UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 25, 2017
|
|
Swift Transportation Company
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(Exact name of registrant as specified in its charter)
|
|
Delaware
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001-35007
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20-5589597
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
|
(IRS Employer
Identification No.)
|
|
2200 South 75th Avenue Phoenix, Arizona
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85043
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(Address of principal executive offices)
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(Zip Code)
|
|
Registrant’s telephone number, including area code (602) 269-9700
|
|
N/A
|
(Former name or former address, if changed since last report.)
|
|
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
|
x
|
Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
|
|
¨
|
Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
|
|
¨
|
Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
|
|
¨
|
Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
|
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
¨
As previously disclosed, on April 9, 2017,
Swift Transportation Company (“
Swift
”) entered into an Agreement and Plan of Merger (the “
Merger Agreement
”),
by and among Swift, Bishop Merger Sub, Inc., an Arizona corporation and a direct wholly owned subsidiary of Swift (“
Merger
Sub
”), and Knight Transportation, Inc., an Arizona corporation (“
Knight
), pursuant to which, on the terms
and subject to the conditions therein, Merger Sub will merge with an into Knight (the “
Merger
”), with Knight
continuing as the surviving corporation and as a direct wholly owned subsidiary of Swift.
On August 9, 2017, Swift and Knight filed
a definitive joint proxy statement/prospectus (the “
Joint Proxy Statement/Prospectus
”) with the Securities and
Exchange Commission (the “
SEC
”) relating to the proposed Merger.
As disclosed in the Joint Proxy Statement/Prospectus,
following the announcement of the execution of the Merger Agreement, purported stockholders of Swift filed two putative stockholder
class actions (the “
Actions
” or, each individually, an “
Action
”) in the United States District
Court for the District of Arizona, purporting to allege, among other matters, that the Joint Proxy Statement/Prospectus failed
to disclose certain information in connection with the Merger. Each Action named Swift and its directors as defendants, and one
Action also named Knight as a defendant. The Actions, among other things, sought various remedies, including an order enjoining
the Merger or rescinding it to the extent it had already been implemented, damages, and an award of costs and attorneys’
fees. The first Action is captioned
Matthew Sciabacucchi et al. v. Swift Transportation Company, et al.
, No. CV-17-0163-PHX-SPL.
The second Action is captioned
Gaylen A. Peterson, et al. v. Swift Transportation Company, et al.
, No. CV-17-2073-PHX-DMF.
On August 25, 2017, the parties to the
Actions entered into a memorandum of understanding (the “
MOU
”), pursuant to which the parties have agreed, and
without admitting any wrongdoing or that the supplemental disclosures are material or required to be made, among other things,
that Swift will make certain supplemental disclosures, which are set forth in the supplemental disclosures below. The MOU provides
that, in light of the supplemental disclosures, the plaintiffs will dismiss the Actions with prejudice on mootness grounds. The
Joint Proxy Statement/Prospectus is supplemented by, and should be read as part of, and in conjunction with, the disclosures set
forth in this Current Report on Form 8-K. To the extent that information in this Current Report on Form 8-K differs from or updates
information contained in the Joint Proxy/Prospectus, the information in this Current Report on Form 8-K shall supersede or supplement
the information in the Joint Proxy Statement/Prospectus.
The settlement will not affect the timing
of the respective special meetings of Swift stockholders and Knight stockholders, the timing of the Merger or the amount or form
of consideration to be paid in the Merger.
Swift
believes that the Actions are without merit and that no supplemental disclosure is required to the Joint Proxy Statement/Prospectus
under any applicable rule, statute, regulation or law. However, to, among other things, eliminate the burden, inconvenience, expense,
risk and disruption of further litigation, Swift has determined that it will make the below supplemental disclosures. The Swift
board of directors continues to recommend unanimously that you vote “FOR” the proposals being considered at the special
meeting of Swift stockholders.
SUPPLEMENTAL DISCLOSURE
Swift is making the following supplemental
disclosures to the Joint Proxy Statement/Prospectus in connection with the settlement of the Actions. The parties have entered
into a MOU to settle the Actions. Pursuant to the MOU, Swift has agreed to provide the additional information set forth below.
Capitalized terms used herein but not otherwise defined herein have the meanings ascribed to those terms in the Joint Proxy Statement/Prospectus.
All page references are to the Joint Proxy Statement/Prospectus and terms used below, unless
otherwise defined, shall have the meanings ascribed to such terms in the Joint Proxy Statement/Prospectus.
Without admitting
in any way that the disclosures below are material or required to be made, Swift makes the following supplemental disclosures:
The disclosure in the section entitled
“The Transaction” under the heading “Background of the Transaction” is hereby amended by amending and restating
the last paragraph on the bottom of page 68 of the Joint Proxy Statement/Prospectus as follows (with new text underlined):
On December 22, 2016,
the Swift board of directors held its quarterly meeting at which the Initial Proposal was discussed, with representatives of Swift’s
management, Kirkland and Morgan Stanley in attendance. Mr. Moyes recounted to the Swift board of directors that he had met with
Mr. Kevin Knight concerning the concept of a potential combination of Swift and Knight within the past six months and that he had
subsequently met with Mr. Kevin Knight to discuss the strategic logic of a potential combination, the structure of the combined
company, the potential leadership of the combined company and the potential synergies that could be achieved. Mr. Dozer then recounted
to the Swift board of directors that he received a call from Mr. Kevin Knight in late August during which Mr. Kevin Knight expressed
that Knight was interested in a potential combination of Swift and Knight. Mr. Dozer also stated that he had separately met with
Mr. Moyes, Mr. Kevin Knight and Mr. Gary Knight and with Mr. Kevin Knight and Mr. Gary Knight to discuss the strategic rationale
for a combination of Knight and Swift, including the potential management team of the combined company. Representatives of Kirkland
reviewed the key terms and legal aspects of the Initial Proposal, and discussed with the Swift board of directors various legal
matters, including the directors’ fiduciary duties, the guidelines that had been distributed to the Swift board of directors
on December 13
th
, process considerations
(including the circumstances in which the formation of a special committee
of directors may be appropriate)
and various aspects of strategic transactions involving companies with significant stockholders.
