Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
OR
[ ] 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 000-20793
SMITHWAY MOTOR XPRESS CORP.
---------------------------
(Exact name of registrant as specified in its charter)
NEVADA 42-1433844
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2031 QUAIL AVENUE
FORT DODGE, IOWA 50501
- ---------------------------------------- ---------------------------------
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 515/576-7418
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 such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
YES [ ] NO [X]
As of April 28, 2004, the registrant had 3,846,821 shares of Class A Common
Stock and 1,000,000 shares of Class B Common Stock outstanding.
1
PAGE
NUMBER
PART I
FINANCIAL INFORMATION
Item 1 Financial Statements 3-9
Condensed Consolidated Balance Sheets as of December 31, 2003 and
March 31, 2004 (unaudited)....................................... 3-4
Condensed Consolidated Statements of Operations for the three months
ended March 31, 2003 and 2004 (unaudited)......................... 5
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 2003 and 2004 (unaudited)......................... 6-7
Notes to Condensed Consolidated Financial Statements (unaudited)......... 8-9
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 10-17
Item 3 Quantitative and Qualitative Disclosures About Market Risks.............. 17
Item 4 Controls and Procedures.................................................. 17-18
PART II
OTHER INFORMATION
Item 1 Legal Proceedings........................................................ 18
Item 2 Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities............................................................... 18
Item 3 Defaults Upon Senior Securities.......................................... 18
Item 4 Submission of Matters to a Vote of Security Holders...................... 18
Item 5 Other Information........................................................ 18
Item 6 Exhibits and Reports on Form 8-K......................................... 19
2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share data)
DECEMBER 31, MARCH 31,
2003 2004
-------- --------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents ...................... $ 355 $ 450
Receivables:
Trade ....................................... 14,231 16,547
Other ....................................... 458 1,850
Recoverable income taxes .................... 8 16
Inventories .................................... 882 957
Deposits, primarily with insurers .............. 945 933
Prepaid expenses ............................... 1,037 1,688
Deferred income taxes .......................... 2,322 2,511
-------- --------
Total current assets ................. 20,238 24,952
-------- --------
Property and equipment:
Land ........................................... 1,548 1,548
Buildings and improvements ..................... 8,209 8,209
Tractors ....................................... 69,384 72,187
Trailers ....................................... 39,977 39,137
Other equipment ................................ 5,516 5,488
-------- --------
124,634 126,569
Less accumulated depreciation .................. 70,235 70,930
-------- --------
Net property and equipment ........... 54,399 55,639
-------- --------
Goodwill ......................................... 1,745 1,745
Other assets ..................................... 298 270
-------- --------
$ 76,680 $ 82,606
======== ========
See accompanying notes to condensed consolidated financial statements.
3
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share data)
DECEMBER 31, MARCH 31,
2003 2004
-------- ---------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt ................. $ 10,582 $ 11,134
Accounts payable ..................................... 4,827 6,139
Accrued loss reserves ................................ 4,974 5,426
Accrued compensation ................................. 2,535 3,361
Checks in excess of cash balances .................... 672 696
Other accrued expenses ............................... 430 478
-------- --------
Total current liabilities .................. 24,020 27,234
Long-term debt, less current maturities ................ 22,609 23,648
Deferred income taxes .................................. 9,020 9,019
Line of credit ......................................... 426 1,765
-------- --------
Total liabilities ......................... 56,075 61,666
-------- --------
Stockholders' equity:
Preferred stock ...................................... - -
Common stock:
Class A ........................................... 40 40
Class B ........................................... 10 10
Additional paid-in capital ........................... 11,393 11,393
Retained earnings .................................... 9,576 9,911
Reacquired shares, at cost ........................... (414) (414)
-------- --------
Total stockholders' equity ................. 20,605 20,940
Commitments
-------- --------
$ 76,680 $ 82,606
======== ========
See accompanying notes to condensed consolidated financial statements.
4
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2003 2004
----------- -----------
Operating revenue:
Freight............................................... $ 39,656 $ 43,408
Other ................................................ 230 192
----------- -----------
Operating revenue .............................. 39,886 43,600
----------- -----------
Operating expenses:
Purchased transportation ............................. 14,355 14,078
Compensation and employee benefits ................... 12,374 13,424
Fuel, supplies, and maintenance ...................... 7,837 8,658
Insurance and claims ................................. 1,022 1,490
Taxes and licenses ................................... 841 881
General and administrative ........................... 1,358 1,722
Communications and utilities ......................... 412 366
Depreciation and amortization ........................ 3,710 3,177
----------- -----------
Total operating expenses ....................... 41,909 43,796
----------- -----------
Loss from operations ............................. (2,023) (196)
Financial (expense) income
Interest expense ..................................... (450) (373)
Interest income ...................................... 2 4
Other income ......................................... - 727
----------- -----------
(Loss) earnings before income taxes .............. (2,471) 162
Income tax benefit ........................................ (913) (173)
----------- -----------
Net (loss) earnings ............................. $ (1,558) $ 335
----------- -----------
Basic and diluted (loss) earnings per share ............... $ (0.32) $ 0.07
=========== ===========
Basic weighted average shares outstanding ................. 4,846,821 4,846,821
Diluted weighted average shares outstanding ............... 4,846,821 4,912,869
See accompanying notes to condensed consolidated financial statements.
