<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT: November 7, 1996
(DATE OF EARLIEST EVENT REPORTED)
CONSOLIDATED FREIGHTWAYS CORPORATION
(Exact name of Registrant as specified in charter)
Delaware 1-12149 77-0425334
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation or origination) Identification Number
175 LINFIELD DRIVE
MENLO PARK, CALIFORNIA 94025
(Address of principal executive office)
(415) 326-1700
Registrant's telephone number, including area code
<PAGE>
ITEM 5. OTHER INFORMATION
On November 7, 1996, the Board of Directors of Consolidated Freightways, Inc.
(CFI) set a record date of November 15, 1996, and a distribution date of
December 2, 1996, for the spinoff of its long-haul trucking business (the
Distribution). Consummation of the Distribution would create two separate,
publicly traded companies, each offering a variety of premium freight
transportation services. Pursuant to the Board's approval, CFI will
distribute all of the outstanding capital stock of its newly created wholly
owned subsidiary, Consolidated Freightways Corporation (the Registrant). The
Registrant will consist of Consolidated Freightways Corporation of Delaware
("CFCD") and its nationwide long-haul motor carrier CF MotorFreight (CFMF)
and its Canadian operations, including Canadian Freightways, Ltd., Epic
Express, Milne & Craighead and Canadian Sufferance Warehouses and other
related businesses, as well as Leland James Service Corporation ("LJSC"),
an administrative service provider.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
PAGE NO.
(A) Pro Forma Condensed Financial Information
Pro Forma Condensed Consolidated Statements
of Operations for the Three Months Ended
March 31, June 30 and September 30, 1996 and the
Nine Months Ended September 30, 1996. 3
Pro Forma Condensed Consolidated Statements of
Operations for the Three Months Ended March 31,
June 30, September 30, and December 31, 1995
and the Year Ended December 31, 1995. 4
(C) EXHIBITS
99 Consolidated Freightways Corporation, Pro Forma
Condensed Consolidated Financial Information.
Pro Forma Condensed Consolidated Balance Sheet
as of September 30, 1996.
Pro Forma Condensed Consolidated Statement of
Operations for the Nine Months Ended September
30, 1996.
Pro Forma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1995.
<PAGE>
The following unaudited pro forma condensed consolidated statements of
operations for each of the three quarters and for the nine months ended
September 30, 1996, and each of the four quarters and for the year ended
December 31, 1995, have been prepared assuming the Distribution occurred as
of January 1, 1996 and 1995, respectively. The unaudited pro forma condensed
consolidated statements of operations are based upon available information
and upon certain assumptions that the Registrant believes are reasonable.
This pro forma data does not purport to be indicative of the consolidated
results of operations that would have occurred had the Distribution occurred
on the dates indicated, or which may be attained in the future. Adjustments
made to the pro forma data (which adjustments are discussed in greater detail
in exhibit 99 included herein) primarily include the adjustment for the
effects on depreciation expense and sub-lease rental income from third
parties, resulting from the pro forma transfer of certain real properties;
the elimination of intercompany interest expense formerly charged on advances
payable to CFI from the Registrant, and the tax effects of these adjustments.
The following unaudited pro forma condensed consolidated statements of
operations should be read in conjunction with, and are qualified in their
entirety by reference to, the pro forma condensed consolidated financial
statements (including notes thereto) included as exhibit 99 herein.
