Knight-Swift Transportation Holdings Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Knight-Swift Transportation Holdings Inc.	Financial_Report.xls
EX-31.2 - EXHIBIT - Knight-Swift Transportation Holdings Inc.	swft-ex3126302014.htm
EX-10.1 - EXHIBIT - Knight-Swift Transportation Holdings Inc.	exhibit992.htm
EX-31.1 - EXHIBIT - Knight-Swift Transportation Holdings Inc.	swft-ex3116302014.htm
EX-32.1 - EXHIBIT - Knight-Swift Transportation Holdings Inc.	swft-ex3216302014.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________

Form 10-Q

______________________________________________________________________

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-35007

______________________________________________________________________

Swift Transportation Company

(Exact name of registrant as specified in its charter)

______________________________________________________________________



Delaware		20-5589597
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2200 South 75th Avenue

Phoenix, AZ 85043

(Address of principal executive offices and zip code)

(602) 269-9700

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

______________________________________________________________________

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 filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

The number of outstanding shares of the registrant’s Class A common stock as of July 31, 2014 was 90,493,888 and the number of outstanding shares of the registrant’s Class B common stock as of July 31, 2014 was 50,991,938.

Table of Contents




	Page
PART I FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of June 30, 2014 (Unaudited) and December 31, 2013	3

Consolidated Statements of Income (Unaudited) for the Three and Six Month Periods Ended June 30, 2014 and 2013	4

Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Month Periods Ended June 30, 2014 and 2013	5

Consolidated Statement of Stockholders' Equity (Unaudited) for the Six Month Period Ended June 30, 2014	6

Consolidated Statements of Cash Flows (Unaudited) for the Six Month Periods Ended June 30, 2014 and 2013	7

Notes to Consolidated Financial Statements (Unaudited)	9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3. Quantitative and Qualitative Disclosures About Market Risk	52

Item 4. Controls and Procedures	52

PART II OTHER INFORMATION

Item 1. Legal Proceedings	52

Item 1A. Risk Factors	52

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 3. Defaults Upon Senior Securities	52

Item 4. Mine Safety Disclosures	52

Item 5. Other Information	52

Item 6. Exhibits	53

Signatures	54

EX 10.1

EX 31.1

EX 31.2

EX 32.1

EX-101 INSTANCE DOCUMENT

EX-101 SCHEMA DOCUMENT

EX-101 CALCULATION LINKBASE DOCUMENT

EX-101 LABELS LINKSBASE DOCUMENT

EX-101 PRESENTATION LINKBASE DOCUMENT

EX-101 DEFINITION LINKBASE DOCUMENT

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

Swift Transportation Company and Subsidiaries

Consolidated Balance Sheets



	June 30, 2014			December 31, 2013
	(Unaudited)
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	73,528		$	59,178
Restricted cash	52,815			50,833
Restricted investments, held to maturity, amortized cost	25,666			25,814
Accounts receivable, net	460,358			418,436
Equipment sales receivable	436			368
Income tax refund receivable	4,314			23,704
Inventories and supplies	20,764			18,430
Assets held for sale	8,694			19,268
Prepaid taxes, licenses, insurance and other	55,256			63,958
Deferred income taxes	41,591			46,833
Current portion of notes receivable	9,001			7,210
Total current assets	752,423			734,032
Property and equipment, at cost:
Revenue and service equipment	1,955,516			1,942,423
Land	116,973			117,929
Facilities and improvements	262,157			248,724
Furniture and office equipment	66,186			61,396
Total property and equipment	2,400,832			2,370,472
Less: accumulated depreciation and amortization	950,480			922,665
Net property and equipment	1,450,352			1,447,807
Other assets	50,735			57,166
Intangible assets, net	308,340			316,747
Goodwill	253,256			253,256
Total assets	$	2,815,106		$	2,809,008

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	141,889		$	118,014
Accrued liabilities	127,177			110,745
Current portion of claims accruals	75,578			75,469
Current portion of long-term debt and obligations under capital leases	85,962			75,056
Fair value of guarantees	—			366
Current portion of interest rate swaps	5,692			4,718
Total current liabilities	436,298			384,368
Revolving line of credit	99,000			17,000
Long-term debt and obligations under capital leases, less current portion	1,016,625			1,246,764
Claims accruals, less current portion	135,878			118,582
Fair value of interest rate swaps, less current portion	3,640			7,050
Deferred income taxes	454,499			484,200
Securitization of accounts receivable	319,000			264,000
Other liabilities	2,358			3,457
Total liabilities	2,467,298			2,525,421
Contingencies (note 13)
Stockholders’ equity:
Preferred stock, par value $0.01 per share; Authorized 10,000,000 shares; none issued	—			—
Class A common stock, par value $0.01 per share; Authorized 500,000,000 shares; 90,481,102 and 88,402,991 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively	905			883
Class B common stock, par value $0.01 per share; Authorized 250,000,000 shares; 50,991,938 and 52,441,938 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively	510			525
Additional paid-in capital	769,400			759,408
Accumulated deficit	(418,666		)	(471,169		)
Accumulated other comprehensive loss	(4,443		)	(6,162		)
Noncontrolling interest	102			102
Total stockholders’ equity	347,808			283,587
Total liabilities and stockholders’ equity	$	2,815,106		$	2,809,008

See accompanying notes to consolidated financial statements.

Table of Contents

Swift Transportation Company and Subsidiaries

Consolidated Statements of Income



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Amounts in thousands, except per share data)
Operating revenue	$	1,075,898		$	1,029,071		$	2,084,344		$	2,010,679
Operating expenses:
Salaries, wages and employee benefits	238,093			223,852			467,459			450,337
Operating supplies and expenses	84,077			78,996			164,902			151,063
Fuel	153,677			160,886			309,699			329,002
Purchased transportation	340,249			308,117			659,418			600,273
Rental expense	56,135			42,996			107,854			83,619
Insurance and claims	33,321			33,597			75,769			65,135
Depreciation and amortization of property and equipment	54,791			56,880			110,966			111,750
Amortization of intangibles	4,203			4,203			8,407			8,407
Gain on disposal of property and equipment	(8,312		)	(5,143		)	(11,471		)	(7,991		)
Communication and utilities	7,716			5,901			14,886			12,466
Operating taxes and licenses	17,926			18,520			36,263			36,634
Total operating expenses	981,876			928,805			1,944,152			1,840,695
Operating income	94,022			100,266			140,192			169,984
Other (income) expenses:
Interest expense	21,453			24,762			44,678			51,124
Derivative interest expense	1,618			532			3,271			1,094
Interest income	(692		)	(546		)	(1,458		)	(1,137		)
Loss on debt extinguishment	6,990			—			9,903			5,044
Gain on sale of real property	—			—			—			(6,078		)
Other	(710		)	(1,324		)	(1,574		)	(1,884		)
Total other expenses, net	28,659			23,424			54,820			48,163
Income before income taxes	65,363			76,842			85,372			121,821
Income tax expense	25,165			26,963			32,869			41,650
Net income	$	40,198		$	49,879		$	52,503		$	80,171
Basic earnings per share	$	0.28		$	0.36		$	0.37		$	0.57
Diluted earnings per share	$	0.28		$	0.35		$	0.37		$	0.57
Shares used in per share calculations
Basic	141,308			139,989			141,143			139,839
Diluted	143,393			141,838			143,265			141,652

See accompanying notes to consolidated financial statements.

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Swift Transportation Company and Subsidiaries

Consolidated Statements of Comprehensive Income



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (In thousands)
Net income	$	40,198		$	49,879		$	52,503		$	80,171
Other comprehensive income before income taxes:
Accumulated losses on derivatives reclassified to derivative interest expense	1,482			468			2,796			959
Change in fair value of interest rate swaps	—			174			—			(145		)
Other comprehensive income before income taxes	1,482			642			2,796			814
Income tax effect of items within other comprehensive income	(571		)	(244		)	(1,077		)	(218		)
Other comprehensive income, net of taxes	911			398			1,719			596
Total comprehensive income	$	41,109		$	50,277		$	54,222		$	80,767

See accompanying notes to consolidated financial statements.

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Swift Transportation Company and Subsidiaries

Consolidated Statement of Stockholders’ Equity



	Class A Common Stock			Class B Common Stock					Additional Paid in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value		Shares		Par Value			Additional Paid in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interest		Total Stockholders’ Equity
	(Unaudited) (In thousands, except per share data)
Balances, December 31, 2013	88,402,991	$	883	52,441,938		$	525		$	759,408	$	(471,169	)	$	(6,162	)	$	102	$	283,587
Exercise of stock options	510,022	5							5,246										5,251
Conversion of Class B common stock to Class A common stock	1,450,000	15		(1,450,000	)	(15		)											—
Income tax benefit from exercise of stock options									1,835										1,835
Grant of restricted Class A common stock	93,069	1							97										98
Shares issued under employee stock purchase plan	25,020	1							559										560
Other comprehensive income														1,719					1,719
Non-cash equity compensation									2,255										2,255
Net income											52,503								52,503
Balances, June 30, 2014	90,481,102	$	905	50,991,938		$	510		$	769,400	$	(418,666	)	$	(4,443	)	$	102	$	347,808

See accompanying notes to consolidated financial statements.

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Swift Transportation Company and Subsidiaries

Consolidated Statements of Cash Flows



	Six Months Ended June 30,
	2014			2013
	(Unaudited) (In thousands)
Cash flows from operating activities:
Net income	$	52,503		$	80,171
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and intangibles	119,373			120,157
Amortization of debt issuance costs, original issue discount, and losses on terminated swaps	5,077			1,868
Gain on disposal of property and equipment less write-off of totaled tractors	(10,522		)	(7,585		)
Gain on sale of real property	—			(6,078		)
Equity losses of investee	—			585
Deferred income taxes	(25,538		)	36,731
Provision for allowance for losses on accounts receivable	1,604			1,671
Loss on debt extinguishment	9,903			5,044
Non-cash equity compensation	2,353			1,498
Income effect of mark-to-market adjustment of interest rate swaps	(43		)	82
Interest on Central stockholders' loan receivable, pre-acquisition	—			(44		)
Increase (decrease) in cash resulting from changes in:
Accounts receivable	(43,526		)	(31,206		)
Inventories and supplies	(2,334		)	194
Prepaid expenses and other current assets	28,128			3,664
Other assets	6,556			5,194
Accounts payable, accrued and other liabilities	39,949			33,700
Net cash provided by operating activities	183,483			245,646
Cash flows from investing activities:
(Increase) decrease in restricted cash	(1,982		)	8,984
Change in restricted investments	(113		)	(4,680		)
Proceeds from sale of property and equipment	77,088			47,261
Capital expenditures	(135,068		)	(164,320		)
Payments received on notes receivable	2,226			2,074
Expenditures on assets held for sale	(1,991		)	(1,614		)
Payments received on assets held for sale	13,603			22,773
Payments received on equipment sale receivables	385			644
Net cash used in investing activities	(45,852		)	(88,878		)
Cash flows from financing activities:
Repayment of long-term debt and capital leases	(707,386		)	(130,202		)
Proceeds from long-term debt	450,000			23,528
Net borrowings on revolving line of credit	82,000			7,313
Borrowings under accounts receivable securitization	95,000			80,000
Repayment of accounts receivable securitization	(40,000		)	(119,000		)
Payment of deferred loan costs	(10,541		)	(2,183		)
Distribution to Central stockholders, pre-acquisition	—			(1,988		)
Issuance of Central stockholders' loan receivable, pre-acquisition	—			(30,000		)
Proceeds from exercise of stock options and the issuance of employee stock purchase plan shares	5,811			6,182
Income tax benefit from exercise of stock options	1,835			(504		)
Net cash used in financing activities	(123,281		)	(166,854		)
Net increase (decrease) in cash and cash equivalents	14,350			(10,086		)
Cash and cash equivalents at beginning of period	59,178			53,596
Cash and cash equivalents at end of period	$	73,528		$	43,510

See accompanying notes to consolidated financial statements.

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Swift Transportation Company and Subsidiaries

Consolidated Statements of Cash Flows — (continued)



	Six Months Ended June 30,
	2014		2013
	(Unaudited) (In thousands)
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	49,331	$	48,823
Income taxes	$	22,041	$	5,003
Supplemental schedule of:
Non-cash investing activities:
Equipment sales receivables	$	453	$	896
Equipment purchase accrual	$	19,916	$	28,230
Notes receivable from sale of assets	$	4,015	$	1,577
Non-cash financing activities:
Accrued deferred loan costs	$	1,433	$	—
Capital lease additions	$	38,043	$	60,111
Insurance premium note payable	$	37	$	—

See accompanying notes to consolidated financial statements.

Table of Contents

Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation

Swift Transportation Company is the holding company for Swift Transportation Co., LLC (a Delaware limited liability company) and its subsidiaries (collectively, “Swift Transportation Co.”), a truckload carrier headquartered in Phoenix, Arizona, and Interstate Equipment Leasing, LLC (“IEL”) (all the foregoing being, collectively, “Swift” or the “Company”).

As of June 30, 2014, the Company operated a national terminal network and a tractor fleet of approximately 18,600 units comprised of 13,600 tractors driven by company drivers and 5,000 owner-operator tractors, a fleet of 57,500 trailers, and 8,700 intermodal containers. The Company’s four reportable operating segments are Truckload, Dedicated, Central Refrigerated and Intermodal. In the first quarter of 2014, the Company reorganized its reportable segments to reflect management’s revised reporting structure of its lines of businesses following the integration of Central Refrigerated. In association with the operational reorganization, the operations of Central Refrigerated's Trailer on Flat Car (TOFC) business are reported within the Company's Intermodal segment and the operations of Central Refrigerated's logistics business, third-party leasing, and other services provided to owner-operators are reported in the Company's other non-reportable segment. All prior period historical results related to the above noted segment reorganization have been retrospectively recast.

In the opinion of management, the accompanying financial statements prepared in accordance with GAAP include all adjustments necessary for the fair presentation of the interim periods presented. These interim financial statements should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2013. Management has evaluated the effect on the Company’s reported financial condition and results of operations of events subsequent to June 30, 2014 through the issuance of the financial statements.

Note 2. New Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") issued, as a new topic, Accounting Standards Update 2014-09, Revenue from Contracts with Customers, Accounting Standards Codification (ASC) Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The premise of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU will be effective for the Company beginning January 1, 2017. Early adoption is not permitted. The Company is currently evaluating the accounting, transition and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.

Note 3. Income Taxes

The effective tax rate for the six months ended June 30, 2014 was 38.5%. The Company's effective tax rate for the six months ended June 30, 2013 was 34.2%, which was 4.3% lower than expected primarily due to Central Refrigerated’s pre-affiliated earnings that were taxed as an S-corporation prior to Swift’s acquisition.

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Accrued interest and penalties as of June 30, 2014 were approximately $1.2 million. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. The Company does not anticipate a decrease of unrecognized tax benefits during the next twelve months.

Certain of the Company’s subsidiaries are currently under examination by the Internal Revenue Service and various state jurisdictions for tax years ranging from 2008 through 2012. At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company’s effective tax rate. Tax years 2009 through 2013 remain subject to examination.

Note 4. Investments

The following table presents the cost or amortized cost, gross unrealized gains and losses, and estimated fair value of the Company’s restricted investments as of June 30, 2014 and December 31, 2013 (in thousands):



	June 30, 2014
	Cost or		Gross Unrealized				Estimated
	Amortized Cost		Gains		Temporary Losses		Fair Value
U.S. corporate securities	$	22,042	$	8	$	4	$	22,046
Foreign corporate securities	1,509		—		—		1,509
Negotiable certificate of deposits	2,115		—		1		2,114
Total restricted investments	$	25,666	$	8	$	5	$	25,669

	December 31, 2013
	Cost or		Gross Unrealized				Estimated
	Amortized				Temporary		Fair
	Cost		Gains		Losses		Value
U.S. corporate securities	$	20,197	$	2	$	7	$	20,192
Foreign corporate securities	3,502		—		—		3,502
Negotiable certificate of deposits	2,115		—		1		2,114
Total restricted investments	$	25,814	$	2	$	8	$	25,808

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Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited) – (continued)

As of June 30, 2014, the contractual maturities of the restricted investments were one year or less. There were 9 securities and 15 securities that were in an unrealized loss position for less than twelve months as of June 30, 2014 and December 31, 2013, respectively.

The Company periodically evaluates restricted investments for impairment. The assessment of whether impairments have occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in estimated fair value.

The Company accounts for other-than-temporary impairments of debt securities using the provisions of Topic 320, Investments – Debt and Equity Securities, related to the recognition of other-than-temporary impairments of debt securities. This guidance requires the Company to evaluate whether it intends to sell an impaired debt security or whether it is more likely than not that it will be required to sell an impaired debt security before recovery of the amortized cost basis. If either of these criteria is met, an impairment equal to the difference between the debt security’s amortized cost and its estimated fair value is recognized in earnings.

For impaired debt securities that do not meet this criteria, the Company determines if a credit loss exists with respect to the impaired security. If a credit loss exists, the credit loss component of the impairment (i.e., the difference between the security’s amortized cost and the present value of projected future cash flows expected to be collected) is recognized in earnings and the remaining portion of the impairment is recognized as a component of accumulated other comprehensive income (OCI). The Company did not recognize any impairment losses for the three and six months ended June 30, 2014 and 2013, respectively.

Note 5. Intangible Assets

Intangible assets as of June 30, 2014 and December 31, 2013 were as follows (in thousands):



	June 30, 2014			December 31, 2013
Customer Relationship:
Gross carrying value	$	275,324		$	275,324
Accumulated amortization	(148,021		)	(139,614		)
Trade Name:
Gross carrying value	181,037			181,037
Intangible assets, net	$	308,340		$	316,747

For all periods ending on or after December 31, 2007, amortization of intangibles consists primarily of amortization of $261.2 million gross carrying value of definite-lived intangible assets recognized under purchase accounting in connection with Swift Transportation Co.’s 2007 going private transaction. Intangible assets acquired as a result of the 2007 going private transaction include trade name, customer relationships, and owner-operator relationships. Amortization of the customer relationship acquired in the going private transaction is calculated on the 150% declining balance method over the estimated useful life of 15 years. The customer relationship contributed to the Company at May 9, 2007 is amortized using the straight-line method over 15 years. The trade name has an indefinite useful life and is not amortized, but rather is tested for impairment at least annually, unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value.

The following table presents amortization of intangibles for the three and six months ended June 30, 2014 and 2013, related to intangible assets recognized in conjunction with the 2007 going private transaction and the previous intangible assets existing prior to the 2007 going private transaction (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Amortization of intangible assets related to 2007 going private transaction	$	3,912	$	3,912	$	7,824	$	7,824
Amortization of intangible assets related to intangible assets existing prior to the 2007 going private transaction	291		291		583		583
Amortization of intangibles	$	4,203	$	4,203	$	8,407	$	8,407

Note 6. Assets Held for Sale

Assets held for sale as of June 30, 2014 and December 31, 2013 were as follows (in thousands):



	June 30, 2014		December 31, 2013
Land and facilities	$	5,141	$	14,627
Revenue equipment	3,553		4,641
Assets held for sale	$	8,694	$	19,268

As of June 30, 2014 and December 31, 2013, assets held for sale are carried at the lower of depreciated cost or estimated fair value less expected selling costs. The Company expects to sell these assets within the next twelve months.

During the three months ended June 30, 2014, the Company sold two operating properties classified as held for sale with a carrying value of $9.7 million. Total net proceeds from sale of these properties approximated their carrying value.