5
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
------------------
2003 2004
-------- -------
Cash flows from operating activities:
Net (loss) earnings ...................................................... $(1,558) $ 335
------- -------
Adjustments to reconcile net (loss) earnings to cash (used in) provided by
operating activities:
Depreciation and amortization ........................................ 3,710 3,177
Deferred income tax benefit .......................................... (919) (190)
Change in:
Receivables ..................................................... (2,714) (3,716)
Inventories ..................................................... (36) (75)
Deposits, primarily with insurers ............................... (78) 12
Prepaid expenses ................................................ (1,170) (651)
Accounts payable and other accrued liabilities .................. 2,459 2,638
------- -------
Total adjustments ........................................... 1,252 1,195
------- -------
Net cash (used in) provided by operating activities ....... (306) 1,530
------- -------
Cash flows from investing activities:
Purchase of property and equipment ....................................... (192) (382)
Proceeds from sale of property and equipment ............................. 2,011 489
Other .................................................................... 45 28
------- -------
Net cash provided by investing activities ..................... 1,864 135
------- -------
Cash flows from financing activities:
Net borrowings on line of credit ......................................... 1,380 1,339
Principal payments on long-term debt ..................................... (2,847) (2,933)
Change in checks issued in excess of cash balances ....................... (78) 24
------- -------
Net cash used in financing activities .......................... (1,545) (1,570)
------- -------
Net increase in cash and cash equivalents ...................... 13 95
Cash and cash equivalents at beginning of period ........................... 105 355
------- -------
Cash and cash equivalents at end of period ................................. $ 118 $ 450
======= =======
See accompanying notes to condensed consolidated financial statements.
6
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows, continued
(Dollars in thousands)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
------------------
2003 2004
------ -------
Supplemental disclosure of cash flow information:
Cash paid during period for:
Interest ........................................................... $ 365 $ 382
Income taxes ....................................................... 15 24
====== ======
Supplemental schedules of noncash investing and financing activities:
Notes payable issued for tractors and trailers ............................ $ 712 $4,524
====== ======
See accompanying notes to condensed consolidated financial statements.
7
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of
Smithway Motor Xpress Corp., a Nevada holding company, and its four wholly
owned subsidiaries (the "Company", "we", "us", or "our"). All significant
intercompany balances and transactions have been eliminated in
consolidation.
The condensed consolidated financial statements have been prepared, without
audit, in accordance with accounting principles generally accepted in the
United States of America, pursuant to the published rules and regulations
of the Securities and Exchange Commission. In our opinion, the accompanying
condensed consolidated financial statements include all adjustments which
are necessary for a fair presentation of the results for the interim
periods presented, such adjustments being of a normal recurring nature.
Certain information and footnote disclosures have been condensed or omitted
pursuant to such rules and regulations. The December 31, 2003, Condensed
Consolidated Balance Sheet was derived from our audited balance sheet for
the year then ended. It is suggested that these condensed consolidated
financial statements and notes thereto be read in conjunction with the
consolidated financial statements and notes thereto included in our Form
10-K for the year ended December 31, 2003. Results of operations in interim
periods are not necessarily indicative of results to be expected for a full
year.
NOTE 2. LIQUIDITY
Although there can be no assurance, we believe that cash generated by
operations and available sources of financing for acquisitions of revenue
equipment will be adequate to meet our currently anticipated working
capital requirements and other cash needs through March 31, 2005. To the
extent that actual results or events differ from our financial projections
or business plans, our liquidity may be adversely affected. Specifically,
our liquidity may be adversely affected by one or more of the following
factors: a decrease in freight demand or a loss in customer relationships
or volume; the ability to attract and retain sufficient numbers of
qualified drivers and owner-operators; elevated fuel prices and the ability
to collect fuel surcharges; costs associated with insurance and claims;
increased exposure with respect to accident claims as a result of a
reduction of our excess insurance coverage limit; inability to maintain
compliance with, or negotiate amendments to, loan covenants; and the
possibility of shortened payment terms by our suppliers and vendors worried
about our ability to meet payment obligations. We expect to fund our cash
requirements primarily with cash generated from operations and revolving
borrowings under our bank financing arrangement.
NOTE 3. NET EARNINGS PER COMMON SHARE
Basic earnings per share have been computed by dividing net earnings by the
weighted-average outstanding Class A and Class B common shares during each
of the quarters. Diluted earnings per share have been calculated by also
including in the computation the effect of employee stock options,
nonvested stock, and similar equity instruments granted to employees as
potential common shares. Because we suffered a net loss for the quarter
ended March 31, 2003, the effects of potential common shares were not
included in the calculation for that period as their effects would be
anti-dilutive. Stock options outstanding at March 31, 2003, and 2004,
totaled 422,025 and 327,150, respectively.
NOTE 4. STOCK OPTION PLANS
We have three stock-based employee compensation plans:
(1) We have reserved 25,000 shares of Class A common stock for
issuance pursuant to an outside director stock option plan. The term of
each option shall be six years from the grant date. Options vest on the
first anniversary of the grant date. The exercise price of each stock
option is 85 percent of the fair market value of the common stock on
the date of grant. In July 2000 we granted outside directors 12,000
stock options in the aggregate not covered by this plan.
(2) We have reserved 500,000 shares of Class A common stock for
issuance pursuant to an incentive
8
stock option plan. Any shares which expire unexercised or are forfeited
become available again for issuance under the plan. Under this plan, no
awards of incentive stock options may be made after December 31, 2004.
(3) We have reserved 400,000 shares of Class A common stock for
issuance pursuant to a new employee incentive stock option plan adopted
during 2001. Any shares which expire unexercised or are forfeited
become available again for issuance under the plan. Under this plan, no
award of incentive stock options may be made after August 6, 2011.
We account for these plans under the recognition and measurement principles
of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees," and related Interpretations. No stock-based employee
compensation cost is reflected in the statement of operations, as all
options granted under these plans had an exercise price equal to the market
value of the common stock on the date of the grant.
