-----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, OwglkAw6pdmF1cMtRuq+Nl4bSLs6Weyv1ZC2+1nhJfQj9WO1mK+8MDbuFAWZW59Z qzDD53Zfcq/OtEvFXu88IQ== 0000950147-99-001211.txt : 19991110 0000950147-99-001211.hdr.sgml : 19991110 ACCESSION NUMBER: 0000950147-99-001211 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991109 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: 99744332 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 QTRLY REPORT FOR THE PERIOD ENDED 09/30/99 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, 1999 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, 1999) Common stock, $.001 par value: 64,334,347 shares EXHIBIT INDEX AT PAGE 16 TOTAL PAGES 19 PART I FINANCIAL INFORMATION Page Number Item 1. Financial statements Condensed consolidated balance sheets as of September 30, 1999 (unaudited) and December 31, 1998 3 - 4 Condensed consolidated statements of earnings (unaudited) for the three and nine month periods ended September 30, 1999 and 1998 5 Condensed consolidated statements of cash flows (unaudited) for the nine month periods ended September 30, 1999 and 1998 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 Item 3. Quantitative and qualitative disclosures about market risk 15 PART II OTHER INFORMATION Items 1, 2, 3, 4 and 5. Not applicable Item 6. Exhibits and Reports on Form 8-K 16 2 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data) September 30, December 31, 1999 1998 -------- -------- (unaudited) ASSETS Current assets: Cash $ 2,481 $ 6,530 Accounts receivable, net 144,867 118,555 Equipment sales receivable 7,398 5,262 Inventories and supplies 6,644 4,866 Prepaid taxes, licenses and insurance 8,611 15,228 Assets held for sale 5,468 5,468 Deferred income taxes 5,049 4,010 -------- -------- Total current assets 180,518 159,919 -------- -------- Property and equipment, at cost: Revenue and service equipment 571,170 487,928 Land 11,122 8,409 Facilities and improvements 100,797 85,919 Furniture and office equipment 19,226 15,566 -------- -------- Total property and equipment 702,315 597,822 Less accumulated depreciation and amortization 160,358 131,045 -------- -------- Net property and equipment 541,957 466,777 -------- -------- Other assets 2,121 1,770 Goodwill 7,257 7,817 -------- -------- $731,853 $636,283 ======== ======== See accompanying notes to condensed consolidated financial statements. Continued 3 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data) September 30, December 31, 1999 1998 -------- -------- (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 42,868 $ 27,100 Accrued liabilities 35,376 27,273 Current portion of claims accruals 29,945 23,788 Current portion of long-term debt 470 710 -------- -------- Total current liabilities 108,659 78,871 -------- -------- Borrowings under line of credit 131,500 128,000 Long-term debt, less current portion 15,623 15,208 Claims accruals, less current portion 26,660 28,091 Deferred income taxes 71,131 58,760 Stockholders' equity: Preferred stock, par value $.001 per share Authorized 1,000,000 shares; none issued Common stock, par value $.001 per share Authorized 150,000,000 shares; issued 65,607,072 and 65,044,275 shares at September 30,1999 and December 31, 1998, respectively 66 65 Additional paid-in capital 125,973 123,386 Retained earnings 265,257 216,918 -------- -------- 391,296 340,369 Less treasury stock, at cost (1,323,075 shares) 13,016 13,016 -------- -------- Total stockholders' equity 378,280 327,353 -------- -------- Commitments and contingencies $731,853 $636,283 ======== ======== 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 Nine months ended September 30, September 30, ---------------------- ---------------------- 1999 1998 1999 1998 --------- --------- --------- --------- Operating revenue $ 279,423 $ 227,184 $ 776,898 $ 634,624 Operating expenses: Salaries, wages and employee benefits 99,951 84,307 284,569 229,906 Operating supplies and expenses 21,504 20,602 65,458 59,010 Fuel 32,284 23,213 84,563 69,080 Purchased transportation 49,627 33,948 131,167 97,817 Rental expense 9,905 11,039 31,897 30,215 Insurance and claims 6,876 6,648 19,703 19,201 Depreciation and amortization 15,232 11,127 41,971 33,071 Communication and utilities 3,540 3,001 10,417 8,387 Operating taxes and licenses 7,354 5,990 21,431 18,606 --------- --------- --------- --------- Total operating expenses 246,273 199,875 691,176 565,293 --------- --------- --------- --------- Operating income 33,150 27,309 85,722 69,331 Other (income) expenses: Interest expense 2,832 1,306 7,020 4,320 Interest income (153) (90) (304) (213) Other (71) (206) (243) (483) --------- --------- --------- --------- Other (income) expenses, net 2,608 1,010 6,473 3,624 --------- --------- --------- --------- Earnings before income taxes 30,542 26,299 79,249 65,707 Income taxes 11,810 10,655 30,910 26,615 --------- --------- --------- --------- Net earnings $ 18,732 $ 15,644 $ 48,339 $ 39,092 ========= ========= ========= ========= Basic earnings per share $ .29 $ .24 $ .76 $ .61 ========= ========= ========= ========= Diluted earnings per share $ .29 $ .24 $ .74 $ .60 ========= ========= ========= =========
