Western Express and Smithway Motor Xpress Announce Acquisition Agreement and Smithway Reports Fourth Quarter and Year-End Earnin

NASHVILLE, Tenn. and FORT DODGE, Iowa, March 23  /PRNewswire-FirstCall/ -- Western Express, Inc. and Smithway Motor Xpress Corp. (NASDAQ:SMXC), two premier truckload carriers that haul diversified freight nationwide, today announced agreement on a plan for Western to acquire Smithway. The acquisition terms have been approved by both companies' Boards of Directors, and the transaction is expected to close in the summer of 2007, subject to approval by Smithway's stockholders and other customary closing conditions.

The acquisition is expected to build upon Western's established dry van operation by combining the dry van operations of both companies. Additionally, Smithway's flatbed operation is expected to offer Western the market presence and reputation to make the combined flatbed operation a force in the industry. On a combined basis, the companies would operate approximately 1,600 tractors in dry van operations and 1,400 tractors in flatbed operations.  Smithway's experienced senior management team and employees are expected to remain at Smithway and play integral roles in delivering the companies' combined services to the truckload market.

Wayne Wise, Chairman, President, and Chief Executive Officer of Western, said, "Western is very excited by the prospect of adding Smithway's operations to our existing business.  Western has a history of growing through strategic acquisitions, and the acquisition of Smithway would be the next chapter in Western's growth story. The combination of the two companies would place us in the top 15 truckload carriers measured by revenue, creating more opportunity for our combined customer, employee, and driver bases.  Besides the many obvious synergies between the two companies' dry van and flatbed operations, the Smithway people were key to our interest in a transaction. We are always looking for strong performers, and we look forward to working with the existing management team as they continue to manage and grow their business from their existing locations."

"Our Board of Directors is pleased with the terms of this transaction, which it believes provides great value to Smithway's stockholders," said G. Larry Owens, President and Chief Executive Officer of Smithway.  "The addition of Smithway's fleet and truckload transportation services brings tremendous value to Western, creating an even stronger company in the truckload market. By joining our complementary services, the combined company gives the Smithway business operations the right platform from which to achieve their full potential.  In addition, our employees will benefit by being part of a larger, more diversified organization."

Structure and Terms

Under the acquisition agreement, approved by both Boards of Directors, the stockholders of Smithway will receive $10.63 in cash for each share of Smithway for a total equity value of approximately $54 million and a total enterprise value, including Smithway's existing debt, of approximately $90 million.  The transaction is structured as a merger, whereby Smithway will become a wholly-owned subsidiary of Western. The transaction is expected to close in the summer of 2007, subject to approval by Smithway's stockholders and other customary closing conditions.

Morgan Keegan & Company, Inc. served as financial advisor, and Faegre & Benson LLP served as legal advisor, to Smithway.  Morpheus Capital Advisors LLC served as financial advisor, and Scudder Law Firm, P.C., L.L.O. served as legal advisor, to Western. JPMorgan Chase Bank has committed financing for the transaction, subject to customary conditions.

Smithway Fourth Quarter and 2006 Earnings

Smithway also announced today its financial and operating results for the fourth quarter and year ended December 31, 2006.

For the quarter, Smithway experienced a net loss of $42,000 compared to net earnings of $755,000 for the same quarter in 2005.  The fourth quarter included an expense of $1.5 million, or $948,000, net of the resulting tax benefit, for an uninsured loss plus legal expenses relating to the settlement of litigation.  Excluding the expense for this uninsured loss, net earnings for the quarter were $906,000, an improvement of 20.0% as compared to the same quarter in 2005.  For the year ended December 31, 2006, net earnings were $4.3 million compared to $4.2 million in 2005.  The year ended December 31, 2006 also included the $948,000 expense for an uninsured loss described above. Excluding the expense for this uninsured loss, net earnings for 2006 were $5.2 million, an improvement of 23.3% from 2005.

For the fourth quarter of 2006, operating revenue decreased approximately 11.7% to $51.2 million from $58.0 million for the corresponding quarter in 2005.  Operating revenue, excluding fuel surcharge revenue of $7.3 million, decreased approximately 9.3% to $43.8 million from $48.3 million, excluding fuel surcharge revenue of $9.7 million, for the corresponding quarter in 2005. For the fourth quarter of 2006, net loss was $42,000, or $0.01 per basic share and diluted share, compared with net earnings of $755,000, or $0.15 per basic share and diluted share, for the same quarter in 2005.  The net loss for the fourth quarter of 2006 included an expense of $948,000 for the uninsured loss described above.  Without this expense, Smithway would have had net earnings of $906,000, or $0.18 per basic and diluted share.

