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SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission File No. 0-18605

Swift Transportation Co., Inc.

(602) 269-9700

Securities Registered Pursuant to Section 12(b) of the Act:

Securities Registered Pursuant to Section 12(g) of the Act:

      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 þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes þ          No o

      At June 28, 2002, the aggregate market value of common stock held by non-affiliates of the Registrant was $1,238,991,118.

      The number of shares outstanding of the Registrant’s common stock on March 21, 2003 was 83,233,464.

DOCUMENTS INCORPORATED BY REFERENCE

      Materials from the Registrant’s Notice and Proxy Statement relating to the 2003 Annual Meeting of Stockholders have been incorporated by reference into Part III, Items 10, 11, 12, 13 and 15.

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PART I

Item 1.     Business

General

      Swift Transportation Co., Inc. is the largest publicly-held, truckload carrier in the United States. Swift operates primarily throughout the continental United States, combining strong regional operations with a transcontinental van operation. The principal types of freight transported by Swift include retail and discount department store merchandise, manufactured goods, paper products, non-perishable food, beverages and beverage containers and building materials. The Company operates predominantly in one industry, road transportation, as a truckload motor carrier and thus has only one single reportable segment.

      Swift Transportation Co., Inc., a Nevada corporation headquartered in Sparks, Nevada, is a holding company for the operating corporations named Swift Transportation Co., Inc. and Swift Transportation Corporation. These companies are collectively referred to herein as “Swift” or the “Company.” The Company’s headquarters are located at 2200 South 75th Avenue, Phoenix, Arizona 85043, and its telephone number is (602) 269-9700.

      This Annual Report on Form 10-K, including but not limited to the portions hereof entitled “Business — Growth Strategy” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements. Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. The words “believe,” “expect,” “anticipate,” and “project,” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may include, but are not limited to, projections of revenues, income, or loss, capital expenditures, plans for future operations, financing needs or plans, the impact of inflation, plans relating to products or services of the Company, the benefits of the Company’s terminal network, the continued consolidation of the truckload industry, the increase in the number of companies outsourcing their transportation requirements, the Company’s ability to sell its used trucks at favorable prices, the Company’s ability to attract and retain qualified drivers, the Company’s ability to pass on to its customers increased labor and fuel costs and protect itself against increases in fuel costs through the use of fuel efficient equipment, and pending or future acquisitions, as well as assumptions relating to the foregoing. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

      Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Statements in this Annual Report, including the Notes to the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” describe factors, among others, that could contribute to or cause such differences. Additional factors that could cause actual results to differ materially from those expressed in such forward-looking statements are set forth in “Business” and “Market for the Registrant’s Common Stock and Related Stockholder Matters” in this Annual Report.

Operating Strategy

      Swift focuses on achieving high density for service-sensitive customers in short-to-medium haul traffic lanes. Through its network of terminals, Swift is able to provide regional service on a nationwide basis. Swift’s terminal network establishes a local market presence in the regions Swift serves and enables Swift to respond more rapidly to its customers’ changing requirements. This regional network also enables Swift to enhance driver recruitment and retention by returning drivers to their homes regularly, reduce its purchases of higher priced fuel at truck stops and expedite lower cost, in-house equipment maintenance. With an average length of haul of less than 600 miles, Swift is able to limit its direct competition with railroads, intermodal services and longer-haul, less specialized truckload carriers. (See further discussion under “Competition”.) Swift seeks to

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      To manage the higher costs and greater logistical complexity inherent in operating in short-to-medium haul traffic lanes, Swift employs sophisticated computerized management control systems to monitor key aspects of its operations, such as availability of equipment, truck productivity and fuel consumption. Swift has a three-year replacement program for the majority of its tractors, which allows Swift to maximize equipment utilization and fuel economy by capitalizing on improved engine efficiency and vehicle aerodynamics and to minimize maintenance expense. Swift is currently extending the usage of three year old tractors into the fourth year while continuing to evaluate the October 2002 EPA engine. Until we better understand the quality, reliability, and fuel economy provided by these new engines we may choose to run our fleet up to five years. Our agreements with our manufacturer enable us to return trucks up to five years old with guaranteed residual values. In addition, we are able to procure cost effective warranties during years four and five.

Growth Strategy

      Major shippers continue to reduce the number of carriers they use for their regular freight needs. This has resulted in a relatively small number of financially stable “core carriers” and has contributed to consolidation in the truckload industry in recent years. The truckload industry remains highly fragmented, and management believes that overall growth in the truckload industry and continued industry consolidation will present opportunities for well managed, financially stable carriers such as Swift to expand. The Company intends to take advantage of growth opportunities through a combination of internal growth and selective acquisitions.

      The key elements of Swift’s growth strategy are:

	•	Strengthen Core Carrier Relationships. Swift intends to continue to strengthen its core carrier relationships, expand its services to its existing customers and pursue new customer relationships. By concentrating on expanding its services to its existing customers, Swift’s revenues from its top 25 customers of 2000 increased by 10% from 2000 to 2002. The largest 25, 10 and 5 customers, respectively, accounted for 50%, 34% and 25% of revenues in 2002, with no customer accounting for more than 7% of Swift’s revenues during that same period. In addition to expanding its services to existing customers, Swift actively pursues new traffic commitments from high volume, financially stable shippers for whom it has not previously provided services.
	•	Pursue Strategic Acquisitions. Swift’s revenue growth has been attributable, in significant part, to acquisitions, which have enabled Swift to expand from its historical operations base in the Western United States and develop a strong regional presence in the Midwestern, Eastern and Southeastern United States. Swift generally limits its consideration of acquisitions to those it believes will be accretive to earnings within six months, and historically all of its acquisitions have met this objective. In certain instances, such as the M.S. Carriers merger, where a proposed acquisition has the potential to significantly increase revenues, expand Swift’s operations in certain key geographic regions, or provide important synergistic opportunities, such as increased efficiencies in equipment utilization, Swift may consider going forward with such an acquisition even though it is not likely to be accretive to earnings within a period of six months.
	•	Exploit Private Fleet Outsourcing. A number of large companies maintain their own private trucking fleets to facilitate distribution of their products. Swift believes that a high percentage of private fleet traffic is short-to-medium haul in nature, traveling an average of 500 miles or less per round trip. In order to reduce operating costs associated with private fleets, a number of large companies have begun to outsource their transportation and logistics requirements. Swift believes that its strong regional operations and average length of haul of less than 600 miles position allows it to take advantage of this

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		trend. Swift already serves as a preferred supplier, or “core carrier” to many major shippers who are considering, or may in the future consider, outsourcing their transportation and logistics requirements.