The following table illustrates the effect on net loss and loss per share
if we had applied the fair value recognition provisions of FASB Statement
No. 123, "Accounting for Stock-Based Compensation," to stock-based employee
compensation. We used the Black-Scholes option pricing model to determine
the fair value of stock options for the three months ended March 31, 2003.
There were no stock options granted during the first quarter of 2004. The
following assumptions were used in determining the fair value of options
granted during the first quarter of 2003: weighted average risk-free
interest rate, 2.54%; weighted average expected life, 5 years; and weighted
average expected volatility, 66%. There were no expected dividends. For
purposes of pro forma disclosures, the estimated fair value of options is
amortized to expense over the options' vesting periods.
THREE MONTHS ENDED
MARCH 31,
------------------
2003 2004
-------- -------
Net (loss) earnings, as reported (1,558) 335
Deduct: Total stock-based employee compensation
expense determined under fair value based method for
all awards, net of related tax effects (5) (4)
------ ------
Pro forma net (loss) earnings (1,563) 331
====== ======
Loss per share
Basic and Diluted - as reported (0.32) 0.07
Basic and Diluted - pro forma (0.32) 0.07
NOTE 5. LONG-TERM DEBT
During April 2004, we amended our financing arrangement with LaSalle Bank
solely to extend the maturity date from January 1, 2005 to January 1, 2006.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
Except for the historical information contained herein, the discussion
in this quarterly report on Form 10-Q contains forward-looking statements that
involve risk, assumptions, and uncertainties that are difficult to predict.
Words such as "anticipates," "believes," "estimates," "projects," "expects,"
variations of these words, and similar expressions, are intended to identify
such forward-looking statements. These statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and expectations of the Company's
management and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in forward-looking statements. The
following factors, among others, could cause actual results to differ materially
from those in forward-looking statements: failure to turn around continued
operating losses, which could result in violation of bank covenants and
acceleration of indebtedness at several financial institutions; the ability to
obtain financing on acceptable terms, and obtain waivers and amendments to
current financing in the event of default; economic recessions or downturns in
customers' business cycles; excessive increases in capacity within truckload
markets; surplus inventories; decreased demand for transportation services
offered by the Company; increases or rapid fluctuations in inflation, interest
rates, fuel prices, and fuel hedging; the availability and costs of attracting
and retaining qualified drivers and owner-operators; increases in insurance
premiums and deductible amounts, or changes in excess coverage, relating to
accident, cargo, workers' compensation, health, and other claims; the resale
value of used equipment and prices of new equipment; seasonal factors such as
harsh weather conditions that increase operating costs; regulatory requirements
that increase costs and decrease efficiency, including new emissions standards
and hours-of-service regulations; changes in management; and the ability to
negotiate, consummate, and integrate acquisitions. Readers should review and
consider the various disclosures made by the Company in its press releases,
stockholder reports, and public filings, as well as the factors explained in
greater detail in the Company's annual report on Form 10-K.
The Company's fiscal year ends on December 31 of each year. Thus, this
report discusses the first quarter of the Company's 2003 and 2004 fiscal years.
We generate substantially all of our revenue by transporting freight
for our customers. Generally, we are paid by the mile for our services. We also
derive revenue from fuel surcharges, loading and unloading activities, equipment
detention, and other accessorial services. The main factors that affect our
revenue are the revenue per mile we receive from our customers, the percentage
of miles for which we are compensated, and the number of miles we generate with
our equipment. These factors relate, among other things, to the United States
economy, inventory levels, the level of capacity in the trucking industry,
specific customer demand, and driver availability. We monitor our revenue
production primarily through average revenue per tractor per week.
During the first quarter of 2004, our average revenue per tractor per
week (excluding fuel surcharge, brokerage, and other revenues) increased to
$2,601 from $2,169 in the first quarter of 2003. We are encouraged by this
improvement and by the fact that our operating revenue increased $3.7 million
(9.3%), while weighted average tractors decreased 8.3% to 1,178 in the 2004
quarter from 1,285 in the 2003 quarter. This reduction was part of our planned
disposition of unseated company-owned tractors. In addition, we contracted with
fewer independent contractor providers of equipment. The decrease in the number
of independent contractors primarily occurred in the first three quarters of
2003 and has slowed substantially since September 2003 as freight demand has
increased and the economy has begun to rebound.
The main factors that impact our profitability on the expense side are
the variable costs of transporting freight for our customers. These costs
include fuel expense, driver-related expenses, such as wages, benefits,
training, and recruitment, and independent contractor costs, which are recorded
under purchased transportation. 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, fleet age, efficiency, and other
factors. Our main fixed costs are the acquisition and financing of long-term
assets, such as revenue equipment and the compensation of non-driver personnel.
Effectively controlling our expenses is a key component of our profit
improvement plan.
For the three months ended March 31, 2004, operating revenue increased
9.3% to $43.6 million from $39.9 million during the same quarter in 2003. Net
earnings was $335, or $0.07 per basic and diluted share, compared with
10
net loss of $1.6 million, or ($0.32) per basic and diluted share, during the
2003 quarter. However, during the first quarter of 2004 we recorded $727,000 of
income from life insurance resulting from the death of William G. Smith, our
former President and Chief Executive Officer. This non operating income is tax
exempt and added $0.15 to our quarterly earnings per share for the first quarter
of 2004. This is a one time event which will not recur in the future. Without
the life insurance proceeds, our net loss would have been $392,000, or ($0.08)
per basic and diluted share, during the 2004 quarter, compared with net loss of
$1.6 million, or ($0.32) per basic and diluted share, during the 2003 quarter.
