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, 1996
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)
1455 Hulda Way
Sparks, NV 89431
(702) 359-9031
(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 13, 1996)
Common stock, $.001 par value: 25,002,084 shares
<PAGE>
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
Item 1. Financial statements
Condensed consolidated balance sheets
as of September 30, 1996 (unaudited) and
December 31, 1995 1 - 2
Condensed consolidated statements of
earnings (unaudited) for the three month and
nine month periods ended September 30, 1996 and 1995 3
Condensed consolidated statements of cash
flows (unaudited) for the nine month
periods ended September 30, 1996 and 1995 4 - 5
Notes to condensed consolidated financial
statements 6 - 7
Item 2. Management's discussion and analysis of
financial condition and results of
operations 8 - 14
PART II
OTHER INFORMATION
Page
Number
Items 1, 2,
3, 4 and 5. Not applicable
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
<PAGE>
SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES
Condensed consolidated balance sheets
(dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
<S> <C> <C>
Assets
------
Current assets:
Cash and cash equivalents $ 4,616 $ 2,627
Accounts receivable, net 72,579 55,897
Equipment sales receivables 7,608 596
Inventories and supplies 5,094 3,223
Prepaid taxes, licenses and insurance 6,963 4,964
Assets held for sale 4,083 ---
Current deferred tax asset 3,370 1,250
-------- --------
Total current assets 104,313 68,557
-------- --------
Property and equipment, at cost:
Revenue and service equipment 297,260 259,362
Land 7,714 10,226
Facilities and improvements 49,394 35,936
Furniture and office equipment 12,032 10,295
-------- --------
Total property and equipment 366,400 315,819
Less accumulated depreciation and amortization 93,008 82,946
-------- --------
Net property and equipment 273,392 232,873
Contracts receivable 243 349
Other assets 1,004 590
Goodwill 9,625 8,939
-------- --------
$388,577 $311,308
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 1
<PAGE>
SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES
Condensed consolidated balance sheets (continued)
(dollars in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 18,806 $ 13,089
Accrued liabilities 29,786 15,508
Claims accruals 15,047 10,457
Current portion of long-term debt 24,086 22,768
-------- --------
Total current liabilities 87,725 61,822
-------- --------
Borrowings under revolving line of credit 40,000 11,750
Long-term debt, less current portion 52,010 57,204
Claims accruals 19,209 13,647
Deferred income taxes 32,910 32,050
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
25,221,784 and 24,877,534 shares at
September 30, 1996 and December 31, 1995, respectively 25 25
Additional paid-in capital 48,979 45,885
Retained earnings 111,135 92,341
-------- --------
160,139 138,251
Less 220,700 shares of treasury stock, at cost 3,416 3,416
-------- --------
Net stockholders' equity 156,723 134,835
-------- --------
Contingencies
-------- --------
$388,577 $311,308
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 2
<PAGE>
SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES
Condensed consolidated statements of earnings
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenue $ 146,739 $ 118,463 $ 408,473 $ 337,118
Operating expenses:
Salaries, wages and employee
benefits 49,539 44,511 145,071 126,470
Operating supplies and expenses 13,575 10,373 37,830 29,850
Fuel and fuel taxes 18,846 14,601 55,176 44,690
Purchased transportation 18,968 11,916 50,538 28,600
Rental expense 7,295 6,676 21,788 18,997
Insurance and claims 5,416 3,373 14,886 9,630
Depreciation and amortization 8,680 7,976 25,539 23,335
Communication and utilities 2,100 2,046 6,052 5,655
Operating taxes and licenses 4,592 4,858 14,188 14,001
--------- --------- --------- ---------
Total operating expenses 129,011 106,330 371,068 301,228
--------- --------- --------- ---------
Operating income 17,728 12,133 37,405 35,890
--------- --------- --------- ---------
Other (income) expenses:
Interest expense 1,830 1,753 5,269 5,421
Interest income (9) (35) (48) (53)
Other (119) (119) (400) (372)
--------- --------- --------- ---------
Other (income) expenses, net 1,702 1,599 4,821 4,996
--------- --------- --------- ---------
Earnings before income taxes 16,026 10,534 32,584 30,894
Income taxes 6,575 4,520 13,790 13,130
--------- --------- --------- ---------
Net earnings $ 9,451 $ 6,014 $ 18,794 $ 17,764
========= ========= ========= =========