Operations

      Swift has developed a network of regional terminals and offices strategically located in areas, which have strong, diverse economies and provide access to other key population centers. The terminals are located in close proximity to major customers who provide Swift with significant traffic volume. To minimize competition with long-haul truckload carriers and railroads, Swift operates principally within short-to-medium-haul traffic lanes. Although the Company’s transcontinental division allows it to serve a broad spectrum of shipper needs, the primary regions in which Swift operates are ideally suited to short-to-medium-haul lanes because of the distribution of population and economic centers.

      Swift focuses the marketing of its services to large, service-sensitive customers that regularly ship over established routes within Swift’s regional service areas. Swift’s services include: the availability of specialized equipment suitable for the requirements of certain industries; high cubic capacity trailers; computerized tracking of and frequent reporting on customer shipments; onboard communications that enable instant re-routing or modification of traffic; well-maintained, late-model equipment that enhances on-time deliveries; multiple drops, appointment pick-ups and deliveries; assistance in loading and unloading; extra trailers that can be placed for the convenience of customers; and sufficient equipment to respond promptly to customers’ varying requirements.

      The achievement of significant regular freight volumes on high-density routes and consistent shipment scheduling over these routes are key elements of Swift’s operations. As a result, Swift’s operations personnel are better able to match available equipment to available loads and schedule regular maintenance and fueling at Company terminals, thereby enhancing productivity and asset utilization and minimizing empty miles and expensive over-the-road fueling and repair costs. Consistent scheduling also allows Swift to be more responsive to its customers’ needs. Swift’s regular scheduling and relatively short length of haul enable drivers to return to their homes regularly, which has helped Swift improve driver recruitment and retention.

      In order to reduce the higher operating costs traditionally associated with medium-length hauls and specialized equipment, Swift has installed sophisticated computerized management control systems to monitor key aspects of its operations. Swift has a significant investment in its computer hardware and utilizes state-of-the-art software specially designed for the trucking industry. The Company’s fully integrated computer network allows its managers to coordinate available equipment with the transportation needs of its customers, monitor truck productivity and fuel consumption and schedule regular equipment maintenance. Dispatchers monitor the location and delivery schedules of all shipments and equipment to coordinate routes and increase equipment utilization. The Company’s computer system provides immediate access to current information regarding driver and equipment status and location, special load and equipment instructions, routing and dispatching.

      Swift’s larger terminals are staffed with terminal managers, driver managers and customer service representatives. Terminal managers work with both the fleet managers and the customer service representatives, as well as other operations personnel, to coordinate the needs of both customers and drivers. Terminal managers are also responsible for soliciting new customers and serving existing customers in their areas. Each driver manager is responsible for the general operation of approximately 35 trucks and their drivers, including driver retention, productivity per truck, routing, fuel consumption, safety and scheduled maintenance. Customer service representatives are assigned specific customers to ensure specialized, high-quality service and frequent customer contact.

      In addition to the domestic operations described above, Swift has a growing cross border operation that primarily ships through commercial border crossings from Laredo, Texas westward to California. In 2000, Swift augmented its cross border operation by acquiring 49% of Trans-Mex, a carrier that focuses on shipments to and from Mexico and intends to purchase the remaining 51% in February 2004. For additional information regarding Swift’s guarantee of certain Trans-Mex obligations, see the Notes to Consolidated Financial Statements.

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      In April 2000, Swift and five other publicly traded truckload carriers founded Transplace, LLC, an Internet-based transportation logistics company. Swift contributed its transportation logistics business and associated intangible assets to Transplace.com upon its formation. Swift’s interest in Transplace.com is approximately 29%. Swift reports its equity interest in Transplace.com and its share of the profits and losses of Transplace.com in its consolidated financial statements using the equity method of accounting. See the Notes to Consolidated Financial Statements.

      As a transportation logistics company, Transplace matches shippers with trucking companies and receives a fee for this service. Swift may receive from Transplace the opportunity to provide transportation services to shippers. In addition, Swift may utilize Transplace to assist in obtaining additional capacity for a customer of Swift. During the year ended December 31, 2002, Swift received less than 1% of its operating revenue from Transplace and paid less than 4% of its purchased transportation to Transplace.

Acquisitions

      The growth of the Company has been dependent in part upon the acquisition of trucking companies throughout the United States. From 1988 through 1997, the Company completed eight acquisitions through which the Company grew from a regional carrier in the Western United States to a national carrier with operations throughout the entire United States.

      In January 2001, Swift further expanded its operations in the eastern United States through an agreement with Cardinal Freight Carriers Inc. (“Cardinal Freight”), a van and flatbed carrier based in Concord, North Carolina. Under this agreement, Swift has hired a number of Cardinal Freight’s drivers and subleased a number of tractors from Cardinal Freight.

      In June 2001, Swift merged with M.S. Carriers, Inc. (“M.S. Carriers”), also a publicly- held truckload carrier operating predominantly in the eastern United States. In exchange for 19,464,322 shares of the Company’s common stock, M.S. Carriers became a wholly owned subsidiary of the Company. The Merger was accounted for as a pooling of interests.

      See “Factors That May Affect Future Results and Financial Condition” under Item 7.

Revenue Equipment

      Swift acquires premium tractors to help attract and retain drivers, promote safe operations and minimize maintenance and repair costs. Management believes the higher initial investment is recovered through improved resale value, improved fuel economy and reduced maintenance costs.

      The following table shows the type and age of Company-owned and leased equipment at December 31, 2002:

(1)	Excludes 3,152 owner-operator tractors.