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, ---------------------- 1999 1998 --------- --------- Cash flows from operating activities: Net earnings $ 48,339 $ 39,092 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 38,657 30,396 Deferred income taxes 11,332 6,661 Provision for losses on accounts receivable 900 770 Amortization of deferred compensation 228 152 Increase (decrease) in cash resulting from changes in: Accounts receivable (27,210) (20,489) Inventories and supplies (1,778) 1,534 Prepaid taxes, licenses and insurance 6,617 (1,656) Other assets (447) (17) Accounts payable, accrued liabilities and claims accruals 28,597 42,262 --------- --------- Net cash provided by operating activities 105,235 98,705 --------- --------- Cash flows from investing activities: Proceeds from sale of property and equipment 40,183 48,117 Capital expenditures (159,789) (158,556) Treasury stock purchases (9,582) Payments received on equipment sale receivables 5,262 3,284 --------- --------- Net cash used in investing activities (114,344) (116,737) --------- --------- See accompanying notes to condensed consolidated financial statements. Continued 6 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) (In thousands) Nine Months Ended September 30, -------------------- 1999 1998 -------- -------- Cash flows from financing activities: Repayments of long-term debt (798) (7,780) Increase in borrowings under line of credit 3,500 22,500 Payment of stock split fractional shares (9) (21) Proceeds from issuance of common stock under stock option and stock purchase plans 2,367 1,915 -------- -------- Net cash provided by financing activities 5,060 16,614 -------- -------- Net decrease in cash (4,049) (1,418) Cash at beginning of period 6,530 5,726 -------- -------- Cash at end of period $ 2,481 $ 4,308 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 6,803 $ 4,147 Income taxes $ 14,528 $ 15,718 Supplemental schedule of noncash investing and financing activities: Equipment sales receivables $ 7,398 $ 2,936 Direct financing for purchase of equipment $ 973 $ 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, 1998. 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 March 15, 1999, the Company's Board of Directors approved a 3-for-2 stock split effected in the form of a stock dividend and paid on April 10, 1999 to the stockholders of record at the close of business on March 31, 1999. 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," "intends," 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, growth and acquisitions, 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 differences in actual results compared to the forward looking statements. 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 has completed its comprehensive review of internal systems (information technology ("IT") and non-IT) for potential Year 2000 issues. The majority of the Company's application software programs are purchased from and maintained by software vendors. The Company has worked with its software vendors to verify that the applications will be Year 2000 ready. The Company presently believes the Year 2000 issues will not pose significant operational problems for the Company's internal systems. In addition, the Company has successfully tested mission critical systems and is on schedule to finish the remaining systems testing. The costs incurred in addressing Year 2000 issues are not expected to be material, including internal payroll costs which have not been separately accumulated. The Company's contingency plan in the event of a Year 2000 issue is to perform tasks through telephonic and fax communication, which the Company believes will allow it to operate in the short term assuming power and telephone services are functioning. 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 believes that its material vendors and customers will be Year 2000 ready and the effect on the Company's results of operations and financial condition will not be material. 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 determines a material vendor or customer will not be ready. However, there can be no assurance that the systems of such third parties will be modified on a timely basis. 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 1,516 tractors to 8,094 tractors as of September 30, 1999 up from 6,578 tractors as of September 30, 1998. The owner operator portion of the Company's fleet increased to 1,663 as of September 30, 1999 from 1,166 as of September 30, 1998. RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1998 Operating revenue increased $52.2 million or 23.0% to $279.4 million for the three months ended September 30, 1999 from $227.2 million for the corresponding period of 1998. 