The representatives of Kirkland noted that the Initial Proposal remained subject to due diligence relating to various contingent
liabilities relating to Swift. During the meeting, Swift’s management team delivered a presentation regarding Swift’s
management projections, based on the Swift December standalone projections and the Swift December standalone projections (as further
described in the section entitled “—
Swift Management’s Unaudited Prospective Financial Information
”).
Morgan Stanley also presented to the Swift board of directors a relationship disclosure letter that had been previously circulated
to the Swift board of directors, noting in particular that in the past two years Morgan Stanley had not been engaged on any financial
advisory or financing assignments for Knight, but that Morgan Stanley or an affiliate thereof was a lender to each of Mr. Moyes
and Mr. Keith Knight. Morgan Stanley reviewed preliminary strategic and financial considerations relevant to the Swift board of
directors’ evaluation of the Initial Proposal, including preliminary financial analysis based on the Swift December standalone
projections. At the request of the Swift board of directors, Mr. Moyes indicated his support for a combination of Knight and Swift,
including if Mr. Moyes would not be offered a role with the combined company. The Swift board of directors discussed potential
next steps in an executive session without management present (which was convened to discuss matters relating to management) and
an additional executive session without Mr. Moyes present (which was convened to discuss considerations relating to Mr. Moyes and
to further discuss the Initial Proposal more generally). At the meeting, the Swift board of directors concluded that Mr. Dozer
should communicate to Mr. Kevin Knight that while the Swift board of directors had not yet taken a formal view on the Initial Proposal,
in order to provide the Swift board of directors with the information necessary to evaluate a potential transaction with Knight,
Swift was willing to sign a nondisclosure agreement, exchange financial projections, provide Knight with the targeted due diligence
items noted in the Initial Proposal and engage in discussions regarding potential synergies. The Swift board of directors further
concluded that Swift should present to Knight the Swift December upside standalone projections.
The disclosure in the section entitled “The Transaction”
under the heading “Opinion of Swift’s Financial Advisor” is hereby amended by amending and restating the second
full paragraph on the top of page 111 of the Joint Proxy Statement/Prospectus (with new text underlined and with deletions in strikethrough
text):
In the
two years prior to the date of Morgan Stanley’s opinion, Morgan Stanley or its affiliates have provided financing services
to Swift and its affiliates, for which Morgan Stanley or its affiliates have received compensation of between $1 million and $2
million relating to Swift’s Term Loan A and revolving credit facility. During the same period, Morgan Stanley and its affiliates
have not provided financing services or financial advisory services to Knight or its affiliates and have not received any compensation
for such services. In connection with Morgan Stanley’s wealth management business,
Morgan Stanley or an affiliate
thereof currently is a lender to Jerry Moyes
Mr. Moyes has a margin account with Morgan Stanley through which he borrows
money on customary terms
. In connection with Morgan Stanley’s wealth management business,
Morgan Stanley or an
affiliate thereof currently is also a lender to Keith Knight
Mr. Keith Knight has a margin account with Morgan Stanley
through which he borrows money on customary terms, and Mr. Keith Knight is a guarantor on a line of credit that Morgan Stanley’s
wealth management business has extended to his son-in-law on customary terms
. Morgan Stanley and its affiliates may also seek
to provide financial advisory and financing services to Swift and Knight and their respective affiliates in the future and would
expect to receive fees for the rendering of any such services.
The disclosure in the section entitled “The Transaction”
under the heading “Swift Management’s Unaudited Prospective Financial Information-Swift Standalone Projections”
is hereby amended by amending and restating the second full paragraph on the top of page 113 of the Joint Proxy Statement/Prospectus
(with deletions in strikethrough text):
Swift and Knight may
calculate certain non-GAAP financial metrics, including EBITDA, Adjusted Net Income, Adjusted EPS and Unlevered Free Cash Flow,
using different methodologies from each other and from other companies. Consequently, the financial metrics presented in each company’s
prospective financial information disclosures and in the sections of this joint proxy statement/prospectus with respect to the
opinions of the financial advisors to Swift and Knight may not be directly comparable to one another.
Swift is not providing
a quantitative reconciliation of the forward looking non-GAAP financial metrics set forth below.