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      When purchasing new revenue equipment, Swift acquires tractors and trailers manufactured to the Company’s specifications. Since 1990, Swift has predominantly acquired tractors manufactured by Freightliner powered by Series 60 Detroit Diesel engines. Standardization of drive-line components allows Swift to operate with a minimum spare parts inventory, enhances Swift’s maintenance program and simplifies driver training. Swift adheres to a comprehensive maintenance program that minimizes downtime and enhances the resale value of its equipment. In addition to its maintenance facility in Phoenix, Arizona, Swift performs routine servicing and maintenance of its equipment at most of its regional terminal facilities, thus avoiding costly on-road repairs and out-of-route trips. Swift has adopted a three-year replacement program on the majority of its line-haul tractors. This replacement policy enhances Swift’s ability to attract and retain drivers, maximize its fuel economy by capitalizing on improvement in both engine efficiency and vehicle aerodynamics, stabilize maintenance expense and maximize equipment utilization. Swift is currently evaluating its replacement policy in light of the changes to tractor engines due to new emissions standards mandated by the U.S. Environmental Protection Agency (EPA) that became effective on October 1, 2002. Swift is currently extending the usage of three year old tractors into the fourth year while continuing to evaluate the October 2002 EPA engine. Until we better understand the quality, reliability, and fuel economy provided by these new engines we may choose to run our fleet up to five years. Our agreements with our manufacturer enable us to return trucks up to five years old with guaranteed residual values. In addition, we are able to procure cost effective warranties during years four and five.

      Swift has installed Qualcomm onboard, two-way vehicle satellite communication systems in the majority of its tractors. This communication system links drivers to regional terminals and corporate headquarters, allowing Swift to rapidly alter its routes in response to customer requirements and to eliminate the need for driver stops to report problems or delays. This system allows drivers to inform dispatchers and driver managers of the status of routing, loading and unloading or the need for emergency repairs. Swift believes the communications system improves fleet control, the quality of customer service and driver recruitment and retention. Swift intends to continue to install the communication system in substantially all tractors acquired in the future.

      Swift has adopted a speed limit of 60 miles per hour for Company tractors (62 miles per hour for team drivers) and 65 miles per hour for owner-operator tractors, below the speed limits of many states. Swift believes these measures reduce accidents, enhance fuel mileage and minimize maintenance expense. Substantially all of Swift’s Company tractors are equipped with electronically controlled engines that are set to limit the speed of the vehicle. M.S. Carriers drivers who joined Swift upon the merger continue to operate at 65 miles per hour.

      Swift enters into contracts with owner-operators. These owner-operators own their tractors and are responsible for operating costs as opposed to drivers who are employees of Swift. The owner-operators operate under the authority of the Company and are generally compensated based upon miles. Owner-operators comprise approximately 25% of our total fleet.

Marketing and Customers

      Swift has targeted the service-sensitive segment of the truckload market, both common and contract, rather than that segment that uses price as its primary consideration. The Company has chosen to provide premium service with commensurate rates rather than compete primarily on the basis of price. The principal elements of Swift’s premium service include: regional terminals to facilitate single and multiple pick-ups and deliveries and to maintain local contact with customers; a fully-integrated computer system to monitor shipment location and variations from schedule; an onboard communication system that enables the Company to reroute traffic; well-maintained, late model equipment; timely deliveries; and extra equipment for the convenience of customers, which enables Swift to respond promptly to customers’ varying requirements and assistance in loading and unloading. Swift concentrates its marketing efforts on expanding the amount of service it provides to existing customers.

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      Swift maintains a strong commitment to marketing. Swift has assigned a member of senior management to each of its largest customers to ensure a high level of customer support. Swift solicits new customers from its Phoenix, Arizona headquarters and each of its regional terminals through a marketing staff of approximately 50 persons. Once a customer relationship has been established, regional customer service representatives maintain contact and solicit additional business. Swift concentrates on attracting non-cyclical customers that regularly ship multiple loads from locations that complement existing traffic flows. Customer shipping point locations are regularly monitored and, as shipping patterns of existing customers expand or change, Swift attempts to obtain additional customers that will complement the new traffic flow. This strategy enables Swift to maximize equipment utilization.

      The largest 25, 10 and 5 customers accounted for approximately 50%, 34% and 25% respectively, of Swift’s revenues during 2002, 48%, 33% and 23%, respectively, of Swift’s revenues during 2001 and 44%, 30% and 19%, respectively, of Swift’s revenues during 2000. No customer accounted for more than 7% of Swift’s gross revenues during any of the three most recent fiscal years. Swift’s largest customers include retail and discount department store chains, manufacturers, non-perishable food companies, beverage and beverage container producers and building materials companies.

Drivers and Employees

      All Swift drivers must meet or exceed specific guidelines relating primarily to safety records, driving experience and personal evaluations, including a physical examination and mandatory drug testing. Upon being hired, a driver is trained in all phases of Swift’s policies and operations, safety techniques, and fuel efficient operation of the equipment. All new drivers must pass a safety test and have a current Commercial Drivers License. In addition, Swift has ongoing driver efficiency and safety programs to ensure that its drivers comply with its safety procedures.

      Senior management is actively involved with the development and retention of drivers. Recognizing the need for qualified drivers, Swift has contracted with driver-training schools, which are managed by outside organizations as well as local community colleges throughout the country. Candidates for the schools must be at least 23 years old (21 years old with military service), with a high school education or equivalent, pass a basic skills test and pass the U.S. Department of Transportation (“DOT”) physical examination, which includes drug and alcohol screening. Students are required to complete three weeks of classroom study and driving range time and a six to eight week, on-the-road training program.

      Swift bases its drivers at the regional terminals and monitors each driver’s location on its computer system. Swift uses this information to schedule the routing for its drivers so that they can return home frequently. In order to attract and retain highly qualified drivers and promote safe operations, the Company purchases premium quality tractors equipped with optional comfort and safety features, such as air ride suspension, air conditioning, high quality interiors, power steering, engine brakes and raised roof double sleeper cabs. The majority of company drivers are compensated on the basis of miles driven, loading/unloading and number of stops or deliveries, plus bonuses. The base pay for the miles driven by a drive increase with a driver’s length of service. Drivers employed by Swift participate in company-sponsored health, life and dental insurance plans and are eligible to participate in a 401(k) Profit Sharing Plan and an Employee Stock Purchase Plan.

      Swift believes its innovative driver-training programs, driver compensation, regionalized operations, driver tracking and late-model equipment provide important incentives to attract and retain qualified drivers. Although Swift has had no significant downtime due to inability to secure qualified drivers, no assurance can be given that a shortage of qualified drivers will not adversely affect the Company in the future.

      As of December 31, 2002, Swift employed approximately 20,400 full-time persons, of whom approximately 16,100 were drivers (including driver trainees), 1,600 were mechanics and other equipment maintenance personnel and the balance were support personnel, such as sales personnel, corporate managers and administration. No Swift driver or other employee is represented by a collective bargaining unit. In the opinion of management, Swift’s relationship with its drivers and employees is good.

