-----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, BeqwQ9UDTr63ToShGYHnRtvKsHdG46rDMdw6Doe1HQZUv4v0oIE3qxPMPBQaS3fX sgfkbgA1EH4i4EPgVcJt2A== 0000950147-98-000601.txt : 19980812 0000950147-98-000601.hdr.sgml : 19980812 ACCESSION NUMBER: 0000950147-98-000601 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980810 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: 98681335 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, 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 (August 7, 1998) Common stock, $.001 par value: 42,835,711 shares Exhibit Index at page 16 Total pages 20 PART I FINANCIAL INFORMATION Page Number Item 1. Financial statements Condensed consolidated balance sheets as of June 30, 1998 (unaudited) and December 31, 1997 3 - 4 Condensed consolidated statements of earnings (unaudited) for the three and six month periods ended June 30, 1998 and 1997 5 Condensed consolidated statements of cash flows (unaudited) for the six month periods ended June 30, 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 - 15 PART II OTHER INFORMATION Items 1, 2, 3 and 5. Not applicable Item 4. Submission of Matters to a Vote of Security Holders 16 Item 6. Exhibits and Reports on Form 8-K 16 2 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) June 30, December 31, 1998 1997 ----------- ------------ (unaudited) Assets ------ Current assets: Cash $ 9,009 $ 5,726 Accounts receivable, net 108,279 92,587 Equipment sales receivables 3,628 3,284 Inventories and supplies 2,637 4,509 Prepaid taxes, licenses and insurance 9,819 5,090 Assets held for sale 5,468 5,468 Deferred income taxes 6,175 5,280 -------- -------- Total current assets 145,015 121,944 Property and equipment, at cost: Revenue and service equipment 413,712 366,223 Land 8,756 7,520 Facilities and improvements 72,350 62,760 Furniture and office equipment 15,245 13,949 -------- -------- Total property and equipment 510,063 450,452 Less accumulated depreciation and amortization 122,213 111,917 -------- -------- Net property and equipment 387,850 338,535 Other assets 2,246 1,976 Goodwill 8,300 8,679 -------- -------- $543,411 $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)
June 30, December 31, 1998 1997 --------- ----------- (unaudited) Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Accounts payable $ 23,797 $ 14,469 Accrued liabilities 29,227 20,177 Current portion of claims accruals 19,691 16,281 Current portion of long-term debt 4,485 6,849 -------- -------- Total current liabilities 77,200 57,776 -------- -------- Borrowings under line of credit 78,500 56,500 Long-term debt, less current portion 15,215 16,920 Claims accruals, less current portion 24,875 21,343 Deferred income taxes 48,034 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 43,153,661 and 42,793,557 shares at June 30, 1998 and December 31, 1997, respectively 43 43 Additional paid-in capital 118,105 116,141 Retained earnings 184,855 161,407 -------- -------- 303,003 277,591 Less treasury stock, at cost (331,050 shares) 3,416 3,416 -------- -------- Net stockholders' equity 299,587 274,175 -------- -------- Commitments and contingencies -------- -------- $543,411 $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 Six months ended June 30, ended June 30, 1998 1997 1998 1997 --------- --------- --------- ---------- Operating revenue $ 215,832 $ 180,855 $ 407,440 $ 336,929 Operating expenses: Salaries, wages and employee benefits 76,411 63,760 145,599 119,042 Operating supplies and expenses 20,886 14,861 38,408 29,140 Fuel 23,264 23,098 45,867 45,466 Purchased transportation 34,473 23,239 63,869 43,585 Rental expense 9,143 11,839 19,176 23,389 Insurance and claims 6,666 6,079 12,553 11,143 Depreciation and amortization 10,867 9,383 21,944 17,889 Communication and utilities 2,668 2,674 5,386 5,067 Operating taxes and licenses 6,368 6,943 12,616 12,115 --------- --------- --------- --------- Total operating expenses 190,746 161,876 365,418 306,836 --------- --------- --------- --------- Operating income 25,086 18,979 42,022 30,093 --------- --------- --------- --------- Other (income) expenses: Interest expense 1,675 1,326 3,013 2,139 Interest income (66) (20) (122) (85) Other (114) (63) (277) (170) --------- --------- --------- --------- Other (income) expenses, net 1,495 1,243 2,614 1,884 --------- --------- --------- --------- Earnings before income taxes 23,591 17,736 39,408 28,209 Income taxes 9,555 7,180 15,960 11,430 --------- --------- --------- --------- Net earnings $ 14,036 $ 10,556 $ 23,448 $ 16,779 ========= ========= ========= ========= Basic earnings per share $ .33 $ .25 $ .55 $ .40 ========= ========= ========= ========= Diluted earnings per share $ .32 $ .24 $ .54 $ .39 ========= ========= ========= =========