Our net loss and loss per share as adjusted to exclude the life insurance
proceeds are not in accordance with, or an alternative for, generally accepted
accounting principles. We believe that the presentation of net loss and the
related per share amount excluding the one-time effect of these life insurance
proceeds provides useful information to investors regarding business trends
relating to our financial condition and results of ongoing operations.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain
items to revenue for the three months ended March 31, 2003 and 2004:
THREE MONTHS ENDED
MARCH 31,
--------------------
2003 2004
----- -----
Operating revenue ......................... 100.0% 100.0%
Operating expenses:
Purchased transportation ......... 36.0 32.3
Compensation and employee benefits 31.0 30.8
Fuel, supplies, and maintenance .. 19.6 19.9
Insurance and claims ............. 2.6 3.4
Taxes and licenses ............... 2.1 2.0
General and administrative ....... 3.4 3.9
Communication and utilities ...... 1.0 0.8
Depreciation and amortization .... 9.3 7.3
----- -----
Total operating expenses ......... 105.1 100.4
----- -----
Loss from operations ...................... (5.1) (0.4)
Interest expense, net ..................... (1.1) (0.9)
Life insurance proceeds ................... - 1.7
----- -----
(Loss) earnings before income taxes ....... (6.2) 0.4
Income tax benefit ........................ (2.3) (0.4)
----- -----
Net (loss) earnings ....................... (3.9)% 0.8%
===== =====
COMPARISON OF THREE MONTHS ENDED MARCH 31, 2004, WITH THREE MONTHS ENDED MARCH
31, 2003.
Operating revenue increased $3.7 million (9.3%), to $43.6 million in
the 2004 quarter from $39.9 million in the 2003 quarter. The increase in
operating revenue resulted from increased average operating revenue per tractor
per week offset partially by a reduction in our weighted average tractors.
Average operating revenue per tractor per week, one measure of asset
productivity, increased significantly to $2,847 in the 2004 quarter from $2,388
in the 2003 quarter. Operating revenue includes revenue from operating our
trucks as well as other, more volatile revenue items, including fuel surcharge,
brokerage, and other revenue. We believe the analysis of tractor productivity is
more meaningful if fuel surcharge, brokerage, and other revenue are excluded
from the computation. Average revenue per tractor per week (excluding fuel
surcharge, brokerage, and other revenue) increased to $2,601 in the 2004 quarter
from $2,169 in the 2003 quarter, primarily due to increased production from our
seated equipment and a lower number of unseated company tractors. Revenue per
loaded mile (excluding fuel surcharge, brokerage, and other revenue) increased
six cents to $1.40 in the 2004 quarter from $1.34 in the 2003 quarter,
reflecting improved lane and customer selection, increased trucking demand, and
improved general economic conditions. Fuel surcharge revenue increased $87,000
to $1.8 million in the 2004 quarter from $1.7 million in the 2003 quarter.
During the first quarter of 2004 and 2003, approximately $1.2 million and $1.1
million, respectively, of the fuel surcharge revenue collected helped to offset
our fuel costs. The remainder was passed through to independent contractors.
11
Our weighted average tractors decreased to 1,178 in the 2004 quarter
from 1,285 in the 2003 quarter. This reflects our planned reduction in fleet
size during 2003 which reduced the number of unmanned company-owned tractors. In
addition, we contracted with fewer independent contractor providers of
equipment. The reduction in fleet size and yield enhancement efforts were
consistent with our strategy of focusing on asset productivity. We believe a
certain level of success has been achieved, as our weighted average number of
tractors decreased 8.3% while operating revenue increased 9.3%.
Purchased transportation consists primarily of payments to independent
contractor providers of revenue equipment, expenses related to brokerage
activities, and payments under operating leases of revenue equipment. Purchased
transportation decreased $277,000 (1.9%), to $14.1 million in the 2004 quarter
from $14.4 million in the 2003 quarter. As a percentage of revenue, purchased
transportation decreased to 32.3% in the 2004 quarter from 36.0% in the 2003
quarter. The changes reflect a decrease in the percentage of the fleet supplied
by independent contractors and in the number of independent contractors. The
percentage of total operating revenue provided by independent contractors
decreased to 34.2% in the 2004 quarter from 38.1% in the 2003 quarter. We
believe the decline in independent contractors as a percentage of our total
fleet is attributable to high fuel costs, high insurance costs, tighter credit
standards, and slow freight demand, which have diminished the pool of drivers
interested in becoming or remaining independent contractors. The decline in
independent contractors has slowed significantly since September, 2003 as
freight demand and the general economy have improved.
Compensation and employee benefits increased $1.0 million (8.5%), to
$13.4 million in the 2004 quarter from $12.4 million in the 2003 quarter. As a
percentage of revenue, compensation and employee benefits decreased slightly to
30.8% in the 2004 quarter from 31.0% in the 2003 quarter. This reflects an
increase in our rate per loaded mile which increases revenue without a
corresponding increase in wages and a $162,000 decrease in wages paid to
non-driver employees. These factors were partially offset by an increase in the
percentage of the fleet comprised of company-owned tractors. Although
compensation and employee benefits expense decreased as a percentage of revenue,
the market for recruiting drivers became increasingly challenging in the first
quarter of 2004. If the Company experiences a shortage of drivers in the near
future, an increase in driver pay would negatively impact the Company's results
of operations to the extent that corresponding freight rate increases were not
obtained.