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Note 7. Debt and Financing Transactions

Other than the Company’s accounts receivable securitization as discussed in Note 8 and its outstanding capital lease obligations as discussed in Note 9, the Company had long-term debt outstanding as of June 30, 2014 and December 31, 2013 as follows (in thousands):



	June 30, 2014		December 31, 2013
Senior secured first lien delayed draw term loan A tranche due June 2019	$	50,000	$	—
Senior secured first lien term loan B tranche due June 2021, net of $992 OID as of June 30, 2014	398,008		—
Senior secured first lien term loan B-1 tranche due December 2016	—		229,000
Senior secured first lien term loan B-2 tranche due December 2017	—		410,000
Senior second priority secured notes due November 15, 2018, net of $5,112 and $6,175 OID as of June 30, 2014 and December 31, 2013, respectively	455,711		493,825
Other	11,765		17,480
Total	915,484		1,150,305
Less: current portion	23,763		11,387
Long-term debt	$	891,721	$	1,138,918

The credit facility and senior notes are secured by substantially all of the assets of the Company and are guaranteed by Swift Transportation Company, IEL, Central Refrigerated Transportation, Inc. and its subsidiaries, and Swift Transportation Companies domestic subsidiaries other than its captive insurance subsidiaries, driver training academy subsidiary, and its bankruptcy-remote special purpose subsidiary. As of June 30, 2014 and December 31, 2013, the balances of deferred loan costs were $13.2 million and $8.9 million, respectively, and is reported in Other assets in the Company’s consolidated balance sheets.

Senior Secured Credit Facility

On June 9, 2014, the Company entered into a Third Amended and Restated Credit Agreement (the “2014 Agreement”) replacing its previous Second Amended and Restated Credit Agreement dated March 7, 2013 (the “2013 Agreement”). The 2014 Agreement includes: (i) a $450.0 million revolving credit facility with a maturity date of June 2019, (ii) a $500.0 million delayed draw term loan A with a maturity date of June 2019, and (iii) a $400.0 million term loan B with a maturity date of June 2021.

The term loan A requires quarterly minimum principal payments of $5.6 million commencing March 31, 2015 through December 31, 2016 and increasing to $11.3 million beginning March 31, 2017 through March 31, 2019, with the remaining outstanding principal balance on June 9, 2019. The term loan B requires quarterly principal payments of $1.0 million commencing June 30, 2014 with the remaining outstanding principal balance on June 9, 2021.

Pursuant to the 2014 Agreement, the interest rate applicable to the term loan A equals LIBOR rate plus 2.00% with no LIBOR floor. Commencing the quarter ended September 30, 2014, the applicable LIBOR margin for the term loan A will range from 1.50% to 2.25% as determined by the Company’s consolidated leverage ratio as defined in the 2014 Agreement. The term loan B under the 2014 Agreement accrues interest at the LIBOR rate plus 3.00% with a 0.75% LIBOR floor. After December 31, 2014, the applicable LIBOR margin for the term loan B will range from 2.75% to 3.00% as determined by the Company’s consolidated leverage ratio. As of June 30, 2014, interest accrues at 2.15% and 3.75% on the Company’s first lien term loan A and B tranches, respectively.

In addition to the pricing attributes described above, the 2014 Agreement increased the availability pursuant to the accordion feature from $350.0 million under the 2013 Agreement to $500.0 million, subject to the satisfaction of certain conditions and the participation of lenders.

As of June 30, 2014, the Company had $99.0 million of outstanding borrowings under the $450.0 million revolving line of credit pursuant to the 2014 Agreement. Additionally, the Company had outstanding letters of credit under this facility primarily for workers’ compensation and self-insurance liability purposes totaling $106.8 million, leaving $244.2 million available under the revolving line of credit. Under the 2014 Agreement, the interest rate spread on the revolving credit facility ranges from 1.50% to 2.25% for LIBOR based borrowings and letters of credit and 0.50% to 1.25% for Base Rate borrowings, depending on the Company’s consolidated leverage ratio. Additionally, the commitment fee for the unused portion of the revolving credit facility ranges 0.25% to 0.35%, depending on the Company’s consolidated leverage ratio. As of June 30, 2014, interest accrues at 2.15%, 2.00% and 0.30% on the outstanding borrowings, letters of credit and unused portion, respectively, on the revolving line of credit.

The 2014 Agreement, specifically the revolving credit facility and the term loan A tranche, contain certain financial covenants with respect to a maximum leverage ratio and a minimum consolidated interest coverage ratio. The 2014 Agreement removed any financial covenants related to the term loan B tranche. Further, the 2014 Agreement removed the maximum capital expenditures covenant and also provides for improved flexibility regarding the use of proceeds from asset sales, payment of dividends, stock buybacks, and equipment financing. In addition to the financial covenants, the 2014 Agreement includes customary events of default, including a change in control default and certain affirmative and negative covenants, including, but not limited to, restrictions, subject to certain exceptions, on incremental indebtedness, asset sales, certain restricted payments (including dividends), certain incremental investments or advances, transactions with affiliates, engaging in additional business activities, and prepayments of certain other indebtedness.

The 2014 Agreement replaced the Company’s previous first lien term loan B-1 tranche maturing December 2016 and B-2 tranche maturing December 2017 under the 2013 Agreement with outstanding principal balances at closing of $229.0 million and $371.0 million, respectively. The previous first lien term loan B-1 and B-2 tranches accrued interest at LIBOR plus 2.75% and LIBOR plus 3.00% with a 1.00% LIBOR floor, respectively. Additionally, the 2014 Agreement replaced the Company’s previous revolving credit facility maturing September 2016. The interest rate spread on the previous revolving credit facility ranged from 3.00% to 3.25% for LIBOR based borrowings and letters of credit and 2.00%

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

to 2.25% for Base Rate borrowings, depending on the Company’s consolidated leverage ratio. Additionally, the commitment fee for the unused portion of the previous revolving credit facility ranged from 0.25% to 0.50%, depending upon the Company’s consolidated leverage ratio. The replacement of the 2013 Agreement resulted in a loss on debt extinguishment of $5.2 million for the three months ended June 30, 2014, representing the write-off of deferred financing fees associated with the 2013 Agreement.

Senior Second Priority Secured Notes

In December 2010, Swift Services Holdings, Inc., a wholly owned subsidiary, completed a private placement of senior second priority secured notes totaling $500.0 million face value which mature in November 2018 and bear interest at 10.00% (the “senior notes”). The Company received proceeds of $490.0 million, net of a $10.0 million original issue discount. In the first six months of 2014, the Company repurchased in open market transactions at an average price of 110.50%, $39.2 million face value of these notes with cash on hand. The Company paid total proceeds of $44.7 million, which included the principal amount, the premium and the accrued interest. The premium and the related write-off of the unamortized original issue discount resulted in a loss on debt extinguishment of $1.8 million and $4.7 million in for the three and six months ended June 30, 2014, respectively. The Company anticipates utilizing the remainder of the delayed-draw first lien Term A loan under the 2014 Agreement to fund the majority of the redemption of the remaining senior second priority secured notes on or before December 31, 2014.

Central Debt

As of June 30, 2014, Central has approximately $1.8 million in various notes payable to financing companies secured by revenue equipment with due dates through May 2015.

Note 8. Accounts Receivable Securitization

In June 2013, Swift Receivables Company II, LLC, a Delaware limited liability company (“SRCII”), a wholly-owned bankruptcy-remote special purpose subsidiary, entered into an Amended and Restated Receivables Sale Agreement (the “2013 RSA”) with unrelated financial entities (the “Purchasers”) to sell, on a revolving basis, undivided interests in the Company’s accounts receivable. Pursuant to the 2013 RSA, the Company’s receivable originator subsidiaries will sell all of their eligible accounts receivable to SRCII, which in turn sells a variable percentage ownership interest in its accounts receivable to the Purchasers. The 2013 RSA provides for up to $325.0 million in borrowing capacity. The 2013 RSA terminates on July 13, 2016 and is subject to customary fees and contains various customary affirmative and negative covenants, representations and warranties, and default and termination provisions. Outstanding balances under the 2013 RSA accrue program fees generally at commercial paper rates plus 95 basis points and unused capacity is subject to an unused commitment fee of 35 basis points. Pursuant to the 2013 RSA, collections on the underlying receivables by the Company are held for the benefit of SRCII and the Purchasers in the facility and are unavailable to satisfy claims of the Company and its subsidiaries. The facility qualifies for treatment as a secured borrowing under Topic 860, Transfers and Servicing, and as such, outstanding amounts are carried on the Company’s consolidated balance sheets as a liability.

For the three and six months ended June 30, 2014, the Company incurred program fees of $0.8 million and $1.6 million, respectively, associated with the 2013 RSA which were recorded in interest expense in the Company's consolidated statements of income. For the three and six months ended June 30, 2013, the Company incurred program fees of $0.7 million and $1.5 million, respectively, primarily associated with the prior accounts receivable facility. As of June 30, 2014, the outstanding borrowing under the 2013 RSA was $319.0 million against a total available borrowing base of $325.0 million, leaving $6.0 million available. As of December 31, 2013, the outstanding borrowing under the 2013 RSA was $264.0 million against a total available borrowing base of $300.8 million.

Note 9. Capital Leases

The Company leases certain revenue equipment under capital leases. The Company’s capital leases are typically structured with balloon payments at the end of the lease term equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers. The Company is obligated to pay the balloon payments at the end of the leased term whether or not it receives the proceeds of the contracted residual values from the respective manufacturers. Certain leases contain renewal or fixed price purchase options. As of June 30, 2014 and December 31, 2013, the present value of obligations under capital leases totaled $187.1 million and $171.5 million, of which the current portion was $62.2 million and $63.7 million, respectively. The leases are collateralized by revenue equipment with a cost of $304.0 million and accumulated amortization of $67.9 million as of June 30, 2014. The amortization of the equipment under capital leases is included in depreciation and amortization expense in the Company’s consolidated statements of income.

Note 10. Derivative Financial Instruments

In April 2011, as contemplated by the then existing credit facility, the Company entered into two forward-starting interest rate swap agreements with a notional amount of $350.0 million. These interest rate swaps were effective in January 2013 and have a maturity date of July 2015. On April 27, 2011 (“designation date”), the Company designated and qualified these interest rate swaps as cash flow hedges. Subsequent to the designation date, the effective portion of the changes in estimated fair value of the designated swaps was recorded in accumulated other comprehensive income ("OCI") and was thereafter recognized as derivative interest expense as the interest on the hedged debt affects earnings, which hedged interest accruals began in January 2013. As of December 31, 2013, changes in estimated fair value of the designated interest rate swap agreements totaling $0.1 million, net-of-tax was reflected in accumulated OCI. Refer to Note 11 below for further discussion of the Company’s estimated fair value methodology.

On March 7, 2013, the Company entered into the 2013 Agreement. Due to the incorporation of a new interest rate floor provision in the 2013 Agreement, the Company concluded, as of February 28, 2013, that the outstanding interest rate swaps were no longer highly effective in achieving offsetting changes in cash flows related to the hedged interest payments. As a result, the Company de-designated the hedges as of February 28, 2013 (“de-designation date”). Beginning on March 1, 2013, the effective portion of the change in fair value of interest rate swaps prior to the change (i.e., amounts previously recorded in accumulated OCI) have been and will continue to be amortized as derivative interest expense over the period of the originally designated hedged interest payments through July 2015. Following the de-designation date, changes in fair value of the interest rate swaps are immediately recognized in the consolidated statements of income as derivative interest expense.

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

The following table presents the changes in fair value, pre-tax of derivatives designated as cash flow hedges had on accumulated OCI and earnings (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Amount of (loss) income recognized in OCI on derivatives (effective portion)	$	—		$	(174	)	$	—		$	145
Amount of loss reclassified from accumulated OCI into income as “Derivative interest expense” (effective portion)	$	(1,482	)	$	(468	)	$	(2,796	)	$	(959	)

The following tables presents information about pre-tax gains and losses recognized in earnings on the Company’s interest rate derivative contracts that were de-designated on February 28, 2013 as hedging instruments under ASC Topic 815, is as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Amount of loss recognized in income as “Derivative interest expense”	$	(136	)	$	(64	)	$	(475	)	$	(135	)

As of June 30, 2014, $7.2 million of pre-tax deferred losses on derivatives in accumulated OCI is expected to be reclassified to earnings within the next twelve months.

Note 11. Fair Value Measurement

Topic 820, Fair Value Measurements and Disclosures, requires that the Company disclose estimated fair values for its financial instruments. The estimated fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for the asset or liability. Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Changes in assumptions could significantly affect these estimates. As the fair value is estimated at June 30, 2014 and December 31, 2013, the amounts that will actually be realized or paid at settlement or maturity of the instruments in the future could be significantly different.

The tables below exclude certain financial instruments. The excluded financial instruments are as follows: cash and cash equivalents, restricted cash, accounts receivable, net, income tax refund receivable and accounts payable. The estimated fair value of these financial instruments approximate carrying value as they are short-term in nature. Additionally, for notes payable under revolving lines of credit, fair value approximates the carrying value due to the variable interest rate. For capital leases, the carrying value approximates the fair value. The table below also excludes financial instruments reported at estimated fair value on a recurring basis. See “— Recurring Fair Value Measurements.” All remaining balance sheet amounts excluded from the table below are not considered financial instruments subject to this disclosure.

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments as of June 30, 2014 and December 31, 2013 (in thousands):



	June 30, 2014				December 31, 2013
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets:
Restricted investments	$	25,666	$	25,669	$	25,814	$	25,808
Financial Liabilities:
Senior secured first lien delayed draw term loan A tranche	50,000		50,000		—		—
Senior secured first lien term loan B tranche	398,008		398,259		—		—
Senior secured first lien term loan B-1 tranche (2013 Agreement)	—		—		229,000		230,031
Senior secured first lien term loan B-2 tranche (2013 Agreement)	—		—		410,000		412,358
Senior second priority secured notes	455,711		491,029		493,825		549,059
Securitization of accounts receivable	319,000		319,000		264,000		264,000
Central Financial Liabilities:
Various notes payables to financing companies, due dates through May 2015					2,190		2,190

The carrying amounts shown in the table (other than the restricted investments, and the securitization of accounts receivable) are included in the consolidated balance sheets in long-term debt and obligations under capital leases. The estimated fair values of the financial instruments shown

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

in the above table as of June 30, 2014 and December 31, 2013, represent management’s best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. The estimated fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the estimated fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. These judgments are developed by the Company based on the best information available under the circumstances.

The following summary presents a description of the methods and assumptions used to estimate the fair value of each class of financial instrument.

Restricted Investments

The estimated fair value of the Company’s restricted investments is based on quoted prices in active markets that are readily and regularly obtainable.

First Lien Term Loans and Senior Second Priority Secured Notes

The estimated fair values of the first lien term loans and senior second priority secured notes were determined by bid prices in trades between qualified institutional buyers.

Central Notes Payables

Fair value is assumed to approximate carrying values for these financial instruments since they are short term in nature, or had stated interest rates that approximate the interest rates available to the Company as of the reporting date.

Securitization of Accounts Receivable

The Company’s securitization of accounts receivable consists of borrowings outstanding pursuant to the Company’s 2013 RSA as of June 30, 2014 and December 31, 2013, respectively, as discussed in Note 8. Its fair value is estimated by discounting future cash flows using a discount rate commensurate with the uncertainty involved.

Fair Value Hierarchy

ASC Topic 820 establishes a framework for measuring fair value in accordance with GAAP and expands financial statement disclosure requirements for fair value measurements. ASC Topic 820 further specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows:


•	Level 1 — Valuation techniques in which all significant inputs are quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.

•

Level 2 — Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices from markets that are not active for assets or liabilities that are identical or similar to the assets or liabilities being measured. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.


•	Level 3 — Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

When available, the Company uses quoted market prices to determine the estimated fair value of an asset or liability. If quoted market prices are not available, the Company will measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the estimated fair value measurement in its entirety. Following is a brief summary of the Company’s classification within the fair value hierarchy of each major category of assets and liabilities that it measures and reports on its consolidated balance sheets at estimated fair value on a recurring basis as of June 30, 2014:

•

Interest rate swaps. The Company’s interest rate swaps are not actively traded but are valued using valuation models and credit valuation adjustments, both of which use significant inputs that are observable in active markets over the terms of the instruments the Company holds, and accordingly, the Company classified these valuation techniques as Level 2 in the hierarchy. Interest rate yield curves and credit spreads derived from trading levels of the Company’s first lien term loan are the significant inputs into these valuation models. These inputs are observable in active markets over the terms of the instruments the Company holds. The Company considers the effect of its own credit standing and that of its counterparties in the valuations of its derivative financial instruments.

Recurring Fair Value Measurements

As of June 30, 2014 and December 31, 2013, no assets of the Company were measured at estimated fair value on a recurring basis. As of June 30, 2014 and December 31, 2013, information about inputs into the estimated fair value measurements of each major category of the Company’s liabilities that were measured at estimated fair value on a recurring basis in periods subsequent to their initial recognition was as follows (in thousands):

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Notes to Consolidated Financial Statements (Unaudited) – (continued)



			Fair Value Measurements at Reporting Date Using
Description	Total Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of June 30, 2014
Interest rate swaps	$	9,332	$	—	$	9,332	$	—
As of December 31, 2013
Interest rate swaps	$	11,768	$	—	$	11,768	$	—

Nonrecurring Fair Value Measurements

As of June 30, 2014 and December 31, 2013, no assets or liabilities of the Company were measured at estimated fair value on a nonrecurring basis.

Note 12. Earnings per Share

The computation of basic and diluted earnings per share is as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(In thousands, except per share amounts)
Net income	$	40,198	$	49,879	$	52,503	$	80,171
Basic:
Weighted average common shares outstanding	141,308		139,989		141,143		139,839
Diluted:
Dilutive effect of stock options	2,085		1,849		2,122		1,813
Total weighted average diluted shares outstanding	143,393		141,838		143,265		141,652
Anti-dilutive shares excluded from the diluted earnings per share calculation ⁽¹⁾	—		171		—		171
Earnings per share:
Basic earnings per share	$	0.28	$	0.36	$	0.37	$	0.57
Diluted earnings per share	$	0.28	$	0.35	$	0.37	$	0.57


(1)	Impact of outstanding options to purchase shares of the Company’s Class A common stock were anti-dilutive because the options exercise price was greater than the average market price of the common shares and were excluded from the calculation of diluted earnings per share.

As of June 30, 2014 and 2013, there were 4,913,872 and 5,847,980 options outstanding, respectively.

Note 13. Contingencies

The Company is involved in certain claims and pending litigation primarily arising in the normal course of business. The majority of these claims relate to workers' compensation, auto collision and liability, and physical damage and cargo damage. The Company expenses legal fees as incurred and accrues for the contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the knowledge of the facts and, in certain cases, advice of outside counsel, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on the Company. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold.