Consolidated Freightways Corporation
Pro Forma Condensed Consolidated Statements of Operations
(In Millions and Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months
-------------------------------- Ended
Mar. 31, June 30, Sep 30, Sep 30,
1996 1996 1996 1996
------- -------- ------- -----------
<S> <C> <C> <C> <C>
Revenues $502.5 $530.0 $559.6 $1,592.1
Operating Loss (24.7) (13.8) (2.4) (40.9)
Other Income (Expense)
Investment income .1 .1 -- .2
Interest expense (.2) (.2) (.2) (.6)
Miscellaneous, net (.7) .3 1.4 1.0
------- -------- ------- -----------
(.8) .2 1.2 .6
Loss before income
tax benefits (25.5) (13.6) (1.2) (40.3)
Income tax benefits (7.9) (4.2) (.3) (12.4)
------- -------- ------- -----------
Net loss applicable to
common shareholders $(17.6) $(9.4) $(.9) $(27.9)
------- -------- ------- -----------
------- -------- ------- -----------
</TABLE>
<PAGE>
Consolidated Freightways Corporation
Pro Forma Condensed Consolidated Statements of Operations
(In Millions and Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------ Year Ended
Mar. 31, June 30, Sep 30, Dec 31, Dec 31,
1995 1995 1995 1995 1995
------- -------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $546.7 $535.5 $525.4 $499.0 $2,106.6
Operating Income (Loss) 6.4 .6 (8.0) (42.3) (43.3)
Other Income (Expense)
Investment income .1 .1 .4 .1 .7
Interest expense (.7) .3 (.3) (.2) (.9)
Miscellaneous, net .3 .2 .9 (2.2) (.8)
------- -------- ------- ------- -----------
(.3) .6 1.0 (2.3) (1.0)
Income (loss) before
income taxes (benefits) 6.1 1.2 (7.0) (44.6) (44.3)
Income taxes (benefits) 2.0 .4 (2.2) (14.3) (14.1)
------- -------- ------- ------- -----------
Net income (loss)
applicable to common
shareholders $ 4.1 $ .8 $ (4.8) $(30.3) $ (30.2)
------- -------- ------- ------- -----------
------- -------- ------- ------- -----------
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Consolidated Freightways Corporation
Dated: November 19, 1996 by: /s/ W. Roger Curry
------------------ ----------------------------------------
Name: W. Roger Curry
Title: President and Chief Executive Officer
<PAGE>
EXHIBIT 99
CONSOLIDATED FREIGHTWAYS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(Dollars in thousands)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 32,825 $ (59)(a) $ 32,766
Receivables, net of allowances 313,536 -- 313,536
Operating supplies, at lower of
average cost or market 16,767 (4,701)(a) 12,066
Prepaid expenses 36,353 (1,316)(a) 35,037
Deferred income taxes 55,405 -- 55,405
---------- ----------- ---------
Total current assets 454,886 (6,076) 448,810
---------- ----------- ---------
Net property, plant and equipment 485,651 (19,336)(a) 426,590
(39,725)(b)
Other assets 14,345 (5,660)(a) 8,685
---------- ----------- ---------
TOTAL ASSETS $954,882 $(70,797) $884,085
---------- ----------- ---------
---------- ----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 83,229 $ (5,028)(a) $ 78,201
Accrued liabilities 212,969 (6,712)(a) 206,257
Accrued claims costs (d) 87,646 -- 87,646
---------- ----------- ---------
Total current liabilities 383,844 (11,740) 372,104
Long-term liabilities
Long-term debt 15,100 -- 15,100
Accrued claims costs (d) 102,801 -- 102,801
Deferred income taxes 35,276 (482)(a)
(1,490)(b) 33,304
Employee benefits and other
liabilities 132,982 -- 132,982
---------- ----------- ---------
Total liabilities 670,003 (13,712) 656,291
---------- ----------- ---------
Stockholders' Equity
CFI investment and advances 284,879 (18,850)(a) --
(38,235)(b)
(227,794)(c)
Common stock and paid-in capital 227,794 (c) 227,794
---------- ----------- ---------
Total stockholders' equity 284,879 (57,085) 227,794
---------- ----------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $954,882 $(70,797) $884,085
---------- ----------- ---------
---------- ----------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CONSOLIDATED FREIGHTWAYS CORPORATION
PRO FORMA CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
Nine Months Ended September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(Dollars in thousands, except per share amount)
<S> <C> <C> <C>
REVENUES $1,592,146 $ - $1,592,146
COSTS AND EXPENSES
Operating Expenses(d) 1,414,969 1,382 (f) 1,416,351
Selling and administrative expenses 171,103 (e) - 171,103
Depreciation 66,599 (1,016)(f) 45,583
---------- ---------- ----------
1,632,671 366 1,633,037
---------- ---------- ----------
OPERATING LOSS (40,525) (366) (40,891)
OTHER INCOME (EXPENSE)
Investment income 214 - 214
Interest expense (i) (626) - (626)
Miscellaneous, net (2,586) (1,266)(g) 957
4,809 (h)
---------- ---------- ----------
(2,998) 3,543 545
---------- ---------- ----------
Loss before income tax benefits (43,523) 3,177 (40,346)
Income tax benefits (13,700) 1,224 (j) (12,476)
---------- ---------- ----------
NET LOSS $ (29,823) $ 1,953 $ (27,870)
---------- ---------- ----------
---------- ---------- ----------
Loss per share (assuming 22,006,500
shares outstanding as of September 30,
1996) $ (1.27)
----------