Fuel, supplies, and maintenance increased $821,000 (10.5%), to $8.7
million in the 2004 quarter from $7.8 million in the 2003 quarter. As a
percentage of revenue, fuel, supplies, and maintenance increased slightly to
19.9% of revenue in the 2004 quarter compared with 19.6% in the 2003 quarter.
This reflects an increase in the percentage of the fleet comprised of
company-owned tractors, partially offset by an increase in our rate per loaded
mile which increases revenue without a corresponding increase in maintenance
costs. We have seen an increase in maintenance expense in recent periods due to
our extended trade cycle, however further increases in repair and maintenance
expense are expected to be minimal as we continue to replace older equipment as
part of the second phase of our profit improvement plan. Fuel prices decreased
approximately 2% to an average of $1.50 per gallon in the 2004 quarter from
$1.53 per gallon in the 2003 quarter.
Insurance and claims increased $468,000 (45.8%), to $1.5 million in the
2004 quarter from $1.0 million in the 2003 quarter. As a percentage of revenue,
insurance and claims increased to 3.4% of revenue in the 2004 quarter compared
with 2.6% in the 2003 quarter. During the first quarter of 2003 we exercised an
option to retroactively increase the deductible for our auto liability policy to
$125,000 per incident beginning July 1, 2001 through June 30, 2002 which reduced
our expense by $467,000. This did not recur in the first quarter of 2004. These
factors were partially offset by the elimination of premiums for excess
insurance coverage which we discontinued in July 2003, due to our financial
condition and the rising cost of insurance, leaving $2 million of primary
coverage with a $250,000 self-insured retention. The lack of excess coverage and
high self-insured retention increases our risk associated with frequency and
severity of accidents and could increase our expenses or make them more volatile
from period to period. Furthermore, if we experience claims that exceed the
limits of our insurance coverage, or if we experience claims for which coverage
is not provided, our financial condition and results of operations could suffer
a materially adverse effect. The insurance policies are scheduled for renewal on
July 1, 2004. Upon renewal, we expect no changes in our self-insured retention
level or our excess insurance coverage limit.
Taxes and licenses increased $40,000 (4.8%) to $881,000 in the 2004
quarter from $841,000 in the 2003 quarter. The decrease in the number of
company-owned tractors subject to annual license and permit costs was offset by
an increase in the need for over-dimensional permits. As a percentage of
revenue, taxes and licenses remained relatively constant at 2.0% of revenue in
the 2004 quarter compared with 2.1% of revenue in the 2003 quarter.
12
General and administrative expenses increased $364,000 (26.8%), to $1.7
million in the 2004 quarter from $1.4 million in the 2003 quarter. As a
percentage of revenue, general and administrative expenses increased to 3.9% in
the 2004 quarter from 3.4% in the 2003 quarter, reflecting increased advertising
and other driver recruiting and orientation expenses and higher legal and
consulting fees.
Communications and utilities decreased $46,000 (11.2%), to $366,000 in
the 2004 quarter from $412,000 in the 2003 quarter, reflecting a decrease in our
weighted average tractors. As a percentage of revenue, communications and
utilities decreased to 0.8% of revenue in the 2004 quarter from 1.0% of revenue
in the 2003 quarter.
Depreciation and amortization decreased $533,000 (14.4%), to $3.2
million in the 2004 quarter from $3.7 million in the 2003 quarter. In accordance
with industry practices, the gain or loss on retirement, sale, or write-down of
equipment is included in depreciation and amortization. In the 2004 and 2003
quarter, depreciation and amortization included net gains from the sale of
equipment of $115,000 and $210,000, respectively. As a percentage of revenue,
depreciation and amortization decreased to 7.3% of revenue in the 2004 quarter
compared with 9.3% in the 2003 quarter, partly due to increased average revenue
per tractor and reduction of unseated tractors, which more efficiently spreads
depreciation expense. Additionally, some of our older equipment still generates
revenue but is no longer being depreciated. In the short-term, we expect that
the presence of older equipment which is not being depreciated will more than
offset increases in depreciation resulting from the addition of new equipment to
our fleet. Over the long-term, as we continue to upgrade our equipment fleet, we
expect depreciation expense to increase.
Interest expense, net, decreased $79,000 (16.7%), to $369,000 in the
2004 quarter from $448,000 in the 2003 quarter. This decrease was attributable
to lower average debt outstanding, partially offset by higher interest rates. As
a percentage of revenue, interest expense, net, decreased to 0.9% of revenue in
the 2004 quarter compared with 1.1% in the 2003 quarter.
During the first quarter of 2004 we recorded $727,000 of income from
life insurance resulting from the death of William G. Smith, our former
President and Chief Executive Officer. This non operating income is tax exempt
and added $0.15 to our quarterly earnings per share for the first quarter of
2004. This is a one time event which will not recur in the future.
As a result of the foregoing, our pre-tax margin increased to 0.4% in
the 2004 quarter from (6.2%) in the 2003 quarter.
Our income tax benefit in the 2004 quarter was $173,000, or 30.6% of
loss before life insurance proceeds and income taxes. Our income tax benefit in
the 2003 quarter was $913,000, or 36.9% of loss before income taxes. In both
years, the effective tax rate is different from the expected combined tax rate
for a company headquartered in Iowa because of the cost of nondeductible driver
per diem expense absorbed by us. The impact of paying per diem travel expenses
varies depending upon the ratio of drivers to independent contractors and the
level of our pre-tax loss.
As a result of the factors described above, net earnings was $335,000
in the 2004 quarter (0.8% of revenue), compared with net loss of $1.6 million in
the 2003 quarter (3.9% of revenue). Without the life insurance proceeds, our net
loss would have been $392,000 (0.1% of revenue) in the 2004 quarter.