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Safety

      The Company has an active safety and loss prevention program at each of its terminals. Supervisors engage in ongoing training of drivers regarding safe vehicle operations. The Company has adopted maximum speed limits. The Company believes that its insurance and claims expense, as a percentage of operating revenue is one of the best in the industry, which is attributable to its overall strong safety program. The Company has received the highest safety rating given to motor carriers by the United States Department of Transportation.

Fuel

      In order to reduce fuel costs, the Company purchases approximately 78% of its fuel in bulk at 34 of its 36 terminals. Swift stores fuel in underground storage tanks at two of its bulk fueling terminals and in above ground storage tanks at its other bulk fueling terminals. The Company believes that it is in substantial compliance with applicable environmental laws and regulations. Shortages of fuel, increases in fuel prices or rationing of petroleum products could have a material adverse effect on the operations and profitability of the Company. From time to time, the Company, in response to increases in fuel costs, has implemented fuel surcharges to pass on to its customers all or substantially all of increased fuel costs. However, there can be no assurance that such fuel surcharges could be used to offset future increases in fuel prices. The Company believes that its most effective protection against fuel cost increases is to maintain a fuel efficient fleet and to implement fuel surcharges when such option is necessary and available. The Company has generally not used derivative-type products as a hedge against higher fuel costs in the past but continues to evaluate this possibility.

Competition

      The trucking industry is extremely competitive and fragmented. Swift seeks to provide premium service with commensurate rates, rather than compete primarily on the basis of price. The Company competes primarily with regional, medium-haul truckload carriers. Management believes, because of its cost efficiencies, productive equipment utilization and financial resources, that the Company has a competitive advantage over most regional truckload carriers. The Company believes that competition for the freight transported by the Company is based, in the long term, as much upon service and efficiency as on freight rates. There are some trucking companies with which the Company competes that have greater financial resources, and one may own more revenue equipment and carry a larger volume of freight than the Company. Long-haul truckload carriers and railroads also provide competition, but to a lesser degree. The Company also competes with other motor carriers for the services of drivers.

Regulation

      The Company is regulated by the United States Department of Transportation. This regulatory authority has broad powers, generally governing matters such as authority to engage in motor carrier operations, certain mergers, consolidations and acquisitions and periodic financial reporting. The trucking industry is subject to regulatory and legislative changes, which can affect the economics of the industry. The Company is also regulated by various state agencies.

      The Company’s operations are also subject to various federal, state and local environmental laws and regulations dealing with transportation, storage, presence, use, disposal and handling of hazardous materials, discharge of stormwater and underground fuel storage tanks. The Company believes that its operations are in substantial compliance with current laws and regulations and does not know of any existing condition that would cause compliance with applicable environmental regulations to have a material adverse effect on the Company’s business or operating results.

Seasonality

      In the transportation industry, results of operations generally show a seasonal pattern as customers reduce shipments after the winter holiday season. The Company’s operating expenses also tend to be higher in the

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Internet Web Site

      Additional information about the Company is available on our Internet web site, www.swifttrans.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and other reports filed pursuant to Section 13 or 15 (d) of the Exchange Act are available, free of charge, on our website as soon as practical after they are filed. In addition, our press releases are posted to our web site as soon as practical after they are issued publicly. The information on our web site is not considered part of this report.

Item 2.     Properties

      Swift’s headquarters is located on approximately 153 acres in Phoenix, Arizona and contains 83,000 square feet of office space, 106,000 square feet of shop and maintenance facilities, 27,000 square feet of a drivers’ center, a recruiting and training center, a warehouse facility, a two-bay truck wash and an eight lane fueling center.

      Swift has terminals throughout the continental United States. A terminal may include customer service, marketing, fuel and repair facilities. The following table provides information regarding the Company’s significant facilities or terminals:

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      As of December 31, 2002, the Company’s aggregate monthly rent for all leased properties was $347,000.

Item 3.     Legal Proceedings

      The Company is a party to routine litigation incidental to its business, primarily involving claims for personal injury or property damage incurred in the transportation of freight. The Company’s insurance program for liability, physical damage and cargo damage involves self-insurance with varying risk retention levels. Claims in excess of these risk retention levels are covered by insurance in amounts which management considers to be adequate. The Company is not aware of any claims or threatened claims that might have a material adverse effect on the Company’s financial condition.

Item 4.     Submission of Matters to a Vote of Security Holders

      No matters were submitted to a vote of the Company’s security holders during the fourth quarter of 2002.

PART II

Item 5.     Market for the Registrant’s Common Stock and Related Stockholder Matters

      The Company’s common stock is publicly traded on the Nasdaq National Market (“Nasdaq”) under the symbol “SWFT”. The following table sets forth the high and low sales prices of the common stock reported by Nasdaq for the periods shown.

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      On March 21, 2003, the last reported sales price of the Company’s common stock was $18.00 per share. At that date, the number of stockholder accounts of record of the Company’s common stock was 4,394. The Company estimates there are approximately 6,200 beneficial holders of the Company’s common stock.

      The Company has not paid cash dividends on its common stock in either of the two preceding fiscal years and our revolving credit facility and one of the Company’s notes payable includes limitations on the payment of cash dividends. It is the current intention of management to retain earnings to finance the growth of the Company’s business. Future payment of cash dividends will depend upon the financial condition, results of operations, and capital requirements of the Company, as well as other factors deemed relevant by the Board of Directors.

Factors That May Affect Future Stock Performance

      The performance of the Company’s common stock is dependent upon several factors, including those set forth below and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors That May Affect Future Results and Financial Condition.”

      Influence by Principal Stockholder. Trusts established for the benefit of Jerry C. Moyes and his family beneficially own approximately 34% of the Company’s common stock. Accordingly, Mr. Moyes will have a significant influence upon the activities of the Company, as well as on all matters requiring approval of the stockholders, including electing members of the Company’s Board of Directors and causing or restricting the sale or merger of the Company. This concentration of ownership, as well as the ability of the Board to establish the terms of and issue preferred stock of the Company without stockholder approval, may have the effect of delaying or preventing changes in control or management of the Company, including transactions in which stockholders might otherwise receive a premium for their shares over their current market prices.

      Possible Volatility of Stock Price. The market price of the Company’s common stock could be subject to significant fluctuations in response to certain factors, including, among others, variations in the anticipated or actual results of operations of the Company or other companies in the transportation industry, changes in conditions affecting the economy generally, fluctuations in interest rates and fuel prices, increases in insurance premiums affecting the trucking industry generally, the depressed market for used tractors affecting the trucking industry generally, analysts’ reports or general trends in the industry, as well as other factors unrelated to the Company’s operating results.

