-----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, I14jsJH/zCpUoETjcNWukL7T7KT6ercewR8XIGTLxUzx1W+ytzjtZUUIl1fldFE7 DvPkJHOxQHvyq8p6G50F4g== 0000950147-98-000351.txt : 19980511 0000950147-98-000351.hdr.sgml : 19980511 ACCESSION NUMBER: 0000950147-98-000351 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980508 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: 98613504 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 March 31, 1998 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 (May 5, 1998) Common stock, $.001 par value: 42,706,950 shares Exhibit Index at page 14 Total pages 17 PART I FINANCIAL INFORMATION Page Number Item 1. Financial statements Condensed consolidated balance sheets as of March 31, 1998 (unaudited) and December 31, 1997 3 - 4 Condensed consolidated statements of earnings (unaudited) for the three month periods ended March 31, 1998 and 1997 5 Condensed consolidated statements of cash flows (unaudited) for the three month periods ended March 31, 1998 and 1997 6 - 7 Notes to condensed consolidated financial statements 8 Item 2. Management's discussion and analysis of financial condition and results of operations 9 - 13 PART II OTHER INFORMATION Items 1, 2, 3, 4 and 5. Not applicable Item 6. Exhibits and Reports on Form 8-K 14 2 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) March 31, December 31, 1998 1997 -------- -------- (unaudited) Assets ------ Current assets: Cash $ 9,165 $ 5,726 Accounts receivable, net 96,530 92,587 Equipment sales receivables 4,566 3,284 Inventories and supplies 4,478 4,509 Prepaid taxes, licenses and insurance 13,224 5,090 Assets held for sale 5,468 5,468 Deferred income taxes 5,639 5,280 -------- -------- Total current assets 139,070 121,944 -------- -------- Property and equipment, at cost: Revenue and service equipment 393,858 366,223 Land 7,730 7,520 Facilities and improvements 68,468 62,760 Furniture and office equipment 15,171 13,949 -------- -------- Total property and equipment 485,227 450,452 Less accumulated depreciation and amortization 119,837 111,917 -------- -------- Net property and equipment 365,390 338,535 Other assets 2,039 1,976 Goodwill 8,490 8,679 -------- -------- $514,989 $471,134 ======== ======== See accompanying notes to condensed consolidated financial statements. 3 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Balance Sheets (continued) (In thousands, except share data)
March 31, December 31, 1998 1997 -------- -------- (unaudited) Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Accounts payable $ 17,535 $ 14,469 Accrued liabilities 29,384 20,177 Current portion of claims accruals 17,359 16,281 Current portion of long-term debt 5,988 6,849 -------- -------- Total current liabilities 70,266 57,776 -------- -------- Borrowings under line of credit 76,000 56,500 Long-term debt, less current portion 16,175 16,920 Claims accruals, less current portion 22,663 21,343 Deferred income taxes 45,870 44,420 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 42,967,710 and 42,793,557 shares at March 31, 1998 and December 31, 1997, respectively 43 43 Additional paid-in capital 116,569 116,141 Retained earnings 170,819 161,407 -------- -------- 287,431 277,591 Less treasury stock, at cost (331,050 shares) 3,416 3,416 -------- -------- Net stockholders' equity 284,015 274,175 -------- -------- Commitments and contingencies -------- -------- $514,989 $471,134 ======== ========
See accompanying notes to condensed consolidated financial statements. 4 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Statements of Earnings (unaudited) (In thousands, except share data) Three months ended March 31, 1998 1997 --------- --------- Operating revenue $ 191,608 $ 156,074 Operating expenses: Salaries, wages and employee benefits 69,187 55,282 Operating supplies and expenses 17,522 14,271 Fuel 22,603 22,368 Purchased transportation 29,396 20,346 Rental expense 10,033 11,550 Insurance and claims 5,887 5,063 Depreciation and amortization 11,078 8,507 Communication and utilities 2,718 2,393 Operating taxes and licenses 6,248 5,171 --------- --------- Total operating expenses 174,672 144,951 --------- --------- Operating income 16,936 11,123 --------- --------- Other (income) expenses: Interest expense 1,338 813 Interest income (56) (65) Other (163) (106) --------- --------- Other (income) expenses, net 1,119 642 --------- --------- Earnings before income taxes 15,817 10,481 Income taxes 6,405 4,250 --------- --------- Net earnings $ 9,412 $ 6,231 ========= ========= Basic earnings per share $ .22 $ .15 ========= ========= Diluted earnings per share $ .22 $ .14 ========= ========= See accompanying notes to condensed consolidated financial statements. 5 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) (In thousands)