The disclosure in the section “The
Transaction” under the heading “Swift Management’s Unaudited Prospective Financial Information-Swift Standalone
Projections” is hereby amended by amending and restating such section beginning on page 113 of the Joint Proxy Statement/Prospectus
(with new text in underline):
Swift Standalone Projections
The following is a summary
of the Swift December standalone projections. The Swift December standalone projections were based on numerous variables and assumptions,
including the following key assumptions: (1) capacity begins to tighten in the second half of 2017 and into 2018 due to regulatory
changes leading to increases in pricing which taper off from 2019 to 2021; (2) fuel prices rise throughout forecast period partially
offset by fuel efficiency improvements by Swift, however assuming that net fuel expense increases between approximately 10% to
12% in 2017 and then 2% to 3% per year thereafter; (3) U.S. gross domestic product growth strengthens in 2018 and 2019 then
tapers in 2020 and 2021; (4) cost inflation of 2% to 3% per year; (5) efficiency gains by Swift (utilization improvements) vary
by line of business but generally improve over the period with larger gains in 2017 and 2018; (6) the combination of items (1)
and (3) leads to rate and volume increases in the second half of 2017 that strengthen in 2018 and then taper off from 2019 to 2021;
(7) driver wage and owner-operator pay increases mirror higher customer rate increases; (8) safety improvements assumed in 2017
partially offset cost of claims on a per mile basis; (9) platooning/autonomous technology is not incorporated; (10) the Mexico
peso/U.S. dollar exchange rate is in the range of 18-19:1 and (11) Swift does not complete any acquisitions or divestitures.
The following table
presents (in millions, except per share amounts) a summary of the Swift December standalone projections, as prepared by Swift’s
management, with all figures (except per share amounts) rounded to the nearest million. The projections included in the below table
treat Swift on a standalone basis, without giving effect to the transaction and as if the transaction had not been contemplated.
|
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2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
Revenue
|
|
$
|
4,347
|
|
|
$
|
4,737
|
|
|
$
|
5,066
|
|
|
$
|
5,426
|
|
|
$
|
5,776
|
|
EBITDA(1)
|
|
$
|
592
|
|
|
$
|
707
|
|
|
$
|
797
|
|
|
$
|
896
|
|
|
$
|
973
|
|
GAAP EBIT
|
|
$
|
288
|
|
|
$
|
364
|
|
|
$
|
412
|
|
|
$
|
460
|
|
|
$
|
503
|
|
Adjusted Net Income(2)
|
|
$
|
174
|
|
|
$
|
222
|
|
|
$
|
251
|
|
|
$
|
282
|
|
|
$
|
308
|
|
Adjusted EPS(3)
|
|
$
|
1.29
|
|
|
$
|
1.63
|
|
|
$
|
1.83
|
|
|
$
|
2.05
|
|
|
$
|
2.22
|
|
Capital Expenditures
|
|
$
|
424
|
|
|
$
|
359
|
|
|
$
|
489
|
|
|
$
|
390
|
|
|
$
|
406
|
|
Capital Lease Payments
|
|
$
|
69
|
|
|
$
|
61
|
|
|
$
|
97
|
|
|
$
|
77
|
|
|
$
|
152
|
|
Unlevered Free Cash Flow(4)
|
|
$
|
(24
|
)
|
|
$
|
124
|
|
|
$
|
58
|
|
|
$
|
244
|
|
|
$
|
215
|
|
__________
|
(1)
|
Defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP
financial measure and should not be considered as an alternative to net income as a measure of operating performance or cash provided
by operating activities as a cash flow measurement.
|
|
(2)
|
Reflects the after tax impact of adding back intangible
amortization expense. Adjusted net income is a non-GAAP financial measure and should not be considered as an alternative to net
income as a measure of operating performance or cash provided by operating activities as a cash flow measurement.
|
|
(3)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted EPS is a
non-GAAP financial measure.
|
|
(4)
|
Defined as tax-affected earnings before interest (other than interest in respect of capital leases)
and taxes and after stock-based compensation expense, plus depreciation and amortization, less capital expenditures, less other
cash flow from investing activities, less principal payments in respect of capital leases and adjusted for changes in working capital
and certain after tax one-time items of Swift. Unlevered free cash flow is a non-GAAP financial measure.
|
The following
table presents reconciliations of the non-GAAP financial measures “EBITDA,” Adjusted Net Income,” “Adjusted
EPS” and “Unlevered Free Cash Flow,” which were included in the Swift December standalone projections, to the
most comparable GAAP measure. The non-GAAP financial measures included in the Swift December standalone projections should not
be considered in isolation from, or as a substitute for, the GAAP measures presented in the reconciliations below. The non-GAAP
financial measures as used in the Swift December standalone projections may not be comparable to similarly-titled measures used
by other companies. For further information on the unaudited prospective financial information in this section entitled “
Swift
Standalone Projections
,” which includes the reconciliations below, see “
Swift Management’s Unaudited Prospective
Financial Information
” in this joint proxy statement/prospectus.