Item 6.     Selected Financial and Operating Data

      The selected consolidated financial data presented below for, and as of the end of, each of the years in the five-year period ended December 31, 2002 is derived from the Company’s Consolidated Financial Statements. The selected consolidated financial data has been restated to include the financial position, results of operations, and cash flows of M.S. Carriers (See Pooling of Interests note to the financial statements). The Consolidated Financial Statements as of December 31, 2002 and 2001, and for each of the years in the three-year period ended December 31, 2002 and the independent auditors’ reports thereon, are included in Item 8 of this Form 10-K. This data should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Form 10-K

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(1)	Includes the results of operations from the acquisition of Challenger Motor Freight beginning March, 1998 and Interstate Trucking Corporation of America beginning November, 1998.
(2)	Pre-tax margin represents earnings before income taxes as a percentage of operating revenue. Because of the impact that equipment financing methods can have on the operating ratio (operating expenses as a percentage of operating revenue), the Company believes that the most meaningful comparative measure of its operating efficiency is its pre-tax margin, which takes into consideration both the Company’s total operating expenses and net interest expense as a percentage of operating revenue.
(3)	Excludes fuel surcharge revenue.

      Management’s Discussion and Analysis contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed in “Factors That May Affect Future Results and Financial Condition.”

Pooling of Interests

      On June 29, 2001, we acquired M.S. Carriers through the merger of a wholly owned subsidiary with and into M.S. Carriers (the “Merger”). The Merger has been accounted for as a pooling of interests. Accordingly, all historical financial data discussed below has been restated to include the financial position, results of operations, and cash flows of M.S. Carriers.

      In addition, the results for 2001 include:

	•	a $7 million increase to M.S. Carriers insurance and claims reserves;
	•	a $10.5 million adjustment, of which $8.5 million relates to the impairment of its 50% equity investment held by M.S. Carriers in Transportes EASO, the largest intra-Mexico truckload carrier, and $2 million is associated with the write off of a cash advance made to EASO in the third quarter of 2001; and

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	•	a $4.0 million adjustment for the change in market value of the interest rate derivative agreements of M.S. Carriers.

      Prior to the merger, M.S. Carriers calculated a range of claims reserves and recorded in their financial statements an amount that they believed was appropriate. We believed, based upon our experience with historical development trends, it was more appropriate to record amounts at a higher level within the range. Upon closing the merger with M.S. Carriers, we completed our evaluation of the claims exposure of M.S. Carriers and recorded a $7 million increase in this accrual.

      M.S. Carriers held the equity investment in Transportes EASO prior to its merger with Swift. Nothing came to our attention to indicate there was an impairment of this investment during the acquisition process or the period subsequent to the merger and prior to the August 2001 request from Transportes EASO management for an advance to meet its cash requirements. The $2 million cash advance to Transportes EASO was made in August 2001. As a result of this advance, we began an evaluation of this investment. Based upon our evaluation, it was our determination that there had been a significant decline in the value of EASO and that it was impaired. Therefore, we adjusted the carrying value of the investment.

Overview

      We are the largest publicly-held truckload carrier in the United States. As part of the truckload segment of the trucking industry, we transport freight for shippers in large quantities who generally pay for our services based upon miles of delivery. Our fleet of tractors and trailers is as follows:

      The Company tractors are either owned by the Company or financed under leases. Our fleet has operated on a three-year cycle for many years. Generally, we traded a tractor for a new tractor every three years. We are currently evaluating extending this three-year cycle.

      The owner-operators own their tractor and are responsible for operating costs. The owner-operators operate under the authority of the Company and are generally compensated based upon miles.

      Trucking revenue is revenue from freight hauled on our fleet. There are three factors that significantly impact our trucking revenue. First, as mentioned above, the truckload industry in which we operate is generally compensated based upon miles. Therefore, an increase in miles will increase the revenue. We monitor utilization of our tractors in the form of miles per tractor per week. The second factor is revenue per mile. Increases in revenue per mile will increase revenue. We monitor our revenue per mile on a daily basis. Finally, the percentage of miles our tractors travel that do not generate revenue, known as deadhead, will adversely affect revenue. We monitor deadhead miles on a daily basis.

      In addition to trucking revenue, our operating revenue includes fuel surcharge revenue and other revenue primarily for freight moved for our customers on rail or purchased transportation.

      We are also compensated, in some instances, for accessorial charges such as loading and unloading.

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      We view our operating cost structure as approximately one-half variable and one-half fixed. Therefore, an increase in revenue will generally improve our operating margin percentage.

Critical Accounting Policies

      We are self-insured for some portion of our liability, property damage and cargo damage risk. This self-insurance results from buying insurance coverage with deductible amounts. Each reporting period we accrue the cost of the uninsured portion of pending claims. These accruals are estimated based on our evaluation of the nature and severity of individual claims and an estimate of future claims development based upon historical claims development trends. Insurance and claims expense will vary as a percentage of operating revenue from period to period based on the frequency and severity of claims incurred in a given period as well as changes in claims development trends.

      We have discussed the development and selection of this accounting estimate with the audit committee of the Board of Directors and the audit committee has reviewed the Company’s disclosure relating to it in this Annual Report on Form 10-K.

      Operating revenues and related direct costs are recognized as of the date the freight is picked up for shipment. M.S. Carriers (see Pooling of Interests note) recognized revenue on the date freight was delivered. Beginning January 1, 2002, M.S. Carriers was operationally combined with the Company and recognizes revenue on the date freight is picked up for shipment. Our revenue recognition policy is consistent with method two under EITF 91-9. We do not believe the financial results derived from the application of this method differ materially from the results that would be derived under method three discussed within EITF 91-9 due to the Company’s relatively short length of haul.

Results of Operations for 2002, 2001 and 2000

      The following table sets forth for the periods indicated certain statement of earnings data as a percentage of operating revenue for the years ending December 31:

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      Our net earnings declined from $68.9 million in 2000 to $27.2 million in 2001. While our operating revenue increased $138 million, the incremental profit from the increased volume was more than offset by the merger related adjustments, increased deadhead, rising insurance costs and increased operating supplies as we standardized our fleets.

      In 2002, our net earnings increased to $59.6 million. Although trucking revenue was down 1% from 2001, lower interest expense, the lack of integration adjustments, and merger related synergies all contributed to our rise in net earnings.