For the year, operating revenue increased approximately 3.8% to $228.8 million from $220.4 million in 2005.  Operating revenue, excluding fuel surcharge revenue of $36.1 million, increased approximately 0.9% to $192.7 million from $191.0 million, excluding fuel surcharge revenue of $29.4 million, in 2005.  Net earnings were $4.3 million, or $0.86 per basic share and $0.84 per diluted share, compared with net earnings of $4.2 million, or $0.86 per basic and $0.84 per diluted share, in 2005. Net earnings for 2006 included an expense of $948,000 for the uninsured loss described above. Without this expense, net earnings would have been $5.2 million, or $1.05 per basic share and $1.03 per diluted share.

Owens commented, "Our fourth quarter results were achieved in a difficult operating environment, including continued high fuel costs, increased labor costs and some softening of demand.  Despite these conditions, as a result of careful expense control, our net earnings improved after adjusting for the one-time expense we experienced as a result of an uninsured loss associated with the settlement of a lawsuit.  We are happy to have this lawsuit behind us and feel it is noteworthy that the associated uninsured loss is much lower than the $11.4 million default judgment originally entered against our subsidiary in this case.

"Our operating ratio, excluding fuel surcharge revenue and the uninsured loss, for the quarter was 95.8% compared to 95.2% during the fourth quarter of 2005.  Our operating ratio for the entire year, excluding fuel surcharge revenue and the uninsured loss, improved to 94.3%, from 94.9% during 2005.

"Many of our operating statistics show improvement for the year, including revenue per mile and fleet size. We are one of the few companies providing an environment to increase our independent contractor fleet, which grew once again this year.

"Costs, on the other hand, continue to impact our business. During the quarter, average fuel prices decreased 6.2% to $2.44 per gallon compared to $2.60 per gallon in the fourth quarter of 2005, but remained at historically high levels.  Fuel surcharge revenue per gallon decreased approximately 16% as a result of the decrease in fuel prices and a less favorable environment for passing fuel surcharges on to customers. During 2006, we increased driver wages in response to the market. We continually monitor controllable expenses, and our truck to non-driver employee ratio remained at approximately 5.0 in the 2005 and 2006 quarters.

"We are proud of our fourth quarter and year-end results which were achieved during a time of challenging conditions in our industry. We continually work to contain costs and improve our operations so that we can positively impact future earnings.  While we have experienced softness in our core truckload markets during January and February of 2007, we have witnessed improvement in March."

About Smithway

Smithway is a truckload carrier that hauls diversified freight nationwide, concentrating primarily on the flatbed segment of the truckload market. Its Class A Common Stock is traded on the Nasdaq Capital Market under the symbol "SMXC."

About Western

Western is a rapidly growing truckload carrier with a history of strategic acquisitions.

This press release and statements made by the Company in its stockholder reports and public filings, as well as oral public statements by Company representatives, may contain certain forward-looking information, usually identified by words such as "anticipates," "believes," "estimates," "projects," "plans," "expects," or similar expressions. 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 of the proposed acquisition of the Company to close on a timely basis or at all as a result of unsatisfied closing conditions or other factors; failure to sustain operating profitability, 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 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 this press release, stockholder reports, and in its Forms 10-K, 10-Q, and other public filings. The Company disclaims any obligation to update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.

  Press Contact: Rick Prickett         Press Contact: Douglas C.
  Chief Financial Officer              Sandvig Senior Vice President,
  Western Express, Inc.                Treasurer and Chief Financial
  [phone]                       Officer Smithway Motor Xpress
                                       Corp. [phone]


                 SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
     (Dollars in thousands, except share and per share data and operating
                                 statistics)