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Net
Income
|
|
164
|
|
|
212
|
|
|
241
|
|
|
272
|
|
|
298
|
|
Income Tax Expense
|
|
94
|
|
|
122
|
|
|
138
|
|
|
156
|
|
|
171
|
|
Interest Income
|
|
(3
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(7
|
)
|
Interest Expense
|
|
33
|
|
|
34
|
|
|
36
|
|
|
36
|
|
|
41
|
|
Depreciation and Amortization
of Property
and Equipment
|
|
288
|
|
|
326
|
|
|
368
|
|
|
419
|
|
|
453
|
|
Amortization of Intangibles
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
EBITDA(1)
|
|
592
|
|
|
707
|
|
|
797
|
|
|
896
|
|
|
973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
164
|
|
|
212
|
|
|
241
|
|
|
272
|
|
|
298
|
|
Amortization of Intangibles
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
Provision
for Income Tax Expense at Effective Rate
|
|
(7
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|
(7
|
)
|
Adjusted Net
Income(2)
|
|
174
|
|
|
222
|
|
|
251
|
|
|
282
|
|
|
308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares Used in Per Share Calculations
|
|
135.1
|
|
|
136.0
|
|
|
136.9
|
|
|
137.8
|
|
|
138.7
|
|
EPS
|
|
1.22
|
|
|
1.56
|
|
|
1.76
|
|
|
1.97
|
|
|
2.15
|
|
Adjusted EPS(3)
|
|
1.29
|
|
|
1.63
|
|
|
1.83
|
|
|
2.05
|
|
|
2.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
288
|
|
|
364
|
|
|
412
|
|
|
460
|
|
|
503
|
|
Interest Component of Capital
Leases
|
|
(6
|
)
|
|
(7
|
)
|
|
(10
|
)
|
|
(13
|
)
|
|
(16
|
)
|
Income Tax Expense
|
|
(103
|
)
|
|
(130
|
)
|
|
(146
|
)
|
|
(163
|
)
|
|
(178
|
)
|
Depreciation and Amortization
of Property,
Equipment, and Intangibles
|
|
304
|
|
|
343
|
|
|
385
|
|
|
436
|
|
|
470
|
|
Capital Expenditures, Net of
Proceeds from
Sale of Property and Equipment
|
|
(424
|
)
|
|
(359
|
)
|
|
(489
|
)
|
|
(390
|
)
|
|
(406
|
)
|
Cash Flows from Other Investing
Activities
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Changes in Net Working Capital
and Cash Flows
from Other Operating Activities
|
|
(16
|
)
|
|
(26
|
)
|
|
3
|
|
|
(10
|
)
|
|
(7
|
)
|
Repayment
of Capital Leases
|
|
(69
|
)
|
|
(61
|
)
|
|
(97
|
)
|
|
(77
|
)
|
|
(152
|
)
|
Unlevered Free
Cash Flow(4)
|
|
(24
|
)
|
|
124
|
|
|
58
|
|
|
244
|
|
|
215
|
|
__________
|
(1)
|
Defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP
financial measure and should not be considered as an alternative to net income as a measure of operating performance or cash provided
by operating activities as a cash flow measurement.
|
|
(2)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted net income
is a non-GAAP financial measure and should not be considered as an alternative to net income as a measure of operating performance
or cash provided by operating activities as a cash flow measurement.
|
|
(3)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted EPS is
a non-GAAP financial measure.
|
|
(4)
|
Defined as tax-affected earnings before interest (other than interest in respect of capital
leases) and taxes and after stock-based compensation expense, plus depreciation and amortization, less capital expenditures, less
other cash flow from investing activities, less principal payments in respect of capital leases and adjusted for changes in working
capital and certain after tax one-time items of Swift. Unlevered free cash flow is a non-GAAP financial measure.
|
The following is
a summary of the Swift December upside standalone projections. The Swift December upside standalone projections were based on numerous
variables and assumptions, including the following key assumptions: (1) capacity tightens more than anticipated in the Swift December
standalone projections in the second half of 2017 and into 2018 due to regulatory changes leading to additional increases in pricing;
(2) U.S. gross domestic product growth strengthens in 2018 and 2019 then tapers in 2020 and 2021; (3) the combination of items
(1) and (2) leads to rate and volume increases in the second half of 2017 that strengthen in 2018 and then taper off from 2019
to 2021; (4) fuel prices rise throughout forecast period partially offset by fuel efficiency improvements by Swift; (5) cost inflation
of 2 to 3% per year; (6) driver wage and owner-operator pay increases mirror higher customer rate increases; (7) additional safety
improvements assumed in 2017 partially offset cost of claims on a per mile basis; (8) efficiency gains by Swift (utilization improvements)
vary by line of business but generally improve over the period with larger gains in 2017 and 2018; (9) platooning/autonomous technology
is not incorporated; (10) the Mexico peso/U.S. dollar exchange rate is in the range of 18-19:1; (11) Swift does not complete any
acquisitions or divestitures and (12) the used truck market improves slightly driving a slight increase in gains on equipment sales
from $5 million in 2017 to $12 million in 2021.
The following table
presents (in millions, except per share amounts) a summary of the Swift December upside standalone projections, as prepared by
Swift’s management, with all figures (except per share amounts) rounded to the nearest million. The projections included
in the below table treat Swift on a standalone basis, without giving effect to the transaction and as if the transaction had not
been contemplated.
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
Revenue
|
|
$
|
4,372
|
|
|
$
|
4,887
|
|
|
$
|
5,375
|
|
|
$
|
5,776
|
|
|
$
|
6,127
|
|
EBITDA(1)
|
|
$
|
614
|
|
|
$
|
744
|
|
|
$
|
867
|
|
|
$
|
973
|
|
|
$
|
1,037
|
|
GAAP EBIT
|
|
$
|
311
|
|
|
$
|
397
|
|
|
$
|
488
|
|
|
$
|
558
|
|
|
$
|
615
|
|
Adjusted Net Income(2)
|
|
$
|
189
|
|
|
$
|
243
|
|
|
$
|
300
|
|
|
$
|
348
|
|
|
$
|
387
|
|
Adjusted EPS(3)
|
|
$
|
1.40
|
|
|
$
|
1.79
|
|
|
$
|
2.20
|
|
|
$
|
2.52
|
|
|
$
|
2.79
|
|
Capital Expenditures
|
|
$
|
428
|
|
|
$
|
397
|
|
|
$
|
476
|
|
|
$
|
351
|
|
|
$
|
390
|
|
Capital Lease Payments
|
|
$
|
69
|
|
|
$
|
61
|
|
|
$
|
90
|
|
|
$
|
60
|
|
|
$
|
117
|
|
Unlevered Free Cash Flow(4)
|
|
$
|
(15
|
)
|
|
$
|
112
|
|
|
$
|
114
|
|
|
$
|
333
|
|
|
$
|
275
|
|
_________
|
(1)
|
Defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP
financial measure and should not be considered as an alternative to net income as a measure of operating performance or cash provided
by operating activities as a cash flow measurement.