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, 1998 1997 --------- --------- Cash flows from operating activities: Net earnings $ 23,448 $ 16,779 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 19,514 17,960 Deferred income taxes 2,719 2,028 Provision for losses on accounts receivable 430 164 Amortization of deferred compensation 104 55 Change in assets and liabilities: Increase in accounts receivable (16,122) (15,065) Decrease in inventories and supplies 1,872 679 Increase in prepaid expenses (4,729) (6,741) Increase in other assets (334) (700) Increase in accounts payable, accrued liabilities and claims accruals 25,320 18,345 --------- --------- Net cash provided by operating activities 52,222 33,504 --------- --------- Cash flows from investing activities: Proceeds from sale of property and equipment 34,044 10,391 Capital expenditures (105,622) (80,737) Cash expended for purchase of DTI assets (3,749) Payments received on equipment sales receivables 3,284 402 --------- --------- Net cash used in investing activities (68,294) (73,693) --------- ---------
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, 1998 1997 ---- ---- Cash flows from financing activities: Repayments of long-term debt $ (4,505) $ (6,734) Increase in borrowings under line of credit 22,000 45,000 Payment of stock split fractional shares (21) Proceeds from issuance of common stock under stock option and stock purchase plans 1,881 1,567 -------- -------- Net cash provided by financing activities 19,355 39,833 -------- -------- Net increase (decrease) in cash 3,283 (356) Cash at beginning of period 5,726 1,210 -------- -------- Cash at end of period $ 9,009 $ 854 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 2,752 $ 1,838 Income taxes $ 6,421 $ 9,243 Supplemental schedule of noncash investing and financing activities: Equipment sales receivables $ 3,628 $ 4,866 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. Note 4. Line of Credit In August 1998, the Company modified its unsecured line of credit agreement to increase the maximum available borrowings from $110 million to $170 million and extend the maturity to January 16, 2003. 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. Year 2000 Issue The Company is in the process of performing a comprehensive review of its Year 2000 issues and has completed its intial review of internal systems (information technology ("IT") and non-IT). The majority of the Company's application software programs are purchased from and maintained by vendors. Therefore, the Company is working with these software vendors to verify these applications become Year 2000 compliant. The Company estimates the status of progress of these internal systems as follows: Vendor Modifications Testing Commenced Being Performed IT Systems 70% 15% Non-IT Systems 50% 5% The Company presently believes that with modifications and updates to existing software, the cost of which is not expected to be material, the Year 2000 problem will not pose significant operational problems for the Company's internal systems. 9 As part of the Company's comprehensive review, it is continuing to verify the Year 2000 readiness of third parties (vendors and customers) with whom the company has material relationships. At present, the Company is not able to determine the effect on the Company's results of operations, liquidity, and financial condition in the event the Company's material vendors and customers are not Year 2000 compliant. The Company will continue to monitor the progress of its material vendors and customers and formulate a contingency plan at that point in time when the Company does not believe a material vendor or customer will be compliant. 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 774 tractors to 6,398 tractors as of June 30, 1998 up from 5,624 tractors as of June 30, 1997. The owner operator portion of the Company's fleet increased to 1,113 as of June 30, 1998 from 798 as of June 30, 1997. Results of Operations Three Months Ended June 30, 1998 compared to Three Months ended June 30, 1997 - ----------------------------------------------------------------------------- Operating revenue increased $34.9 million or 19.3% to $215.8 million for the three months ended June 30, 1998 from $180.9 million for the corresponding period of 1997. The increase in operating revenue is primarily the result of the expansion of the Company's fleet as a result of strong shipper demand. The Company's freight rates increased by approximately 1.9% in the second quarter of 1998 compared to the second quarter of 1997. The Company's operating ratio (operating expenses expressed as a percentage of operating revenue) for the second quarter of 1998 was 88.4% compared to 89.5% in the comparable period of 1997. The Company's operating ratio for the three months ended June 30, 1998 improved as a result of the aforementioned increase in operating revenue combined with