Net earnings per common and
equivalent share $ .37 $ .24 $ .74 $ .70
========= ========= ========= =========
Shares used in per share
calculations 25,556 25,363 25,488 25,342
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3
<PAGE>
SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES
Condensed consolidated statements of cash flows
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 18,794 $ 17,764
Adjustments to reconcile net earnings
to net cash provided by operating activities
Depreciation and amortization 25,539 23,335
Deferred income taxes (1,260) 4,530
Provision for losses on accounts receivable 180 645
Amortization of deferred compensation 18 40
Change in assets and liabilities:
Increase in accounts receivable (16,862) (11,852)
(Increase) decrease in inventories and supplies (1,871) 790
Increase in prepaid expenses (1,777) (830)
(Increase) decrease in other assets (424) 258
Increase in accounts payable, accrued liabilities
and claims accruals 30,147 7,351
-------- --------
Net cash provided by operating activities 52,484 42,031
-------- --------
Cash flows from investing activities:
Proceeds from sale of property and equipment 22,994 36,736
Capital expenditures (93,979) (50,240)
Cash expended for purchase of Navajo Shippers (5,148) --
Payments received on contracts receivable 106 91
-------- --------
Net cash used in investing activities (76,027) (13,413)
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements
Page 4
<PAGE>
SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES
Condensed consolidated statements of cash flows (continued)
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
1996 1995
-------- --------
<S> <C> <C>
Cash flows from financing activities:
Repayments of long-term debt $(18,902) $(18,641)
Proceeds from issuance of long-term debt 15,026 ---
Increase (decrease) in borrowings under revolving
line of credit 28,250 (7,227)
Proceeds from issuance of common stock
under stock option and stock purchase plans 1,158 1,246
Purchase of treasury stock --- (2,371)
-------- --------
Net cash provided by (used in)
financing activities 25,532 (26,993)
-------- --------
Net increase in cash 1,989 1,625
Cash at beginning of period 2,627 4,033
-------- --------
Cash at end of period $ 4,616 $ 5,658
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 5,085 $ 5,560
Income taxes $ 5,150 $ 6,928
Supplemental schedule of noncash investing and
financing activities:
Equipment sales receivables $ 7,608 $ 3,762
Direct financing for purchase of equipment --- 34,010
Issuance of 90,000 shares of common stock in
connection with the purchase of Navajo Shippers $ 1,918 $ ---
</TABLE>
Page 5
<PAGE>
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. It is suggested
that these condensed consolidated financial statements and notes
thereto 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, 1995. 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. Revolving Line of Credit
On September 30, 1996 the Company amended its Credit Agreement to
extend the maturity date of its revolving line of credit from
September 30, 1997 to November 15, 1997. The Company is in final
negotiations for a line of credit with maximum borrowings ranging
from $100 to $125 million. The Company anticipates that a portion
of the line of credit will be used to pay off existing secured
revenue equipment debt with current rates exceeding the proposed
line of credit rate. The new line will also be used for funding
letters of credit of approximately $12 million. The proposed line
of credit covenants will include limitations on funded debt (as
defined) to earnings before interest, taxes and depreciation and
amortization and will require a minimum debt service coverage
ratio.
Page 6
<PAGE>
SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES
Notes to condensed consolidated financial statements
(unaudited)
Note 4. Acquisition
On September 12, 1996, the Company acquired substantially all of
the operating assets utilized in the dry freight van division of
Navajo Shippers, Inc. and two of its wholly-owned subsidiaries,
Digby Leasing and Digby-Ringsby Truck Lines, Inc. (collectively,
"Navajo Shippers"). The acquisition was accounted for as a
purchase and the results of operations of Navajo Shippers have
been included in the consolidated financial statements beginning
on September 12, 1996. The Company acquired 287 tractors and
related on-board communication equipment. The Company assumed
Navajo Shipper's position on operating leases for 257 tractors and
acquired 30 owner operators.