|
|
(2)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted net income
is a non-GAAP financial measure and should not be considered as an alternative to net income as a measure of operating performance
or cash provided by operating activities as a cash flow measurement.
|
|
(3)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted EPS is a
non-GAAP financial measure.
|
|
(4)
|
Defined as tax-affected earnings before interest (other than interest in respect of capital leases)
and taxes and after stock-based compensation expense, plus depreciation and amortization, less capital expenditures, less other
cash flow from investing activities, less principal payments in respect of capital leases and adjusted for changes in working capital
and certain after tax one-time items of Swift. Unlevered free cash flow is a non-GAAP financial measure.
|
The following
table presents reconciliations of the non-GAAP financial measures “EBITDA,” Adjusted Net Income,” “Adjusted
EPS” and “Unlevered Free Cash Flow,” which were included in the Swift December upside standalone projections,
to the most comparable GAAP measure. The non-GAAP financial measures included in the Swift December upside standalone projections
should not be considered in isolation from, or as a substitute for, the GAAP measures presented in the reconciliations below. The
non-GAAP financial measures as used in the Swift December upside standalone projections may not be comparable to similarly-titled
measures used by other companies. For further information on the unaudited prospective financial information in this section entitled
“
Swift Standalone Projections
,” which includes the reconciliations below, see “
Swift Management’s
Unaudited Prospective Financial Information
” in this joint proxy statement/prospectus.
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Net
Income
|
|
179
|
|
|
233
|
|
|
291
|
|
|
338
|
|
|
377
|
|
Income Tax Expense
|
|
103
|
|
|
134
|
|
|
167
|
|
|
194
|
|
|
217
|
|
Interest Income
|
|
(3
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(6
|
)
|
|
(12
|
)
|
Interest Expense
|
|
32
|
|
|
34
|
|
|
34
|
|
|
32
|
|
|
34
|
|
Depreciation and Amortization
of Property
and Equipment
|
|
286
|
|
|
330
|
|
|
363
|
|
|
398
|
|
|
405
|
|
Amortization of Intangibles
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
EBITDA(1)
|
|
614
|
|
|
744
|
|
|
867
|
|
|
973
|
|
|
1,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
179
|
|
|
233
|
|
|
291
|
|
|
338
|
|
|
377
|
|
Amortization of Intangibles
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
Provision
for Income Tax Expense at Effective Rate
|
|
(7
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|
(7
|
)
|
Adjusted Net Income(2)
|
|
189
|
|
|
243
|
|
|
300
|
|
|
348
|
|
|
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares Used in Per Share Calculations
|
|
135.1
|
|
|
136.0
|
|
|
136.9
|
|
|
137.8
|
|
|
138.7
|
|
EPS
|
|
1.32
|
|
|
1.71
|
|
|
2.12
|
|
|
2.45
|
|
|
2.72
|
|
Adjusted EPS(3)
|
|
1.40
|
|
|
1.79
|
|
|
2.20
|
|
|
2.52
|
|
|
2.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
311
|
|
|
397
|
|
|
488
|
|
|
558
|
|
|
615
|
|
Interest Component of Capital
Leases
|
|
(6
|
)
|
|
(7
|
)
|
|
(9
|
)
|
|
(9
|
)
|
|
(9
|
)
|
Income Tax Expense
|
|
(111
|
)
|
|
(142
|
)
|
|
(175
|
)
|
|
(200
|
)
|
|
(221
|
)
|
Depreciation and Amortization
of Property, Equipment, and Intangibles
|
|
303
|
|
|
347
|
|
|
380
|
|
|
415
|
|
|
422
|
|
Capital Expenditures, Net of Proceeds
from Sale of Property and Equipment
|
|
(428
|
)
|
|
(397
|
)
|
|
(476
|
)
|
|
(351
|
)
|
|
(390
|
)
|
Cash Flows from Other Investing
Activities
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Changes in Net Working Capital
and Cash
Flows from Other Operating Activities
|
|
(16
|
)
|
|
(25
|
)
|
|
(5
|
)
|
|
(20
|
)
|
|
(27
|
)
|
Repayment
of Capital Leases
|
|
(69
|
)
|
|
(61
|
)
|
|
(90
|
)
|
|
(60
|
)
|
|
(117
|
)
|
Unlevered Free Cash
Flow(4)
|
|
(15
|
)
|
|
112
|
|
|
114
|
|
|
333
|
|
|
275
|
|
__________
|
(1)
|
Defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP
financial measure and should not be considered as an alternative to net income as a measure of operating performance or cash provided
by operating activities as a cash flow measurement.
|
|
(2)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted net income
is a non-GAAP financial measure and should not be considered as an alternative to net income as a measure of operating performance
or cash provided by operating activities as a cash flow measurement.
|
|
(3)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted EPS is
a non-GAAP financial measure.