decreases in certain components of operating expenses as a percentage of operating revenue as discussed below. The Company's empty mile factor for linehaul operations was 13.5% and 14.4% and average loaded linehaul revenue per mile was $1.32 and $1.31 in the second quarter of 1998 and 1997, respectively. Salaries, wages and employee benefits represented 35.4% of operating revenue for the three months ended June 30, 1998 compared with 35.3% 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 10 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 10.8% for the second quarter of 1998 versus 12.8% in 1997. The 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 13 cents per gallon in the second quarter of 1998 versus the second quarter of 1997. This decrease in cost per gallon resulted in an approximately $1.4 million reduction in fuel surcharge revenue in the second quarter of 1998 compared to the second 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 16.0% for the three months ended June 30, 1998 compared to 12.8% in 1997. The increase is due to the growth of the owner operator fleet to 1,113 as of June 30, 1998 from 798 as of June 30, 1997. Rental expense as a percentage of operating revenue was 4.2% for the second quarter of 1998 versus 6.5% in 1997. At June 30, 1998 and 1997, leased tractors represented 57% and 60%, respectively, of the total fleet of Company tractors. In addition to the reduction in the percentage of tractors which were leased, rental expense was positively impacted by a reduction in the number of leased trailers as well as a slight reduction in the average lease rate for tractors in the second quarter of 1998 versus the second quarter of 1997. 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 $1.5 million in the second quarter of 1998 and no gain during the second quarter of 1997 from the sale of leased tractors. Depreciation and amortization expense as a percentage of operating revenue was 5.0% in the second quarter of 1998 versus 5.2% 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 June 30, 1998, net gains from the sale of revenue equipment reduced depreciation and amortization expense by approximately $1.7 million compared to approximately $930,000 in the second quarter of 1997. Exclusive of gains, which reduced depreciation and amortization expense, the percentage in the second quarter of 1998 and 1997 to operating revenue was 5.8% and 5.7%, respectively. The increase in 1998 is due to an increase in the percentage of owned equipment versus leased equipment offset by the expansion of the owner operator fleet as discussed above. Insurance and claims expense represented 3.1% and 3.4% of operating revenue in the second 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 11 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. Six Months Ended June 30, 1998 compared to Six Months ended June 30, 1997 - ------------------------------------------------------------------------- Operating revenue increased $70.5 million or 20.9 % to $407.4 million for the six months ended June 30, 1998 from $336.9 million for the corresponding period of 1997. 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 1998 was 89.7% compared to 91.1% in the comparable period of 1997. The Company's operating ratio for the six months ended June 30, 1998 improved as a result of the aforementioned increase in operating revenue combined with decreases in certain components of operating expenses as a percentage of operating revenue as discussed below. The Company's empty mile factor for linehaul operations was 13.8% and 14.3% and average loaded linehaul revenue per mile was $1.32 and $1.31 in the first six months of 1998 and 1997, respectively. Salaries, wages and employee benefits represented 35.7% of operating revenue for the six months ended June 30, 1998 compared with 35.3% 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. Fuel as a percentage of operating revenue was 11.3% for the first six months of 1998 versus 13.5% in 1997. The decrease is due to an increase in the number of owner operators who are responsible for their own fuel and the reduction in fuel prices as discussed above. Purchased transportation as a percentage of operating revenue was 15.7% for the six months ended June 30, 1998 compared to 12.9% in 1997. The increase is due to the growth of the owner operator fleet to 1,113 as of June 30, 1998 from 798 as of June 30, 1997. Rental expense as a percentage of operating revenue was 4.7% for the first six months of 1998 versus 6.9% in 1997. 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 $2.5 million in 1998 and no gain during the first six months of 1997 from the sale of leased tractors. As discussed above, rental expense decreased in the first six months of 1998 vesus 1997 as a result of a reduction in the percentage of leased tractors, number of leased trailers and the average lease rate for tractors. Depreciation and amortization expense as a percentage of operating revenue was 5.4% in the first 12 six months of 1998 versus 5.3% in 1997. 