                                  Three months ended        Year ended
                                     December 31,          December 31,
                                     (unaudited)           (unaudited)
                                     2005       2006       2005       2006
    Operating revenue:
      Freight                      $57,578    $50,656   $218,850   $226,762
      Other                            421        537      1,536      2,000
        Operating revenue           57,999     51,193    220,386    228,762
    Operating expenses:
      Purchased transportation      20,465     17,272     76,403     80,052
      Compensation and employee
       benefits                     14,207     12,982     56,314     56,423
      Fuel, supplies, and
       maintenance                  13,836     11,912     49,957     53,129
      Insurance and claims           1,733      1,404      6,708      5,724
      Uninsured loss                     -      1,529          -      1,529
      Taxes and licenses               814        931      3,599      3,839
      General and administrative     2,160      1,858      7,752      7,804
      Communications and
       utilities                       327        287      1,189      1,180
      Gain on disposal of assets      (749)      (643)    (2,245)    (2,794)
      Depreciation and
       amortization                  2,863      3,338     11,017     12,355
        Total operating expenses    55,656     50,870    210,694    219,241
        Earnings from operations     2,343        323      9,692      9,521

    Other (expense) income:
      Interest expense                (558)      (647)    (1,826)    (2,316)
      Interest income                   26         57        124        183
        Earnings (loss) before
         income taxes                1,811       (267)     7,990      7,388
      Income tax expense
       (benefit)                     1,056       (225)     3,749      3,106
        Net earnings (loss)           $755       $(42)    $4,241     $4,282

    Basic earnings (loss) per
     share                           $0.15     $(0.01)     $0.86      $0.86
    Diluted earnings (loss) per
     share                           $0.15     $(0.01)     $0.84      $0.84
    Basic weighted average
     common shares outstanding   4,948,146  4,990,559  4,931,446  4,982,288
    Diluted weighted average
     common shares outstanding   5,057,592  5,087,239  5,047,373  5,082,015

      Operating Statistics

                                      2005       2006       2005       2006
      Operating ratio(1)             96.0%      99.4%      95.6%      95.8%
      Operating ratio, excluding
       fuel surcharges(2)            95.2%      99.3%      94.9%      95.1%
      Average operating revenue
       per tractor per week         $3,575     $3,118     $3,426     $3,478
      Average revenue per
       tractor per week(3)          $2,809     $2,534     $2,808     $2,772
      Average revenue per seated
       tractor per week (3)         $2,893     $2,589     $2,891     $2,832
      Average length of haul in
       miles                           610        610        621        611
      Average revenue per loaded
       mile(3)                       $1.60      $1.61      $1.56      $1.62
      Ending company tractors          782        775        782        775
      Ending owner/operators
       tractors                        470        474        470        474
      Ending trailers                2,047      2,071      2,047      2,071
      Weighted average tractors      1,248      1,263      1,237      1,265

    (1) Operating expenses divided by operating revenue.
    (2) Operating expenses minus fuel surcharge revenue, divided by
        operating revenue excluding fuel surcharge revenue.
    (3) Excludes fuel surcharge, brokerage, and other revenue.  For the
        three months ended December 31, 2005 and 2006, brokerage revenue was
        $2,326 and $1,705.  For the year ended December 31, 2005 and 2006,
        brokerage revenue was $8,823 and $8,379.



                 SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands)


                                             December 31,       December 31,
                                                   2005               2006
                                                        (unaudited)
       ASSETS
         Current assets:
           Cash and cash equivalents                $168             $2,020
           Receivables, net                       19,820             17,807
           Inventories                               938              1,158
           Prepaid expenses and other              4,287              5,691
              Total current assets                25,213             26,676

         Property and equipment                  121,126            125,714
         Less accumulated depreciation            59,704             52,880
           Net property and equipment             61,422             72,834

         Other assets                              2,057              2,055

       Total assets                              $88,692           $101,565

       LIABILITIES AND STOCKHOLDERS'
        EQUITY
         Current liabilities:
           Current debt                           $8,363            $10,479
           Accounts payable and accrued
            expenses                              13,694             14,208
              Total current liabilities           22,057             24,687

         Long-term debt                           25,185             28,006
         Accrued loss reserves, less
          current portion                          3,657              3,952
         Deferred income taxes                    10,315             13,001

       Total liabilities                          61,214             69,646

         Stockholders' equity                     27,478             31,919

       Total liabilities and
        stockholders' equity                     $88,692           $101,565


DATASOURCE: Smithway Motor Xpress Corp.



CONTACT: Rick Prickett, Chief Financial Officer of Western Express, Inc.,

[phone] or Douglas C. Sandvig, Senior Vice President,

Treasurer and Chief Financial Officer of Smithway Motor Xpress Corp.,

[phone]



Web site:  http://www.smxinc.com/ 

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