LIQUIDITY AND CAPITAL RESOURCES
USES AND SOURCES OF CASH
We require cash to fund working capital requirements and to service our
debt. We have historically financed acquisitions of new equipment with
borrowings under installment notes payable to commercial lending institutions
and equipment manufacturers, borrowings under lines of credit, cash flow from
operations, and equipment leases from third-party lessors. We also have obtained
a portion of our revenue equipment fleet from independent contractors who own
and operate the equipment, which reduces overall capital expenditure
requirements compared with providing a fleet of entirely company-owned
equipment.
13
Our primary sources of liquidity have been funds provided by operations
and borrowings under credit arrangements with financial institutions and
equipment manufacturers. We are experiencing improved cash flow as losses
decrease. As of the date of this report, we have adequate borrowing availability
on our line of credit to finance any near-term needs for working capital. We
purchased 63 new tractors during the first quarter of 2004 and plan to purchase
180 new tractors throughout the remainder of 2004, allowing for the replacement
of older, high mileage tractors. Our ability to fund cash requirements in future
periods will depend on our ability to comply with covenants contained in
financing arrangements and the availability of other financing options, as well
as our financial condition and results of operations. Our financial condition
and results of operations will depend on insurance and claims experience,
general shipping demand by the Company's customers, fuel prices, the
availability of drivers and independent contractors, continued success in
implementing the profit improvement plan described above, and other factors.
During the first quarter of 2004, our truck production increased 18%
over the first quarter of 2003, despite the traditional lag in shipping demand
for flatbed freight and weather-related and hours-of-service operational issues.
Going forward, we believe that seasonal improvements in shipping demand and
continued focus on the profit improvement plan should improve our financial
performance. However, there is no assurance the improvements will occur as
planned. Assuming the improvements do occur as planned, we believe there will be
sufficient cash flow to meet our liquidity requirements at least through
December 31, 2004. To the extent that actual results or events differ from our
financial projections or business plans, our liquidity may be adversely affected
and we may be unable to meet our financial covenants. In such event, we believe
we could renegotiate the terms of our debt or that alternative financing would
be available, although this cannot be assured.
We will require additional sources of financing over the long-term to
upgrade our tractor and trailer fleets. To the extent that actual results or
events differ from our financial projections or business plans, our liquidity
may be adversely affected and we may be unable to meet our financial covenants.
Specifically, our short- and long-term liquidity may be adversely affected by
one or more of the following factors: costs associated with insurance and
claims; weak freight demand or a loss in customer relationships or volume; the
impact of new hours-of-service regulations on asset productivity; the ability to
attract and retain sufficient numbers of qualified drivers and independent
contractors; elevated fuel prices and the ability to collect fuel surcharges;
inability to maintain compliance with, or negotiate amendments to, loan
covenants; and the ability to finance the tractors and trailers delivered and
scheduled for delivery. Based upon our improving results, anticipated future
cash flows, current availability under the financing arrangement with LaSalle
Bank, and sources of equipment financing that we expect to be available, we do
not expect to experience significant liquidity constraints in the foreseeable
future.
Net cash provided by operating activities was $1.5 million for the
three months ended March 31, 2004, compared to net cash used by operating
activities of $306,000 for the three months ended March 31, 2003, reflecting
improved operating results and $727,000 of life insurance proceeds.
Historically, our principal use of cash from operations is to service debt and
to internally finance acquisitions of revenue equipment. Total receivables
increased $3.7 million for the three months ended March 31, 2004. The average
age of our trade accounts receivable was approximately 34.5 days in the 2003
period and 33.0 days in the 2004 period.
Net cash provided by investing activities was $135 for the three months
ended March 31, 2004. Such amounts related primarily to proceeds from the sale
of revenue equipment and other fixed assets, offset by down payments made for
the purchase of new equipment.
Net cash used in financing activities was $1.6 million for the three
months ended March 31, 2004, consisted primarily of net payments of principal
under our long-term debt agreements.
We have a financing arrangement with LaSalle Bank, which expires on
January 1, 2006, and provides for automatic month-to-month renewals under
certain conditions after that date. LaSalle may terminate the arrangement prior
to January 1, 2006, in the event of default, as discussed below, and may
terminate at anytime during the renewal terms. Since the beginning of 2004, the
financing arrangement has been amended to allow for changes in management and
voting control resulting from the death of William G. Smith, and to provide for
a remaining term of at least one year. The arrangement provides for a term loan,
a revolving line of credit, a capital expenditure loan, and financing for
letters of credit. The combination of all loans with LaSalle Bank cannot exceed
the lesser of $25 million or a specified borrowing base.
At March 31, 2004, the term loan had a principal balance of $8.5
million, payable in 45 remaining equal monthly principal installments of
$189,000. The revolving line of credit allows for borrowings up to 85 percent of
14
eligible receivables. At March 31, 2004, total borrowings under the revolving
line were $1.8 million. The capital expenditure loan allows for borrowing up to
80 percent of the purchase price of revenue equipment purchased with such
advances, provided borrowings under the capital expenditure loan are limited to
$2.0 million annually, and $4.0 million over the term of the arrangement. At
March 31, 2004, the amount owed under capital expenditure notes was $897,000. At
March 31, 2004, we had outstanding letters of credit totaling $7.7 million for
self-insured amounts under our insurance programs. These letters of credit
directly reduce the amount of potential borrowings available under the financing
arrangement. Any increase in self-insured retention, as well as increases in
claim reserves, may require additional letters of credit to be posted, which
would negatively affect our liquidity. At March 31, 2004, our borrowing limit
under the financing arrangement was $21.7 million, leaving approximately $2.9
million in remaining availability at such date.