For certain cases described below, management is unable to provide a meaningful estimate of the possible loss or range of loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals; and/or (v) there are significant factual issues to be resolved. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

2004 owner-operator class action litigation

On January 30, 2004, a class action lawsuit was filed by Leonel Garza on behalf of himself and all similarly situated persons against Swift Transportation: Garza vs. Swift Transportation Co., Inc., Case No. CV7-472, or the Garza Complaint. The putative class originally involved certain owner-operators who contracted with the Company under a 2001 Contractor Agreement that was in place for one year. The putative class

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

is alleging that the Company should have reimbursed owner-operators for actual miles driven rather than the contracted and industry standard remuneration based upon dispatched miles. The trial court denied plaintiff’s petition for class certification, the plaintiff appealed and on August 6, 2008, the Arizona Court of Appeals issued an unpublished Memorandum Decision reversing the trial court’s denial of class certification and remanding the case back to the trial court. On November 14, 2008, the Company filed a petition for review to the Arizona Supreme Court regarding the issue of class certification as a consequence of the denial of the Motion for Reconsideration by the Court of Appeals. On March 17, 2009, the Arizona Supreme Court granted the Company’s petition for review, and on July 31, 2009, the Arizona Supreme Court vacated the decision of the Court of Appeals opining that the Court of Appeals lacked automatic appellate jurisdiction to reverse the trial court’s original denial of class certification and remanded the matter back to the trial court for further evaluation and determination. Thereafter, the plaintiff renewed the motion for class certification and expanded it to include all persons who were employed by Swift as employee drivers or who contracted with Swift as owner-operators on or after January 30, 1998, in each case who were compensated by reference to miles driven. On November 4, 2010, the Maricopa County trial court entered an order certifying a class of owner-operators and expanding the class to include employees. Upon certification, the Company filed a motion to compel arbitration as well as filing numerous motions in the trial court urging dismissal on several other grounds including, but not limited to the lack of an employee as a class representative, and because the named owner-operator class representative only contracted with the Company for a three month period under a one year contract that no longer exists. In addition to these trial court motions, the Company also filed a petition for special action with the Arizona Court of Appeals arguing that the trial court erred in certifying the class because the trial court relied upon the Court of Appeals ruling that was previously overturned by the Arizona Supreme Court. On April 7, 2011, the Arizona Court of Appeals declined jurisdiction to hear this petition for special action and the Company filed a petition for review to the Arizona Supreme Court. On August 31, 2011, the Arizona Supreme Court declined to review the decision of the Arizona Court of Appeals. In April 2012, the court issued the following rulings with respect to certain motions filed by Swift: (1) denied Swift’s motion to compel arbitration; (2) denied Swift’s request to decertify the class; (3) granted Swift’s motion that there is no breach of contract; and (4) granted Swift’s motion to limit class size based on statute of limitations. The Company intends to continue to pursue all available appellate relief supported by the record, which the Company believes demonstrates that the class is improperly certified and, further, that the claims raised have no merit. The Company retains all of its defenses against liability and damages. The final disposition of this case and the impact of such final disposition cannot be determined at this time.

Owner-operator misclassification class action litigation

On December 22, 2009, a class action lawsuit was filed against Swift Transportation and IEL: Virginia VanDusen, John Doe 1 and Joseph Sheer individually and on behalf of all other similarly situated persons v. Swift Transportation Co., Inc., and Interstate Equipment Leasing, Inc., Jerry Moyes, and Chad Killebrew, Case No. 9-CIV-10376 filed in the United States District Court for the Southern District of New York, or the Sheer Complaint. The putative class involves owner-operators alleging that Swift Transportation misclassified owner-operators as independent contractors in violation of the federal Fair Labor Standards Act, or FLSA, and various New York and California state laws and that such owner-operators should be considered employees. The lawsuit also raises certain related issues with respect to the lease agreements that certain owner-operators have entered into with IEL. At present, in addition to the named plaintiffs, approximately 200 other current or former owner-operators have joined this lawsuit. Upon Swift’s motion, the matter has been transferred from the United States District Court for the Southern District of New York to the United States District Court in Arizona. On May 10, 2010, the plaintiffs filed a motion to conditionally certify an FLSA collective action and authorize notice to the potential class members. On September 23, 2010, plaintiffs filed a motion for a preliminary injunction seeking to enjoin Swift and IEL from collecting payments from plaintiffs who are in default under their lease agreements and related relief. On September 30, 2010, the District Court granted Swift’s motion to compel arbitration and ordered that the class action be stayed pending the outcome of arbitration. The District Court further denied plaintiff’s motion for preliminary injunction and motion for conditional class certification. The District Court also denied plaintiff’s request to arbitrate the matter as a class.

The plaintiff filed a petition for a writ of mandamus to the Ninth Circuit Court of Appeals asking that the District Court’s September 30, 2010 order be vacated. On July 27, 2011, the Ninth Circuit Court of Appeals denied the plaintiff’s petition for writ of mandamus and thereafter the District Court denied plaintiff’s motion for reconsideration and certified its September 30, 2010 order. The plaintiffs filed an interlocutory appeal to the Ninth Circuit Court of Appeals to overturn the District Court’s September 30, 2010 order to compel arbitration alleging that the agreement to arbitrate is exempt from arbitration under Section 1 of the Federal Arbitration Act (“FAA”) because the class of plaintiffs are alleged to be employees exempt from arbitration agreements. On November 6, 2013, the Ninth Circuit Court of Appeals reversed and remanded, stating its prior published decision “expressly held that a district court must determine whether an agreement for arbitration is exempt from arbitration under Section 1 of the FAA as a threshold matter". As a consequence of this determination by the Ninth Circuit Court of Appeals being different from a decision of the Eighth Circuit Court of Appeals on a similar issue, on February 4, 2014, the Company filed a petition for writ of certiorari to the U.S. Supreme Court to address whether the district court or the arbitrator should determine whether the contract is an employment contract exempt from Section 1 of the Federal Arbitration Act. On June 16, 2014, the U.S. Supreme Court denied the Company’s petition for writ of certiorari. The Company intends to vigorously defend against any proceedings. The final disposition of this case and the impact of such final disposition cannot be determined at this time.

California wage, meal and rest employee class action

On March 22, 2010, a class action lawsuit was filed by John Burnell, individually and on behalf of all other similarly situated persons against Swift Transportation: John Burnell and all others similarly situated v. Swift Transportation Co., Inc., Case No. CIVDS 1004377 filed in the Superior Court of the State of California, for the County of San Bernardino, or the Burnell Complaint. On September 3, 2010, upon motion by Swift, the matter was removed to the United States District Court for the Central District of California, Case No. EDCV10-809-VAP. The putative class includes drivers who worked for Swift during the four years preceding the date of filing alleging that Swift failed to pay the California minimum wage, failed to provide proper meal and rest periods and failed to timely pay wages upon separation from employment. The Burnell Complaint was subject to a stay of proceedings pending determination of similar issues in a case unrelated to Swift, Brinker v Hohnbaum, which was then pending before the California Supreme Court. A ruling was entered in the Brinker matter and in August 2012 the stay in the Burnell Complaint was lifted. On April 9, 2013 the Company filed a motion for judgment on the pleadings requesting dismissal of plaintiff's claims

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

related to alleged meal and rest break violations under the California Labor Code alleging that such claims are preempted by the Federal Aviation Administration Authorization Act. On May 29, 2013, the U.S. District Court for the Central District of California granted the Company's motion for judgment on the pleadings and dismissed plaintiff's claims that are based on alleged violations of meal and rest periods set forth in the California Labor Code.

On April 5, 2012, the Company was served with an additional class action complaint alleging facts similar to those as set forth in the Burnell Complaint. This new class action is James R. Rudsell, on behalf of himself and all others similarly situated v. Swift Transportation Co. of Arizona, LLC and Swift Transportation Company, Case No. CIVDS 1200255, in the Superior Court of California for the County of San Bernardino, or the Rudsell Complaint. The Rudsell matter has been stayed pending a resolution in Burnell v Swift. Any claims related to orientation pay in the Rudsell matter have been subsumed within the Montalvo v. Swift class action matter (discussed below).

The issue of class certification must first be resolved before the court will address the merits of the case, and we retain all of our defenses against liability and damages pending a determination of class certification. The Company intends to vigorously defend certification of the class in both matters as well as the merits of these matters should the classes be certified. The final disposition of both cases and the impact of such final dispositions of these cases cannot be determined at this time.

California minimum wage class action

On July 12, 2011, a class action lawsuit was filed by Simona Montalvo on behalf of herself and all similarly situated persons against Swift Transportation: Montalvo et al. v. Swift Transportation Corporation d/b/a ST Swift Transportation Corporation in the Superior Court of California, County of San Diego, or the Montalvo Complaint. The Montalvo Complaint was removed to federal court on August 15, 2011, case number 3-11-CV-1827-L. Upon petition by plaintiffs, the matter was remanded to state court and the Company filed an appeal to this remand, which appeal has been denied. The putative class includes employees alleging that candidates for employment within the four year statutory period in California were not paid the state mandated minimum wage during their orientation phase. On July 29, 2013, the court certified the class. The Company appealed the class certification and the remand to state court but on April 10, 2014, the Company’s appeal of class certification was denied.

The Company intends to vigorously defend against the merits of this matter. The final disposition of this case and the impact of such final disposition of this case cannot be determined at this time.

Washington overtime class action

On September 9, 2011, a class action lawsuit was filed by Troy Slack on behalf of himself and all similarly situated persons against Swift Transportation: Troy Slack, et al v. Swift Transportation Co. of Arizona, LLC and Swift Transportation Corporation in the State Court of Washington, Pierce County, or the Slack Complaint. The Slack Complaint was removed to federal court on October 12, 2011, case number 11-2-114380. The putative class includes all current and former Washington State based employee drivers during the three year statutory period alleging that they were not paid overtime in accordance with Washington State law and that they were not properly paid for meals and rest periods. On November 23, 2013 the court entered an order on plaintiffs' motion to certify the class. The court only certified the class as it pertains to dedicated route drivers and did not certify any other class or claims including any class related to over the road drivers (“OTR Drivers”). The court also further limited the class of dedicated drivers to only those dedicated drivers that either begin or end their shift in the state of Washington and therefore is a Washington-based employee. Swift is appealing the limited certification of the Washington dedicated drivers.

The issue of class certification must first be resolved before the court will address the merits of the case, and we retain all of our defenses against liability and damages pending a determination of class certification. The Company intends to vigorously defend certification of the class as well as the merits of these matters should the class be certified. The final disposition of this case and the impact of such final disposition of this case cannot be determined at this time.

Utah minimum wage collective action

On October 8, 2013, a collective action lawsuit was filed by Jacob Roberts on behalf of himself and all similarly situated persons against Central Refrigerated Service, Inc., Jon Isaacson, Bob Baer and John Does 1-10 (“CRS”): Jacob Roberts and Collective Action Plaintiffs John Does 1-10 v. Central Refrigerated Service, Inc., Jon Isaacson, Bob Baer and John Does 1-10 in the United States District Court for the District of Utah, Case No. 2;13-ev-00911-EJF, or the Roberts Complaint. The putative nationwide class includes employees alleging that candidates for employment within the three year statutory period in Utah were not paid proper compensation pursuant to the FLSA, specifically that the putative collective action plaintiffs were not paid the state mandated minimum wage for orientation, travel, and training.

The issue of collective action certification in the Roberts Complaint must first be resolved before the court will address the merits of the case, and we retain all of our defenses against liability and damages pending a determination of collective action certification. Central intends to vigorously defend against collective action certification as well as the merits of this matter should the collective action be certified. The final disposition of this case and the impact of such final disposition of this case cannot be determined at this time.

Utah collective and individual arbitration

On June 1, 2012, a collective and class action complaint was filed by Gabriel Cilluffo, Kevin Shire and Bryan Ratterree individually and on behalf of themselves and all similarly situated persons against Central Refrigerated Services, Inc., Central Leasing, Inc., Jon Isaacson, and Jerry Moyes (“Central”): Gabriel Cilluffo, Kevin Shire and Bryan Ratterree individually and on behalf themselves and all similarly situated persons v. Central Refrigerated Services, Inc., Central Leasing, Inc., Jon Isaacson, and Jerry Moyes in the United States District Court for the Central District of California, Case No. ED CV 12-00886, or the Cilluffo Complaint. The putative class involves owner-operators alleging that Central misclassified owner-operators as independent contractors in violation of the FLSA, and that such owner-operators should be considered employees. The lawsuit also raises a claim of forced labor and state law contractual claims. On September 24, 2012, the California District Court ordered that FLSA claim proceed to collective arbitration under the Utah Uniform Arbitration Act (“UUAA”) and not the Federal Arbitration Act (“FAA”). The September 24, 2012 order directed the arbitrator to determine the validity of proceeding as a collective arbitration under the UAA, and then if the arbitrator determines that such collective action is permitted, then the arbitrator is to consider the plaintiff’s FLSA claim. On November

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

8, 2012, the California District Court entered a clarification order clarifying that the plaintiff’s FLSA claim was to proceed to collective arbitration under the UUAA, but the plaintiff’s forced labor claim and state law contractual claims were to proceed as individual arbitrations for those plaintiffs seeking to pursue those specific claims. Central filed a motion for reconsideration and a motion for interlocutory appeal of the California District Court’s orders, both of which were denied and the claims are proceeding to collective and individual arbitration as originally ordered. On December 9, 2013 the arbitrator determined that the issue of misclassification as it relates to the FLSA will proceed as a collective arbitration, however the plaintiffs forced labor claim and state law claims of contractual misrepresentation and breach of contract must proceed on an individual arbitration basis and not as a class.

Central intends to vigorously defend collective arbitration in the Cilluffo Complaint as well as the merits of the FLSA claim and any individual arbitration matters that are filed and proceed on the forced labor and state contract law claims. The final disposition of this case and the impact of such final disposition of this case cannot be determined at this time.

California minimum wage class action

On November 7, 2013, a class action lawsuit was filed by Jorge Calix on behalf of himself and all similarly situated persons against Central Refrigerated Service, Inc.: Calix et al. v. Central Refrigerated Service, Inc. (“Central”) in the Superior Court of California, County of San Bernardino, or the Calix Complaint. The putative class includes employees alleging that candidates for employment within the four year statutory period in California were not paid the state mandated minimum wage during their orientation phase. On December 13, 2013, Central filed an answer denying the allegations.

The issue of class certification must first be resolved before the court will address the merits of the case, and we retain all of our defenses against liability and damages pending a determination of class certification. Central intends to vigorously defend against certification of the class as well as the merits of this matter should the class be certified. The final disposition of this case and the impact of such final disposition of this case cannot be determined at this time.

Environmental notice

On April 17, 2009, the Company received a notice from the Lower Willamette Group, or LWG, advising that there are a total of 250 potentially responsible parties, or PRPs, with respect to alleged environmental contamination of the Lower Willamette River in Portland, Oregon designated as the Portland Harbor Superfund site, or the Site, and that as a previous landowner at the Site the Company has been asked to join a group of 60 PRPs and proportionately contribute to (i) reimbursement of funds expended by LWG to investigate environmental contamination at the Site and (ii) remediation costs of the same, rather than be exposed to potential litigation. Although the Company does not believe it contributed any contaminants to the Site, the Company was at one time the owner of property at the Site and the Comprehensive Environmental Response, Compensation and Liability Act imposes a standard of strict liability on property owners with respect to environmental claims. Notwithstanding this standard of strict liability, the Company believes our potential proportionate exposure to be minimal and not material. No formal complaint has been filed in this matter. The Company’s pollution liability insurer has been notified of this potential claim. The Company does not believe the outcome of this matter is likely to have a material adverse effect on Swift. However, the final disposition of this matter and the impact of such final disposition cannot be determined at this time.

2013 Environmental Incident

On May 14, 2013, a Swift Transportation tractor and trailer was involved in an accident in Bridgeport, California that resulted in fuel and other liquid components being released into the ground and a nearby stream. Based on soil and water testing of the impacted area, the Company expects the range of cost to remediate this release is $0.3 million to $0.5 million.

Other environmental

Our tractors and trailers are involved in motor vehicle accidents, experience damage, mechanical failures and cargo issues as an incidental part of our normal ordinary course of operations. From time to time these matters result in the discharge of diesel fuel, motor oil or other hazardous materials into the environment. Depending on local regulations and who is determined to be at fault, we are sometimes responsible for the clean-up costs associated with these discharges. As of June 30, 2014, we estimate our total legal liability for all such clean-up and remediation costs to be approximately $0.5 million in the aggregate for all current and prior year claims.

Note 14. Segment information

The Company’s four reportable operating segments are Truckload, Dedicated, Central Refrigerated and Intermodal. In the first quarter of 2014, the Company reorganized its reportable segments to reflect management’s revised reporting structure of its lines of businesses following the integration of Central Refrigerated. In association with the operational reorganization, the operations of Central Refrigerated's TOFC business are reported within the Company's Intermodal segment and the operations of Central Refrigerated's logistics business, third-party leasing, and other services provided to owner-operators are reported in the Company's other non-reportable segment. All prior period historical results related to the above noted segment reorganization have been retrospectively recast.


•	Truckload. The truckload segment consists of one-way movements over irregular routes throughout the United States, Mexico, and Canada. This service utilizes both company and owner-operator tractors with dry van, flatbed, and other specialized trailing equipment.


•	Dedicated. Through the dedicated segment, the Company devotes use of equipment and offers tailored solutions under long-term contracts. This dedicated segment utilizes refrigerated, dry van, flatbed and other specialized trailing equipment.


•	Central Refrigerated. The Central Refrigerated segment is primarily shipments for customers that require temperature-controlled trailers and represents the core operations of Central Refrigerated. These shipments include one-way movements over irregular routes and dedicated truck operations.


•	Intermodal. The intermodal segment includes revenue generated by moving freight over the rail in our containers and other trailing equipment, combined with revenue for drayage to transport loads between the railheads and customer locations.

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Notes to Consolidated Financial Statements (Unaudited) – (continued)


•	Other businesses. Nonreportable segments are comprised of the Company’s freight brokerage and logistics management services, as well as revenue generated by the Company’s subsidiaries offering support services to its customers and owner-operators, including shop maintenance, equipment leasing, and insurance.

The Company uses the “management approach” to determine its reportable operating segments, as well as to determine the basis of reporting the operating segment information. The management approach focuses on financial information that the Company’s management uses to make operating decisions. The chief operating decision makers use operating revenues, operating expense categories, operating ratios, operating income and key operating statistics to evaluate performance and allocate resources to the Company’s operations.

Operating income is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources and, consistent with GAAP accounting guidance for segment reporting, it is the Company’s measure of segment performance and is reported below. Operating income should not be viewed as a substitute for GAAP net income (loss). The Company believes the presentation of operating income enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business segments.

Operating income is defined as operating revenues less operating expenses, before tax.

Based on the unique nature of the operating structure of the Company, revenue generating assets are interchangeable between segments. Therefore, the Company does not prepare separate balance sheets by segment as assets are not separately identifiable by segment. The Company allocates depreciation and amortization expense on its property and equipment to the segments based on the actual utilization of the asset by the segment during the period.

The Company’s foreign operations total revenue was less than 5.0% of the Company’s total revenue for the three and six months ended June 30, 2014 and 2013, respectively.

Set forth in the tables below is certain financial information with respect to the Company’s reportable segments (in thousands):



	Operating Revenue
	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Truckload	$	575,481		$	588,724		$	1,128,538		$	1,148,319
Dedicated	223,098			182,651			416,751			361,877
Central Refrigerated	106,911			111,238			213,674			217,640
Intermodal	100,911			90,994			192,224			174,258
Subtotal	1,006,401			973,607			1,951,187			1,902,094
Nonreportable segments	83,491			71,915			159,157			143,972
Intersegment eliminations	(13,994		)	(16,451		)	(26,000		)	(35,387		)
Consolidated operating revenue	$	1,075,898		$	1,029,071		$	2,084,344		$	2,010,679



	Operating Income (Loss)
	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
Truckload	$	69,596		$	64,614	$	101,503		$	107,017
Dedicated	21,112			24,263		32,642			43,217
Central Refrigerated	3,662			5,660		6,082			10,381
Intermodal	(495		)	788		(1,421		)	(816		)
Subtotal	93,875			95,325		138,806			159,799
Nonreportable segments	147			4,941		1,386			10,185
Consolidated operating income	$	94,022		$	100,266	$	140,192		$	169,984

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Notes to Consolidated Financial Statements (Unaudited) – (continued)



	Depreciation and Amortization Expense
	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Truckload	$	28,316	$	32,387	$	58,561	$	63,380
Dedicated	13,670		11,223		26,075		21,728
Central Refrigerated	2,914		3,821		6,020		7,799
Intermodal	2,583		2,318		4,951		4,745
Subtotal	47,483		49,749		95,607		97,652
Nonreportable segments	7,308		7,131		15,359		14,098
Consolidated depreciation and amortization expense	$	54,791	$	56,880	$	110,966	$	111,750

Other Intersegment Transactions

Certain operating segments provide transportation and related services for other affiliates outside their reportable segment. Revenues for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results.