Total consideration for the assets purchased and goodwill is
approximately $7.1 million consisting of cash of approximately
$5.1 million and 90,000 shares of the Company's common stock
valued at $2.0 million. The Company will pay the sellers
approximately $1.2 million for commissions on revenues expected to
be generated by the Company in the 12 months following the date of
acquisition. Such amount has been accounted for as goodwill.
Goodwill will be amortized on a straight-line basis over 15 years.
Page 7
<PAGE>
SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The trend in the truckload segment of the motor carrier industry over the past
several years has been towards shippers' use of a relatively small number of
financially stable "core carriers". This trend has resulted in consolidation of
the truckload industry. However, the truckload industry remains highly
fragmented. Management believes that this industry trend towards core carriers
will continue and will result in continued industry consolidation. In response
to this trend, the Company has expanded its fleet to 4,674 tractors as of
September 30, 1996 from 3,846 tractors as of September 30, 1995. This net fleet
growth was accomplished through a combination of internal growth and the
acquisition in September 1996 of substantially all of the operating assets
utilized in the dry freight van division of Navajo Shippers, Inc., and two of
its wholly-owned subsidiaries, Digby Leasing and Digby-Ringsby Truck Line, Inc.
(collectively, "Navajo Shippers"). The acquisition added 287 tractors including
30 owner operators. The Company's owner operator fleet (including the 30
acquired in the acquisition) increased to 659 as of September 30, 1996 from 447
as of September 30, 1995.
Results of Operations
Three Months Ended September 30, 1996 compared to three months ended
- ---------------------------------------------------------------------
September 30, 1995
- ------------------
Operating revenue increased $28.3 million or 23.9% to $146.7 million for the
three months ended September 30, 1996 from $118.5 million for the corresponding
period of 1995. 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 third quarter of 1996 was 87.9% compared to 89.8% in
the comparable period of 1995. The Company's operating revenue and operating
ratio for the three months ended September 30, 1996 improved as a result of
improved shipper demand. The Company's empty mile factor was 13.7% and 13.4% and
average linehaul revenue per mile was $1.111 and $1.112 in the third quarter of
1996 and 1995, respectively. Significant differences in the components of
operating expenses as a percentage of operating revenue are explained below.
Salaries, wages and employee benefits represented 33.8% of operating revenue for
the three months ended September 30, 1996 compared with 37.6% for the third
quarter of 1995. The decrease is due primarily to expansion of the Company's
owner operator fleet (see discussion of purchased transportation below) and to
overall reduction in workers' compensation costs under the Company's
self-insurance program.
Page 8
<PAGE>
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 freight rate increases were not obtained.
Fuel as a percentage of operating revenue was 12.8% for the third quarter of
1996 versus 12.3% for the corresponding quarter of 1995 even though the increase
in fuel costs were offset in part by an increase in the number of owner
operators who are responsible for their own fuel. Actual fuel cost per gallon
increased by approximately 12 cents per gallon in the third quarter of 1996
versus the third quarter of 1995. On April 11, 1996, the Company implemented a
fuel surcharge program which recovered approximately one-half of the increase in
fuel cost.
Increases in fuel costs (including fuel taxes), to the extent not offset by rate
increases or fuel surcharges, could have an adverse effect on the operations and
profitability of the Company. Management believes that the most effective
protection against fuel cost increases is to maintain a fuel efficient fleet and
to implement fuel surcharges when such option is necessary and available.
Therefore, the Company does not use derivative-type hedging products.
Purchased transportation as a percentage of operating revenue was 12.9% for the
three months ended September 30, 1996 compared to 10.1% in 1995. The increase is
due to the growth of the owner operator fleet to 659 as of September 30, 1996
from 447 as of September 30, 1995.
Rental expense as a percentage of operating revenue was 5.0% of the third
quarter of 1996 versus 5.6% for the third quarter of 1995. At September 30, 1996
and 1995 leased tractors represented 65% and 46%, 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. During the third quarter of 1996 and
1995, respectively, the Company recorded gains of approximately $1.3 million and
$752,000 from the sale of leased tractors.
Depreciation and amortization expense as a percentage of operating revenue was
5.9% in the third quarter of 1996 versus 6.7% in the corresponding quarter of
1995. 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, 1996, net gains from the sale of revenue equipment
reduced depreciation and amortization expense by approximately $770,000 compared
to approximately $530,000 in the third quarter of 1995. Exclusive of gains,
which reduced depreciation and amortization expense, the percentage in the third
quarter of 1996 and 1995 to operating revenue was 6.4% and 7.2%, respectively.
The decrease in 1996 is due to expansion of the owner operator fleet and due to
the increase in the percentage of leased equipment versus owned equipment as
discussed above.
Page 9
<PAGE>
The Company is replacing substantially all of its fleet of double van trailers
with 13'-6" high 53 foot trailers to be used in the Eastern United States and
14' high 53 foot trailers to be used in the Western United States. Management
believes that this conversion to a standardized fleet of 53' trailers will
provide cost reductions such as lower licensing costs, simplified driver
training and increased equipment utilization. The conversion to a standardized
fleet of 53' trailers will result in the sale of substantially all of the
Company's fleet of double van trailers. While the Company believes that the
market value of its double van trailer fleet is currently greater than the book
value, there can be no assurance the market value of such equipment will not
decline or that the sale of such equipment will result in gains. The sale of the
Company's double van trailer fleet may result in significant fluctuations in the
amount of gains or losses recorded in any given quarter. The amount of such
gains or losses recorded in a particular quarter will be dependent upon the
quantity of trailers sold and the prevailing market prices for used trailering
equipment.
Insurance and claims expense represented 3.7% and 2.8% of operating revenue in
the third quarter of 1996 and 1995, 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.
Nine Months Ended September 30, 1996 Compared to the Nine Months Ended
- ----------------------------------------------------------------------
September 30, 1995
- ------------------
Operating revenue increased $71.4 million, or 21.2%, to $408.5 million for the
nine months ended September 30, 1996 from $337.1 million for the corresponding
period of the previous year. The increase in operating revenue is due primarily
to the expansion of the Company's fleet to 4,674 tractors at September 30, 1996
from 3,846 at September 30, 1995.
The Company's operating ratio was 90.8% and 89.3% in the first nine months of
1996 and 1995, respectively. The Company's operating revenue and operating ratio
for the nine months ended September 30, 1996 was impacted by overall soft
shipper demand in the first four months of 1996, harsh winter conditions and an
increase in fuel costs. This resulted in lower equipment utilization and a
slightly lower revenue per mile. The Company's empty mile factor was 13.9% and
14.0% and the average rate per mile was $1.102 and $1.110 for the nine months
ended September 30, 1996 and 1995, respectively.
Salaries, wages and employee benefits represented 35.5% of operating revenue for
the nine months ended September 30, 1996 compared with 37.5% for the comparable
period of 1995. The improvement is due primarily to the increase in owner
operators.
Page 10
<PAGE>
Purchased transportation represented 12.4% and 8.5% of operating revenue for the
nine months ended September 30, 1996 and 1995, respectively. This increase is
the result of the growth of the Company's owner operator fleet from 447 at
September 30, 1995 to 659 at September 30, 1996.
Rental expense as a percentage of operating revenue was 5.3% for the first three
quarters of 1996 versus 5.6% for the first three quarters of 1995. When it is
economically feasible to do so, the Company will purchase then sell tractors it
leases by exercising the purchase option contained in the lease. Gains on these
activities are recorded as a reduction of rent expense. During the first three
quarters of 1996 and 1995, respectively, the Company recorded gains of
approximately $3.2 million and $1.6 million from the sale of leased tractors.
Depreciation and amortization expense was 6.3% of operating revenue for the nine
months ended September 30, 1996 versus 6.9% for the comparable period in 1995.
During the nine months ended September 30, 1996 the Company recorded gains on
the sale of revenue equipment of $1.5 million compared with approximately $2.5
million in the first nine months of 1995. Exclusive of gains, which reduced
depreciation and amortization expense, the percentage in the first nine months
of 1996 and 1995 to operating revenue was 6.6% and 7.7%, respectively.
Insurance and claims expense represented 3.6% and 2.9% of operating revenue in
the first nine months of 1996 and 1995, 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.
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.
Forward-Looking Statements
This Report on Form 10-Q contains "Forward-Looking Statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended. See "Liquidity and Capital
Resources" for discussions of important factors that may affect the validity of
such forward-looking statements. Additional factors that may affect the validity
of forward-looking statements are set forth in "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
* Contains "Forward-Looking Statements".
Page 11
<PAGE>
Liquidity and Capital Resources
The growth in the Company's business has required 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 revolving line of credit, the use of
operating leases to finance the acquisition of revenue equipment and from public
offerings of common stock.
Net cash provided by operating activities was $52.5 million in the first nine
months of 1996 compared to $42.0 million in the first nine months of 1995. The
increase is primarily attributable to increases in accounts payable, accrued
liabilities and claims accruals offset primarily by increases in accounts
receivable.
Net cash used in investing activities increased to $76.0 million in the first
nine months of 1996 from $13.4 million in the first nine months of 1995. The
increase is due primarily to larger increases for the purchases of revenue
equipment and for facilities and improvements, which were offset by smaller
proceeds from sale of property and equipment. Cash expended for investment
activities also includes $5.1 million expended for the purchase of Navajo
Shippers.
Accounts receivable increased to $72.6 million at September 30, 1996 from $55.9
million at December 31, 1995. The increase is primarily due to a $25.7 million
increase in revenues from to third quarter 1996 as compared to the fourth
quarter of 1995.
Equipment sales receivables increased $7.5 million from December 31, 1995 to
September 30, 1996. The increase is primarily attributable to sales of revenue
equipment disposed of in connection with the Company's normal policy of
replacing tractors in service every three years.
Revenue and service equipment increased to $297.3 million at September 30, 1996
from $259.4 million at December 31, 1995 primarily due to the purchase of
revenue equipment acquired in the acquisition of Navajo Shippers and to the
purchase of approximately 2,800 trailers in the first nine months of 1996. As
described above, the Company is replacing its double-van trailer configurations
with 53 foot vans. Such purchases were offset by a decrease in owned tractors
from 1,821 at September 30, 1995 to 1,416 at September 30, 1996.
As of September 30, 1996, the Company had commitments outstanding to acquire
replacement and additional revenue equipment for approximately $140 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.*
* Contains "Forward-Looking Statements".
Page 12
<PAGE>
During the first three quarters of 1996, the Company incurred approximately
$18.7 million of non-revenue equipment capital expenditures. These expenditures
were primarily for the completion of the construction of the Company's terminal
facility in Edwardsville, Kansas and for construction of the Company's new
headquarters facility in Phoenix, Arizona. In the third quarter of 1996, the
Company relocated its corporate headquarters facility to the newly constructed
facility. The former headquarters facility is currently held for sale and the
net assets are reflected as such on the accompanying consolidated balance
sheets.
The Company anticipates that it will expend approximately $25 million through
December 1997 to complete construction of the Company's new headquarters
facility for various facilities upgrades and acquisitions 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, long-term debt including $15 million
borrowed to finance the new Phoenix headquarters facility, amounts available
under the Company's revolving line of credit 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 $25.5 million in the first
three quarters of 1996 compared to net cash used in financing activities of
$27.0 million in the first half of 1995. In 1996, the increase in cash provided
by financing activities is due to increases in borrowings under the revolving
line of credit and long-term debt net of repayments of long-term debt. The net
use of cash in financing activities in 1995 was primarily the result of
repayments of long-term debt of $18.7 million and reductions in borrowings under
the revolving line of credit of $7.3 million.
On September 30, 1996 the Company amended its Credit Agreement to extend the
maturity of its revolving line of credit from September 30, 1997 to November 15,
1997. The Company is in final negotiations for a line of credit with maximum
borrowings ranging from $100 to $125 million. The Company anticipates that a
portion of the proposed line of credit will be used to pay off existing secured
revenue equipment debt with current interest rates exceeding the proposed line
of credit rate.* The new line will also be used for funding letters of credit of
approximately $12 million.
Management believes that it will be able to finance its needs for working
capital, facilities improvements and expansion, as well as anticipated fleet
growth by additional revenue equipment acquisitions and additional strategic
acquisitions as opportunities become available through cash flows from future
operations, borrowings available under current or replacement revolving line of
credit and through long-term debt and operating lease financing believed to be
available to finance revenue equipment acquisitions.* Over the long term, the
Company will continue to have significant
* Contains "Forward-Looking Statements".
Page 13
<PAGE>
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.
Seasonality
In the transportation industry, results of operations generally show a seasonal
pattern as customers reduce shipments during and after the winter holiday
season. The Company's operating expenses also tend to be higher in the winter
months primarily due to increased operating costs in colder weather and higher
fuel consumption due to increased idle time.
* Contains "Forward-Looking Statements".
Page 14
<PAGE>
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 (see attached)
Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K have been filed
during the quarter for which this report is
filed.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Swift Transportation Co., Inc.
Date: November 13, 1996 /s/ William F. Riley III
------------------------------
(Signature)
William F. Riley III
Chief Financial Officer
Page 15
EXHIBIT 11
SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES
Schedule of Computation of Net Earnings Per Share
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
1996 1995 1996 1995
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings $ 9,451 $ 6,014 $ 18,794 $ 17,764
=========== =========== ========== ==========
Weighted average shares:
Common shares outstanding 24,863 24,620 24,778 24,551
Common equivalent shares issuable
upon exercise of employee stock
options (1) 693 743 710 791
----------- ----------- ---------- ----------
Total weighted average shares
- primary 25,556 25,363 25,488 25,342
Incremental common equivalent
shares (calculated using the higher
of the end of period or average
fair market value (2) 23 -- 46 --
----------- ----------- ---------- ----------
Total weighted average shares -
fully diluted 25,579 25,363 25,534 25,342
=========== =========== =========== ===========
Net earnings per common
and equivalent share $ .37 $ .24 $ .74 $ .70
=========== =========== =========== ===========
Net earnings per common share -
assuming full dilution $ .37 $ .24 $ .74 $ .70
=========== =========== =========== ===========
</TABLE>
Notes:
(1) Amount calculated using the treasury stock method and average fair market
values.
(2) The calculation is submitted in accordance with Regulation S-K Item 601(b)
(11) although not required by footnote 2 to paragraph 14 of APB Opinion No.
15 because it results in dilution of less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS AS OF SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS
</LEGEND>
<CIK> 0000863557
<NAME> SWIFT TRANSPORTATION CO., INC.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 4,616
<SECURITIES> 0
<RECEIVABLES> 72,579
<ALLOWANCES> 0
<INVENTORY> 5,094
<CURRENT-ASSETS> 104,313
<PP&E> 366,400
<DEPRECIATION> 93,008
<TOTAL-ASSETS> 388,577
<CURRENT-LIABILITIES> 87,725
<BONDS> 0
0
0
<COMMON> 25
<OTHER-SE> 156,698
<TOTAL-LIABILITY-AND-EQUITY> 388,577
<SALES> 408,473
<TOTAL-REVENUES> 408,473
<CGS> 0
<TOTAL-COSTS> 371,068
<OTHER-EXPENSES> (448)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,269
<INCOME-PRETAX> 32,584
<INCOME-TAX> 13,790
<INCOME-CONTINUING> 18,794
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,794
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