Three months ended March 31, 1998 1997 -------- -------- Cash flows from operating activities: Net earnings $ 9,412 $ 6,231 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 10,119 8,507 Deferred income taxes 1,091 754 Provision for losses on accounts receivable 90 60 Amortization of deferred compensation 48 9 Change in assets and liabilities: Increase in accounts receivable (3,792) (4,543) Decrease in inventories and supplies 31 422 Increase in prepaid expenses (8,134) (8,378) Increase in other assets (94) (712) Increase in accounts payable, accrued liabilities and claims accruals 14,671 6,633 -------- -------- Net cash provided by operating activities 23,442 8,983 -------- -------- Cash flows from investing activities: Proceeds from sale of property and equipment 10,175 1,150 Capital expenditures (51,059) (21,217) Payments received on equipment sales receivables 3,284 390 -------- -------- Net cash used in investing activities (37,600) (19,677) -------- --------
See accompanying notes to condensed consolidated financial statements 6 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (continued) (unaudited) (In thousands) Three months ended March 31, 1998 1997 -------- -------- Cash flows from financing activities: Repayments of long-term debt $ (2,042) $ (4,756) Increase in borrowings under line of credit 19,500 19,000 Payment of stock split fractional shares (21) Proceeds from issuance of common stock under stock option plan 160 282 -------- -------- Net cash provided by financing activities 17,597 14,526 -------- -------- Net increase in cash 3,439 3,832 Cash at beginning of period 5,726 1,210 -------- -------- Cash at end of period $ 9,165 $ 5,042 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 1,291 $ 826 Income taxes $ 2,630 $ 4,633 Supplemental schedule of noncash investing and financing activities: Equipment sales receivables $ 4,566 $ 4,213 Direct financing for purchase of equipment $ 436 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, 1997. 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. Stock Split On February 20, 1998, the Company's Board of Directors approved a 3-for-2 stock split effected in the form of a stock dividend and payable on March 12, 1998 to the stockholders of record at the close of business on March 2, 1998. All share amounts, share prices and earnings per share have been retroactively adjusted to reflect this 3-for-2 stock split. 8 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 an increase of 1,081 tractors to 6,056 tractors as of March 31, 1998, up from 4,975 tractors as of March 31, 1997. 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 Direct Transit, Inc. The owner operator portion of the Company's fleet increased to 1,028 as of March 31, 1998 from 721 as of March 31, 1997. Results of Operations Operating revenue increased $35.5 million or 22.8% to $191.6 million for the three months ended March 31, 1998 from $156.1 million for the corresponding period of 1997. The increase in operating revenue is primarily the result of the expansion of the Company's fleet, including the Direct Transit, Inc. revenue equipment acquired in April 1997. The Company's freight rates 9 increased by approximately 2.5% in the first quarter of 1998 compared to the first quarter of 1997. The Company's operating ratio (operating expenses expressed as a percentage of operating revenue) for the first quarter of 1998 was 91.2% compared to 92.9% in the comparable period of 1997. The Company's operating revenue and operating ratio for the three months ended March 31, 1998 improved as a result of stronger shipper demand in January and February, improvement in driver recruiting and turnover, and reduced fuel expenses. The Company's empty mile factor for linehaul operations was 14.1% and 14.3% and average loaded linehaul revenue per mile was $1.32 and $1.30 in the first quarter of 1998 and 1997, respectively. Significant differences in the components of operating expenses as a percentage of operating revenue are explained below. Salaries, wages and employee benefits represented 36.1% of operating revenue for the three months ended March 31, 1998 compared with 35.4% in 1997. The increase is primarily due to an increase in the accrual for the Company's profit sharing contribution and normal wage increases and associated benefits and taxes. 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 first quarter of 1998 versus 14.3% in 1997. This decrease is partially due to an increase in the number of owner operators who are responsible for their own fuel. In addition, actual fuel cost per gallon decreased by approximately 18 cents per gallon in the first quarter of 1998 versus the first quarter of 1997. This decrease in cost per gallon resulted in an approximately $2.0 million reduction in fuel surcharge revenue in the first quarter of 1998 compared to the first quarter of 1997. This reduction in fuel surcharge revenue reduced the decrease in fuel as a percentage of operating revenue. Increases in fuel costs, 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. The Company currently does not use derivative-type hedging products but is currently evaluating the possible use of these products. Purchased transportation as a percentage of operating revenue was 15.3% for the three months ended March 31, 1998 compared to 13.0% in 1997. The increase is due to the growth of