-----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, J8HVy2i/BHH+6yHtzre08kQ2n03naRwSxECaOofjh4rUOr9+M2Nt4WRtinSWLkU7 +V2C3WRWktqbmimFIWw8xQ== 0000950153-01-500448.txt : 20010510 0000950153-01-500448.hdr.sgml : 20010510 ACCESSION NUMBER: 0000950153-01-500448 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010509 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: 1626077 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 p65036e10-q.txt 10-Q 1 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, 2001 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 --- --- At May 4, 2001, the number of shares outstanding of the Registrant's common stock, par value $0.001, was 63,360,246. EXHIBIT INDEX AT PAGE 14 TOTAL PAGES 17 2
PART I FINANCIAL INFORMATION Page Number Item 1. Financial Statements Condensed Consolidated Balance Sheets as of March 31, 2001 (unaudited) and December 31, 2000 3-4 Condensed Consolidated Statements of Earnings (unaudited) for the Three Month Periods Ended March 31, 2001 and 2000 5 Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Month Periods Ended March 31, 2001 and 2000 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 Item 3. Quantitative and Qualitative Disclosures about Market Risk 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 3 PART I FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data)
March 31, December 31, 2001 2000 ------------ ------------ (unaudited) Assets Current assets: Cash $ 6,048 $ 19,196 Accounts receivable, net 181,739 174,524 Equipment sales receivable 2,749 5,799 Inventories and supplies 8,987 8,966 Prepaid taxes, licenses and insurance 27,031 27,191 Assets held for sale 3,169 Note receivable 3,200 ------------ ----------- Total current assets 226,554 242,045 ----------- ----------- Property and equipment, at cost: Revenue and service equipment 729,228 716,305 Land 22,589 22,589 Facilities and improvements 137,918 128,654 Furniture and office equipment 24,034 23,545 ----------- ----------- Total property and equipment 913,769 891,093 Less accumulated depreciation and amortization 202,436 188,111 ----------- ----------- Net property and equipment 711,333 702,982 ----------- ----------- Other assets 8,281 8,860 Goodwill 6,137 6,324 ----------- ----------- $ 952,305 $ 960,211 =========== ===========
See accompanying notes to condensed consolidated financial statements. 3 4 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data)
March 31, December 31, 2001 2000 --------------------- ---------------------- (unaudited) Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 43,669 $ 53,659 Accrued liabilities 41,432 31,688 Current portion of claims accruals 24,428 23,104 Current portion of long-term debt 3,383 386 Securitization of accounts receivable 105,000 117,000 Current portion of deferred income taxes 7,458 7,200 ----------- ----------- Total current liabilities 225,370 233,037 ----------- ----------- Borrowings under line of credit 154,000 154,000 Long-term debt, less current portion 12,115 15,240 Claims accruals, less current portion 22,225 21,040 Deferred income taxes 100,399 100,170 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 66,426,689 and 66,389,281 shares at March 31, 2001 and December 31, 2000. 66 66 Additional paid-in capital 138,559 138,243 Retained earnings 337,506 336,350 ----------- ----------- 476,131 474,659 Less treasury stock, at cost (3,157,850 shares) 37,935 37,935 ----------- ----------- Total stockholders' equity 438,196 436,724 ----------- ----------- Commitments and contingencies ----------- ----------- $ 952,305 $ 960,211 ============ ===========
See accompanying notes to condensed consolidated financial statements. 4 5 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Statements of Earnings (unaudited) (In thousands, except share data)
Three months ended March 31, 2001 2000 -------------- ------------- Operating revenue $ 327,411 $ 291,522 Operating expenses: Salaries, wages and employee benefits 126,542 103,606 Operating supplies and expenses 28,715 23,754 Fuel 46,541 39,786 Purchased transportation 57,431 55,209 Rental expense 20,178 14,158 Insurance and claims 8,898 8,918 Depreciation and amortization 18,606 13,644 Communication and utilities 4,393 3,854 Operating taxes and licenses 9,156 8,482 ----------- ----------- Total operating expenses 320,460 271,411 ----------- ----------- Operating income 6,951 20,111 Other (income) expenses: Interest expense 5,040 3,164 Interest income (290) (164) Other 315 (244) ----------- ----------- Other (income) expenses, net 5,065 2,756 ----------- ----------- Earnings before income taxes 1,886 17,355 Income taxes 730 6,700 ----------- ----------- Net earnings $ 1,156 $ 10,655 =========== =========== Basic earnings per share $ .02 $ .17 =========== =========== Diluted earnings per share $ .02 $ .17 =========== ===========