Revenue

      As discussed above, we believe there are three factors that have a significant impact on our trucking revenue. These three factors, along with operating revenue and its components (dollars in thousands) are shown in the table below for the last three years.

      Our trucking revenue decreased by approximately 1.0% in 2002 compared to 2001 and increased 10.2% in 2001 compared to 2000. Comparing 2002 to 2001, the improvement in deadhead percentage and revenue per loaded mile was offset by a decrease in utilization. We began 2002 with approximately 650 trucks without drivers. The number of trucks without drivers decreased throughout 2002 and we ended the year with approximately 150 trucks without drivers. Comparing 2001 to 2000, the increase in deadhead percentage and slight decrease in utilization was more than offset by our increase in revenue per loaded mile.

      Other revenue increased in 2002 compared to 2001 primarily due to an increase in freight moved for our customers on rail and Mexican carriers. In July 2000, we transferred our logistics business and associated intangible assets to Transplace, an Internet-based logistics company we commonly own with four other truckload carriers. Therefore, 2000 included $43 million of other revenue that did not recur in 2002 or 2001. We own approximately 29% of Transplace and account for our investment in Transplace using the equity method of accounting.

Operating Expenses

      Our most significant operating costs are salaries, wages and employee benefits, fuel and purchased transportation. Our salaries, wages and employee benefits were 36.9%, 37.0% and 34.2% of operating revenue in 2002, 2001 and 2000, respectively. The percentage decreased slightly in 2002 as we experienced some headcount attrition that was offset by an increase in workers’ compensation costs. Our deductible amount for workers’ compensation rose from zero to $350,000 per incident in 2002. Beginning in 2003, this deductible

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      From time to time the industry has experienced shortages of qualified drivers. If such a shortage were to occur over a prolonged period and increases in driver pay rates were to occur in order to attract and retain drivers, our results of operations would be negatively impacted to the extent we did not obtain corresponding rate increases.

      Fuel was 12.4%, 13.0% and 13.4% of operating revenue in 2002, 2001 and 2000, respectively. This percentage is primarily affected by fuel prices. Our average fuel cost per gallon was $1.21, $1.28 and $1.30, in 2002, 2001 and 2000, respectively.

      Increases in fuel costs, to the extent not offset by rate increases or fuel surcharges, would have an adverse effect on our operations and profitability. We believe that the most effective protection against fuel cost increases is to maintain a fuel-efficient fleet and to implement fuel surcharges when such an option is necessary and available. We do not use derivative-type hedging products, but periodically evaluate their possible use.

      Purchased transportation was 17.1%, 17.3% and 20.2% of operating revenue in 2002, 2001 and 2000, respectively. This percentage has dropped as our owner operator fleet has decreased from 3,383 at December 31, 2000 to 3,152 at December 31, 2002.

      Insurance and claims was 4.1%, 4.5% and 2.7% of operating revenue in 2002, 2001 and 2000, respectively. The year ended December 31, 2001 includes a $7 million increase to M.S. Carriers insurance and claims reserves and $4.1 million of increased insurance premiums, with the same coverage, over the prior year. We experienced an increase in auto liability claims and cargo theft claims in 2001 when compared to 2000.

      As discussed under Critical Accounting Policies, we are self-insured for some portion of our liability, property damage and cargo damage risk. We buy insurance coverage with deductible amounts. Beginning in 2003, the deductible amount for general liability will rise from $250,000 to $1,000,000 per incident. This expense will vary as a percentage of operating revenue from period to period based on the frequency and severity of claims incurred in a given period as well as changes in claims development trends.

      As we discussed in the notes to our financial statements, we entered into a settlement agreement with an insurance company. Pursuant to this settlement, the insurance company agreed to provide certain insurance coverage, at no cost to the Company, through December 2004, in exchange our releasing all claims that were the subject of the litigation. We will recognize this settlement amount as a reduction of insurance expense as the insurance coverage is provided during the period from July 1, 2002 through December 31, 2004. In addition, we deferred the $21.1 million of legal expenses, which were paid pursuant to a contingent fee arrangement based upon our estimate of the value of the insurance provided of between $65 million and $74 million. These legal expenses are being amortized on a straight-line basis over the thirty-month period beginning July 1, 2002. In the event that we do not receive the future insurance coverage due to the liquidation, rehabilitation, bankruptcy or other similar insolvency of the insurers, we will receive a reimbursement of our legal expenses on a declining basis ranging from $15.8 million through December 15, 2002 to $3.9 million through July 1, 2004.

      When it is economically advantageous to do so, we will purchase and then resell tractors that we currently lease by exercising the purchase option contained in the lease. Gains on these activities are recorded as a reduction of rental expense. We also generate gains from the sale of tractors we own. These gains are recorded as a reduction of depreciation expense. These gains are summarized below.

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Other Expenses

      Our largest pre-tax non-operating expense is interest. Our debt balance combining the operating line of credit, accounts receivable securitization, capital leases and other debt was $402 million, $401 million and $560 million at December 31, 2002, 2001 and 2000, respectively.

      As shown below, our interest expense, net of the impact of the derivative agreements decreased in 2001 as we reduced debt by $159 million. Our interest expense further decreased in 2002 as we shifted to lower cost borrowings and interest rates continued to decline.

      Included in other expense in 2002 was the Company’s share of a nonrecurring charge within the earnings of our equity investment in Transplace, which amounted to $1.3 million. Other expense in 2001 included an $8.5 million adjustment for the impairment of the 50% equity investment held by M.S. Carriers in Transportes EASO, and the equity loss of $3.0 million for Transplace.

      Our effective tax rate was 38%, 40% and 37.3% in 2002, 2001 and 2000, respectively. The increase in 2001 was primarily due to the nondeductible portion ($5.2 million) of the EASO impairment adjustment.

Liquidity and Capital Resources

      Our cash flow sources and uses by operating, investing and financing activities are shown below:

      Although net earnings increased substantially, our cash provided by operating activities increased slightly in 2002 compared to 2001 primarily because our accounts receivable increased by a comparable amount. Our cash provided by operating activities increased in 2001 compared to 2000 despite lower net earnings. This was a result of an increase in accounts payable, accrued liabilities and claims accruals and a decrease in accounts receivable.

      Our cash used in investing activities is mainly driven by our capital expenditures, net of sales proceeds. Our capital expenditures, net of cash sales proceeds were $219 million, $165 million and $183 million in 2002, 2001 and 2000, respectively. In addition, we made equity investments of $21 million in 2000 and loans to investment entities of $16 million in 2002.