|
|
(4)
|
Defined as tax-affected earnings before interest (other than interest in respect of capital
leases) and taxes and after stock-based compensation expense, plus depreciation and amortization, less capital expenditures, less
other cash flow from investing activities, less principal payments in respect of capital leases and adjusted for changes in working
capital and certain after tax one-time items of Swift. Unlevered free cash flow is a non-GAAP financial measure.
|
The following is
a summary of the Swift April standalone projections, which was based on the Swift December standalone projections, updated to reflect
headwinds experienced in the first quarter of 2017 and a delay in the expected timing of industry capacity contraction and related
pricing increases from the second half of 2017 to 2018. The Swift April standalone projections were based on numerous variables
and assumptions, including the following key assumptions: (1) truck count growth delayed by approximately a year relative to December
standalone projections, (2) lower total miles as compared to December standalone projections, (3) continued price erosion through
the second quarter of 2017, (4) overall pricing decrease relative to December standalone projections, (5) deadhead is the same
or slightly improved from December standalone projections, and (6) driver wages lower as compared with December standalone projections.
The following table
presents (in millions, except per share amounts) a summary of the Swift April standalone projections, as prepared by Swift’s
management, with all figures (except per share amounts) rounded to the nearest million. The projections included in the below table
treat Swift on a standalone basis, without giving effect to the transaction and as if the transaction had not been contemplated.
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
Revenue
|
|
$
|
4,191
|
|
|
$
|
4,553
|
|
|
$
|
4,892
|
|
|
$
|
5,226
|
|
|
$
|
5,543
|
|
EBITDA(1)
|
|
$
|
532
|
|
|
$
|
628
|
|
|
$
|
709
|
|
|
$
|
796
|
|
|
$
|
850
|
|
GAAP EBIT
|
|
$
|
239
|
|
|
$
|
304
|
|
|
$
|
360
|
|
|
$
|
420
|
|
|
$
|
462
|
|
Adjusted Net Income(2)
|
|
$
|
144
|
|
|
$
|
181
|
|
|
$
|
216
|
|
|
$
|
256
|
|
|
$
|
283
|
|
Adjusted EPS(3)
|
|
$
|
1.06
|
|
|
$
|
1.34
|
|
|
$
|
1.58
|
|
|
$
|
1.86
|
|
|
$
|
2.04
|
|
Capital Expenditures
|
|
$
|
310
|
|
|
$
|
391
|
|
|
$
|
429
|
|
|
$
|
345
|
|
|
$
|
368
|
|
Capital Lease Payments
|
|
$
|
75
|
|
|
$
|
58
|
|
|
$
|
87
|
|
|
$
|
53
|
|
|
$
|
108
|
|
Unlevered Free Cash Flow(4)
|
|
$
|
7
|
|
|
$
|
42
|
|
|
$
|
56
|
|
|
$
|
227
|
|
|
$
|
188
|
|
_________
|
(1)
|
Defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP
financial measure and should not be considered as an alternative to net income as a measure of operating performance or cash provided
by operating activities as a cash flow measurement.
|
|
(2)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted net income
is a non-GAAP financial measure and should not be considered as an alternative to net income as a measure of operating performance
or cash provided by operating activities as a cash flow measurement.
|
|
(3)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted EPS is a
non-GAAP financial measure.
|
|
(4)
|
Defined as tax-affected earnings before interest (other than interest in respect of capital leases)
and taxes and after stock-based compensation expense, plus depreciation and amortization, less capital expenditures, less other
cash flow from investing activities, less principal payments in respect of capital leases and adjusted for changes in working capital
and certain after tax one-time items of Swift. Unlevered free cash flow is a non-GAAP financial measure.
|
The following
table presents reconciliations of the non-GAAP financial measures “EBITDA,” Adjusted Net Income,” “Adjusted
EPS” and “Unlevered Free Cash Flow,” which were included in the Swift April standalone projections, to the most
comparable GAAP measure. The non-GAAP financial measures included in the Swift April standalone projections should not be considered
in isolation from, or as a substitute for, the GAAP measures presented in the reconciliations below. The non-GAAP financial measures
as used in the Swift April standalone projections may not be comparable to similarly-titled measures used by other companies. For
further information on the unaudited prospective financial information in this section entitled “
Swift Standalone Projections
,”
which includes the reconciliations below, see “
Swift Management’s Unaudited Prospective Financial Information
”
in this joint proxy statement/prospectus.
