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FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 2002NOTES TO CONSOLIDATED FINANCIAL STATEMENTS6. Stockholders' Equity
Common Stock. In December 2000, the holders of approximately
$100.0 million of our Convertible Notes converted such notes into
3,164,644 shares of our common stock, which resulted in an increase in
our common stock capital accounts of approximately $97.4 million. During the first quarter of 2002, we issued 1.725 million shares of
common stock at a price of $18.25 per share. Gross proceeds from this
offering were $31,481,250, with issuance costs of $998,191. Stock-Based Compensation Plans. We have two current stock
option plans, the 2001 Omnibus Stock Compensation Plan, which was
adopted by our board of directors in February 2001 and was approved by
shareholders at the 2001 annual meeting of shareholders, and the 1990
Non-Qualified Stock Option Plan solely for our independent directors. In
addition, we have an employee stock purchase plan. Under the 2001 plan, incentive stock options and other options and
awards may be granted to employees to purchase shares of common stock.
Under the 1990 non-qualified plan, non-employee members of our board of
directors are automatically granted options to purchase shares of common
stock on a formula basis. Both plans provide that the exercise prices
equal 100% of the fair value of the common stock on the date of grant.
Unless otherwise provided, options become exercisable for 20% of the
shares on the first anniversary of the grant of the option and are
exercisable for an additional 20% per year thereafter. Options granted
expire 10 years after the date of grant or earlier in the event of the
optionee’s separation from employment. At the time the stock options
are exercised, the option price is credited to common stock and
additional paid-in capital. The employee stock purchase plan provides eligible employees the
opportunity to acquire shares of Swift common stock at a discount
through payroll deductions. The plan year is from June 1 to the
following May 31. The first year of the plan commenced June 1, 1993. To
date, employees have been allowed to authorize payroll deductions of up
to 10% of their base salary during the plan year by making an election
to participate prior to the start of a plan year. The purchase price for
stock acquired under the plan is 85% of the lower of the closing price
of our common stock as quoted on the New York Stock Exchange at the
beginning or end of the plan year or a date during the year chosen by
the participant. Under this plan for the last three years, we have
issued 9,801 shares at a price of $12.47 in 2002, 22,360 shares at a
price of $21.41 in 2001, and 29,889 shares at a price range of $8.40 to
$10.57 in 2000. The estimated weighted average fair value of shares
issued under this plan, as determined using the Black-Scholes
option-pricing model, was $1.92 in 2002, $8.19 in 2001, and $4.25 in
2000. As of December 31, 2002, 352,627 shares remained available for
issuance under this plan. There are no charges or credits to income in
connection with this plan. |
The following is a summary of our stock options under these plans as of December 31, 2002, 2001, and 2000:
| 2002 | 2001 | 2000 | ||||||
| Wtd. Avg. | Wtd. Avg. | Wtd. Avg. | ||||||
| Shares | Exer. Price | Shares | Exer. Price | Shares | Exer. Price | |||
| Options outstanding, beginning of period | 2,639,504 | $17.44 | 2,076,593 | $11.70 | 2,148,511 | $9.08 | ||
| Options granted | 585,055 | $12.32 | 747,073 | $31.51 | 645,944 | $16.88 | ||
| Options canceled | (84,254) | $23.37 | (31,247) | $14.09 | (174,412) | $8.71 | ||
| Options exercised | (121,800) | $8.61 | (152,915) | $8.69 | (543,450) | $8.48 | ||
| ------------ | ------------ | ------------- | ||||||
| Options outstanding, end of period | 3,018,505 | $16.64 | 2,639,504 | $17.44 | 2,076,593 | $11.70 | ||
| ========= | ========= | ========= | ||||||
| Options exercisable, end of period | 1,480,490 | $13.71 | 1,181,141 | $11.49 | 897,711 | $9.35 | ||
| ========= | ========= | ========= | ||||||
| Options available for future grant, end of period | 419,845 | 1,155,057 | 181,235 | |||||
| ========= | ========= | ========= | ||||||
| Estimated weighted average fair value per share of options granted during the year | $9.55 | $20.68 | $10.90 | |||||
| ========= | ======== | ======== | ||||||
The following table summarizes information about stock options outstanding at December 31, 2002:
| Options Outstanding | Options Exercisable | ||||||
| Number | Wtd. Avg. | Number | |||||
| Range of | Outstanding | Remaining | Wtd. Avg. | Exercisable | Wtd. Avg. | ||
| Exercise Prices | at 12/31/02 | Contractual Life | Exercise Price | at 12/31/02 | Exercise Price | ||
| ------------ | ---------- | ------------ | ----------- | ----------- | ------------ | ||
| $5.00 to $16.99 | 2,018,767 | 6.2 | $10.32 | 1,126,267 | $ 9.31 | ||
| $17.00 to $28.99 | 272,480 | 5.4 | $23.01 | 183,625 | $23.52 | ||
| $29.00 to $41.00 | 727,258 | 8.1 | $31.82 | 170,598 | $32.18 | ||
| ---------- | ---------- | ||||||
| $5.00 to $41.00 | 3,018,505 | 6.6 | $16.64 | 1,480,490 | $13.71 | ||
| ======= | ======= | ||||||
Employee Stock Ownership Plan. In 1996, we established an Employee Stock Ownership Plan (“ESOP”) effective January 1, 1996. All employees over the age of 21 with one year of service are participants. This plan has a five-year cliff vesting, and service is recognized after the ESOP effective date. The ESOP is designed to enable our employees to accumulate stock ownership. While there will be no employee contributions, participants will receive an allocation of stock that has been contributed by Swift. Compensation expense is reported when such shares are released to employees. The plan may also acquire Swift common stock, purchased at fair market value. The ESOP can borrow money from Swift to buy Swift stock. Benefits will be paid in a lump sum or installments, and the participants generally have the choice of receiving cash or stock. At December 31, 2002, 2001, and 2000, all of the ESOP compensation was earned.
Employee Savings Plan. We have a savings plan under Section 401(k) of the Internal Revenue Code. Eligible employees may make voluntary contributions into the 401(k) savings plan with Swift contributing on behalf of the eligible employee an amount equal to 100% of the first 2% of compensation and 75% of the next 4% of compensation based on the contributions made by the eligible employees. Our contribution to the 401(k) savings plan totaled $603,000, $558,000, and $483,000 for the years ended December 31, 2002, 2001, and 2000, respectively. The contributions in 2002 and 2001 were made all in common stock, while the 2000 contribution was made half in common stock and half in cash. The shares of common stock contributed to the 401(k) savings plan totaled 64,490, 28,798, and 7,175 shares for the 2002, 2001, and 2000 contributions, respectively.
Common Stock Repurchase Program. In March 1997, our board of directors approved a common stock repurchase program that terminated as of June 30, 1999. Under this program, we spent approximately $13.3 million to acquire 927,774 shares in the open market at an average cost of $14.34 per share. At December 31, 2002, 610,123 shares remain in treasury (net of 317,651 shares used to fund ESOP, 401(k) contributions and acquisitions) with a total cost of $8,749,922 and are included in “Treasury stock held, at cost” on the balance sheet.
Shareholder Rights Plan. In August 1997, the board of directors declared a dividend of one preferred share purchase right on each outstanding share of Swift common stock. The rights are not currently exercisable but would become exercisable if certain events occurred relating to any person or group acquiring or attempting to acquire 15% or more of our outstanding shares of common stock. Thereafter, upon certain triggers, each right not owned by an acquirer allows its holder to purchase Swift securities with a market value of two times the $150 exercise price.
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