We are required to pay a facility fee on the LaSalle financing
arrangement of .25% of the maximum loan limit ($25 million). Borrowings under
the arrangement are secured by liens on revenue equipment, accounts receivable,
and certain other assets. The interest rate on outstanding borrowings under the
arrangement is equal to LaSalle's prime rate plus two percent.
The LaSalle financing arrangement requires compliance with certain
financial covenants, including compliance with a minimum tangible net worth,
capital expenditure limits, and a fixed charge coverage ratio. We were in
compliance with these covenants at March 31, 2004 and we believe we will remain
in compliance, although there can be no assurance that the required financial
performance will be achieved. In addition, equipment financing provided by a
manufacturer contains a minimum tangible net worth requirement. We were in
compliance with the required minimum tangible net worth requirement for March
31, 2004 and we expect to remain in compliance going forward. If we fail to
maintain compliance with these financial covenants, or to obtain a waiver of any
noncompliance, the lenders will have the right to declare all sums immediately
due and pursue other remedies. In such event, we believe we could renegotiate
the terms of our debt or that alternative financing would be available, although
this cannot be assured. As of the filing date, we were in compliance with all
financial covenants.
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following tables set forth the contractual obligations and other
commercial commitments as of March 31, 2004:
PAYMENTS (IN THOUSANDS) DUE BY PERIOD
Less than After
Contractual Obligations Total One year 2-3 years 4-5 years 5 years
- ----------------------------------------------------------------------------------------------
Long-term debt $34,782 $11,134 $15,593 $ 7,687 $ 368
Operating leases 922 221 397 236 68
-------------------------------------------------------
Total contractual cash obligations $35.704 $11,355 $15,990 $ 7,923 $ 436
=======================================================
The Company had no other commercial commitments at March 31, 2004.
RECENT REGULATION
The U.S. Department of Transportation adopted revised hours-of-service
regulations for drivers that became effective on January 4, 2004. These revised
regulations represent the most significant changes to the hours-of-service
regulations in over 60 years. We anticipated that the new regulations could have
an overall negative impact on our average miles per tractor due to operational
changes; however, average revenue per tractor has increased as we successfully
increased our rate per mile, accessorial charges to customers for multiple stop
shipments, and rates for tractor detention during the first quarter of 2004. We
also raised driver pay for multiple stop shipments, unanticipated delays, and
other non-driving tasks.
15
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires us to
make decisions based upon estimates, assumptions, and factors we consider as
relevant to the circumstances. Such decisions include the selection of
applicable accounting principles and the use of judgment in their application,
the results of which impact reported amounts and disclosures. Changes in future
economic conditions or other business circumstances may affect the outcomes of
our estimates and assumptions. Accordingly, actual results could differ from
those anticipated. A summary of the significant accounting policies followed in
preparation of the financial statements included in this Form 10-Q is contained
in Note 1 of the consolidated financial statements included in our Form 10-K for
the year ended December 31, 2003. Other footnotes in the Form 10-K describe
various elements of the financial statements included in this Form 10-Q and the
assumptions on which specific amounts were determined.
Our critical accounting policies include the following:
REVENUE RECOGNITION
We generally recognize operating revenue when the freight to be
transported has been loaded. We operate primarily in the short-to-medium length
haul category of the trucking industry; therefore, our typical customer delivery
is completed one day after pickup. Accordingly, this method of revenue
recognition is not materially different from recognizing revenue based on
completion of delivery. We recognize operating revenue when the freight is
delivered for longer haul loads where delivery is completed more than one day
after pickup. Amounts payable to independent contractors for purchased
transportation, to Company drivers for wages, and other direct expenses are
accrued when the related revenue is recognized.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is provided
by use of the straight-line and declining-balance methods over lives of 5 to 39
years for buildings and improvements, 5 years for tractors, 7 years for
trailers, and 3 to 10 years for other equipment. Tires purchased as part of
revenue equipment are capitalized as a cost of the equipment. Replacement tires
are expensed when placed in service. Expenditures for maintenance and minor
repairs are charged to operations, and expenditures for major replacements and
betterments are capitalized. The cost and related accumulated depreciation on
property and equipment retired, traded, or sold are eliminated from the property
accounts at the time of retirement, trade, or sale. The gain or loss on
retirement or sale is included in depreciation and amortization in the
consolidated statements of operation. Gains on trade-ins are included in the
basis of the new asset. Judgments concerning salvage values and useful lives can
have a significant impact.
ESTIMATED LIABILITY FOR INSURANCE CLAIMS
Losses resulting from auto liability, physical damage, workers'
compensation, and cargo loss and damage are covered by insurance subject to
certain self-retention levels. Losses resulting from uninsured claims are
recognized when such losses are incurred. We estimate and accrue a liability for
our share of ultimate settlements using all available information. We accrue for
claims reported, as well as for claims incurred but not reported, based upon our
past experience. Expenses depend on actual loss experience and changes in
estimates of settlement amounts for open claims which have not been fully
resolved. However, final settlement of these claims could differ materially from
the amounts we have accrued. Our judgment concerning the ultimate cost of claims
and modification of initial reserved amounts is an important part of
establishing claims reserves, and is of increasing significance with higher
self-insured retention and lack of excess coverage.
16
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net undiscounted cash
flows expected to be generated by the asset. Our judgment concerning future cash
flows is an important part of this determination. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less the costs to sell.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to a variety of market risks, most importantly the
effects of the price and availability of diesel fuel and changes in interest
rates.