See accompanying notes to condensed consolidated financial statements. 5 6 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) (In thousands)
Three Months Ended March 31, 2001 2000 ---------------- ------------------ Cash flows from operating activities: Net earnings $ 1,156 $ 10,655 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 18,758 12,872 Deferred income taxes 487 5,569 Provision for losses on accounts receivable 300 200 Amortization of deferred compensation 141 81 Increase (decrease) in cash resulting from changes in: Accounts receivable (5,926) (12,018) Inventories and supplies (21) (18) Prepaid expenses 160 (57) Other assets 677 489 Accounts payable, accrued liabilities and claims accruals 2,664 (3,810) ----------- ----------- Net cash provided by operating activities 18,396 13,963 ----------- ----------- Cash flows from investing activities: Proceeds from sale of property and equipment 10,121 23,674 Capital expenditures (38,707) (78,028) Repayment of note receivable 3,200 Payments received on equipment sales receivables 5,799 5,966 ----------- ----------- Net cash used in investing activities (19,587) (48,388) ----------- -----------
See accompanying notes to condensed consolidated financial statements. Continued 6 7 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) (In thousands)
Three Months Ended March 31, 2001 2000 ---------------- ------------ Cash flows from financing activities: Repayments of long-term debt (128) (124) Change in borrowings under line of credit (37,000) Change in borrowings under accounts receivable securitization (12,000) 79,000 Purchases of treasury stock (13,238) Proceeds from issuance of common stock under stock option and stock purchase plans 171 360 ------------ ------------ Net cash provided (used) by financing activities (11,957) 28,998 ------------ ------------ Net decrease in cash (13,148) (5,427) Cash at beginning of period 19,196 9,969 ------------ ------------ Cash at end of period $ 6,048 $ 4,542 ============ ============ Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 4,891 $ 3,198 Income taxes Supplemental schedule of noncash investing and financing activities: Equipment sales receivables $ 2,749 $ 8,781 Note receivable from property sale $ 1,715
See accompanying notes to condensed consolidated financial statements. 7 8 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 normal recurring 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, 2000. 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. Assets Held for Sale In January 2001, the Company sold the remainder of the assets held for sale. The Company received $1,000,000 and a non interest-bearing note for $1,900,000. Under the terms of the note, a $1,000,000 payment is due January 2002 and the balance is due January 2003. 8 9 SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES Item 2. 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 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 for the year ended December 31, 2000, including Notes to the Consolidated Financial Statements, "Business," "Market for the Registrant's Common Stock and Related Stockholder Matters" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," describe factors, among others, that could cause actual results to differ materially from those expressed in such forward-looking statements. OVERVIEW Although the trend in the truckload segment of the motor carrier industry over the past several years has been towards consolidation, the truckload segment remains highly fragmented. Management believes the industry trend towards financially stable "core carriers" will continue and result in further industry consolidation. In response to this trend, the Company continues to expand its fleet with an increase of 1,453 tractors to 10,384 tractors as of March 31, 2001 up from 8,931 tractors as of March 31, 2000. The owner operator portion of the Company's fleet increased to 2,160 as of March 31, 2001 from 1,908 as of March 31, 2000. Swift has entered into an agreement to acquire M.S. Carriers. This acquisition, if consummated, would have a significant impact on Swift's financial condition and results of operations. In particular, Swift's equity capitalization, revenues and other indicia of financial performance will change significantly due to the issuance of Swift common stock, the inclusion of M.S. Carriers operating results and the anticipated integration and other costs associated with the merger, among other factors. Accordingly, the results discussed below are not necessarily indicative of the results 9 10 to be expected in any future periods in the event that the M.S. Carriers transaction is consummated. RESULTS OF OPERATIONS Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000 Operating revenue increased $35.9 million or 12.3% to $327.4 million for the three months ended March 31, 2001 from $291.5 million for the corresponding period of 2000. The increase in operating revenue is primarily the result of the expansion of the Company's fleet, rate increases of approximately 3% and a fuel surcharge revenue increase of approximately $5 million. The Company's operating ratio (operating expenses expressed as a percentage of operating revenue) for the first quarter of 2001 was 97.9% compared to 93.1% in the comparable period of 2000. The Company's operating ratio for the three months ended March 31, 2001 increased as a result of increases 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 16.02% and 14.15% and average loaded linehaul revenue per mile was $1.39 and $1.35 (excluding fuel surcharge) in the first quarter of 2001 and 2000, respectively. Salaries, wages and employee benefits represented 38.6% of operating revenue for the three months ended March 31, 2001 compared with 35.5% in 2000. The increase is primarily due to a greater number of empty miles, an overall driver wage scale increase that went into effect in April 2000 and normal wage increases. 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 needed in order to attract and retain drivers, the Company's results of operations would be negatively impacted to the extent that corresponding freight rate increases were not obtained. Fuel as a percentage of operating revenue was 14.2% for the first quarter of 2001 versus 13.6% in 2000. The increase is primarily due to actual fuel cost per gallon increasing by approximately 5 cents per gallon (3.9%) in the first quarter of 2001 versus the first quarter of 2000. Increases in fuel costs, to the extent not offset by rate increases or fuel surcharges, would 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 17.5% for the three months ended March 31, 2001 compared to 18.9% in 2000. The decrease is primarily due to the transfer of our logistics business to Transplace.com and a lower growth rate of the owner operator fleet as a percentage of total fleet growth. 10 11 Rental expense as a percentage of operating revenue was 6.2% for the first quarter of 2001 versus 4.9% in 2000. At March 31, 2001 and 2000, leased tractors represented 60% and 50%, respectively, of the total fleet of Company tractors. When it is economically advantageous to do so, the Company will purchase then sell tractors that it currently leases by exercising the purchase option contained in the lease. Gains on these activities are recorded as a reduction of rent expense. The Company recorded gains of $19,000 in the first quarter of 2001 and $657,000 during the first quarter of 2000 from the sale of leased tractors. Exclusive of gains, which reduced this expense, rental expense as a percentage of operating revenue was 6.2% and 5.1% in the third quarter of 2001 and 2000, respectively. Depreciation and amortization expense as a percentage of operating revenue was 5.7% in the first quarter of 2001 versus 4.7% in 2000. 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, 2001, net gains from the sale of revenue equipment reduced depreciation and amortization expense by approximately $941,000 compared to approximately $3.9 million in the first quarter of 2000. Exclusive of gains, which reduced this expense, depreciation and amortization expense as a percentage of operating revenue was 6.0% in the first quarter of both 2001 and 2000. Insurance and claims expense represented 2.7% and 3.1% of operating revenue in the first quarter of 2001 and 2000, 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. Insurance and claims expense will vary as a percentage of operating revenue from period to period based on the frequency and severity of claims incurred in a given period as well as changes in 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, proceeds from the accounts receivable securitization, 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 $18.4 million in the first three months of 2001 compared to $14.0 million in 2000. The increase is primarily attributable to an increase in depreciation and amortization, a smaller increase in accounts receivable and a larger increase in 11 12 accounts payable, accrued liabilities and claims accruals offset by a decrease in net earnings and deferred income taxes. Net cash used in investing activities decreased to $19.6 million in the first three months of 2001 from $48.4 million in 2000. The decrease is primarily due to lower capital expenditures in 2001 and repayment by Transplace.com of a $3.2 million loan offset by decreased proceeds from the sale of property and equipment. As of March 31, 2001, the Company had commitments outstanding to acquire replacement and additional revenue equipment for approximately $176 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 three months of 2001, the Company incurred approximately $10 million of non-revenue equipment capital expenditures. These expenditures were primarily for facilities and equipment. The Company anticipates that it will expend approximately $45 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, accounts receivable securitization 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 used by financing activities amounted to $12.0 million in the first three months of 2001 compared to $29.0 million provided by financing activities in 2000. This decrease is primarily due to reduced proceeds from the accounts receivable securitization offset by reduced treasury stock purchases. 