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Net
Income
|
|
132
|
|
|
171
|
|
|
206
|
|
|
246
|
|
|
273
|
|
Income Tax Expense
|
|
77
|
|
|
99
|
|
|
118
|
|
|
142
|
|
|
157
|
|
Interest Income
|
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(8
|
)
|
Interest Expense
|
|
32
|
|
|
36
|
|
|
38
|
|
|
36
|
|
|
40
|
|
Depreciation and Amortization
of Property
and Equipment
|
|
275
|
|
|
308
|
|
|
333
|
|
|
359
|
|
|
371
|
|
Amortization of Intangibles
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
EBITDA(1)
|
|
532
|
|
|
628
|
|
|
709
|
|
|
796
|
|
|
850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
132
|
|
|
171
|
|
|
206
|
|
|
246
|
|
|
273
|
|
Amortization of Intangibles
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
|
17
|
|
Provision
for Income Tax Expense at
Effective Rate
|
|
(5
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|
(7
|
)
|
Adjusted Net Income(2)
|
|
144
|
|
|
181
|
|
|
216
|
|
|
256
|
|
|
283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares Used in Per Share Calculations
|
|
136.0
|
|
|
135.9
|
|
|
136.8
|
|
|
137.7
|
|
|
138.6
|
|
EPS
|
|
0.97
|
|
|
1.26
|
|
|
1.51
|
|
|
1.79
|
|
|
1.97
|
|
Adjusted EPS(3)
|
|
1.06
|
|
|
1.34
|
|
|
1.58
|
|
|
1.86
|
|
|
2.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
239
|
|
|
304
|
|
|
360
|
|
|
420
|
|
|
462
|
|
Interest Component of Capital
Leases
|
|
(6
|
)
|
|
(7
|
)
|
|
(9
|
)
|
|
(9
|
)
|
|
(9
|
)
|
Income Tax Expense
|
|
(86
|
)
|
|
(108
|
)
|
|
(128
|
)
|
|
(150
|
)
|
|
(166
|
)
|
Depreciation and Amortization
of Property, Equipment, and Intangibles
|
|
293
|
|
|
324
|
|
|
350
|
|
|
376
|
|
|
388
|
|
Capital Expenditures, Net of
Proceeds
from Sale of Property and Equipment
|
|
(310
|
)
|
|
(391
|
)
|
|
(429
|
)
|
|
(345
|
)
|
|
(368
|
)
|
Cash Flows from Other Investing
Activities
|
|
(2
|
)
|
|
(0
|
)
|
|
1
|
|
|
0
|
|
|
1
|
|
Changes in Net Working Capital
and Cash
Flows from Other Operating Activities
|
|
(45
|
)
|
|
(22
|
)
|
|
(2
|
)
|
|
(12
|
)
|
|
(12
|
)
|
Repayment
of Capital Leases
|
|
(75
|
)
|
|
(58
|
)
|
|
(87
|
)
|
|
(53
|
)
|
|
(108
|
)
|
Unlevered Free Cash
Flow(4)
|
|
7
|
|
|
42
|
|
|
56
|
|
|
227
|
|
|
188
|
|
__________
|
(1)
|
Defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP
financial measure and should not be considered as an alternative to net income as a measure of operating performance or cash provided
by operating activities as a cash flow measurement.
|
|
(2)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted net income
is a non-GAAP financial measure and should not be considered as an alternative to net income as a measure of operating performance
or cash provided by operating activities as a cash flow measurement.
|
|
(3)
|
Reflects the after tax impact of adding back intangible amortization expense. Adjusted EPS is
a non-GAAP financial measure.
|
|
(4)
|
Defined as tax-affected earnings before interest (other than interest in respect of capital
leases) and taxes and after stock-based compensation expense, plus depreciation and amortization, less capital expenditures, less
other cash flow from investing activities, less principal payments in respect of capital leases and adjusted for changes in working
capital and certain after tax one-time items of Swift. Unlevered free cash flow is a non-GAAP financial measure.
|
The disclosure in the section entitled
“The Transaction” under the heading “Interests of Swift’s Directors and Officers in the Transaction-Director
Compensation” and sub-heading “Director Compensation” is hereby amended by amending and restating the section
on page 128 of the Joint Proxy Statement/Prospectus as follows (with new text underlined):
On November 3, 2016,
the Swift board of directors unanimously approved director compensation for services provided in connection with the transaction
as follows: (i) $500 for meetings (in person or via tele-conference) of one hour or less; (ii) $1,000 for meetings (in person or
via tele-conference) of one to four hours; and (iii) $2,500 for meetings (in person or via tele-conference) of four hours or more.
On May 24, 2017, the Swift board of directors clarified that the previously-approved director compensation program included compensation
for meetings with third parties and advisors relating to the transaction.
The following members of the Swift board of directors
received the following approximate amounts for their service in connection with the transaction: Richard H. Dozer ($95,000); Glenn
F. Brown ($15,000); José A. Cárdenas ($15,000); William F. Riley, III ($17,000); and David N. Vander Ploeg ($17,500).
FORWARD-LOOKING STATEMENTS
This communication includes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Use of the words “may,” “will,”
“would,” “could,” “should,” “believes,” “estimates,” “projects,”
“potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,”
“pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,”
“forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,”
“priorities,” “goal,” or the negative of those words or other similar expressions is intended to identify
forward-looking statements that represent our current judgment about possible future events. These forward-looking statements may
include statements with respect to, among other things, the proposed merger of a wholly-owned subsidiary of Swift with and into
Knight, including the expected timing of completion of the Merger; the benefits of the Merger; the combined company’s plans,
objectives and expectations; future financial and operating results; and other statements that are not historical facts.
These forward-looking statements are based
on numerous assumptions (some of which may prove to be incorrect) and are subject to risks, uncertainties and other factors that
could cause actual results and events to differ materially from those expressed or implied by these forward-looking statements.