Commodity Price Risk
Our operations are heavily dependent upon the use of diesel fuel. The
price and availability of diesel fuel can vary and are subject to political,
economic, and market factors that are beyond our control. Significant increases
in diesel fuel prices could materially and adversely affect our results of
operations and financial condition.
We presently use fuel surcharges to address the risk of increasing fuel
prices. We believe these fuel surcharges are an effective means of mitigating
the risk of increasing fuel prices, although the competitive nature of our
industry prevents us from recovering the full amount of fuel price increases
through the use of such surcharges.
In the past, we have used derivative instruments, including heating oil
price swap agreements, to reduce a portion of our exposure to fuel price
fluctuations. Since 2000 we have had no such agreements in place. We do not
trade in such derivatives with the objective of earning financial gains on price
fluctuations.
Interest Rate Risk
We also are exposed to market risks from changes in certain interest
rates on our debt. Our financing arrangement with LaSalle Bank carries a
variable interest rate based on LaSalle's prime rate plus two percent, provided
there has been no default. In addition, approximately $21.8 million of our other
debt carries variable interest rates. This variable interest exposes us to the
risk that interest rates may rise. Assuming borrowing levels at March 31, 2004,
a one-point increase in the prime rate would increase interest expense by
approximately $329,000. The remainder of our other debt carries fixed interest
rates and exposes us to the risk that interest rates may fall. At March 31,
2004, approximately 90% of our debt carries a variable interest rate and the
remainder is fixed.
ITEM 4. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Securities Exchange Act of 1934
(the "Exchange Act"), we have carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures (as defined
in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this
report. This evaluation was carried out under the supervision and with the
participation of our management, including our Chief Executive Officer and our
Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer
and our Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of March 31, 2004. During our first fiscal quarter,
there were no changes in our internal control over financial reporting that have
materially affected, or that are reasonably likely to materially affect, our
internal control over financial reporting. We intend to periodically evaluate
our disclosure controls and procedures as required by the Exchange Act Rules.
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in the
Company's reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer as appropriate, to allow timely decisions regarding
disclosures.
17
We have confidence in our internal controls and procedures.
Nevertheless, our management, including our Chief Executive Officer and our
Chief Financial Officer, does not expect that our disclosure controls and
procedures or our internal controls will prevent all errors or intentional
fraud. An internal control system, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of such
internal controls are met. Further, the design of an internal control system
must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all internal control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No reportable events or material changes occurred during the quarter
for which this report is filed.
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
3.1 * Articles of Incorporation.
3.2 ** Amended and Restated Bylaws.
10.17 # 10th Amendment to Amended and Restated Loan and Security Agreement dated March 26,
2004, between LaSalle Bank National Association, Smithway Motor Xpress, Inc., as
Borrower, and East West Motor Express, Inc., as Borrower. (Due to an error in
sequential numbering, amendments 8 and 9 do not exist)
10.18 # 11th Amendment to Amended and Restated Loan and Security Agreement dated April 23,
2004, between LaSalle Bank National Association, Smithway Motor Xpress, Inc., as
Borrower, and East West Motor Express, Inc., as Borrower.
31.1 # Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2 # Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1 # Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, by G. Larry Owens, the Company's principal executive
officer.
32.2 # Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, by Douglas C. Sandvig, the Company's principal
financial officer.
- ---------------------
* Incorporated by reference from the Company's Registration Statement on
Form S-1, Registration No. 33-90356, effective June 27, 1996.
** Incorporated by reference from the Company's Annual Report on Form 10-K
for the year ended December 31, 2003.
# Filed herewith.
(B) REPORTS ON FORM 8-K.
During the first quarter ended March 31, 2004, the Company filed with,
or furnished to, the Securities and Exchange Commission the following Current
Reports on Form 8-K:
Current Report on Form 8-K dated February 17, 2004 (furnished to the
Commission on February 20, 2004) regarding the issuance of a press release to
report the Company's financial results for the quarter and year ended December
31, 2003.
Current Report on Form 8-K dated March 3, 2004 (furnished to the
Commission on March 12, 2004) regarding the issuance of a press release to
report the death of William G. Smith, the Company's former President and Chief
Executive Officer.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SMITHWAY MOTOR XPRESS CORP.
Date: May 13, 2004 By: /s/ Douglas C. Sandvig
-------------------------------------------
Douglas C. Sandvig
Senior Vice President, Treasurer,
and Chief Financial Officer, in his capacity as
such and on behalf of the issuer
20
Exhibit Index
Exhibit Method of
Number Description Filing
- ------ ------------------------------------------------------------------------- ---------------
3.1 Articles of Incorporation. Incorporated
by reference.
3.2 Amended and Restated Bylaws. Incorporated
by reference.
10.17 10th Amendment to Amended and Restated Loan and Security Agreement dated Filed herewith.
March 26, 2004, between LaSalle Bank National Association, Smithway Motor
Xpress, Inc., as Borrower, and East West Motor Express, Inc., as
Borrower. (Due to an error in sequential numbering, amendments 8 and 9
do not exist)
10.18 11th Amendment to Amended and Restated Loan and Security Agreement dated Filed herewith.
April 23, 2004, between LaSalle Bank National Association, Smithway Motor
Xpress, Inc., as Borrower, and East West Motor Express, Inc., as Borrower.
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. Filed herewith.
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. Filed herewith.
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Filed herewith.
Section 906 of the Sarbanes-Oxley Act of 2002, by G. Larry Owens, the
Company's principal executive officer.
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Filed herewith.
Section 906 of the Sarbanes-Oxley Act of 2002, by Douglas C. Sandvig, the
Company's principal financial officer.