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 operating ratio (operating expenses expressed as a percentage of operating revenue) for the third quarter of 1999 was 88.1% compared to 88.0% in the comparable period of 1998. The Company's operating ratio for the three months ended September 30, 1999 increased as a result of changes 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 13.9% and 13.2% in the third quarter of 1999 and 1998, respectively, and average loaded linehaul revenue per mile was $1.33 and $1.32 in the third quarter of 1999 and 1998, respectively. Salaries, wages and employee benefits represented 35.8% of operating revenue for the three months ended September 30, 1999 compared with 37.1% for the same period in 1998. The decrease is primarily due to a decrease in the accrual for the profit-sharing contribution to the Company's 401(k) plan. This profit sharing contribution is based upon the Company's operating ratio. During the third quarter, the estimate of the full year operating ratio was revised due to the significant increase in fuel prices. 10 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 11.6% for the third quarter of 1999 versus 10.2% for the same period in 1998. The increase is due to an increase in fuel prices partially offset by an increase in the number of owner operators who are responsible for their own fuel. Actual fuel cost per gallon increased by approximately 19 cents per gallon in the third quarter of 1999 versus the third quarter of 1998. 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. Purchased transportation as a percentage of operating revenue was 17.8% for the three months ended September 30, 1999 compared to 14.9% in 1998. The increase is due to the growth of the owner operator fleet to 1,663 as of September 30, 1999 from 1,166 as of September 30, 1998 and an increase in logistics and intermodal revenue. Rental expense as a percentage of operating revenue was 3.5% for the third quarter of 1999 versus 4.9% in 1998. At September 30, 1999 and 1998, leased tractors represented 48% and 54%, respectively, of the total fleet of Company tractors. When it is economically advantageous to do so, the Company will purchase and 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 $1.6 million in the third quarter of 1999 and $223,000 during the third quarter of 1998 from the sale of leased tractors. Depreciation and amortization expense as a percentage of operating revenue was 5.5% in the third quarter of 1999 versus 4.9% in 1998. 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, 1999, net gains from the sale of revenue equipment reduced depreciation and amortization expense by approximately $695,000 compared to approximately $2.1 million in the third quarter of 1998. Exclusive of gains, which reduced this expense, depreciation and amortization expense as a percentage of operating revenue was 5.7% and 5.8% in the third quarter of 1999 and 1998, respectively. Insurance and claims expense represented 2.5% and 2.9% of operating revenue in the third quarter of 1999 and 1998, respectively. The Company's insurance program for liability, physical damage and cargo damage involves self-insurance 11 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 and the related provision are estimated and adjusted 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. NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1998 Operating revenue increased $142.3 million or 22.4% to $776.9 million for the nine months ended September 30, 1999 from $634.6 million for the corresponding period of 1998. The increase in operating revenue is primarily the result of the expansion of the Company's fleet. The Company's operating ratio (operating expenses expressed as a percentage of operating revenue) for the first nine months of 1999 was 89.0% compared to 89.1% in the comparable period of 1998. The Company's operating ratio for the nine months ended September 30, 1999 improved as a result of the increase in operating revenue combined with changes 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 14.1% and 13.6% in the first nine months of 1999 and 1998, respectively, and average loaded linehaul revenue per mile was $1.33 and $1.32 in the first nine months of 1999 and 1998, respectively. Salaries, wages and employee benefits represented 36.6% of operating revenue for the nine months ended September 30, 1999 compared with 36.2% for the same period in 1998. The increase is primarily due to normal wage increases and associated benefits and taxes. Fuel as a percentage of operating revenue was 10.9% for the first nine months of 1999 and 1998. Actual fuel cost per gallon increased by approximately five cents per gallon in the first nine months of 1999 versus 1998. However, an increase in the number of owner operators who are responsible for their own fuel had a positive impact on fuel as a percentage of operating revenue. Purchased transportation as a percentage of operating revenue was 16.9% for the nine months ended September 30, 1999 compared to 15.4% in 1998. The increase is due to the growth of the owner operator fleet to 1,663 as of September 30, 1999 from 1,166 as of September 30, 1998 and an increase in logistics and intermodal revenue. Rental expense as a percentage of operating revenue was 4.1% for the first nine months of 1999 versus 4.8% in 1998. As noted above, the percentage of the Company owned tractors which the Company leases decreased from 54% to 48% from the third quarter of 1998 to the third quarter of 1999. When it is economically advantageous to do so, the Company will purchase and 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 $3.2 million and $2.7 million in the first nine months of 1999 and 1998 respectively, from the sale of leased tractors. 