----------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CONSOLIDATED FREIGHTWAYS CORPORATION
PRO FORMA CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
Year Ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ----------
(Dollars in thousands, except per share amount)
<S> <C> <C> <C>
REVENUES $2,106,529 $ -- $2,106,529
COSTS AND EXPENSES
Operating expenses (d) 1,871,224 1,842 (f) 1,873,066
Selling and administrative
expenses 214,535(e) -- 214,535
Depreciation 63,556 (1,354)(f) 62,202
---------- ---------- ---------
2,149,315 488 2,149,803
---------- ---------- ---------
OPERATING LOSS (42,786) (488) (43,274)
OTHER INCOME (EXPENSE)
Investment income 756 -- 756
Interest expense (i) (918) -- (918)
Miscellaneous, net (850) (1,688)(g) (809)
1,729 (h)
---------- ---------- ---------
(1,012) 41 (971)
---------- ---------- ---------
Loss before income tax benefits (43,798) (447) (44,245)
Income tax benefits (13,889) (174)(j) (14,063)
---------- ---------- ---------
NET LOSS $ (29,909) $ (273) $(30,182)
---------- ---------- ---------
Loss per share (assuming
22,006,500 shares outstanding
as of September 30, 1996) $ (1.37)
--------
--------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CONSOLIDATED FREIGHTWAYS CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(a) Represents the transfer of certain assets (including real properties)
and liabilities from LJSC to a subsidiary of CFI in connection with
the transfer of various administrative service departments from LJSC to a
subsidiary of CFI.
(b) Represents the transfer of certain real properties from CFCD to a
subsidiary of CFI, some of which may be leased back to CFCD under
short-term operating leases.
(c) Represents the distribution of CFI's remaining investment in CFCD and
LJSC to shareholders of CFI pursuant to the Distribution.
(d) CFCD provides for uninsured workers' compensation claims in its financial
statements. Estimated costs of uninsured workers' compensation claims are
included in operating expenses on CFCD's financial statements. The amounts
provided are estimated based on historical claims and unfiled claims
through the date of the financial statements in accordance with generally
accepted accounting principles. The management of the Company to be in
place after the Distribution is currently evaluating the estimated accrued
claims cost for workers' compensation and expects to increase the accrual
after the Distribution to an estimate of the claims on a fully developed
basis. If management had so decided to act as of January 1, 1995, an
increase of approximately $20 million would have been included in operating
expenses for the year ended December 31, 1995. If, however, management had
so decided to act as of January 1, 1996, an increase of an amount between
$15 million and $20 million would have been included in operating expenses
for the nine months ended September 30, 1996, resulting in a corresponding
increase of an amount between $15 million and $20 million in the accrual
at September 30, 1996.
(e) The historical financial statements include an allocation of corporate
overhead costs incurred by CFI using both incremental and proportional
methods on a revenue and capital basis. These charges are included in
Selling and Administrative Expenses. Although management believes the
allocation methods used provided CFCD with a reasonable share of such
expenses, there can be no assurance that these costs will not increase
after the Distribution.
(f) To adjust for the effects on depreciation expense, and sub-lease rental
income from third parties, resulting from the pro forma transfers of
certain real properties.
(g) To adjust for the pro forma allocation of letter of credit and surety
bond fees from CFI relating to uninsured costs of primarily workers'
compensation claims and other lesser uninsured claims that CFCD
participates in with CFI. Also includes estimated unused commitment fee
and letter of credit fees on CFCD's anticipated revolving credit facility.
The Company anticipates that its letter of credit and surety bond
requirements, for programs similar to the CFI programs CFCD participated
in, will substantially increase. As a result, the Company anticipates a
substantial increase in related letter of credit and surety bond expenses.
(h) To eliminate the intercompany interest expense, net, charged on balances
payable to CFI.
(i) The historical financial statements do not include any allocation of
interest expense for CFI's consolidated borrowings (except to the extent
of interest expense on borrowings incurred directly by CFCD). Except for
borrowings incurred directly by CFCD, no portion of CFI's consolidated
borrowings were allocated to the Company in accordance with CFI's
centralized cash management policy, as all cash requirements not satisfied
by operating cash flows are met by CFI and recorded net in CFI Investment
and Advances on the balance sheet.
(j) To adjust for the effects of the pro forma adjustments on income tax
expense using an estimated marginal income tax rate of 39%.