the owner operator fleet to 1,028 as of March 31, 1998 from 721 as of March 31, 1997. Rental expense as a percentage of operating revenue was 5.2% for the first quarter of 1998 versus 7.4% in 1997. At March 31, 1998 and 1997, leased tractors represented 54% and 62%, 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 10 recorded $971,000 in the first quarter of 1998 and no gain during the first quarter of 1997 from the sale of leased tractors. Depreciation and amortization expense as a percentage of operating revenue was 5.8% in the first quarter of 1998 versus 5.5% in 1997. The Company includes gains and losses from the sale of owned revenue equipment in depreciation and amortization expense. During the three month period ended March 31, 1998, net gains from the sale of revenue equipment reduced depreciation and amortization expense by approximately $809,000 compared to approximately $875,000 in the first quarter of 1997. Exclusive of gains, which reduced depreciation and amortization expense, the percentage in the first quarter of 1998 and 1997 to operating revenue was 6.2% and 6.0%, respectively. The increase in 1998 is due to an increase in the number of tractors and trailers owned. Insurance and claims expense represented 3.1% and 3.2% of operating revenue in the first quarter of 1998 and 1997, 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 increased to $1,338,000 in the first quarter of 1998 from $813,000 in 1997. This increase is due to a higher debt level. 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 $23.4 million in the first three months of 1998 compared to $9.0 million in 1997. The increase is primarily attributable to increased earnings and depreciation and an increase in accounts payable, accrued liabilities and claims accruals. Prepaid expenses increased by $8.1 million from December 31, 1997 to March 31, 1998. 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 $37.6 million in the first three months of 1998 from $19.7 million in 1997. The increase is due primarily to more capital expenditures in 1998 offset in part by greater proceeds from the sale of property and equipment. 11 As of March 31, 1998, the Company had commitments outstanding to acquire replacement and additional revenue equipment for approximately $141 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 quarter of 1998, the Company incurred approximately $7.4 million of non-revenue equipment capital expenditures. These expenditures were primarily for facilities and equipment. The Company anticipates that it will expend approximately $28 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 $17.6 million in the first quarter of 1998 compared to $14.5 million in 1997. This increase is primarily due to a decrease in repayments of long term debt. 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. 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. 12 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. 13 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 Current Reports on Form 8-K were filed during the three months ended March 31, 1998. 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: May 7, 1998 /s/ William F. Riley III ---------------------------------------- (Signature) William F. Riley III Chief Financial Officer 14 EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Schedule of Computation of Net Earnings Per Share (in thousands, except per share amounts) Three months ended March 31, 1998 1997 ------- ------- Net earnings $ 9,412 $ 6,231 ======= ======= Weighted average shares: Common shares outstanding 42,498 41,918 Common equivalent shares issuable upon exercise of employee stock options (1) 938 1,063 ------- ------- Total weighted average shares -diluted 43,436 42,981 ======= ======= Basic earnings per share $ .22 $ .15 ======= ======= Diluted earnings per share $ .22 $ .14 ======= ======= Notes: (1) Amount calculated using the treasury stock method and fair market values. (2) The 1997 share amounts and earnings per share have been retroactively adjusted to reflect the 3-for-2 stock split payable on March 12, 1998 to shareholders of record at the close of business on March 2, 1998. 15 EX-27 3 FDS -- 1ST QUARTER 10Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS AS OF March 31,1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS 863557 SWIFT TRANSPORTATION CO., INC. 1,000 US DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1 9,165 0 96,530 0 4,478 139,070 485,227 119,837 514,989 70,266 0 0 0 43 283,972 514,989 191,608 191,608 0 174,672 (219) 0 1,338 15,817 6,405 9,412 0 0 0 9,412 .22 .22
EX-99 4 SAFE HARBOR 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) the inability of the Company to continue to secure acceptable financing arrangements; (viii) the ability of the Company to continue to identify acquisition candidates that will result in successful combinations; (ix) an unanticipated increase in the number of claims for which the Company is self insured; and (x) 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. 17 -----END PRIVACY-ENHANCED MESSAGE-----