      Regarding our financing activities, in 2002 we repurchased $52 million of our common stock and received $14 million from issuance of stock to our employees under the stock option and stock purchase plans. In 2001, we repaid a total of $161 million of long-term debt, capital leases and borrowings under revolving credit agreement and received $20 million from our public stock offering and $27 million from issuance of stock to our employees. In 2000, we increased our borrowings $80 million and repurchased $44 million of our common stock while receiving $6 million from issuance of stock to our employees.

      As of December 31, 2002 and 2001 we had a working capital deficit of $69,599 and $24,299, respectively, and as of December 31, 2000, our working capital was $29,426. As discussed in the notes to the financial statements, the accounts receivable securitization is reflected as a current liability because the committed term, subject to annual renewals, is 364 days. The funds received under the accounts receivable securitization are generally used for capital expenditures or repurchases of our common stock. Therefore, our working capital

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      As of December 31, 2002, we have $136.4 million of borrowings and $65.9 million of letters of credit outstanding on our $255 million line of credit, leaving $52.7 million available. Interest on outstanding borrowings is based upon one of two options, which we select at the time of borrowing: the bank’s prime rate or the London Interbank Offered Rate (LIBOR) plus applicable margins ranging from 62.5 to 137.5 basis points, as defined in the Credit Agreement (currently 70 basis points). The unused portion of the line of credit is subject to a commitment fee ranging from 17.5 to 25 basis points (currently 20 basis points). The Credit Agreement requires us to meet certain covenants with respect to leverage and fixed charge coverage ratios and tangible net worth. The Credit Agreement also requires us to maintain unencumbered assets of not less than 120% of indebtedness (as defined).

      Our accounts receivable securitization allows us to sell up to $200 million of our eligible trade accounts receivable to a financial institution. As of December 31, 2002, we had received sales proceeds of $169 million.

      As of December 31, 2002, we had commitments outstanding to acquire replacement and additional revenue equipment for approximately $27 million. We have the option to cancel such commitments upon 60 days notice. We believe it will be able to support these acquisitions of revenue equipment through debt and lease financings and cash flows generated by operating activities.

      During the year ended December 31, 2002, we incurred approximately $39 million of non-revenue equipment capital expenditures. These expenditures were primarily for facilities and equipment.

      We anticipate that we will expend approximately $40 million in 2003 for various facilities upgrades and acquisition and development of terminal facilities. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.

      We believe we will be able to finance needs for working capital, facilities improvements and expansion, as well as anticipated fleet growth, with cash flows from operations, borrowings available under the line of credit, accounts receivable securitization and with long-term debt and lease financing believed to be available to finance revenue equipment purchases. Over the long term, we will continue to have significant capital requirements, which may require us to seek additional borrowings or equity capital. The availability of debt financing or equity capital will depend upon our financial condition and results of operations as well as prevailing market conditions, the market price of our common stock and other factors over which we have little or no control.

Off-Balance Sheet Arrangements

      As discussed in the Commitments note to the financial statements, we have guaranteed certain financing arrangements of entities in which we hold equity interests. These guarantees were issued to assist these entities when entering into financing arrangements. Furthermore, the Company guarantees certain residual values under its operating lease agreements for revenue equipment. At the termination of these operating leases, the Company would be responsible for the excess of the guarantee amount above the fair market value, if any. The maximum potential amount of future payments the Company would be required to make under these guarantees is $149 million. The Company utilizes operating leases as an additional financing source.

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Contractual Obligations

      The tables below summarize our contractual obligations as of December 31, 2002.

(1)	We expect to refinance the $136.4 million line of credit included in Long-Term Debt upon maturity.
(2)	Operating leases include an interest element within the commitment amount as opposed to the Long-Term Debt and Capital Lease Obligations amounts, which do not include an interest element.

Inflation

      Inflation can be expected to have an impact on our operating costs. A prolonged period of inflation would cause interest rates, fuel, wages and other costs to increase and would adversely affect our results of operations unless freight rates could be increased correspondingly. However, the effect of inflation has been minimal over the past three years.

Seasonality

      In the transportation industry, results of operations generally show a seasonal pattern as customers reduce shipments after the winter holiday season. Our operating expenses also tend to be higher in the winter months primarily due to colder weather, which causes higher fuel consumption from increased idle time.

Accounting Standards Not Yet Adopted by the Company

      The Financial Accounting Standards Board has issued Statements of Financial Accounting Standard (“SFAS”) and Interpretations (“FIN”) for which the required implementation dates have not yet become effective. Those standards that may materially impact the Company are discussed below.

      In December 2002, SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” was issued. This standard provides guidance on the transition, if a company so elects, from the intrinsic value method of accounting for stock-based employee compensation under Accounting Principles Board Opinion No. 25, which the Company currently uses, to the fair value method of accounting under SFAS No. 123. In addition, this standard now requires certain disclosures in our interim financial statements that previously were only required in our Annual Report on Form 10K. The standard is effective for the Company beginning January 1, 2003. The Company has not yet made a decision on the adoption of the fair value method of accounting for stock options under SFAS No. 123.

      In November 2002, FIN 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” was issued. This standard requires a guarantor recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The standard also elaborates on the disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees that it has issued. The recognition provisions of this standard apply to guarantees issued or modified after December 31, 2002. The disclosure provisions of this standard apply to our financial statements for the year ended December 31, 2002. Under this new standard, the Company will be required to recognize a liability for the guarantee of residual values on any new operating

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Factors That May Affect Future Results and Financial Condition

      The Company’s future operating results and financial condition are dependent on the Company’s ability to successfully provide truckload carrier services to meet dynamic customer demand patterns. Inherent in this process are a number of factors that the Company must successfully manage in order to achieve favorable future operating results and financial condition. Potential risks and uncertainties that could affect the Company’s future operating results and financial condition include, without limitation, the factors discussed below.

      General Economic and Business Factors. The Company’s business is dependent upon a number of factors that may have a material adverse effect on its results of operations, many of which are beyond the Company’s control. These factors include excess capacity in the trucking industry, significant increases or rapid fluctuations in fuel prices, interest rates, fuel taxes, tolls, license and registration fees and insurance and claims costs, to the extent not offset by increases in freight rates or fuel surcharges, and difficulty in attracting and retaining qualified drivers and owner operators. The Company’s results of operations also are affected by recessionary economic cycles and downturns in customers’ business cycles, particularly in market segments and industries (such as retail, manufacturing and paper products) in which the Company has a concentration of customers. In addition, the Company’s results of operations are affected by seasonal factors. Customers tend to reduce shipments after the winter holiday season and the Company’s operating expenses tend to be higher in the winter months primarily due to colder weather which causes higher fuel consumption from increased idle time.