In addition to the risks, uncertainties and other factors previously disclosed in Swift’s and Knight’s reports filed
with the Securities and Exchange Commission and those identified elsewhere in this communication, the following risks, uncertainties
and other factors, among others, could cause actual results to differ materially from forward-looking statements and historical
performance: the risk that the Merger may not be completed in a timely manner or at all due to the failure to obtain the approval
of Swift’s or Knight’s stockholders or the failure to satisfy other conditions to completion of the Merger; the occurrence
of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; the outcome of any
legal proceeding that may be instituted against Swift, Knight or others following the announcement of the Merger; the amount of
the costs, fees, expenses and charges related to the Merger; the risk that the benefits of the Merger, including synergies, may
not be fully realized or may take longer to realize than expected; the risk that the Merger may not advance the combined company’s
business strategy; the risk that the combined company may experience difficulty integrating Swift’s and Knight’s employees
or operations; the potential diversion of Swift’s and Knight’s management’s attention resulting from the proposed
Merger; economic conditions, including future recessionary economic cycles and downturns in customers’ business cycles, particularly
in market segments and industries in which Swift or Knight has a significant concentration of customers; increasing competition
from trucking, rail, intermodal, and brokerage competitors; increases in driver compensation to the extent not offset by increases
in freight rates and difficulties in driver recruitment and retention; additional risks arising from contractual agreements with
owner-operators that do not exist with Swift or Knight drivers; the loss of key employees or inability to identify and recruit
new employees; Swift’s and Knight’s dependence on third parties for intermodal and brokerage business; potential failure
in computer or communications systems; the consequences of any armed conflict involving, or terrorist attack against, the United
States; inflationary, deflationary and other general economic trends; seasonal factors such as severe weather conditions that increase
operating costs; the possible re-classification of owner operators as employees; changes in rules or legislation by the National
Labor Relations Board, Congress, or states and/or union organizing efforts; government regulation with respect to captive insurance
companies; uncertainties and risks associated with operations in Mexico; significant reduction in, or termination of, Swift’s
or Knight’s trucking services by a key customer; Swift’s and Knight’s significant ongoing capital requirements;
volatility in the price or availability of fuel, as well as Swift’s and Knight’s ability to recover fuel prices through
a fuel surcharge program; fluctuations in new and used equipment prices or replacement costs, and the potential failure of manufacturers
to meet their sale and trade-back obligations; the impact that the combined company’s leverage may have on the way it operates
its business and its ability to services debt, including compliance with its debt covenants; restrictions contained in its debt
agreements; adverse impacts of insuring risk through captive insurance companies, including the need to provide restricted cash
and similar collateral for anticipated losses; potential volatility or decrease in the amount of earnings as a result of the claims
exposure through captive insurance companies and third-party insurance; goodwill impairment; fluctuations in interest rates; the
outcome of pending or future litigation; the effects of losses from natural catastrophes in excess of insurance coverage; and the
potential impact of announcement of the proposed transactions or consummation of the proposed transactions on relationships, including
with employees, customers and competitors. Actual results may differ materially from those projected in the forward-looking statements.
Neither Swift nor Knight undertakes to update any forward-looking statements.
ADDITIONAL INFORMATION AND WHERE
TO FIND IT
Investors and security holders are urged
to carefully review and consider each of Swift’s and Knight’s public filings with the SEC, including but not limited
to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on
Form 10-Q. The documents filed by the Company with the SEC may be obtained free of charge at Swift’s website at http://investor.swifttrans.com/
or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Swift by requesting them
in writing to 2200 S. 75th Ave., Phoenix, AZ 85043. The documents filed by Knight with the SEC may be obtained free of charge at
Knight’s website at www.knighttrans.com or at the SEC’s website at www.sec.gov. These documents may also be obtained
free of charge from Knight by requesting them in writing to 20002 N 19th Ave, Phoenix, AZ 85027.
In connection with the proposed Merger,
Swift has filed a registration statement on Form S-4 (Registration Statement No. 333-218196) containing a Joint Proxy Statement/Prospectus
of Swift and Knight. The Registration Statement was declared effective by the SEC on August 8, 2017 and the Joint Proxy Statement/Prospectus
was mailed to stockholders of record as of July 12, 2017, the record date fixed by Swift’s board of directors for the special
meeting, on or about August 9, 2017. BEFORE MAKING ANY VOTING DECISION, SWIFT’s AND KNIGHT’s STOCKHOLDERS ARE URGED
TO READ THE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY AND IN ITS ENTIRETY BECAUSE THE JOINT PROXY STATEMENT/PROSPECTUS CONTAINS
IMPORTANT INFORMATION ABOUT THE MERGER. Swift’s and Knight’s stockholders may obtain, free of charge, a copy of the
Joint Proxy Statement/Prospectus and other relevant documents filed with the SEC from the SEC’s web site at
http://www.sec.gov
.
The content of the website referenced above is not deemed to be incorporated by reference into the Joint Proxy Statement/Prospectus.
NO OFFER OR SOLICITATIONS
This document
does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval
nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
PARTICIPANTS IN THE SOLICITATION
Swift, Knight,
and certain of their respective directors, executive officers and other members of management and employees, under SEC rules may
be deemed to be participants in the solicitation of proxies from Swift and Knight stockholders in connection with the proposed
Merger. Information regarding the interests of the persons who may, under the rules of the SEC, be deemed participants in the solicitation
of Swift and Knight stockholders in connection with the proposed Merger is set forth in the definitive Joint Proxy Statement/Prospectus,
which was filed with the SEC on August 9, 2017. You can find more detailed information about Swift’s and Knight’s executive
officers and directors the definitive Joint Proxy Statement/Prospectus.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 25, 2017
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Swift Transportation Company
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By:
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/s/ Mickey R. Dragash
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Mickey R. Dragash
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Executive Vice President, General Counsel and
Corporate Secretary
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Grafico Azioni Swift Transportation Company Class A (delisted) (NYSE:SWFT)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Swift Transportation Company Class A (delisted) (NYSE:SWFT)
Storico
Da Giu 2023 a Giu 2024