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, 1998, net gains from the sale of revenue equipment reduced depreciation and amortization expense by approximately $2.5 million compared to approximately $1.8 million in the first six months of 1997. Exclusive of gains, which reduced depreciation and amortization expense, the percentage in the first six months of 1998 and 1997 to operating revenue was 6.0% and 5.8 %, respectively. The increase in 1998 is due to the increase in the percentage of owned equipment versus leased equipment offset by the expansion of the owner operator fleet as discussed above. Insurance and claims expense represented 3.1% and 3.3% of operating revenue in the first six months 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. 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 $52.2 million in the first six months of 1998 compared to $33.5 million in 1997. The increase is primarily attributable to an increase in net earnings and accounts payable, accrued liabilities and claims accruals. Prepaid expenses increased by $4.7 million from December 31, 1997 to June 30, 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 decreased to $68.3 million in the first six months of 1998 from $73.7 million in 1997. The decrease is due primarily to increased proceeds from the sale of property and equipment and payments received on equipment sales receivable in 1998 along with a reduction in cash expended for Direct Transit, Inc. assets in 1997 offset by greater capital expenditures in 1998. As of June 30, 1998, the Company had commitments outstanding to acquire replacement and 13 additional revenue equipment for approximately $276 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 1998, the Company incurred approximately $13 million of non-revenue equipment capital expenditures. These expenditures were primarily for facilities and equipment. The Company anticipates that it will expend approximately $24 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 $19.4 million in the first six months of 1998 compared to $39.8 million in 1997. This decrease is primarily due to reduced borrowings under the line 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. 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. 14 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. 15 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 28, 1998. At the Annual Meeting, the stockholders elected Jerry C. Moyes and Alphonse E. Frei to serve as Directors for three-year terms. William F. Riley, Lou A. Edwards, Earl H. Scudder, Jr. and Rodney K. Sartor continued as Directors after the meeting. Additionally, the stockholders approved an amendment to the Stock Option Plan to increase the number of shares authorized for issuance thereunder from 3,825,000 to 4,200,000. Stockholders representing 40,395,130 shares or 94.74% 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 Jerry C. Moyes 40,395,130 40,289,955 105,175 Alphonse E. Frei 40,395,130 40,314,245 80,885 Amendment to Stock Option Plan 40,395,130 32,014,379 8,380,751
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 June 30, 1998. 16 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 7, 1998 /s/ William F. Riley III --------------------------------------- (Signature) William F. Riley III Chief Financial Officer 17 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 Six months ended June 30, ended June 30, 1998 1997 1998 1997 ------- ------- ------- ------- Net earnings $14,036 $10,556 $23,448 $16,779 ======= ======= ======= ======= Weighted average shares: Common shares outstanding 42,723 42,302 42,612 42,111 Common equivalent shares issuable upon exercise of employee stock options (1) 815 924 875 993 ------- ------- ------- ------- Total weighted average shares - diluted 43,538 43,226 43,487 43,104 ======= ======= ======= ======= Basic earnings per share $ .33 $ .25 $ .55 $ .40 ======= ======= ======= ======= Diluted earnings per share $ .32 $ .24 $ .54 $ .39 ======= ======= ======= =======
Note: (1) Amount calculated using the treasury stock method and fair market values. 18 EX-27 3 FDS -- 2ND QUARTER 10Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS AS OF June 30,1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS 863557 SWIFT TRANSPORTATION CO., INC. 1,000 US DOLLARS 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 1 9,009 0 108,279 0 2,637 145,015 510,063 122,213 387,850 77,200 0 0 0 43 299,544 543,411 407,440 407,440 0 365,418 (399) 0 3,013 39,408 15,960 23,448 0 0 0 23,448 .55 .54
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. -----END PRIVACY-ENHANCED MESSAGE-----