12 Depreciation and amortization expense as a percentage of operating revenue was 5.4 % and 5.2% in the first nine months of 1999 and 1998. 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, 1999, net gains from the sale of revenue equipment reduced depreciation and amortization expense by approximately $3.3 million compared to approximately $4.6 million in the first nine months of 1998. Exclusive of gains, which reduced this expense, depreciation and amortization expense as a percentage of operating revenue was 5.8% and 5.9% in the first nine months of 1999 and 1998, respectively. Insurance and claims expense represented 2.5% and 3.0% of operating revenue in the first nine months of 1999 and 1998. 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 and the related provision are estimated and adjusted 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 $105.2 million in the first nine months of 1999 compared to $98.7 million in 1998. The increase is primarily attributable to an increase in net earnings, depreciation and amortization and deferred income taxes offset by an increase in accounts receivable and a reduced increase in accounts payable, accrued liabilities and claims accrual. Net cash used in investing activities decreased to $114.3 million in the first nine months of 1999 from $116.7 million in 1998. The decrease is primarily due to treasury stock purchases in 1998 that did not occur in 1999 and an increase in payments received on equipment sales receivable offset by an increase in capital expenditures, net of proceeds from the sale of equipment. As of September 30, 1999, the Company had commitments outstanding to acquire replacement and additional revenue equipment for approximately $432 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. 13 During the first nine months of 1999, the Company incurred approximately $22.7 million of non-revenue equipment capital expenditures. These expenditures were primarily for facilities and equipment. The Company anticipates that it will expend approximately $12 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 is anticipated to continue to 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 $5.1 million in the first nine months of 1999 compared to $16.6 million in 1998. This decrease is primarily due to decreased borrowings under the line of credit offset by a reduction 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, 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. The Company is currently negotiating with financial institutions for an additional financing facility to permit borrowings of up to $100 million. The Company now expects to have this facility in place during the fourth quarter of 1999. 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. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Quantitative Disclosure - There have been no material changes in the Company's market risk during the nine months ended September 30, 1999. Qualitative Disclosure - This information is set forth on page 17 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and is incorporated herein by reference. 15 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 September 30, 1999. 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, 1999 /s/ William F. Riley III ---------------------------------------- (Signature) William F. Riley III Chief Financial Officer 16 EX-11 2 SCHEDULE OF COMPUTATION OF NET 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 Nine months ended September 30, September 30, ----------------- ----------------- 1999 1998 1999 1998 ------- ------- ------- ------- Net earnings $18,732 $15,644 $48,339 $39,092 ======= ======= ======= ======= Weighted average shares: Common shares outstanding 64,260 64,032 64,013 63,957 Common equivalent shares issuable upon exercise of employee stock options 1,211 1,077 1,240 1,236 ------- ------- ------- ------- Diluted weighted average shares 65,471 65,109 65,253 65,193 ====== ====== ====== ====== Basic earnings per share $ .29 $ .24 $ .76 $ .61 ======= ======= ======= ======= Diluted earnings per share $ .29 $ .24 $ .74 $ .60 ======= ======= ======= ======= EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS 863557 SWIFT TRANSPORTATION CO., INC. 1,000 US DOLLARS 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 1 2,481 0 144,867 0 6,644 180,518 702,315 160,358 731,853 108,659 0 0 0 66 378,214 731,853 776,898 776,898 0 691,176 (547) 0 7,020 79,249 30,910 48,339 0 0 0 48,339 .76 .74
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 both oral and written 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 manufacturing) in which the Company has a significant concentration of customers; (v) seasonal factors such as harsh weather conditions that increase operating costs; (vi) issues relating to Y2K readiness of the Company and its material vendors and customers; (vii) increases in driver compensation to the extent not offset by increases in freight rates; (viii) the inability of the Company to continue to secure acceptable financing arrangements; (ix) the ability of the Company to continue to identify and combine 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. -----END PRIVACY-ENHANCED MESSAGE-----