Note 15. Accumulated Other Comprehensive Loss

The following table is a reconciliation of accumulated other comprehensive loss by component (in thousands):



	Derivative Financial Instruments			Foreign Currency Transactions		Accumulated Other Comprehensive Loss
Balance as of December 31, 2013	$	(6,245	)	$	83	$	(6,162	)
Other comprehensive loss before reclassifications	—			—		—
Amounts reclassified from accumulated other comprehensive loss	1,719			—		1,719
Net current-period other comprehensive income	1,719			—		1,719
Balance as of June 30, 2014	$	(4,526	)	$	83	$	(4,443	)
All amounts are net-of-tax. Amounts in parenthesis indicate debits, or loss.

The following table presents details about reclassifications out of accumulated other comprehensive loss for the three and six months ended June 30, 2014 and 2013 (in thousands):



	Amounts Reclassified from Accumulated Other Comprehensive Loss
	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013			Statement of Income Classifications
Gains and losses on cash flow hedging:
Interest rate swaps	$	1,482		$	468		$	2,796		$	959		Derivative interest expense
Income tax benefit	(571		)	(180		)	(1,077		)	(369		)	Income tax expense
	$	911		$	288		$	1,719		$	590		Net income

Note 16. Guarantor Condensed Consolidating Financial Statements

The payment of principal and interest on the Company’s senior second priority secured notes are guaranteed by the Company and the Company’s 100% owned domestic subsidiaries (the “Guarantor Subsidiaries”) other than its driver academy subsidiary, its captive insurance subsidiaries, its special-purpose receivables securitization subsidiary, and its foreign subsidiaries (the “Non-guarantor Subsidiaries”). The separate financial statements of the Guarantor Subsidiaries are not included herein because the Guarantor Subsidiaries are the Company’s 100% owned consolidated subsidiaries and are jointly, severally, fully and unconditionally liable for the obligations represented by the senior second priority secured notes.

Pursuant to the terms of the Indenture governing the senior second priority secured notes, the guarantees are full and unconditional, but are subject to release under the following circumstances:

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

Ÿ in connection with any sale, disposition or transfer of all or substantially all of the assets to a person that is not the parent, the Company or a subsidiary guarantor;

Ÿ in connection with any sale, disposition or transfer of all of the capital stock of that subsidiary guarantor to a person that is not the parent, the Company or a subsidiary guarantor;

Ÿ if the Company designates any restricted subsidiary that is a subsidiary guarantor to be an Unrestricted Subsidiary,

Ÿ upon legal Defeasance or the discharge of the Company's obligation under the Indenture; or

Ÿ at such time as such subsidiary guarantor does not have any indebtedness that would have required a guarantee.

Although the guarantees are subject to release under the above described circumstances, we have concluded they are still deemed full and unconditional for purposes of Rule 3-10 of Regulation S-X because these circumstances are customary, and accordingly, the Company concluded that it may rely on Rule 3-10 of Regulation S-X, as the other requirements of Rule 3-10 have been met.

The condensed financial statements present condensed financial data for (i) Swift Transportation Company (on a parent only basis), (ii) Swift Services Holdings, Inc. (on an issuer only basis), (iii) the combined Guarantor Subsidiaries, (iv) the combined Non-Guarantor Subsidiaries, (v) an elimination column for adjustments to arrive at the information for the parent company and subsidiaries on a consolidated basis and (vi) the parent company and subsidiaries on a consolidated basis as of June 30, 2014 and December 31, 2013 and for the three and six months ended June 30, 2014 and 2013.

Investments in subsidiaries are accounted for by the respective parent company using the equity method for purposes of this presentation. Results of operations of subsidiaries are therefore reflected in the parent company’s investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions.

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating balance sheet as of June 30, 2014 (in thousands)



	Swift Transportation Company (Parent)		Swift Services Holdings, Inc. (Issuer)		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations for Consolidation			Consolidated
Cash and cash equivalents	$	—	$	—	$	66,487	$	7,041	$	—		$	73,528
Restricted cash	—		—		—		52,815		—			52,815
Restricted investments, held to maturity, amortized cost	—		—		—		25,666		—			25,666
Accounts receivable, net	—		—		31,620		431,974		(3,236		)	460,358
Intercompany receivable	131,608		344,418		—		57,073		(533,099		)	—
Other current assets	9,542		—		118,297		16,248		(4,031		)	140,056
Total current assets	141,150		344,418		216,404		590,817		(540,366		)	752,423
Property and equipment, net	—		—		1,412,170		38,182		—			1,450,352
Investment in subsidiaries	296,176		909,847		1,010,290		—		(2,216,313		)	—
Other assets	10,453		2,028		65,534		3,846		(31,126		)	50,735
Intangible assets, net	—		—		299,071		9,269		—			308,340
Goodwill	—		—		246,977		6,279		—			253,256
Total assets	$	447,779	$	1,256,293	$	3,250,446	$	648,393	$	(2,787,805	)	$	2,815,106
Intercompany payable	$	—	$	4,031	$	533,099	$	—	$	(537,130	)	$	—
Current portion of long-term debt and obligations under capital leases	2,430		—		79,745		23,242		(19,455		)	85,962
Other current liabilities	17,430		3,814		308,348		23,980		(3,236		)	350,336
Total current liabilities	19,860		7,845		921,192		47,222		(559,821		)	436,298
Long-term debt and obligations under capital leases, less current portion	—		455,711		557,673		4,013		(772		)	1,016,625
Deferred income taxes	—		—		457,286		8,112		(10,899		)	454,499
Revolving line of credit	—		—		99,000		—		—			99,000
Securitization of accounts receivable	—		—		—		319,000		—			319,000
Other liabilities	—		—		89,532		52,344		—			141,876
Total liabilities	19,860		463,556		2,124,683		430,691		(571,492		)	2,467,298
Total stockholders’ equity	427,919		792,737		1,125,763		217,702		(2,216,313		)	347,808
Total liabilities and stockholders’ equity	$	447,779	$	1,256,293	$	3,250,446	$	648,393	$	(2,787,805	)	$	2,815,106

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating balance sheet as of December 31, 2013 (in thousands)



	Swift Transportation Company (Parent)		Swift Services Holdings, Inc. (Issuer)		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations for Consolidation			Consolidated
Cash and cash equivalents	$	—	$	—	$	54,564	$	4,614	$	—		$	59,178
Restricted cash	—		—		—		50,833		—			50,833
Restricted investments, held to maturity, amortized cost	—		—		—		25,814		—			25,814
Accounts receivable, net	—		—		28,997		394,044		(4,605		)	418,436
Intercompany receivable	85,498		400,569		—		55,799		(541,866		)	—
Other current assets	37,022		—		127,775		16,270		(1,296		)	179,771
Total current assets	122,520		400,569		211,336		547,374		(547,767		)	734,032
Property and equipment, net	—		—		1,407,414		40,393		—			1,447,807
Investment in subsidiaries	239,432		870,599		983,289		—		(2,093,320		)	—
Other assets	11,780		2,355		83,967		4,639		(45,575		)	57,166
Intangible assets, net	—		—		307,092		9,655		—			316,747
Goodwill	—		—		246,977		6,279		—			253,256
Total assets	$	373,732	$	1,273,523	$	3,240,075	$	608,340	$	(2,686,662	)	$	2,809,008
Intercompany payable	$	—	$	1,296	$	542,772	$	—	$	(544,068	)	$	—
Current portion of long-term debt and obligations under capital leases	6,036		—		64,970		36,626		(32,576		)	75,056
Other current liabilities	2,281		6,389		277,921		27,170		(4,449		)	309,312
Total current liabilities	8,317		7,685		885,663		63,796		(581,093		)	384,368
Long-term debt and obligations under capital leases, less current portion	—		493,825		747,918		5,046		(25		)	1,246,764
Deferred income taxes	—		—		487,670		8,754		(12,224		)	484,200
Securitization of accounts receivable	—		—		—		264,000		—			264,000
Revolving line of credit	—		—		17,000		—		—			17,000
Other liabilities	—		—		73,774		55,315		—			129,089
Total liabilities	8,317		501,510		2,212,025		396,911		(593,342		)	2,525,421
Total stockholders’ equity	365,415		772,013		1,028,050		211,429		(2,093,320		)	283,587
Total liabilities and stockholders’ equity	$	373,732	$	1,273,523	$	3,240,075	$	608,340	$	(2,686,662	)	$	2,809,008

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of income for the three months ended June 30, 2014 (in thousands)



	Swift Transportation Company (Parent)			Swift Services Holdings, Inc. (Issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations for Consolidation			Consolidated
Operating revenue	$	—		$	—		$	1,054,756		$	39,206		$	(18,064	)	$	1,075,898
Operating expenses:
Salaries, wages and employee benefits	1,291			—			228,897			7,905			—			238,093
Operating supplies and expenses	679			1			84,815			1,296			(2,714		)	84,077
Fuel	—			—			146,495			7,182			—			153,677
Purchased transportation	—			—			349,494			2,595			(11,840		)	340,249
Rental expense	—			—			55,524			776			(165		)	56,135
Insurance and claims	1,680			—			25,457			9,529			(3,345		)	33,321
Depreciation and amortization of property and equipment	—			—			53,473			1,318			—			54,791
Amortization of intangibles	—			—			4,010			193			—			4,203
Gain on disposal of property and equipment	—			—			(8,312		)	—			—			(8,312		)
Communication and utilities	—			—			7,441			275			—			7,716
Operating taxes and licenses	62			—			15,063			2,801			—			17,926
Total operating expenses	3,712			1			962,357			33,870			(18,064		)	981,876
Operating income (loss)	(3,712		)	(1		)	92,399			5,336			—			94,022
Interest expense, net	19			11,918			9,381			1,061			—			22,379
Other (income) expenses, net	(42,587		)	(33,347		)	(23,638		)	(3,485		)	109,337			6,280
Income before income taxes	38,856			21,428			106,656			7,760			(109,337		)	65,363
Income tax expense (benefit)	(1,342		)	(5,095		)	28,896			2,706			—			25,165
Net income (loss)	$	40,198		$	26,523		$	77,760		$	5,054		$	(109,337	)	$	40,198

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Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of income for the three months ended June 30, 2013 (in thousands)



	Swift Transportation Company (Parent)			Swift Services Holdings, Inc. (Issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations for Consolidation			Consolidated
Operating revenue	$	—		$	—		$	1,009,881		$	40,813		$	(21,623	)	$	1,029,071
Operating expenses:
Salaries, wages and employee benefits	833			—			215,346			7,673			—			223,852
Operating supplies and expenses	631			4			75,194			5,041			(1,874		)	78,996
Fuel	—			—			154,059			6,827			—			160,886
Purchased transportation	—			—			317,745			3,641			(13,269		)	308,117
Rental expense	—			—			42,259			876			(139		)	42,996
Insurance and claims	—			—			29,562			10,376			(6,341		)	33,597
Depreciation and amortization of property and equipment	—			—			55,720			1,160			—			56,880
Amortization of intangibles	—			—			4,010			193			—			4,203
Gain on disposal of property and equipment	—			—			(5,178		)	35			—			(5,143		)
Communication and utilities	—			—			5,675			226			—			5,901
Operating taxes and licenses	—			—			15,719			2,801			—			18,520
Total operating expenses	1,464			4			910,111			38,849			(21,623		)	928,805
Operating income (loss)	(1,464		)	(4		)	99,770			1,964			—			100,266
Interest expense, net	—			12,914			10,405			1,429			—			24,748
Other (income) expenses, net	(20,844		)	(38,501		)	(30,739		)	(2,981		)	91,741			(1,324		)
Income (loss) before income taxes	19,380			25,583			120,104			3,516			(91,741		)	76,842
Income tax expense (benefit)	(23,561		)	(4,793		)	53,821			1,496			—			26,963
Net income (loss)	$	42,941		$	30,376		$	66,283		$	2,020		$	(91,741	)	$	49,879

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Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of income for the six months ended June 30, 2014 (in thousands)



	Swift Transportation Company (Parent)			Swift Services Holdings, Inc. (Issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations for Consolidation			Consolidated
Operating revenue	$	—		$	—		$	2,043,749		$	77,728		$	(37,133	)	$	2,084,344
Operating expenses:
Salaries, wages and employee benefits	2,352			—			449,431			15,676			—			467,459
Operating supplies and expenses	1,363			1			161,090			7,924			(5,476		)	164,902
Fuel	—			—			295,627			14,072			—			309,699
Purchased transportation	—			—			679,006			5,052			(24,640		)	659,418
Rental expense	—			—			106,516			1,666			(328		)	107,854
Insurance and claims	3,395			—			60,392			18,671			(6,689		)	75,769
Depreciation and amortization of property and equipment	—			—			108,241			2,725			—			110,966
Amortization of intangibles	—			—			8,021			386			—			8,407
Gain on disposal of property and equipment	—			—			(11,471		)	—			—			(11,471		)
Communication and utilities	—			—			14,321			565			—			14,886
Operating taxes and licenses	62			—			30,580			5,621			—			36,263
Total operating expenses	7,172			1			1,901,754			72,358			(37,133		)	1,944,152
Operating income (loss)	(7,172		)	(1		)	141,995			5,370			—			140,192
Interest expense, net	49			24,699			19,325			2,418			—			46,491
Other (income) expenses, net	(56,743		)	(34,510		)	(16,863		)	(6,547		)	122,992			8,329
Income (loss) before income taxes	49,522			9,810			139,533			9,499			(122,992		)	85,372
Income tax expense (benefit)	(2,981		)	(10,914		)	43,541			3,223			—			32,869
Net income (loss)	$	52,503		$	20,724		$	95,992		$	6,276		$	(122,992	)	$	52,503

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Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of income for the six months ended June 30, 2013 (in thousands)



	Swift Transportation Company (Parent)			Swift Services Holdings, Inc. (Issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations for Consolidation			Consolidated
Operating revenue	$	—		$	—		$	1,973,623		$	79,439		$	(42,383	)	$	2,010,679
Operating expenses:
Salaries, wages and employee benefits	1,378			—			434,067			14,892			—			450,337
Operating supplies and expenses	1,130			4			145,532			8,029			(3,632		)	151,063
Fuel	—			—			315,917			13,085			—			329,002
Purchased transportation	—			—			619,395			6,619			(25,741		)	600,273
Rental expense	—			—			82,149			1,797			(327		)	83,619
Insurance and claims	—			—			56,293			21,525			(12,683		)	65,135
Depreciation and amortization of property and equipment	—			—			109,550			2,200			—			111,750
Amortization of intangibles	—			—			8,021			386			—			8,407
Gain on disposal of property and equipment	—			—			(8,011		)	20			—			(7,991		)
Communication and utilities	—			—			12,043			423			—			12,466
Operating taxes and licenses	—			—			31,169			5,465			—			36,634
Total operating expenses	2,508			4			1,806,125			74,441			(42,383		)	1,840,695
Operating income (loss), net	(2,508		)	(4		)	167,498			4,998			—			169,984
Interest expense, net	—			25,827			22,753			2,501			—			51,081
Other (income) expenses	(44,343		)	(45,448		)	(31,271		)	(5,347		)	123,491			(2,918		)
Income before income taxes	41,835			19,617			176,016			7,844			(123,491		)	121,821
Income tax expense (benefit)	(24,447		)	(9,583		)	72,336			3,344			—			41,650
Net income (loss)	$	66,282		$	29,200		$	103,680		$	4,500		$	(123,491	)	$	80,171

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Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of comprehensive income for the three months ended June 30, 2014 (in thousands)



	Swift Transportation Company (Parent)		Swift Services Holdings, Inc. (Issuer)		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations for Consolidation			Consolidated
Net income	$	40,198	$	26,523	$	77,760		$	5,054	$	(109,337	)	$	40,198
Other comprehensive income before income taxes:
Accumulated losses on derivatives reclassified to derivative interest expense	—		—		1,482			—		—			1,482
Change in fair value of interest rate swaps	—		—		—			—		—			—
Other comprehensive income before income taxes	—		—		1,482			—		—			1,482
Income tax effect of items of other comprehensive income	—		—		(571		)	—		—			(571		)
Total comprehensive income	$	40,198	$	26,523	$	78,671		$	5,054	$	(109,337	)	$	41,109

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Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of comprehensive income for the three months ended June 30, 2013 (in thousands)



	Swift Transportation Company (Parent)		Swift Services Holdings, Inc. (Issuer)		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations for Consolidation			Consolidated
Net income (loss)	$	42,941	$	30,376	$	66,283		$	2,020	$	(91,741	)	$	49,879
Other comprehensive income before income taxes:
Accumulated losses on derivatives reclassified to derivative interest expense	—		—		468			—		—			468
Change in fair value of interest rate swaps	—		—		174			—		—			174
Other comprehensive income before income taxes	—		—		642			—		—			642
Income tax effect of items of other comprehensive income	—		—		(244		)	—		—			(244		)
Total comprehensive income (loss)	$	42,941	$	30,376	$	66,681		$	2,020	$	(91,741	)	$	50,277

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Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of comprehensive income for the six months ended June 30, 2014 (in thousands)



	Swift Transportation Company (Parent)		Swift Services Holdings, Inc. (Issuer)		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations for Consolidation			Consolidated
Net income (loss)	$	52,503	$	20,724	$	95,992		$	6,276	$	(122,992	)	$	52,503
Other comprehensive income before income taxes:
Accumulated losses on derivatives reclassified to derivative interest expense	—		—		2,796			—		—			2,796
Change in fair value of interest rate swaps	—		—		—			—		—			—
Other comprehensive income before income taxes	—		—		2,796			—		—			2,796
Income tax effect of items of other comprehensive income	—		—		(1,077		)	—		—			(1,077		)
Total comprehensive income (loss)	$	52,503	$	20,724	$	97,711		$	6,276	$	(122,992	)	$	54,222

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Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of comprehensive income for the six months ended June 30, 2013 (in thousands)



	Swift Transportation Company (Parent)		Swift Services Holdings, Inc. (Issuer)		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations for Consolidation			Consolidated
Net income (loss)	$	66,282	$	29,200	$	103,680		$	4,500	$	(123,491	)	$	80,171
Other comprehensive income before income taxes:
Accumulated losses on derivatives reclassified to derivative interest expense	—		—		959			—		—			959
Change in fair value of interest rate swaps	—		—		(145		)	—		—			(145		)
Other comprehensive income before income taxes	—		—		814			—		—			814
Income tax effect of items of other comprehensive income	—		—		(218		)	—		—			(218		)
Total comprehensive income (loss)	$	66,282	$	29,200	$	104,276		$	4,500	$	(123,491	)	$	80,767

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Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of cash flows for the six months ended June 30, 2014 (in thousands)



	Swift Transportation Company (Parent)			Swift Services Holdings, Inc. (Issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations for Consolidation		Consolidated
Net cash provided by (used in) operating activities	$	42,070		$	(56,151	)	$	233,111		$	(35,547	)	$	—	$	183,483
Cash flows from investing activities:
Increase in restricted cash	—			—			—			(1,982		)	—		(1,982		)
Change in restricted investments	—			—			—			(113		)	—		(113		)
Proceeds from sale of property and equipment	—			—			77,088						—		77,088
Capital expenditures	—			—			(134,554		)	(514		)	—		(135,068		)
Payments received on notes receivable				—			2,226			—			—		2,226
Expenditures on assets held for sale	—			—			(1,991		)	—			—		(1,991		)
Payments received on assets held for sale	—			—			13,603			—			—		13,603
Payments received on equipment sale receivables	—			—			385			—			—		385
Net cash used in investing activities	—			—			(43,243		)	(2,609		)	—		(45,852		)
Cash flows from financing activities:
Proceeds from long-term debt	—			—			450,000			—			—		450,000
Payment of deferred loan costs	—			—			(10,541		)	—			—		(10,541		)
Borrowings under accounts receivable securitization	—			—			—			95,000			—		95,000
Repayment of long-term debt and capital leases	(3,607		)	—			(701,732		)	(2,047		)	—		(707,386		)
Net borrowings on revolving line of credit	—			—			82,000			—			—		82,000
Repayment of accounts receivable securitization	—			—			—			(40,000		)	—		(40,000		)
Net funding (to) from affiliates	(46,109		)	56,151			2,328			(12,370		)	—		—
Proceeds from exercise of stock options	5,811			—			—			—			—		5,811
Income tax benefit from exercise of stock options	1,835			—			—			—			—		1,835
Net cash provided by (used in) financing activities	(42,070		)	56,151			(177,945		)	40,583			—		(123,281		)
Net increase in cash and cash equivalents	—			—			11,923			2,427			—		14,350
Cash and cash equivalents at beginning of period	—			—			54,564			4,614			—		59,178
Cash and cash equivalents at end of period	$	—		$	—		$	66,487		$	7,041		$	—	$	73,528