      Competition. The trucking industry is extremely competitive and fragmented. The Company competes with many other truckload carriers of varying sizes and, to a lesser extent, with railroads. Competition has created downward pressure on the truckload industry’s pricing structure. There are some trucking companies with which the Company competes that have greater financial resources than the Company, and one may own more revenue equipment and carry a larger volume of freight than the Company.

      Capital Requirements. The trucking industry is very capital intensive. The Company depends on cash from operations, operating leases and debt financing for funds to expand the size of its fleet and maintain modern revenue equipment. If the Company were unable in the future to enter into acceptable financing arrangements, it would have to limit its growth and might be required to operate its revenue equipment for longer periods, which could have a material adverse effect on the Company’s operating results.

      Acquisitions. The growth of the Company has been dependent in part upon the acquisition of trucking companies throughout the United States. To date, the Company has been successful in identifying trucking companies to acquire and in integrating such companies’ operations into the Company’s operations. The Company may face competition from transportation companies or other third parties for acquisition opportunities that become available. There can be no assurance that the Company will identify acquisition candidates that will result in successful combinations in the future. Any future acquisitions by the Company may result in the incurrence of additional debt, which could adversely affect the Company’s profitability, or could involve the potentially dilutive issuance of additional equity securities. In addition, acquisitions involve numerous risks, including difficulties in assimilation of the acquired company’s operations particularly in the period immediately following the consummation of such transactions, the diversion of the attention of the Company’s management from other business, and the potential loss of customers, key employees and drivers of the acquired company, all of which could have a material adverse effect on the Company’s business and operating results.

      Dependence on Key Personnel. The Company is highly dependent upon the services of Mr. Jerry Moyes, Chairman of the Board, President and Chief Executive Officer, Mr. William F. Riley, III, Senior Executive Vice President, Mr. Gary Enzor, Chief Financial Officer, Mr. Rodney K. Sartor, Executive Vice President, Mr. Patrick J. Farley, Executive Vice President, Mr. Kevin H. Jensen, Executive Vice President, Mr. Michael S. Starnes, President of M.S. Carriers, and Mr. James W. Welch, Senior Vice President of M.S.

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      Regulation. The Company is regulated by the United States Department of Transportation. This regulatory authority exercises broad powers, generally governing activities such as authorization to engage in motor carrier operations, safety, financial reporting, and certain mergers, consolidations and acquisitions. Swift may also become subject to new or more comprehensive or restrictive regulations relating to fuel emissions, ergonomics and limitations on hours of service. The increased cost of complying with such regulations could have a material adverse effect on Swift’s business and operating results.

      In addition, the Company’s operations are subject to various environmental laws and regulations dealing with the transportation, storage, presence, use, disposal and handling of hazardous materials, discharge of stormwater and underground fuel storage tanks. If the Company should be involved in a spill or other accident involving hazardous substances or if the Company were found to be in violation of applicable laws or regulations, it could have a material adverse effect on the Company’s business and operating results.

      Used Equipment Market. Swift relies on the sale of used equipment to offset the cost of purchasing new equipment. In the past two years, used tractor values have deteriorated significantly. Should this trend continue, it could have a material adverse effect on Swift’s business and operating results.

      Claims Exposure; Insurance. The Company currently self-insures for liability resulting from cargo loss, personal injury, workers’ compensation, and property damage, and maintains insurance with licensed insurance companies above its limits on self-insurance. To the extent the Company were to experience an increase in the number of claims for which it is self-insured, the Company’s operating results would be materially adversely affected. In addition, significant increases in insurance costs, to the extent not offset by freight rate increases, would reduce the Company’s profitability.

      Dependence on Key Customers. A significant portion of the Company’s revenue is generated from key customers. During 2002, the Company’s top 25, 10 and 5 customers accounted for 50%, 34% and 25% of revenues, respectively. The Company does not have long-term contractual relationships with many of its key customers, and there can be no assurance that the Company’s relationships with its key customers will continue as presently in effect. A reduction in or termination of the Company’s services by a key customer could have a material adverse effect on the Company’s business and operating results.

      The Company has interest rate exposure arising from the Company’s line of credit ($136 million), capital lease obligations ($42 million) of and accounts receivable securitization ($169 million), all of which have variable interest rates. These variable interest rates are impacted by changes in short-term interest rates. The Company manages interest rate exposure through its mix of variable rate debt, fixed rate lease financing and $70 million notional amount of interest rate swaps (weighted average rate of 5.88%). The fair value of the Company’s long-term debt approximates carrying values. Assuming the current level of borrowings, a hypothetical one-percentage point increase in interest rates would increase the Company’s interest expense by $2.8 million.

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      Consolidated Financial Statements of the Company as of December 31, 2002 and 2001 for each of the years in the three-year period ended December 31, 2002, together with related notes and the reports of KPMG LLP and Ernst and Young LLP, independent certified public accountants, are set forth on the following pages. Other required financial information set forth herein is more fully described in Item 16 of this Form 10-K.

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors
Swift Transportation Co., Inc.:

      We have audited the accompanying consolidated balance sheets of Swift Transportation Co., Inc. and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of earnings, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2002. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

      The consolidated financial statements of Swift Transportation Co., Inc. for the year ended December 31, 2000, have been restated to reflect the pooling-of-interests transaction with MS Carriers, Inc. as described in Note 2 to the consolidated financial statements. We did not audit the 2000 consolidated financial statements of MS Carriers, Inc., which statements reflect total revenues constituting 36 percent of the consolidated total. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for MS Carriers, Inc. for the year ended December 31, 2000, is based solely on the report of the other auditors.

      We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes, examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

      In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Swift Transportation Co., Inc. and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.

      As discussed in Note 13 to the consolidated financial statements, the Company adopted the provisions of Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, effective January 1, 2001.

      As discussed in Note 1 to the consolidated financial statements, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, effective January 1, 2002.

	KPMG LLP
	Phoenix, Arizona
	February 7, 2003, except as to Note 27,
	as to which the date is February 21, 2003

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SWIFT TRANSPORTATION CO., INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS