sales receivables $ 5,324 $ 7,608 Issuance of 90,000 shares of common stock in connection with the purchase of Navajo Shippers $ 1,918
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 5,790 tractors as of September 30, 1997 compared to 4,674 tractors as of September 30, 1996. This net fleet growth was accomplished through a combination of internal growth and the acquisition in April 1997 of 565 tractors from various lessors of DTI. The owner operator portion of the Company's fleet increased to 848 as of September 30, 1997 from 659 as of September 30, 1996. 10 Results of Operations Three Months Ended September 30, 1997 compared to Three Months ended September - -------------------------------------------------------------------------------- 30, 1996 - -------- Operating revenue increased $41.3 million or 28.2% to $188.1 million for the three months ended September 30, 1997 from $146.7 million for the corresponding period of 1996. The increase in operating revenue is primarily the result of the expansion of the Company's fleet, including the DTI revenue equipment beginning in April 1997. The Company's operating ratio (operating expenses expressed as a percentage of operating revenue) was 87.9% for the third quarter of 1997 and 1996. The Company's operating revenue for the three months ended September 30, 1997 improved as a result of improved shipper demand. The Company's empty mile factor for linehaul operations was 13.1% and 13.7% and average loaded linehaul revenue per mile was $1.30 and $1.29 in the third 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 34.4% of operating revenue for the three months ended September 30, 1997 compared with 33.8% in 1996. The increase is due primarily to driver pay including retention bonuses offset in part by expansion of the Company's owner operator fleet (see discussion of purchased transportation below). 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 11.8 % for the third quarter of 1997 versus 12.8% 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 13.6% for the three months ended September 30, 1997 compared to 12.9% in 1996. The increase is due to the growth of the owner operator fleet to 848 as of September 30, 1997 from 659 as of September 30, 1996. Rental expense as a percentage of operating revenue was 6.3% for the third quarter of 1997 versus 5.0% in 1996. This increase is partially due to an increase in trailers under lease. At September 30, 1997 and 1996, leased tractors represented 63% and 65%, respectively, of the total fleet of Company tractors. When it is economically advantageous to do so, the Company will purchase then sell 11 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 third quarter of 1997 and $1.3 million in 1996 from the sale of leased tractors. Exclusive of gains, which reduced rental expense, the percentage in the third quarter of 1997 and 1996 to operating revenue was 6.3% and 5.9%, respectively. Depreciation and amortization expense as a percentage of operating revenue was 5.2% in the third quarter of 1997 versus 5.9% 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 September 30, 1997, net gains from the sale of revenue equipment reduced depreciation and amortization expense by approximately $1.1 million compared to approximately $770,000 in the third quarter of 1996. Exclusive of gains, which reduced depreciation and amortization expense, the percentage in the third quarter of 1997 and 1996 to operating revenue was 5.8% and 6.4%, respectively. The decrease in 1997 is primarily due to expansion of the owner operator fleet. The Company continues to replace a significant portion 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 September 30, 1997, the Company has replaced approximately 50% 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 2.5% and 3.7% of operating revenue in the third 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 third quarter of 1997 from $1.8 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 Nine Months Ended September 30, 1997 compared to Nine Months ended September 30, - -------------------------------------------------------------------------------- 1996 - ---- Operating revenue increased $116.5 million or 28.5% to $525.0 million for the nine months ended September 30, 1997 from $408.5 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 nine months of 1997 was 89.9% compared to 90.8% in the comparable period of 1996. The Company's operating revenue and operating ratio for the nine months ended September 30, 1997 improved as a result of improved shipper demand. The Company's empty mile factor for linehaul operations was 13.9% for both periods and average loaded linehaul revenue per mile was $1.30 and $1.28 in the first nine 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 35.0% of operating revenue for the nine months ended September 30, 1997 compared with 35.5% 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 12.9% for the first nine months of 1997 versus 13.5% in 1996. Although the Company experienced an increase in fuel costs during the first nine 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. Purchased transportation as a percentage of operating revenue was 13.2% for the nine months ended September 30, 1997 compared to 12.4% in 1996. The increase is due to the growth of the owner operator fleet to 848 as of September 30, 1997 from 659 as of September 30, 1996. Rental expense as a percentage of operating revenue was 6.7% for the first nine months of 1997 versus 5.3% in 1996. This increase is partially due to an increase in trailers under lease. At September 30, 1997 and 1996, leased tractors represented 63% and 65%, 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 nine months of 1997 and $3.2 million in 1996 from the sale of leased tractors. Exclusive of gains, which reduced rental expense, the percentage in the first nine months of 1997 and 1996 to operating revenue was 6.7% and 6.1%, respectively. Depreciation and amortization expense as a percentage of operating revenue was 5.3% in the first nine months 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 nine month period ended September 30, 1997, net gains from the sale of revenue equipment reduced depreciation and amortization expense by approximately $2.9 million compared to approximately $1.5 million 13 in the first nine months of 1996. Exclusive of gains, which reduced depreciation and amortization expense, the percentage in the first nine months of 1997 and 1996 to operating revenue was 5.8% and 6.6 %, respectively. The decrease in 1997 is due to expansion of the owner operator fleet. Insurance and claims expense represented 3.0% and 3.6% of operating revenue in the first nine 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 $3.5 million in the first nine months of 1997 from $5.3 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 $57.7 million in the first nine months of 1997 compared to $52.5 million in 1996. The increase is primarily attributable to an increase in net earnings offset by an increase in prepaid expenses and a smaller increase in accounts payable, accrued liabilities and claims accruals. Prepaid expenses increased by $3.8 million from December 31, 1996 to September 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 $83.0 million in the first nine months of 1997 from $76.0 million in 1996. The increase is due primarily to greater capital expenditures primarily for revenue equipment including $33 million for the purchase of certain assets from DTI and its lessors and reduced proceeds from sale of property and equipment offset in part by capital expenditures in 1996 to complete construction of the Company's new corporate facilities. As of September 30, 1997, the Company had commitments outstanding to acquire replacement and additional revenue equipment for approximately $167 million. The Company has the option to cancel such commitments upon 60 days notice. The Company believes it has the ability to obtain 14 debt and lease financing and generate sufficient cash flows from operating activities to support these acquisitions of revenue equipment. During the first nine months of 1997, the Company incurred approximately $7.3 million of non-revenue equipment capital expenditures. These expenditures were primarily for facilities and equipment. The Company anticipates that it will expend approximately $5 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 debt 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 $34.1 million in the first nine months of 1997 compared to $25.5 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, 4 and 5. Not applicable 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) No reports on Form 8-K have been filed during the quarter for which this report is filed. 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: November 5, 1997 /s/ William F. Riley III ------------------------------------------- (Signature) William F. Riley III Chief Financial Officer 17 EX-11 2 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 Nine months ended September 30, ended September 30, 1997 1996 1997 1996 ------- ------- ------- ------- Net earnings $12,882 $ 9,451 $29,645 $18,794 ======= ======= ======= ======= Weighted average shares: Common shares outstanding 28,245 24,863 28,131 24,778 Common equivalent shares issuable upon exercise of employee stock options (1) 598 693 642 710 ------- ------- ------- ------- Total weighted average shares - primary 28,843 25,556 28,773 25,488 Incremental common equivalent shares (calculated using the higher of the end of period or average fair market value)(2) 23 23 30 46 ------- ------- ------- ------- Total weighted average shares - fully diluted 28,866 25,579 28,803 25,534 ======= ======= ======= ======= Net earnings per common and equivalent share $ .45 $ .37 $ 1.03 $ .74 ======= ======= ======= ======= Net earnings per common share - assuming full dilution $ .45 $ .37 $ 1.03 $ .74 ======= ======= ======= =======
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%. 18 EX-27 3 FDS -- 3RD QUARTER 10Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS AS OF September 30,1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS 863557 SWIFT TRANSPORTATION CO., INC. 1,000 US DOLLARS 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1 10,087 0 99,897 0 3,580 132,343 429,757 105,202 467,743 70,068 0 0 0 28 258,017 467,743 524,999 524,999 0 472,093 (409) 0 3,470 49,845 20,200 29,645 0 0 0 29,645 1.03 1.03
EX-99 4 COMPLIANCE STATEMENT 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 ability of the Company to continue to identify acquisition candidates that will result in successful combinations; (x) an unanticipated increase in the number of claims for which the Company is self insured; and (xi) 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. 20 -----END PRIVACY-ENHANCED MESSAGE-----