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Swift Transportation Company and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited) – (continued)

Condensed consolidating statement of cash flows for the six months ended June 30, 2013 (in thousands)



	Swift Transportation Company (Parent)			Swift Services Holdings, Inc. (Issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations for Consolidation			Consolidated
Net cash provided by (used in) operating activities	$	57,295		$	(14,029	)	$	222,329		$	(19,949	)	$	—		$	245,646
Cash flows from investing activities:
Decrease in restricted cash	—			—			—			8,984			—			8,984
Change in restricted investments	—			—			—			(4,680		)	—			(4,680		)
Proceeds from sale of property and equipment	—			—			47,125			136			—			47,261
Capital expenditures	—			—			(163,815		)	(505		)	—			(164,320		)
Payments received on notes receivable	—			—			2,074			—			—			2,074
Expenditures on assets held for sale	—			—			(1,614		)	—			—			(1,614		)
Payments received on assets held for sale	—			—			22,773			—			—			22,773
Payments received on equipment sale receivables	—			—			644			—			—			644
Dividends from subsidiary	—			—			6,800			—			(6,800		)	—
Payments received on intercompany notes payable	—			—			3,399			—			(3,399		)	—
Capital contribution to subsidiary	—			—			(1,160		)	—			1,160			—
Net cash provided by (used in) investing activities	—			—			(83,774		)	3,935			(9,039		)	(88,878		)
Cash flows from financing activities:
Repayment of long-term debt and capital leases	—			—			(129,300		)	(902		)	—			(130,202		)
Net borrowings on revolving line of credit	—			—			7,313			—			—			7,313
Borrowings under accounts receivable securitization	—			—			—			80,000			—			80,000
Repayment of accounts receivable securitization	—			—			—			(119,000		)	—			(119,000		)
Proceeds from long-term debt	—			—			16,000			7,528			—			23,528
Payment of deferred loan costs	—			—			(1,332		)	(851		)	—			(2,183		)
Distribution to Central stockholders, pre-acquisition	—			—			(1,988		)	—			—			(1,988		)
Issuance of Central loan receivable, pre-acquisition	—			—			(30,000		)	—			—			(30,000		)
Proceeds from exercise of stock options	6,182			—			—			—			—			6,182
Income tax benefit from exercise of stock options	(504		)	—			—			—			—			(504		)
Dividend to parent	—			—			—			(6,800		)	6,800			—
Capital contribution	—			—			—			1,160			(1,160		)	—
Repayment of intercompany notes payable	—			—			—			(3,399		)	3,399			—
Net funding (to) from affiliates	(62,973		)	14,029			(14,052		)	62,996			—			—
Net cash provided by (used in) financing activities	(57,295		)	14,029			(153,359		)	20,732			9,039			(166,854		)
Net increase (decrease) in cash and cash equivalents	—			—			(14,804		)	4,718			—			(10,086		)
Cash and cash equivalents at beginning of period	—			—			43,877			9,719			—			53,596
Cash and cash equivalents at end of period	$	—		$	—		$	29,073		$	14,437		$	—		$	43,510

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2013.

Non-GAAP Measures

In addition to disclosing financial results that are determined in accordance with United States generally accepted accounting principles, or GAAP, we also disclose certain non-GAAP financial information, such as, Adjusted Operating Ratio, Adjusted EBITDA and Adjusted EPS, which are not recognized measures under GAAP and should not be considered alternatives to or superior to profitability and cash flow measures derived in accordance with GAAP. We use Adjusted Operating Ratio, Adjusted EBITDA and Adjusted EPS as a supplement to our GAAP results in evaluating certain aspects of our business, as described below. We believe our presentation of Adjusted Operating Ratio, Adjusted EBITDA and Adjusted EPS is useful because it provides investors and securities analysts the same information that we use internally for purposes of assessing our core operating performance. See below for more information on our use of Adjusted Operating Ratio, Adjusted EBITDA and Adjusted EPS, as well as a description of the computation and reconciliation of our Operating Ratio to our Adjusted Operating Ratio, our net income to Adjusted EBITDA and our diluted earnings per share to Adjusted EPS.

We define Adjusted Operating Ratio as (a) total operating expenses, less (i) fuel surcharges, (ii) amortization of intangibles from our 2007 going-private transaction, (iii) non-cash impairment charges, (iv) other special non-cash items, and (v) excludable transaction costs, as a percentage of (b) total revenue excluding fuel surcharge revenue (Revenue xFSR). We believe fuel surcharge is sometimes volatile and eliminating the impact of this source of revenue (by netting fuel surcharge revenue against fuel expense) affords a more consistent basis for comparing our results of operations. We also believe excluding impairments, non-comparable nature of the intangibles from our going-private transaction and other special items enhances the comparability of our performance from period to period. A reconciliation of our Adjusted Operating Ratio for each of the periods indicated is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Total GAAP operating revenue	$	1,075,898		$	1,029,071		$	2,084,344		$	2,010,679
Less: Fuel surcharge revenue	199,561			198,924			391,008			395,981
Revenue xFSR	876,337			830,147			1,693,336			1,614,698
Total GAAP operating expense	981,876			928,805			1,944,152			1,840,695
Adjusted for:
Fuel surcharge revenue	(199,561		)	(198,924		)	(391,008		)	(395,981		)
Amortization of certain intangibles (a)	(3,912		)	(3,912		)	(7,824		)	(7,824		)
Adjusted operating expense	778,403			725,969			1,545,320			1,436,890
Adjusted operating income	$	97,934		$	104,178		$	148,016		$	177,808
Operating Ratio	91.3		%	90.3		%	93.3		%	91.5		%
Adjusted Operating Ratio	88.8		%	87.5		%	91.3		%	89.0		%


(a)	Amortization of certain intangibles reflects the non-cash amortization expense relating to certain intangible assets identified in our 2007 going private transaction.

We define adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") as net income (loss) plus (i) depreciation and amortization, (ii) interest and derivative interest expense, including other fees and charges associated with indebtedness, net of interest income, (iii) income taxes, (iv) non-cash equity compensation expense, (v) non-cash impairments, (vi) other special non-cash items, and (vii) excludable transaction costs. We believe that Adjusted EBITDA is a relevant measure for estimating the cash generated by our operations that would be available to cover capital expenditures, taxes, interest and other investments and that it enhances an investor’s understanding of our financial performance. We use Adjusted EBITDA for business planning purposes and in measuring our performance relative to that of our competitors. Our method of computing Adjusted EBITDA is consistent with that used in our senior secured credit agreement for covenant compliance purposes and may differ from similarly titled measures of other companies. A reconciliation of GAAP net income to Adjusted EBITDA for each of the periods indicated is as follows:

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	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Net income	$	40,198		$	49,879		$	52,503		$	80,171
Adjusted for:
Depreciation and amortization of property and equipment	54,791			56,880			110,966			111,750
Amortization of intangibles	4,203			4,203			8,407			8,407
Interest expense	21,453			24,762			44,678			51,124
Derivative interest expense	1,618			532			3,271			1,094
Interest income	(692		)	(546		)	(1,458		)	(1,137		)
Income tax expense	25,165			26,963			32,869			41,650
EBITDA	146,736			162,673			251,236			293,059
Non-cash equity compensation (a)	1,292			893			2,353			1,498
Loss on debt extinguishment (b)	6,990			—			9,903			5,044
Adjusted EBITDA	$	155,018		$	163,566		$	263,492		$	299,601


(a)	Represents recurring non-cash equity compensation expense on a pre-tax basis. In accordance with the terms of our senior credit agreement, this expense is added back in the calculation of Adjusted EBITDA for covenant compliance purposes.

(b)

On June 9, 2014, the Company entered into a Third Amended and Restated Credit Agreement ("2014 Agreement"). The 2014 Agreement replaced the then-existing first lien term loan B-1 and B-2 tranches with outstanding principal balances of $229.0 million and $370.9 million, respectively, at closing under the Second Amended and Restated Credit Agreement ("2013 Agreement"), with a $500.0 million face value delayed-draw first lien term loan A tranche maturing June 2019, of which $50.0 million was drawn upon closing, and a $400.0 million face value first lien term loan B tranche maturing June 2021. Additionally, the 2014 Agreement includes a $450.0 million revolving credit line maturing June 2019, $164.0 million of which was drawn upon closing, replacing the previous $400.0 million revolving credit line maturing September 2016. The replacement of the 2013 Agreement and the previous revolver resulted in a loss on debt extinguishment of $5.2 million in the second quarter of 2014, representing the write-off of the unamortized original issue discount and deferred financing fees associated with the 2013 Agreement and the previous revolver. Further, in April 2014, the Company repurchased in an open market transaction at a price of 110.30%, $15.4 million principal amount of its Senior Second Priority Secured Notes with cash on hand. The Company paid total proceeds of $17.6 million, which included the principal amount, the premium and the accrued interest. These amounts and the related write-off of the unamortized original issue discount resulted in a loss on debt extinguishment of $1.8 million in second quarter of 2014. Additionally, in March 2014, the Company repurchased in an open market transaction at a price of 110.70%, $23.8 million principal amount of its Senior Second Priority Secured Notes with cash on hand. The Company paid total proceeds of $27.1 million, which included the principal amount, the premium and the accrued interest. These amounts and the related write-off of the unamortized original issue discount resulted in a loss on debt extinguishment of $2.9 million in the first quarter of 2014.

On March 7, 2013, the Company entered into the 2013 Agreement. The 2013 Agreement replaced the then-existing first lien term loan B-1 and B-2 tranches under the Amended and Restated Credit Agreement (“2012 Agreement”) entered into on March 6, 2012, with outstanding principal balances of $152.0 million and $508.0 million, respectively, with new first lien term loan B-1 and B-2 tranches with face values of $250.0 million and $410.0 million, respectively. The replacement of the 2012 Agreement resulted in a loss on debt extinguishment of $5.0 million in the first quarter of 2013, representing the write-off of the unamortized original issue discount and deferred financing fees associated with the 2012 Agreement.

We define Adjusted EPS as (1) income (loss) before income taxes plus (i) amortization of the intangibles from our 2007 going private transaction, (ii) non-cash impairments, (iii) other special non-cash items, (iv) excludable transaction costs, (v) the mark-to-market adjustment on our interest rate swaps that is recognized in the consolidated statement of income in a given period, and (vi) the amortization of previous losses recorded in accumulated other comprehensive income (“OCI”) related to interest rate swaps we terminated upon our IPO and refinancing transactions in December 2010; (2) reduced by income taxes; (3) divided by weighted average diluted shares outstanding. Beginning in 2013, we began using our GAAP expected effective tax rate of 38.5% for our adjusted EPS calculation. We believe the presentation of financial results excluding the impact of the items noted above provides a consistent basis for comparing our results from period to period and to those of our peers due to the non-comparable nature of the intangibles from our going-private transaction, the historical volatility of the interest rate derivative agreements and the non-operating nature of the impairment charges, transaction costs and other adjustment items. A reconciliation of GAAP diluted earnings per share to Adjusted EPS for each of the periods indicated is as follows (the numbers reflected in the below table are calculated on a per share basis and may not foot due to rounding):

Table of Contents



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Unaudited)
Diluted earnings per share	$	0.28	$	0.35	$	0.37	$	0.57
Adjusted for:
Income tax expense	0.18		0.19		0.23		0.29
Income before income taxes	0.46		0.54		0.60		0.86
Loss on debt extinguishment (a)	0.05		—		0.07		0.04
Amortization of certain intangibles (b)	0.03		0.03		0.05		0.06
Adjusted income before income taxes	0.53		0.57		0.72		0.95
Provision for income tax expense at effective rate	0.20		0.22		0.28		0.37
Adjusted EPS	$	0.33	$	0.35	$	0.44	$	0.59


(a)	Includes the items discussed in note (b) to the Adjusted EBITDA table above.


(b)	Includes the items discussed in note (a) to the Adjusted Operating Ratio table above.

Overview

We are a multi-faceted transportation services company and have the largest fleet of truckload equipment in North America. As of June 30, 2014, we operate a tractor fleet of approximately 18,600 units comprised of 13,600 tractors driven by company drivers and 5,000 owner-operator tractors, a fleet of 57,500 trailers, and 8,700 intermodal containers from 40 major terminals positioned near major freight centers and traffic lanes in the United States and Mexico. We offer customers the opportunity for “one-stop shopping” for their truckload transportation needs through a broad spectrum of services and equipment. Our extensive suite of services includes general, dedicated, and cross-border U.S./Mexico truckload services through dry van, temperature-controlled, flatbed, and specialized trailers, in addition to rail intermodal and non-asset based freight brokerage and logistics management services, making us an attractive choice for a broad array of customers.

We principally operate in short-to-medium-haul traffic lanes around our terminals or dedicated customer locations. We concentrate on this length of haul because the majority of domestic truckload freight (as measured by revenue) moves in these lanes and our extensive terminal network affords us marketing, equipment control, supply chain, customer service, and driver retention advantages in local markets. Our relatively short average length of haul also helps reduce competition from railroads and trucking companies that lack a regional presence.

During the three and six months ended June 30, 2014, we continued to focus on our goals related to utilization improvements, rate increases, and Dedicated and Intermodal segment growth. We also accelerated the progress we are making with our post systems integration related to Central Refrigerated and have laid the foundation for the cost synergies previously identified. In addition, we took a significant step forward in reducing the costs of our outstanding debt by entering into our new 2014 Agreement with more favorable terms and additional capacity to facilitate the call of our 10.00% Senior Second Priority Secured Notes in the fourth quarter of 2014. Despite these improvements, we were constrained in our Truckload and Central Refrigerated segments by the challenging driver market. Our driver turnover and unseated truck count were higher than anticipated during the second quarter of 2014. Therefore, we sold more trucks in the second quarter to offset the impact of idle equipment, which drove additional gains on sale of equipment during the second quarter of 2014. After assessing the current and expected environment, we believe the best investment we can make at this time, for all stakeholders, is in our drivers. Our goal is to clear the path for our drivers by helping them overcome challenges, eliminate wait times and take home more money. We believe we can accomplish this through improved productivity and enhanced pay packages. Based on results we have seen thus far, we believe our drivers will stay with Swift, which will further improve our productivity and safety. These operational improvements, combined with rate increases from our customers, should help pay for the investments we are making in our drivers; however, we expect to have cost headwinds in the latter half of 2014 as the investment in our drivers will be more immediate and the benefits are expected to be derived over time. We believe by making these investments now, we can deliver on our goals for 2015 and beyond.

The table below reflects our key operating and financial metrics for the periods indicated.



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands, except per share amounts)
Total operating revenue	$	1,075,898		$	1,029,071		$	2,084,344		$	2,010,679
Revenue xFSR	$	876,337		$	830,147		$	1,693,336		$	1,614,698
Net income	$	40,198		$	49,879		$	52,503		$	80,171
Diluted earnings per share	$	0.28		$	0.35		$	0.37		$	0.57
Operating Ratio	91.3		%	90.3		%	93.3		%	91.5		%
Adjusted Operating Ratio	88.8		%	87.5		%	91.3		%	89.0		%
Adjusted EBITDA	$	155,018		$	163,566		$	263,492		$	299,601
Adjusted EPS	$	0.33		$	0.35		$	0.44		$	0.59

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Revenue

We primarily generate revenue by transporting freight for our customers. Generally, we are paid a predetermined rate per mile for our services. We enhance our revenue by charging for fuel surcharges, stop-off pay, loading and unloading activities, tractor and trailer detention, and other ancillary services. The main factors that affect our revenue are the rate per mile we receive from our customers and the number of loaded miles we run.

Fuel surcharges are designed to compensate us for fuel costs above a certain cost per gallon base. Generally, we receive fuel surcharges on the miles for which we are compensated by customers. However, we continue to have exposure to increasing fuel costs related to deadhead miles, fuel inefficiency due to engine idle time, and other factors as well as the extent to which the surcharge paid by the customer is insufficient. The main factors that affect fuel surcharge revenue are the price of diesel fuel and the number of loaded miles. Although our surcharge programs vary by customer, we endeavor to negotiate an additional penny per mile charge for every five cent increase in the United States Department of Energy, or DOE, national average diesel fuel index over an agreed baseline price. In some instances, customers choose to incorporate the additional charge by splitting the impact between the basic rate per mile and the surcharge fee. In addition, we have moved much of our West Coast customer activity to a surcharge program that is indexed to the DOE’s West Coast average diesel fuel index as diesel fuel prices in the western United States generally are higher than the national average index. Our fuel surcharges are billed on a lagging basis, meaning we typically bill customers in the current week based on a previous week’s applicable index. Therefore, in times of increasing fuel prices, we do not recover as much as we are currently paying for fuel. In periods of declining prices, the opposite is true.

Revenue in our non-reportable segment is generated by our non-asset based freight brokerage and logistics management service, tractor leasing revenue from our financing subsidiaries, premium revenue generated by our captive insurance companies, and other revenue generated by our repair and maintenance shops. The main factors that affect the revenue in our non-reportable segment are demand for brokerage and logistics services and the number of owner-operators leasing equipment from our financing subsidiaries.

Expenses

The most significant expenses in our business vary with miles traveled and include fuel, driver-related expenses (such as wages and benefits) and services purchased from owner-operators and other transportation providers, such as the railroads, drayage providers, and other trucking companies (which are recorded on the “Purchased transportation” line of our consolidated statements of income). Expenses that have both fixed and variable components include maintenance and tire expense and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety improvements, fleet age, efficiency, and other factors. Our main fixed costs are depreciation and lease expense of long-term assets, such as tractors, trailers, containers, and terminals, interest expense, and the compensation of non-driver personnel.

A significant portion of our expenses are either fully or partially variable based on the number of miles traveled, changes in weekly trucking revenue per tractor caused by increases or decreases in deadhead miles percentage, rate per mile and loaded miles have varying effects on our profitability. In general, changes in deadhead miles percentage have the largest proportionate effect on profitability because we still bear all of the expenses for each deadhead mile but do not earn any revenue to offset those expenses. Changes in rate per mile have the next largest proportionate effect on profitability because incremental improvements in rate per mile are not offset by any additional expenses. Changes in loaded miles generally have a smaller effect on profitability because variable expenses increase or decrease with changes in miles. However, items such as driver and owner-operator satisfaction and network efficiency are affected by changes in mileage and have significant indirect effects on expenses.

In general, our miles per tractor per week, rate per mile, and deadhead miles percentage are affected by industry-wide freight volumes, industry-wide trucking capacity and the competitive environment, which factors are beyond our control, as well as by our service levels, planning, and discipline of our operations, over which we have significant control.

Results of Operations for the Three and Six Months Ended June 30, 2014 and 2013

Factors Affecting Comparability between Periods

Three months ended June 30, 2014 and 2013 results of operations

Net income for the three months ended June 30, 2014 and June 30, 2013 was $40.2 million and $49.9 million, respectively. Items during the 2014 period impacting comparability between the three months ended June 30, 2014 and the corresponding 2013 period include the following:


•	$3.3 million reduction in interest expense in 2014 as compared to 2013 resulting from our voluntary debt prepayments made in the latter half of 2013 and through the first six months of 2014; and


•	$7.0 million loss on debt extinguishment resulting from the repurchase of our Senior Second Priority Secured Notes and the replacement of the senior credit facility during the second quarter of 2014.

Six months ended June 30, 2014 results of operations

Net income for the six months ended June 30, 2014 was $52.5 million. Items during the 2014 period impacting comparability between the six months ended June 30, 2014 and the corresponding 2013 period include the following:


•	$6.4 million reduction in interest expense in 2014 as compared to 2013, resulting from our voluntary debt prepayments made in the latter half of 2013 and through the first six months of 2014; and


•	$9.9 million loss on debt extinguishment resulting from the repurchase of our Senior Second Priority Secured Notes and the replacement of the senior credit facility during the second quarter of 2014.

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Six months ended June 30, 2013 results of operations

Net income for the six months ended June 30, 2013 was $80.2 million. Items during the 2013 period impacting comparability between the first six months of 2013 and the corresponding 2014 period include the following:


•	$6.1 million gain on the sale of two properties classified as held for sale in the first quarter of 2013; and


•	$5.0 million loss on debt extinguishment resulting from the replacement of our previous Amended and Restated Credit Agreement in the first quarter of 2013.

Results of Operations—Segment Review

We operate four reportable segments: Truckload, Dedicated, Central Refrigerated and Intermodal. The descriptions of the operations of these reportable segments are described in Note 14 in the notes to our consolidated financial statements. In the first quarter of 2014, the Company reorganized its reportable segments to reflect management's revised reporting structure of its lines of businesses following the integration of Central Refrigerated. In association with the operational reorganization, the operations of Central Refrigerated's Trailer on Flat Car business are reported within the Company's Intermodal segment and the operations of Central Refrigerated's logistic business, third-party leasing, and other services provided to owner-operators are reported in the Company's other non-reportable segment. The following tables reconcile our operating revenues and operating income by reportable segment to our consolidated operating revenue and operating income for the periods indicated.



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Operating revenue:
Truckload	$	575,481		$	588,724		$	1,128,538		$	1,148,319
Dedicated	223,098			182,651			416,751			361,877
Central Refrigerated	106,911			111,238			213,674			217,640
Intermodal	100,911			90,994			192,224			174,258
Subtotal	1,006,401			973,607			1,951,187			1,902,094
Nonreportable segments	83,491			71,915			159,157			143,972
Intersegment eliminations	(13,994		)	(16,451		)	(26,000		)	(35,387		)
Consolidated operating revenue	$	1,075,898		$	1,029,071		$	2,084,344		$	2,010,679
Operating income (loss):
Truckload	$	69,596		$	64,614		$	101,503		$	107,017
Dedicated	21,112			24,263			32,642			43,217
Central Refrigerated	3,662			5,660			6,082			10,381
Intermodal	(495		)	788			(1,421		)	(816		)
Subtotal	93,875			95,325			138,806			159,799
Nonreportable segments	147			4,941			1,386			10,185
Consolidated operating income	$	94,022		$	100,266		$	140,192		$	169,984

The results and discussions that follow are reflective of how our chief operating decision makers monitor the performance of our reporting segments. We supplement the reporting of our financial information determined under generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures. Additionally, we use a number of primary indicators to monitor our revenue and expense performance and efficiency. We believe that these adjusted measures provide meaningful information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance. We believe these adjusted financial measures are important indicators of our recurring results of operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and provide a better baseline for analyzing trends in our underlying businesses.

Our main measure of productivity for our Truckload, Dedicated and Central Refrigerated reportable segments is weekly trucking revenue xFSR per tractor excluding fuel surcharge revenue (weekly trucking Revenue xFSR per tractor). Weekly trucking Revenue xFSR per tractor is affected by our loaded miles, which only include the miles driven when hauling freight, the size of our fleet (because available loads may be spread over fewer or more tractors), and the rates received for our services. We strive to increase our revenue per tractor by improving freight rates with our customers and hauling more loads with our existing equipment, effectively moving freight within our network, keeping tractors maintained and recruiting and retaining drivers as well as owner-operators.

We also strive to reduce our number of deadhead miles within our Truckload and Central Refrigerated segments. We measure our performance in this area by monitoring our deadhead miles percentage, which is calculated by dividing the number of unpaid miles by the total number of miles driven. By balancing our freight flows and planning consecutive loads with shorter distances between the drop-off and pick-up locations, we are able to reduce the percentage of deadhead miles driven to allow for more revenue-generating miles during our drivers’ hours-of-service. This also enables us to reduce costs associated with deadhead miles, such as wages and fuel.

For our reportable segments, average tractors available measures the average number of tractors we have available during the period for dispatch and includes tractors driven by company drivers as well as owner-operator units. This measure changes based on our ability to increase or decrease our fleet size to respond to changes in demand.

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We consider our Adjusted Operating Ratio to be an important measure of our operating profitability for each of our reportable segments. Operating Ratio is operating expenses as a percentage of revenue, or the inverse of operating margin, and produces a quick indication of operating efficiency. It is widely used in our industry as an assessment of management’s effectiveness in controlling all categories of operating expenses. We net fuel surcharge revenue against fuel expense in the calculation of our Adjusted Operating Ratio, therefore excluding fuel surcharge revenue from total revenue in the denominator. We exclude fuel surcharge revenue because fuel prices and fuel surcharge revenue are often volatile and changes in fuel surcharge revenue largely offset corresponding changes in our fuel expense. Eliminating the volatility (by netting fuel surcharge revenue against fuel expense) affords a more consistent basis for comparing our results of operations between periods. We also exclude impairments and other special or non-cash items in the calculation of our Adjusted Operating Ratio because we believe this enhances the comparability of our performance between periods. Accordingly, we believe Adjusted Operating Ratio is a better indicator of our core operating profitability than Operating Ratio and provides a better basis for comparing our results between periods and against others in our industry.

Within our Intermodal reportable segment, we monitor our load count and average container count. These metrics allow us to measure our utilization of our container fleet.

We monitor weekly trucking Revenue xFSR per tractor, deadhead miles percentage, average tractors available, load count and average container count on a daily basis, and we measure Adjusted Operating Ratio on a monthly basis.

Truckload



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars and miles in thousands, except per tractor amounts)
Operating revenue	$	575,481		$	588,724		$	1,128,538		$	1,148,319
Operating income	$	69,596		$	64,614		$	101,503		$	107,017
Operating Ratio	87.9		%	89.0		%	91.0		%	90.7		%
Adjusted Operating Ratio	84.8		%	86.2		%	88.7		%	88.2		%
Weekly trucking Revenue xFSR per tractor	$	3,453		$	3,270		$	3,335		$	3,227
Total loaded miles	259,583			274,830			514,009			536,680
Deadhead miles percentage	11.7		%	11.4		%	11.7		%	11.3		%
Average tractors available for dispatch:
Company	6,822			7,733			6,987			7,613
Owner-Operator	3,406			3,288			3,445			3,290
Total	10,228			11,021			10,432			10,903

A reconciliation of our Adjusted Operating Ratio for each of the periods indicated is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Total GAAP operating revenue	$	575,481		$	588,724		$	1,128,538		$	1,148,319
Less: Fuel surcharge revenue	116,414			120,144			228,062			238,483
Revenue xFSR	459,067			468,580			900,476			909,836
Total GAAP operating expense	505,885			524,110			1,027,035			1,041,302
Adjusted for:
Fuel surcharge revenue	(116,414		)	(120,144		)	(228,062		)	(238,483		)
Adjusted operating expense	389,471			403,966			798,973			802,819
Adjusted operating income	$	69,596		$	64,614		$	101,503		$	107,017
Adjusted Operating Ratio	84.8		%	86.2		%	88.7		%	88.2		%

Revenue

For the three months ended June 30, 2014, our Truckload segment operating revenue decreased by $13.2 million, or 2.2%, compared with the same period in 2013. Additionally, our Truckload Revenue xFSR decreased 2.0% from the three months ended June 30, 2013 to the three months ended June 30, 2014. This decrease was primarily due to the shift of resources from our Truckload segment to support the growth within our Dedicated segment as well as the increased challenges in the over the road driver market resulting in a 5.5% decrease in loaded miles. Despite these headwinds, during the second quarter of 2014, Truckload Revenue xFSR per loaded mile increased 3.7% as compared to the second quarter of 2013. This increase in Revenue xFSR per loaded mile in addition to our 1.8% improvement in loaded miles per truck per week resulted in our a 5.6% increase in our Truckload weekly Revenue xFSR per tractor during the second quarter of 2014 as compared to the second quarter of 2013.

For the six months ended June 30, 2014, our Truckload segment operating revenue decreased by $19.8 million, or 1.7%, compared with the same

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period in 2013. Additionally, our Truckload Revenue xFSR decreased 1.0% from the six months ended June 30, 2013 to the six months ended June 30, 2014. As noted above, this decrease was primarily the result of the shift of resources from our Truckload segment to support the growth within our Dedicated segment, specifically within the second quarter of 2014. As a result of this shift and the severe winter weather during the first quarter of 2014, total loaded miles decreased 4.2% during the six months ended June 30, 2014 as compared to the same period of 2013. The reduction in loaded miles were slightly offset by the 3.3% increase in our Truckload weekly Revenue xFSR per tractor from June 30, 2013 to June 30, 2014 as a result of the 3.4% increase in Truckload Revenue xFSR per loaded mile during the same periods driven by contractual rate increases, freight mix, and an increase in paid repositioning.

Operating income

Truckload operating income increased $5.0 million from the second quarter of 2013 to the second quarter of 2014, which resulted in our Adjusted Operating Ratio improving 140 basis points to 84.8% during the three months ended June 30, 2014. This improvement in our Truckload Adjusted Operating Ratio was primarily driven by the 5.6% increase in our Truckload weekly Revenue xFSR per Tractor from the second quarter of 2013 to the second quarter of 2014 noted above. Our continued focus on improving utilization and the initiatives we are implementing more than offset the negative impact from the hours of service changes implemented in July 2013.

Truckload operating income decreased $5.5 million from the six months ended June 30, 2013 to the six months ended June 30, 2014. Additionally, our Truckload Adjusted Operating Ratio increased from 88.2% for the six months ended June 30, 2013 to 88.7% for the six months ended June 30, 2014. This increase in Adjusted Operating Ratio was primarily driven by increases in insurance and claims expense, other weather related items and higher equipment costs incurred during the first quarter of 2014 offset by the improvements noted above during the second quarter of 2014.

Dedicated



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands, except per tractor amounts)
Operating revenue	$	223,098		$	182,651		$	416,751		$	361,877
Operating income	$	21,112		$	24,263		$	32,642		$	43,217
Operating Ratio	90.5		%	86.7		%	92.2		%	88.1		%
Adjusted Operating Ratio	88.5		%	83.7		%	90.4		%	85.3		%
Weekly trucking Revenue xFSR per tractor	$	3,191		$	3,396		$	3,184		$	3,391
Average tractors available for dispatch:
Company	3,650			2,735			3,405			2,709
Owner-Operator	770			632			731			638
Total	4,420			3,367			4,136			3,347

A reconciliation of our Adjusted Operating Ratio for each of the periods indicated is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Total GAAP operating revenue	$	223,098		$	182,651		$	416,751		$	361,877
Less: Fuel surcharge revenue	39,775			33,998			76,309			68,431
Revenue xFSR	183,323			148,653			340,442			293,446
Total GAAP operating expense	201,986			158,388			384,109			318,660
Adjusted for:
Fuel surcharge revenue	(39,775		)	(33,998		)	(76,309		)	(68,431		)
Adjusted operating expenses	162,211			124,390			307,800			250,229
Adjusted operating income	$	21,112		$	24,263		$	32,642		$	43,217
Adjusted Operating Ratio	88.5		%	83.7		%	90.4		%	85.3		%

Revenue

For the three months ended June 30, 2014, our Dedicated segment operating revenue increased $40.4 million, or 22.1% and our Dedicated Revenue xFSR increased 23.3%, compared to the same period in 2013. This increase in Revenue xFSR was driven by numerous new contracts that started in the latter half of 2013 and continued through the first six months of 2014.

For the six months ended June 30, 2014, our Dedicated segment operating revenue increased $54.9 million, or 15.2%, and our Revenue xFSR increased $47.0 million, or 16.0%, compared to the same period in 2013. Theses increases were driven by new customer accounts added in the latter half of 2013 and the first six months of 2014.

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Operating income

For the three months ended June 30, 2014, our Dedicated operating income decreased to $21.1 million compared to $24.3 million in the same period in 2013. Our Dedicated Adjusted Operating Ratio increased 480 basis points to 88.5% for the three months ended June 30, 2014 from 83.7% in the same period in 2013. Despite the increase in Dedicated Revenue xFSR during the second quarter of 2014, the increase in our Dedicated Adjusted Operating Ratio was primarily driven by the start up costs related to the new customer accounts noted above, an increase in both equipment costs and workers compensation expense during the second quarter of 2014 as compared to the same period in 2013.

For the six months ended June 30, 2014, our dedicated operating income decreased to $32.6 million from $43.2 million in the same period in 2013 and our Dedicated Adjusted Operating Ratio increased 510 basis points to 90.4% for the six months ended June 30, 2014 from 85.3% in the same period in 2013. This deterioration in our Dedicated Adjusted Operating Ratio was primarily due to the increased start-up costs of new customer accounts, higher replacement costs of new equipment, and the severe winter weather experienced in the first quarter of 2014.

Central Refrigerated



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars and miles in thousands, except per tractor amounts)
Operating revenue	$	106,911		$	111,238		$	213,674		$	217,640
Operating income	$	3,662		$	5,660		$	6,082		$	10,381
Operating Ratio	96.6		%	94.9		%	97.2		%	95.2		%
Adjusted Operating Ratio	95.7		%	93.5		%	96.4		%	93.8		%
Weekly trucking Revenue xFSR per tractor	$	3,543		$	3,367		$	3,383		$	3,349
Total loaded miles	42,937			49,239			85,694			96,339
Deadhead miles percentage	15.1		%	12.4		%	14.6		%	12.2		%
Average tractors available for dispatch:
Company	1,057			1,043			1,057			1,020
Owner-Operator	810			947			882			927
Total	1,867			1,990			1,939			1,947

A reconciliation of our Adjusted Operating Ratio for each of the periods indicated is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Total GAAP operating revenue	$	106,911		$	111,238		$	213,674		$	217,640
Less: Fuel surcharge revenue	20,941			24,162			44,118			49,012
Revenue xFSR	85,970			87,076			169,556			168,628
Total GAAP operating expense	103,249			105,578			207,592			207,259
Adjusted for:
Fuel surcharge revenue	(20,941		)	(24,162		)	(44,118		)	(49,012		)
Adjusted operating expenses	82,308			81,416			163,474			158,247
Adjusted operating income	$	3,662		$	5,660		$	6,082		$	10,381
Adjusted Operating Ratio	95.7		%	93.5		%	96.4		%	93.8		%

Revenue

For the three months ended June 30, 2014, our Central Refrigerated segment operating revenue decreased $4.3 million, or 3.9%, compared with the same period in 2013. Additionally, during the second quarter of 2014, our Central Refrigerated Revenue xFSR decreased 1.3%, as compared to the second quarter of 2013. This decrease in Revenue xFSR was driven primarily by the increasingly challenging driver market and the systems integration in February 2014, which increased our unseated trucks reducing our average tractors available for dispatch by 6.2% from the second quarter of 2013 to the second quarter of 2014. Our total loaded miles within our Central Refrigerated segment decreased 12.8% during the three months ended June 30, 2014 as compared to the same period in 2013. This decrease in loaded miles was offset by a 5.2% increase in our weekly trucking Revenue xFSR per tractor during the second quarter of 2014 as compared to the second quarter of 2013, primarily as a result of the 13.2% increase in Revenue xFSR per loaded mile partially offset by a 7.1% decrease in our loaded miles per truck per week. A portion of these changes were driven by the significant new dedicated customer added in June 2013, which has a much lower average length of haul, higher deadhead, and a much higher Revenue xFSR per loaded mile. Excluding this specialty dedicated account, Revenue xFSR per loaded mile improved 8.6%, partially offset by a 4.5% reduction in our loaded miles per tractor per week.

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For the six months ended June 30, 2014, our Central Refrigerated segment operating revenue decreased $4.0 million, or 1.8%, compared with the same period in 2013. However, Revenue xFSR for our Central Refrigerated segment remained relatively flat, increasing $0.9 million, or 0.5% from the six month ended June 30, 2013 to the six months ended June 30, 2014. Overall, total loaded miles decreased 11.0% from the six months ended June 30, 2013 to the six months ended June 30, 2014. However, this decrease was offset by a 1.0% increase in weekly trucking Revenue xFSR per tractor from the first six months of 2013 to the first six months of 2014, as a result of 13.0% increase in Revenue xFSR per loaded mile. As noted above, in June 2013, our Central Refrigerated segment added a significant new dedicated customer, which has a much lower average length of haul, higher deadhead, and a much higher Revenue xFSR per loaded mile. This increase in business was partially offset by lower volumes during the first quarter of 2014 primarily due to the severe winter weather and the conversion to Swift's system and process in February 2014.

Operating income

Our Central Refrigerated segment operating income decreased $2.0 million from the second quarter of 2013 to the second quarter of 2014. This decrease in operating income caused our Adjusted Operating Ratio to increase to 95.7% during the three months ended June 30, 2014 compared with 93.5% in the same period in 2013. The 220 basis point increase in Adjusted Operating Ratio over the second quarter of 2013 was driven primarily by the decrease in our over the road fleet as discussed above as well as continued challenges with a large unique dedicated customer added in June 2013.

For the six months ended June 30, 2014, our Central Refrigerated operating income decreased to $6.1 million from $10.4 million in the same period in 2013 and our Central Refrigerated Adjusted Operating Ratio increased to 96.4% for the six months ended June 30, 2014 from 93.8% in the same period in 2013. This 260 basis point increase in our Adjusted Operating Ratio over the first six months of 2013 to the first six months of 2014 was primarily related to the severe weather we experienced in the first quarter of 2014, higher equipment costs, higher deadhead percentage, the challenges associated with the February 2014 system conversion, and the continued challenges with adding the large unique dedicated customer added in June 2013.

Intermodal



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands, except per tractor amounts)
Operating revenue	$	100,911		$	90,994		$	192,224		$	174,258
Operating loss	$	(495	)	$	788		$	(1,421	)	$	(816	)
Operating Ratio	100.5		%	99.1		%	100.7		%	100.5		%
Adjusted Operating Ratio	100.6		%	98.9		%	100.9		%	100.6		%
Average tractors available for dispatch:
Company	409			301			394			298
Owner-Operator	68			29			71			24
Total	477			330			465			322
Load count	43,404			39,124			82,007			74,763
Average container count	8,717			8,717			8,717			8,717

A reconciliation of our Adjusted Operating Ratio for each of the periods indicated is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Total GAAP operating revenue	$	100,911		$	90,994		$	192,224		$	174,258
Less: Fuel surcharge revenue	20,104			18,814			38,468			36,825
Revenue xFSR	80,807			72,180			153,756			137,433
Total GAAP operating expense	101,406			90,206			193,645			175,074
Adjusted for:
Fuel surcharge revenue	(20,104		)	(18,814		)	(38,468		)	(36,825		)
Adjusted operating expenses	81,302			71,392			155,177			138,249
Adjusted operating (loss) income	$	(495	)	$	788		$	(1,421	)	$	(816	)
Adjusted Operating Ratio	100.6		%	98.9		%	100.9		%	100.6		%

Revenue

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For the three months ended June 30, 2014, our Intermodal operating revenue increased $9.9 million, or 10.9%, compared to the same period in 2013. During the second quarter of 2014, our Intermodal Revenue xFSR grew 12.0% over the same period of 2013. This increase in Revenue xFSR was driven by a 10.9% increase in loads and a 1.0% improvement in Revenue xFSR per load.

For the six months ended June 30, 2014, our Intermodal operating revenue increased $18.0 million, or 10.3%, compared to the same period in 2013. During the first six months of 2014, our Intermodal Revenue xFSR grew 11.9% over the same period of 2013. This increase in Revenue xFSR was driven by a 2.0% increase in Revenue xFSR per load and a 9.7% increase in loads during the six months ended June 30, 2014 compared to same period in 2013.

Operating (loss) income

During the second quarter of 2014, our Intermodal segment had an operating loss equal to $0.5 million compared to operating income of $0.8 million during the same period in 2013. Our Intermodal Adjusted Operating Ratio increased from 98.9% in the second quarter of 2013 to 100.6% in the second quarter of 2014. This 170 basis point increase was primarily driven by increased insurance and drayage costs. These cost increases were partially offset by improved container utilization during the second quarter of 2014 compared to the same period in 2013.

For the six months ended June 30, 2014, our intermodal operating loss increased to $1.4 million from $0.8 million for the six months ended June 30, 2013. Correspondingly, our Intermodal Adjusted Operating Ratio increased to 100.9% during the first half of 2014 from 100.6% in the same period in 2013. This increase in our Adjusted Operating Ratio was primarily driven by increased insurance and drayage costs and the severe weather conditions during the first quarter of 2014, which negatively impacted our volumes and operational costs. These increased costs were partially offset by improvements in our network, utilization of our equipment, and increase in our Revenue xFSR per load during the first six months of 2014 compared to the same period in 2013.

Other non-reportable segments



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Unaudited) (Dollars in thousands)
Operating revenue	$	83,491	$	71,915	$	159,157	$	143,972
Operating income	$	147	$	4,941	$	1,386	$	10,185

Revenue

Our other non-reportable segment revenue is generated primarily by our logistics and brokerage services and revenue generated by our subsidiaries offering support services to customers and owner-operators, including shop repair and maintenance services, equipment leasing, and insurance. The main factors that impact our other non-reportable segment revenue are the demand for our brokerage and logistics services and the number of owner-operators leasing equipment and purchasing insurance coverage from our financing subsidiaries.

For the three and six months ended June 30, 2014, combined revenue from these services increased 16.1% and 10.5%, respectively, compared to the corresponding period in 2013. These increases for the three and six months ended June 30, 2014 were driven primarily by an increase in services provided to owner-operators compared to the same periods in 2013.

Operating income

During the three and six months ended June 30, 2014, other non-reportable segment operating income decreased by $4.8 million and $8.8 million, respectively. These decreases for the three and six months ended June 30, 2014 as compared to the same periods in 2013 were primarily the result of increases in expenses related to the services we provide to owner-operators partially offset by the growth in revenue for these services noted above.

Consolidated Operating Expense

Salaries, Wages and Employee Benefits



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Salaries, wages and employee benefits	$	238,093		$	223,852		$	467,459		$	450,337
% of Revenue xFSR	27.2		%	27.0		%	27.6		%	27.9		%
% of operating revenue	22.1		%	21.8		%	22.4		%	22.4		%

For the three months ended June 30, 2014, salaries, wages, and employee benefits increased by $14.2 million, or 6.4%, compared with the same period in 2013. The dollar increase was primarily a result of an increase in workers compensation expense, the number of non-driver administrative staff, and an increase in driver wages per mile, primarily driven by driver mix changes across our various segments. Specifically, we experienced growth in our dedicated business, which typically has a shorter length of haul and a higher driver wage per mile. These increases are partially offset by a 4.3% decrease in the number of miles driven by company drivers during the second quarter of 2014, compared to the same period in 2013.

For the six months ended June 30, 2014, salaries, wages, and employee benefits increased by $17.1 million, or 3.8%, compared with the same

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period in 2013. The dollar increase was primarily a result of an increase in non-driver administrative staff and an increase in driver wages per mile, primarily driven by driver mix changes across our various segments. Specifically, we experienced growth in our dedicated business, which typically has a shorter length of haul and a higher driver wage per mile. These increases are partially offset by a 4.6% decrease in the number of miles driven by company drivers during the six months ended June 30, 2014, compared to the same period in 2013.

The compensation paid to our drivers and other employees increased and may increase further in future periods as the economy strengthens and other employment alternatives become more available. Furthermore, because we believe that the market for drivers has tightened, we expect hiring expenses, including recruiting and advertising, to increase in order to attract sufficient numbers of qualified drivers to operate our fleet.

Operating Supplies and Expenses



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Operating supplies and expenses	$	84,077		$	78,996		$	164,902		$	151,063
% of Revenue xFSR	9.6		%	9.5		%	9.7		%	9.4		%
% of operating revenue	7.8		%	7.7		%	7.9		%	7.5		%

For the three months ended June 30, 2014, operating supplies and expenses increased by $5.1 million, or 6.4%, compared with the same period in 2013. As a percentage of Revenue xFSR, operating supplies and expenses remained relatively flat from the second quarter of 2013 to the second quarter of 2014. The dollar increase was primarily due to increased hiring costs, legal and professional expenses during the three months ended June 30, 2014 compared to the three months ended June 30, 2013.

For the six months ended June 30, 2014, operating supplies and expenses increased by $13.8 million, or 9.2%, compared with the same period in 2013. As a percentage of Revenue xFSR, operating supplies and expenses increased to 9.7%, compared with 9.4% for the 2013 period. The increase was primarily due to increases in equipment maintenance, hiring costs and legal and professional expenses.

We believe that the market for drivers has tightened. As a result, hiring expenses, including recruiting and advertising, which are included in operating supplies and expenses, have increased and we expect this will continue to increase in order to attract sufficient numbers of qualified drivers to operate our fleet.

Fuel Expense



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Fuel expense	$	153,677		$	160,886		$	309,699		$	329,002
% of operating revenue	14.3		%	15.6		%	14.9		%	16.4		%

To measure the effectiveness of our fuel surcharge program, we subtract fuel surcharge revenue (other than the fuel surcharge revenue we reimburse to owner-operators, the railroads, and other third parties which is included in purchased transportation) from our fuel expense. The result is referred to as net fuel expense. Our net fuel expense as a percentage of Revenue xFSR is affected by the cost of diesel fuel net of surcharge collection, the percentage of miles driven by company trucks, our fuel economy, and our percentage of deadhead miles, for which we do not receive fuel surcharge revenues. Net fuel expense as a percentage of Revenue xFSR is shown below:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Total fuel surcharge revenue	$	199,561		$	198,924		$	391,008		$	395,981
Less: Fuel surcharge revenue reimbursed to owner-operators and other third parties	89,869			82,684			176,178			164,837
Company fuel surcharge revenue	$	109,692		$	116,240		$	214,830		$	231,144
Total fuel expense	$	153,677		$	160,886		$	309,699		$	329,002
Less: Company fuel surcharge revenue	109,692			116,240			214,830			231,144
Net fuel expense	$	43,985		$	44,646		$	94,869		$	97,858
% of Revenue xFSR	5.0		%	5.4		%	5.6		%	6.1		%

For the three months ended June 30, 2014, net fuel expense was $44.0 million compared to $44.6 million in the same period in 2013. The slight year over year decrease was primarily due to a 4.3% reduction in the number of miles driven by company drivers and improved miles per gallon, partially offset by an increase in idle fuel costs.

For the six months ended June 30, 2014, net fuel expense decreased $3.0 million, or 3.1%, compared with the same period in 2013. As a percentage of Revenue xFSR, net fuel expense improved to 5.6% during the six months ended June 30, 2014, compared with 6.1% in the 2013 period. The decrease in net fuel expense is due primarily to the 4.6% reduction of miles driven by company drivers which was partially offset by an increase

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in idle fuel costs resulting from the severe winter weather during the first quarter of 2014.

Purchased Transportation



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Purchased transportation expense	$	340,249		$	308,117		$	659,418		$	600,273
% of operating revenue	31.6		%	29.9		%	31.6		%	29.9		%

Purchased transportation expense includes payments made to owner-operators, rail partners and other third parties for their services. Because we reimburse owner-operators and other third parties for fuel, we subtract fuel surcharge revenue reimbursed to third parties from our purchased transportation expense. The result, referred to as purchased transportation, net of fuel surcharge reimbursements, is evaluated as a percentage of Revenue xFSR, as shown below:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Purchased transportation expense	$	340,249		$	308,117		$	659,418		$	600,273
Less: Fuel surcharge revenue reimbursed to owner-operators and other third parties	89,869			82,684			176,178			164,837
Purchased transportation expense, net of fuel surcharge reimbursement	$	250,380		$	225,433		$	483,240		$	435,436
% of Revenue xFSR	28.6		%	27.2		%	28.5		%	27.0		%

For the three months ended June 30, 2014, purchased transportation, net of fuel surcharge reimbursement, increased $24.9 million, or 11.1%, compared with the same period in 2013. This year over year dollar increase was primarily due to an increase in the number of owner-operators and an increase in intermodal miles. As a percentage of Revenue xFSR, purchased transportation, net of fuel surcharge reimbursement, increased 140 basis points from 27.2% in the second quarter of 2013 to 28.6% in the second quarter of 2014 primarily due to the increase in the percent of miles driven by owner-operators compared to company drivers and the revenue growth of both Intermodal and logistics businesses.

For the six months ended June 30, 2014, purchased transportation, net of fuel surcharge reimbursement, increased $47.8 million, or 11.0%, compared with the same period in 2013. This year over year dollar increase was primarily due to an increase in the number of owner-operators and an increase in both intermodal and third party logistics volume. As a percentage of Revenue xFSR, purchased transportation, net of fuel surcharge reimbursement, increased 150 basis points due primarily to due to the increase in the percent of miles driven by owner-operators compared to company drivers and the revenue growth of both Intermodal and logistics businesses.

Insurance and Claims



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited) (Dollars in thousands)
Insurance and claims	$	33,321		$	33,597		$	75,769		$	65,135
% of Revenue xFSR	3.8		%	4.0		%	4.5		%	4.0		%
% of operating revenue	3.1		%	3.3		%	3.6		%	3.2		%

For the three months ended June 30, 2014, insurance and claims expense remained relatively flat decreasing to $33.3 million compared to $33.6 million in the same period in 2013. As a percentage of Revenue xFSR, insurance and claims decreased to 3.8%, compared with 4.0% in the 2013 period.

For the six months ended June 30, 2014, insurance and claims expense increased by $10.6 million, or 16.3%, compared with the same period in 2013. As a percentage of Revenue xFSR, insurance and claims increased to 4.5%, compared with 4.0% in the 2013 period. The increase was primarily due to $5.5 million negative development in 2014 from two claims relating to accidents that occurred in December 2013. Additionally, during the first three months of 2014, we experienced higher accident frequency, primarily related to the severe winter weather resulting in higher incurred but not reported reserves.

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Rental Expense and Depreciation and Amortization of Property and Equipment

Because the mix of our leased versus owned tractors varies, we believe it is appropriate to combine our rental expense with our depreciation and amortization of property and equipment when comparing results from period to period for analysis purposes.



	Three Months Ended June 30,							Six Months Ended June 30,
	2014			2013				2014				2013
	(Unaudited) (Dollars in thousands)
Rental expense	$	56,135		$	42,996			$	107,854			$	83,619
Depreciation and amortization of property and equipment	54,791			56,880			—	110,966			—	111,750
Rental expense and depreciation and amortization of property and equipment	$	110,926		$	99,876			$	218,820			$	195,369
% of Revenue xFSR	12.7		%	12.0		%		12.9		%		12.1		%
% of operating revenue	10.3		%	9.7		%		10.5		%		9.7		%

Rental expense and depreciation and amortization of property and equipment were primarily driven by our fleet of tractors and trailers shown below:



	As of
	June 30, 2014	December 31, 2013	June 30, 2013
	(Unaudited)
Tractors:
Company
Owned	5,618	6,081	6,201
Leased — capital leases	2,059	1,851	2,732
Leased — operating leases	5,880	4,834	4,402
Total company tractors	13,557	12,766	13,335
Owner-operator
Financed through the Company	4,473	4,473	4,028
Other	567	722	986
Total owner-operator tractors	5,040	5,195	5,014
Total tractors	18,597	17,961	18,349
Trailers	57,462	57,310	55,576
Containers	8,717	8,717	8,717

For the three months ended June 30, 2014, rental expense and depreciation and amortization of property and equipment increased by $11.1 million, or 11.1%, compared with the same period in 2013. As a percentage of Revenue xFSR, such expenses increased to 12.7% compared with 12.0% for same period in 2013. The increase was primarily due to the growth in the number of tractors, a higher number of leased tractors which includes financing costs, an increase in the number of owner-operator tractors financed through the Company, and higher equipment replacement cost from the second quarter of 2013 compared to the second quarter of 2014.

For the six months ended June 30, 2014, rental expense and depreciation and amortization of property and equipment increased by $23.5 million, or 12.0%, compared with the same period in 2013. As a percentage of Revenue xFSR, such expenses increased to 12.9% compared with 12.1% for same period in 2013. The increase was primarily due to the growth in the number of tractors, a higher number of leased tractors which includes financing costs, an increase in the number of owner-operator tractors financed through the Company, and higher equipment replacement cost during the first six months of 2014 compared to the same period in 2013.

Amortization of Intangibles

Amortization of intangibles consists primarily of amortization of $261.2 million gross carrying value of definite-lived intangible assets recognized under purchase accounting in connection with our 2007 going private transaction.



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Unaudited) (Dollars in thousands)
Amortization of intangibles	$	4,203	$	4,203	$	8,407	$	8,407

Amortization of intangibles for the three months ended June 30, 2014 and 2013 is comprised of $3.9 million in each period related to intangible assets recognized in conjunction with the 2007 going private transaction and $0.3 million in each period related to previous intangible assets from smaller acquisitions by Swift Transportation Co. prior to the going private transaction.

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Amortization of intangibles for the six months ended June 30, 2014 and 2013 is comprised of $7.8 million in each period related to intangible assets recognized in conjunction with the 2007 going private transaction and $0.6 million in each period related to previous intangible assets from smaller acquisitions by Swift Transportation Co. prior to the going private transaction.

Gain on disposal of property and equipment



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Unaudited) (Dollars in thousands)
Gain on disposal of property and equipment	$	8,312	$	5,143	$	11,471	$	7,991

Gain on disposal of property and equipment increased from $5.1 million during the second quarter of 2013 to $8.3 million during the second quarter of 2014. Given the difficult driver market, combined with strong used truck resale market, we made the decision to sell more tractors than originally anticipated, rather than have idle equipment during the second quarter of 2014.

For the six months ended June 30, 2014, gain on disposal of property and equipment increased $3.5 million to $11.5 million, compared with the same period in 2013. The increase was primarily related to the increase tractors sold during the second quarter of 2014 noted above.

Interest Expense



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Unaudited) (Dollars in thousands)
Interest expense	$	21,453	$	24,762	$	44,678	$	51,124

On June 9, 2014, we entered into a Third Amended and Restated Credit Agreement ("2014 Agreement"). The 2014 Agreement replaced the then-existing first lien term loan B-1 and B-2 tranches under the Second Amended and Restated Credit Agreement entered into on March 7, 2013 ("2013 Agreement") including applicable interest rates of LIBOR plus 2.75% with no minimum LIBOR rate and LIBOR plus 3.00% with a minimum LIBOR rate of 1.00%, respectively, with a $500.0 million face value delayed-draw first lien term loan A tranche, of which $50.0 million was drawn upon closing, with applicable interest rates equal to LIBOR plus 2.00% with no minimum LIBOR rate and a $400.0 million face value first lien term loan B tranche with applicable interest rates equal to LIBOR plus 3.00 % with a minimum LIBOR rate of 0.75%. Additionally, the 2014 Agreement includes a $450.0 million revolving credit line maturing June 2019, $164 million of which was drawn upon closing, replacing the previous $400.0 million revolving credit line maturing September 2016. Under the 2014 Agreement, the interest rate spread on the revolving credit facility ranges from 1.50% to 2.25% for LIBOR based borrowings, compared to the previous revolving credit facility with in a LIBOR rate spread ranging from 3.00% to 3.25%.

Interest expense for the three and six months ended June 30, 2014 is primarily based on the end of period debt balances as of June 30, 2014 of $455.7 million net carrying value of senior second priority secured notes, $319.0 million of our accounts receivable securitization obligation, and $187.1 million present value of capital lease obligations. Additionally, interest expense for the three and six months ended June 30, 2014 included interest expense on the then-existing first lien term loan B-1 and B-2 tranches under the 2013 Agreement with outstanding principal balances of $229.0 million and $370.9 million, respectively, replaced at closing of the 2014 Agreement noted above. As of June 30, 2014, the outstanding principal balances of the first lien delayed draw term loan A tranche and the first lien term loan B tranche under the 2014 Agreement were $50.0 million and $398.0 million, respectively. Additionally, we had $99.0 million outstanding under our revolving credit facility under the 2014 Agreement as of June 30, 2014.

Interest expense decreased for the three and six months ended June 30, 2014, compared to the prior year periods primarily due to our various voluntary prepayments of debt made from June 30, 2013 to June 30, 2014, a strategic shift to debt instruments that carry lower interest rates, and the replacement of our 2013 Agreement with the 2014 Agreement in June 2014.

Derivative Interest Expense

In April 2011, in connection with our new senior secured credit facility, we entered into two forward-starting interest rate swap agreements with a total notional amount of $350.0 million. These interest rate swaps became effective in January 2013, mature in July 2015, and had been designated and qualified as cash flow hedges. As such, the effective portion of the changes in fair value of these designated swaps was recorded in accumulated OCI and is thereafter recognized to derivative interest expense as the interest on the hedged debt affects earnings, which hedged interest accruals started in January of 2013. Any ineffective portions of the changes in the fair value of designated interest rate swaps is recognized directly to earnings as derivative interest expense.

As noted above, on March 7, 2013, we entered into the 2013 Agreement. Due to the incorporation of a new interest rate floor provision in the 2013 Agreement, we concluded as of February 28, 2013, the outstanding interest rate swaps were no longer highly effective in achieving offsetting changes in cash flows related to the hedged interest payments. As a result, we de-designated the hedges as of February 28, 2013 (“de-designation date”). Beginning on March 1, 2013, the effective portion of the interest rate swaps prior to the change (i.e., amounts previously recorded in accumulated OCI) have been and will continue to be amortized as derivative interest expense over the period of the originally designated hedged interest payments through July 2015. Following the de-designation date, changes in fair value of the interest rate swaps are immediately recognized in the consolidated statements of income as derivative interest expense.

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The following is a summary of our derivative interest expense for the periods indicated:



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Unaudited) (Dollars in thousands)
Derivative interest expense	$	1,618	$	532	$	3,271	$	1,094

Derivative interest expense for the three and six months ended June 30, 2014 represents reclassified amounts from accumulated OCI, mark-to-market adjustments and settlement payments related to our interest rate swaps, which were de-designated in February 2013.