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, accounts receivable securitization 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. 12 13 INFLATION Inflation can be expected to have an impact on the Company's operating costs. A prolonged period of inflation could cause interest rates, fuel, wages and other costs to increase which would adversely affect the Company's results of operations unless freight rates could be increased correspondingly. However, the effect of inflation on the Company has been minimal over the past three years. SEASONALITY In the transportation industry, results of operations generally show a seasonal pattern as customers reduce shipments after the winter holiday season. The Company's operating expenses also tend to be higher in the winter months primarily due to colder weather, which causes higher fuel consumption from increased idle time. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There were no material changes to the disclosure made in the Annual Report on Form 10-K for the year ended December 31, 2000 regarding this matter. 13 14 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 99 - Private Securities Litigation Reform Act of 1995 Safe Harbor Compliance Statement for Forward-Looking Statements (b) Current Reports on Form 8-K were filed on March 14, 2001 and March 23, 2001. 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 8, 2000 /s/ William F. Riley III ------------------------------------------ (Signature) William F. Riley III Senior Executive Vice President and Chief Financial Officer 14 EX-11 2 p65036ex11.txt EX-11 1 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, 2001 2000 ---- ---- Net earnings $ 1,156 $10,655 ======= ======= Weighted average shares: Common shares outstanding 63,254 63,239 Common equivalent shares issuable upon exercise of employee stock options 1,352 811 ------- ------- Diluted weighted average shares 64,606 64,050 ======= ======= Basic earnings per share $ .02 $ .17 ======= ======= Diluted earnings per share $ .02 $ .17 ======= =======
EX-99 3 p65036ex99.txt EX-99 1 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. As to Swift's business and financial performance generally, 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) 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; (x) a significant reduction in or termination of the Company's trucking services by a key customer; (xi) the loss of key executives; (xii) new or more comprehensive regulations with respect to fuel emissions, hours in service, or ergonomics; (xiii) a spill or other accident involving hazardous substances; and (xiv) the depressed market for used equipment, particularly tractors. With respect to Swift's pending merger with M.S. Carriers, these factors include, but are not limited to, the following: (i) the failure of Swift's or M.S. Carriers' stockholders to approve the merger; (ii) the risk that the merger will not be completed due to the failure of one or more of the conditions to which it remains subject; (iii) the risk that the business will not be integrated successfully; (iv) the risk that the revenue and other synergies and cost savings anticipated to result from the merger may not be fully realized or may take longer to realize than expected; (v) the significant expenses that will be incurred in connection with the merger, to the extent not offset by synergies and cost savings; (vi) the risk that the merger will not be accretive to earnings within the time period estimated by management or at all; (vii) disruption from the merger making it more difficult to maintain relationships with customers, employees, or suppliers; and (viii) increased competition and its effects on pricing, spending, third-party relationships and revenues. In addition 2 to the factors set forth above, Swift intends to accrue pre-tax claims reserves in the range of $9.0 to $13.0 million in the quarter in which the merger is completed. This expected increase in claims reserves would decrease quarterly and annual earnings per share of the combined company by approximately $0.06 to $0.09 per share. 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-----