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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
SWIFT TRANSPORTATION CO., INC. & SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
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
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
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
<PAGE>
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
<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. 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
<PAGE>
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
<PAGE>
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
<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 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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<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
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
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
======= ======= ======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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
</LEGEND>
<CIK> 863557
<NAME> SWIFT TRANSPORTATION CO., INC.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 2,481
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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.