Loss on Debt Extinguishment



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Unaudited) (Dollars in thousands)
Loss on debt extinguishment	$	6,990	$	—	$	9,903	$	5,044

As noted above, on June 9, 2014, we entered into a Third Amended and Restated Credit Agreement ("2014 Agreement"). The 2014 Agreement replaced the then-existing first lien term loan B-1 and B-2 tranches with outstanding principal balances of $229.0 million and $370.9 million, respectively, at closing under the Second Amended and Restated Credit Agreement ("2013 Agreement"), with a $500.0 million face value delayed-draw first lien term loan A tranche maturing June 2019, of which $50.0 million was drawn upon closing, and a $400.0 million face value first lien term loan B tranche maturing June 2021. Additionally, the 2014 Agreement includes a $450.0 million revolving credit line maturing June 2019, $164 million of which was drawn upon closing, replacing the previous $400.0 million revolving credit line maturing September 2016. The replacement of the 2013 Agreement and the previous revolver resulted in a loss on debt extinguishment of $5.2 million in the second quarter of 2014, representing the write-off of the unamortized original issue discount and deferred financing fees associated with the 2013 Agreement and the previous revolver. Further, in April 2014, the Company repurchased in an open market transaction at a price of 110.30%, $15.4 million principal amount of its Senior Second Priority Secured Notes with cash on hand. The Company paid total proceeds of $17.6 million, which included the principal amount, the premium and the accrued interest. These amounts and the related write-off of the unamortized original issue discount resulted in a loss on debt extinguishment of $1.8 million in second quarter of 2014. Additionally, in March 2014, the Company repurchased in an open market transaction at a price of 110.70%, $23.8 million principal amount of its Senior Second Priority Secured Notes with cash on hand. The Company paid total proceeds of $27.1 million, which included the principal amount, the premium and the accrued interest. These amounts and the related write-off of the unamortized original issue discount resulted in a loss on debt extinguishment of $2.9 million in the first quarter of 2014.

Gain on Sale of Real Property



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Unaudited) (Dollars in thousands)
Gain on sale of real property	$	—	$	—	$	—	$	6,078

During the first quarter of 2013, we disposed of two non-operating properties in Wilmington, CA and Phoenix, AZ, resulting in a gain of $6.1 million.

Income Tax Expense



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Unaudited) (Dollars in thousands)
Income tax expense	$	25,165	$	26,963	$	32,869	$	41,650

The effective tax rate for the three and six months ended June 30, 2014 was 38.5%, as expected. The effective tax rate for the three and six months ended June 30, 2013 was 35.1% and 34.2%, respectively. These lower than expected effective tax rates were primarily due to Central Refrigerated’s pre-affiliated earnings that were taxed as an S-corporation prior to Swift’s acquisition during 2013.

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Liquidity and Capital Resources

Cash Flow

Our summary statements of cash flows information for the six months ended June 30, 2014 and 2013, is set forth in the table below:



	Six Months Ended June 30,
	2014			2013
	(Unaudited) (Dollars in thousands)
Net cash provided by operating activities	$	183,483		$	245,646
Net cash used in investing activities	$	(45,852	)	$	(88,878	)
Net cash used in financing activities	$	(123,281	)	$	(166,854	)

The $62.2 million decrease in net cash provided by operating activities during the six months ended June 30, 2014, compared to the same period in 2013, was primarily the result of a $29.8 million decrease in operating income and an additional $12.3 million negative impact on net cash flows resulting from increases in accounts receivable as a result of the timing of collections during the six months ended June 30, 2014, compared to the same period of 2013.

We used $43.0 million less cash in investing activities during the six months ended June 30, 2014, compared to the same period in 2013. This decrease in cash used in investing activities was primarily related to the $29.3 million decrease in gross capital expenditures and the $20.7 million increase in proceeds received from sale of property, equipment and assets classified as held for sale during the quarter.

We used $43.6 million less cash in financing activities during the six months ended June 30, 2014, compared to the same period in 2013. As noted above, on June 9, 2014, we entered into the 2014 Agreement replacing the 2013 Agreement. Specifically, under the 2014 Agreement, total proceeds received included $50.0 million at closing under the $500.0 million delayed draw first lien term loan A tranche and $400.0 million under the first lien term loan B tranche. Additionally, we borrowed $164.0 million under the revolving credit facility. With these proceeds, we repaid the then-existing first lien term loan B-1 tranche and first lien term loan B-2 tranche under the 2013 Agreement with an outstanding principal balances of $229.0 million and $370.9 million plus accrued interest, respectively, and paid $10.5 million in deferred financing fees at closing. Excluding the impact of the 2014 Agreement, during the six months ended June 30, 2014, we made repayments of long-term debt and capital leases of $107.5 million compared to $130.2 million during the same period in 2013. Additionally, net borrowing under our accounts receivable securitization was $55.0 million during the six months ended June 30, 2014 compared to $39.0 million net repayments under the accounts receivable securitization during the same period in 2013. The increase in the net borrowings under our accounts receivable securitization was predominately used to repay $65.0 million of our revolving credit facility following the closing of the 2014 Agreement.

Sources

As of June 30, 2014 and December 31, 2013, we had the following sources of liquidity available to us:



	June 30, 2014		December 31, 2013
	(Unaudited) (Dollars in thousands)
Cash and cash equivalents, excluding restricted cash	$	73,528	$	59,178
Availability under revolving line of credit due June 2019	244,194		—
Availability under revolving line of credit due September 2016	—		274,493
Availability under 2013 RSA	6,000		36,800
Total unrestricted liquidity	$	323,722	$	370,471
Restricted cash	52,815		50,833
Restricted investments, held to maturity, amortized cost	25,666		25,814
Total liquidity, including restricted cash and investments	$	402,203	$	447,118

As of June 30, 2014, we had $99.0 million outstanding borrowings on our $450.0 million revolving line of credit, and there were $106.8 million in letters of credit outstanding under this facility, leaving $244.2 million available. In addition, we had borrowed $319.0 million against a total borrowing base of $325.0 million of eligible receivables from our accounts receivable facility, leaving $6.0 million available as of June 30, 2014. The availability on these two facilities combined with our cash and cash equivalents provides a total of unrestricted liquidity of $323.7 million as of June 30, 2014, compared to $370.5 million as of December 31, 2013.

Uses

Our business requires substantial amounts of cash to cover operating expenses as well as to fund items such as cash capital expenditures, other assets, working capital changes, principal and interest payments on our obligations and tax payments.

We make substantial net capital expenditures to maintain a modern company tractor fleet, refresh our trailer fleet, and potentially fund growth in our revenue equipment fleet if justified by customer demand and our ability to fund the equipment and generate acceptable returns. As of June 30, 2014, we expect our net cash capital expenditures to be in the range of approximately $120.0 million to $150.0 million for the remainder of 2014. In addition, we believe we have ample flexibility with our trade cycle and purchase agreements to alter our current plans if economic or other conditions warrant. Beyond 2014, we expect our net capital expenditures to remain substantial.

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As of June 30, 2014, we had $196.7 million of purchase commitments outstanding to acquire replacement tractors through the rest of 2014 and 2015. We generally have the option to cancel tractor purchase orders with 60 to 90 day notice prior to scheduled production, although the notice date has lapsed for approximately 66% of the commitments remaining as of June 30, 2014. In addition, we had trailer purchase commitments outstanding at June 30, 2014 for $132.4 million through the rest of 2014. These purchases are expected to be financed by a combination of operating leases, capital leases, debt, proceeds from sales of existing equipment and cash flows from operations.

As of June 30, 2014, we did not have outstanding purchase commitments for intermodal containers, fuel, facilities, or non-revenue equipment. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.

As of June 30, 2014 and December 31, 2013, we had a working capital surplus of $316.1 million and $349.7 million, respectively. The decrease was primarily related to the $10.9 million increase in the current portion of long-term debt and capital leases and the $10.6 million decrease in our assets held for sale from December 31, 2013 to June 30, 2014.

Financing

We believe we can finance our expected cash needs, including debt repayment, in the short-term with cash flows from operations, borrowings available under our revolving line of credit, borrowings under our 2013 RSA, and lease financing believed to be available for at least the next twelve months. Over the long-term, we will continue to have significant capital requirements, which may require us to seek additional borrowings, lease financing, or equity capital. The availability of financing or equity capital will depend upon our financial condition and results of operations as well as prevailing market conditions. If such additional borrowings, lease financing, or equity capital is not available at the time we need to incur such indebtedness, then we may be required to utilize the revolving portion of our senior secured credit facility (if not then fully drawn), extend the maturity of then-outstanding indebtedness, rely on alternative financing arrangements, or engage in asset sales.

As of June 30, 2014, we had the following material debt agreements:


•	senior secured credit facility consisting of a term loan A tranche due June 2019, term loan B tranche due June 2021, and a revolving line of credit due June 2019;


•	senior second priority secured notes due November 2018;


•	2013 RSA due July 2016; and


•	other secured indebtedness and capital lease agreements.

The amounts outstanding under such agreements and other debt instruments as of June 30, 2014 and December 31, 2013 were as follows:



	June 30, 2014		December 31, 2013
	(In thousands)
	(Unaudited)
Senior secured first lien delayed draw term loan A tranche due June 2019	$	50,000	$	—
Senior secured first lien term loan A tranche due June 2021	398,008		—
Senior secured first lien term loan B-1 tranche due December 2016	—		229,000
Senior secured first lien term loan B-2 tranche due December 2017	—		410,000
Senior second priority secured notes due November 15, 2018, net of $0,000 and $6,175 OID as of June 30, 2014 and December 31, 2013, respectively	455,711		493,825
2013 RSA	319,000		264,000
Other secured debt and capital leases	198,868		188,995
Revolving line of credit	99,000		17,000
Total debt and capital leases	$	1,520,587	$	1,602,820
Less: current portion	85,962		75,056
Long-term debt and capital leases	$	1,434,625	$	1,527,764

The indenture for our senior secured notes provides that we may only incur additional indebtedness if, after giving effect to the new incurrence, we meet a minimum fixed charge coverage ratio of 2.00:1.00, as defined therein, or the indebtedness qualifies under certain specifically enumerated carve-outs and debt incurrence baskets, including a provision that permits us to incur capital lease obligations of up to $350.0 million outstanding at any one time. As of June 30, 2014, we had a fixed charge coverage ratio in excess of 4.00:1.00. However, there can be no assurance that we can maintain a fixed charge coverage ratio over 2.00:1.00, in which case our ability to incur additional indebtedness under our existing financial arrangements to satisfy our ongoing capital requirements would be limited as noted above, although we believe the combination of our expected cash flows, financing available through operating leases which are not subject to debt incurrence baskets, the capital lease basket, and the funds available to us through our accounts receivable sale facility and our revolving credit facility will be sufficient to fund our expected capital expenditures for the remainder of 2014. We anticipate utilizing the remainder of the delayed-draw first lien Term A loan under the 2014 Agreement to fund the majority of the redemption of the remaining senior second priority secured notes on or before December 31, 2014.

See Notes 7 and 8 of the notes to our consolidated financial statements included in Part I, Item 1, in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014 for further discussion of the senior secured credit facility, senior second priority secured notes and 2013 RSA.

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Capital and Operating Leases

In addition to the net cash capital expenditures discussed above, we also acquired revenue equipment, including tractors and trailers, with capital and operating leases. During the six months ended June 30, 2014, we acquired tractors and trailers through capital leases and operating leases with gross value of $38.0 million and $219.4 million, which were offset by capital lease and operating lease terminations with originating values of $45.8 million and $49.8 million, respectively. During the six months ended June 30, 2013, we acquired revenue equipment through capital leases and operating leases with gross values of $60.1 million and $142.1 million, respectively, which were partially offset by capital and operating lease terminations with originating values of $10.7 million and $34.5 million, respectively.

Contractual Obligations

During the six months ended June 30, 2014, other than the voluntary prepayments of our long-term debt and entering into the 2014 Agreement as discussed under the heading "Financing", there have not been any material changes outside the ordinary course of business to the contractual obligations table contained in our Form 10-K for the fiscal year ended December 31, 2013.

Off-Balance Sheet Arrangements

We lease approximately 9,400 tractors under operating leases, which includes approximately 5,900 company tractors and 3,500 owner-operator tractors financed by the Company. Operating leases have been an important source of financing for our revenue equipment. Tractors held under operating leases are not carried on our consolidated balance sheets, and lease payments in respect of such tractors are reflected in our consolidated statements of income in the line item “Rental expense.” Our revenue equipment rental expense was $104.9 million for the six months ended June 30, 2014, compared with $81.1 million in the six months ended June 30, 2013.

Seasonality

In the transportation industry, results of operations generally show a seasonal pattern. As customers ramp up for the holiday season at year-end, the late third and fourth quarters have historically been our strongest volume quarters. As customers reduce shipments after the winter holiday season, the first quarter has historically been a lower volume quarter for us than the other three quarters. In the eastern and midwestern United States, and to a lesser extent in the western United States, during the winter season, our equipment utilization typically declines and our operating expenses generally increase, with fuel efficiency declining because of engine idling and harsh weather sometimes creating higher accident frequency, increased claims, and more equipment repairs. Our revenue also may be affected by holidays as a result of curtailed operations or vacation shutdowns, because our revenue is directly related to available working days of shippers. From time to time, we also suffer short-term impacts from weather-related events such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes, and explosions that could harm our results of operations or make our results of operations more volatile.

Inflation

Inflation can have an impact on our operating costs. A prolonged period of inflation could cause interest rates, fuel, wages, and other costs to increase, which would adversely affect our results of operations unless freight rates correspondingly increase. However, with the exception of fuel, the effect of inflation has been minor in recent years. Historically, the majority of the increase in fuel costs has been passed on to our customers through a corresponding increase in fuel surcharge revenue, making the impact of the increased fuel costs on our operating results less severe. If fuel costs escalate and we are unable to recover these costs timely with effective fuel surcharges, it would have an adverse effect on our operation and profitability.

Forward Looking Statements

This Quarterly Report contains statements that may constitute forward-looking statements, usually identified by words such as “anticipates,” “believes,” “estimates,” “plans,” “projects,” “expects,” “intends,” or similar expressions which speak only as of the date the statement was made. Forward-looking statements in this quarterly report include statements concerning: the outcome of pending litigation and actions we intend to take in respect thereof; trends concerning supply, demand, pricing and costs in the trucking industry; our expectation of increasing driver wage, retention, and hiring expenses; the benefits of our actions to improve driver retention and satisfaction; the benefits of our fuel surcharge program and our ability to recover increasing fuel costs through surcharges; the impact of the lag effect relating to our fuel surcharges; the sources and sufficiency of our liquidity and financial resources; our intentions concerning the use of derivative financial instruments to hedge fuel price exposure; and the timing and amount of future acquisitions of trucking equipment and other capital expenditures and the use and availability of cash, cash flow from operations, leases and debt to finance such acquisitions. Such statements are based upon the current beliefs and expectations of the Company’s management. Such forward-looking statements are subject to significant risks and uncertainties as set forth in the "Risk Factor" section of our Annual Report Form 10-K for the year ended December 31, 2013 and in this Form 10-Q. Actual events may differ materially from those set forth in the forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

As to the Company’s business and financial performance, the following factors, among others, could cause actual results to differ materially from those in forward-looking statements: any future recessionary economic cycles and downturns in customers’ business cycles, particularly in market segments and industries in which we have a significant concentration of customers; increasing competition from trucking, rail, intermodal, and brokerage competitors; a significant reduction in, or termination of, our trucking services by a key customer; the amount and velocity of changes in fuel prices and our ability to recover fuel prices through our fuel surcharge program; volatility in the price or availability of fuel; increases in new equipment prices or replacement costs; the regulatory environment in which we operate, including existing regulations and changes in existing regulations, or violations by us of existing or future regulations; our Compliance Safety Accountability safety rating; increases in driver compensation to the extent not offset by increases in freight rates and difficulties in driver recruitment and retention; changes in rules or legislation by the National Labor Relations Board or Congress and/or union organizing efforts; potential volatility or decrease in the amount of earnings as a result of our claims exposure through our captive insurance companies; risks relating to our captive insurance companies; uncertainties associated with our operations in Mexico; our ability to attract and maintain relationships with owner-operators; the possible re-classification of our owner-operators as employees; our ability to retain or replace key personnel; conflicts of interest or potential litigation that may arise from other businesses owned by Jerry Moyes, including pledges of Swift stock and guarantees related to other businesses by Jerry Moyes; our dependence on third parties for intermodal and brokerage business; our ability to sustain cost savings realized as part of

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recent cost reduction initiatives; potential failure in computer or communications systems; our ability to execute or integrate any future acquisitions successfully; seasonal factors such as harsh weather conditions that increase operating costs; goodwill impairment; the potential impact of the significant number of shares of our common stock that is outstanding; our intention to not pay dividends; our significant ongoing capital requirements; our level of indebtedness and our ability to service our outstanding indebtedness, including compliance with our indebtedness covenants, and the impact such indebtedness may have on the way we operate our business; the significant amount of our stock and related control over the Company by Jerry Moyes; and restrictions contained in our debt agreements.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have interest rate exposure arising from our senior secured credit facility, 2013 RSA, and other financing agreements, which have variable interest rates. These variable interest rates are impacted by changes in short-term interest rates, although the volatility related to the first lien term loan B tranche is mitigated due to a minimum LIBOR rate of 0.75%. We manage interest rate exposure through a mix of variable rate debt, and fixed rate notes (weighted average rate of 2.6% before applicable margin). Assuming the current level of borrowings, a hypothetical one-percentage point increase in interest rates would increase our annual interest expense by $6.6 million considering the effect of the minimum LIBOR rate on the first lien term loan B tranche.

We have commodity exposure with respect to fuel used in company tractors. Further increases in fuel prices will continue to raise our operating costs, even after applying fuel surcharge revenue. Historically, we have been able to recover a majority of fuel price increases from our customers in the form of fuel surcharges. The weekly average diesel price per gallon in the United States, as reported by the DOE, decreased slightly from an average of $3.950 per gallon for the six months ended June 30, 2013 to an average of $3.949 per gallon for the six months ended June 30, 2014. We cannot predict the extent or speed of potential changes in fuel price levels in the future, the degree to which the lag effect of our fuel surcharge programs will impact us as a result of the timing and magnitude of such changes, or the extent to which effective fuel surcharges can be maintained and collected to offset such increases. We generally have not used derivative financial instruments to hedge our fuel price exposure in the past, but continue to evaluate this possibility.

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures and determined that as of June 30, 2014 our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Change in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

Information about our legal proceedings is included in Note 13 of the notes to our consolidated financial statements, included in Part I, Item 1, in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014 and is incorporated by reference herein.

ITEM 1A: RISK FACTORS

In addition to the other information set forth in this report, the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013 should be carefully considered as these risk factors could materially affect our business, financial condition, future results and/or our ability to maintain compliance with our debt covenants. The risks described in our Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also adversely affect our business, financial condition, operating results and/or our ability to maintain compliance with our debt covenants.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4: MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5: OTHER INFORMATION

Not applicable.

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ITEM 6: EXHIBITS



Exhibit Number	Description	Page or Method of Filing

3.1	Amended and Restated Certificate of Incorporation of Swift Transportation Company	Incorporated by reference to Exhibit 3.1 of Form 10-K for the year ended December 31, 2010

3.2	Bylaws of Swift Transportation Company	Incorporated by reference to Exhibit 3.2 of Form 10-K for the year ended December 31, 2010

31.1	Certification by CEO pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

31.2	Certification by CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32.1	Certification by CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith

10.1	Third Amended and Restated Credit Agreement among Swift Transportation Co., as borrower, Swift Transportation Company and the other guarantors party thereto, as guarantors, and the lenders and agents parties thereto*	Filed herewith

10.2	Swift Transportation Company 2014 Omnibus Incentive Plan, effective May 22, 2014	Incorporated by reference to Appendix A to the Company’s 2014 Proxy Statement, filed on April 4, 2014

101	XBRL Instance Document	Filed herewith

101	XBRL Taxonomy Extension Schema Document	Filed herewith

101	XBRL Taxonomy Calculation Linkbase Document	Filed herewith

101	XBRL Taxonomy Label Linkbase Document	Filed herewith

101	XBRL Taxonomy Presentation Linkbase Document	Filed herewith

101	XBRL Taxonomy Extension Definition Document	Filed herewith


*	Confidential information on this Exhibit has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request.

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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.




		SWIFT TRANSPORTATION COMPANY

		/s/ Jerry Moyes
		(Signature)
		Jerry Moyes
		Chief Executive Officer

Date:	August 7, 2014

		/s/ Virginia Henkels
		(Signature)
		Virginia Henkels
		Executive Vice President and Chief Financial Officer

Date:	August 7, 2014

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