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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number 000-23341
MOTOR CARGO INDUSTRIES, INC.
(Exact Name of the Registrant as Specified in its Charter)
<TABLE>
<S> <C>
Utah 87-0406479
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
845 West Center Street
North Salt Lake, Utah 84054
(801) 292-1111
(Address of principal executive offices and telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, no par value
--------------------------
(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark 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. [X]
As of March 20, 2000, the aggregate market value of the Registrant's voting
Common Stock held by non-affiliates of the Registrant based upon the last sale
price reported for such date on the Nasdaq National Market System was
approximately $12,475,971.
The number of shares of the Registrant's Common Stock outstanding as of March
20, 2000 was 6,800,840.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Registrant's definitive proxy statement pursuant to
Regulation 14A of the Securities Exchange Act of 1934 in connection with the
2000 Annual Meeting of Shareholders of the Registrant is incorporated by
reference into Part III of this Form 10-K.
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This report contains certain forward-looking statements that involve
risks and uncertainties, including statements regarding the Company's plans,
objectives, goals, strategies and financial performance. The Company's actual
results could differ materially from the results anticipated in these
forward-looking statements as a result of certain factors set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Cautionary Statement for Forward-Looking Information" and elsewhere
in this report.
PART I
ITEM 1. BUSINESS
GENERAL
Motor Cargo Industries, Inc. (the "Company") is a regional
less-than-truckload ("LTL") carrier which provides transportation and logistics
services to shippers within the Company's service region. The Company's service
region is the western United States, including Arizona, California, Colorado,
Idaho, New Mexico, Oregon, Texas, Utah and Washington. The Company transports
general commodities, including consumer goods, packaged foodstuffs, electronics,
computer equipment, apparel, hardware, industrial goods and auto parts for a
diversified customer base. The Company offers a broad range of services,
including expedited scheduling and full temperature-controlled service. Through
its wholly-owned subsidiary, MC Distribution Services, Inc. ("MCDS"), the
Company also provides customized logistics, warehousing and distribution
management services.
The Company utilizes 27 strategically located service centers (also
referred to as "terminals") to serve major markets within the Company's service
region. In addition, the Company provides service to 26 smaller markets within
its service region pursuant to agreements with independent agents, most of which
act as exclusive agents for the Company. See Item 1 "Business - Operations."
In 1997, the Company initiated a program to establish market and
operations presence in certain major business economic areas ("BEAs") outside of
the Company's service region in order to solicit tonnage from these markets
moving west into its service region. The Company opened BEA expansion facilities
in Dallas and Chicago in October 1997 and April 1998, respectively. During the
second quarter of 1999, the Company determined that the Chicago facility was not
profitable and would not produce acceptable levels of profitability for the near
or intermediate term. Consequently, in mid-July 1999, the Company discontinued
freight pick-up operations and closed its service center in Chicago. The Company
expanded its operation in Dallas to a full service terminal during 1999. The
Dallas facility now provides both pick-up and delivery operations. The Company
continued to utilize third-party truckload carriers, however, to transport
freight from the Dallas facility to other service centers within the Company's
service region. The Company currently has no plans to open additional BEA
operations.
THE LTL INDUSTRY
The Company transports primarily LTL shipments. LTL shipments are
defined as shipments weighing less than 10,000 pounds. Generally, LTL carriers
transport freight from multiple shippers to multiple consignees on a scheduled
basis. Unlike truckload carriers, LTL carriers typically do not transport full
trailer loads directly from origin to destination. LTL operations require the
handling of shipments in several coordinated stages.
Typically, LTL carriers transport freight along scheduled routes from
multiple shippers to multiple consignees utilizing a network of terminals,
together with fleets of linehaul and pickup and delivery tractors and trailers.
Freight is picked up from customers by local drivers and consolidated for
shipment. The freight is then loaded into inter city trailers and transported to
other terminals by linehaul drivers. Large LTL carriers have traditionally
employed a series of hub and spoke terminals. This method improves truck
utilization but requires both multiple cargo rehandlings, which are expensive,
and a fixed network of pickup, breakbulk and destination terminals, which is
capital intensive and requires a large staff of freight handlers. At each
breakbulk terminal, freight is unloaded and reloaded with other freight destined
for locations in the same general direction of another breakbulk terminal, where
the truck is sent for further unloading and loading, until the freight arrives
at a destination terminal located nearest the region of the consignee. At the
destination terminal, freight is then loaded
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onto a local truck for final delivery. The Company emphasizes direct loading
between the originating and destination service centers in order to avoid the
costly and time-consuming use of breakbulk terminals.
LTL companies are generally categorized as regional, interregional or
national carriers, based upon length of haul and service territory. Carriers
with average lengths of haul less than 500 miles are referred to as regional
carriers and generally provide either overnight or second day service. Regional
LTL carriers usually are able to load freight for direct transport to a
destination terminal, thereby avoiding the costly and time-consuming use of
breakbulk terminals (where freight is rehandled and reloaded for delivery to its
ultimate destination). Carriers with average lengths of haul between 500 and
1,000 miles are generally referred to as inter-regional carriers. National
carriers, with average lengths of haul greater than 1,000 miles, generally
operate coast to coast relying on networks of breakbulk and satellite terminals.
Due to the geographical size of the western United States, the Company has a
longer average length of haul than most other regional carriers. For the year
ended December 31, 1999, the Company had an average length of haul of
approximately 665 miles.
In general, the more freight volume an LTL carrier has within a given
geographical area, the lower its incremental operating costs. This is
particularly true with respect to its pickup and delivery operations where
increased freight volumes generally result in less distance between stops and
more shipments per stop ("route density"). As route density increases, an LTL
carrier is able to make more deliveries on shorter routes, thereby increasing
the number of shipments that can be delivered within a defined period and
lowering overall labor costs for each shipment. Similarly, the more business a
carrier experiences in a given traffic lane from one service center to another
("lane density") the lower its incremental costs. As lane density increases, a
carrier experiences improved load factors resulting in increased revenue per
mile, reduced empty miles and reduced costs associated with intermediate
shipment handling and reconsolidation. A carrier's incremental costs are also
improved as the amount of freight handled at a given service center location
("service center density") increases. As service center density improves, a
carrier experiences higher revenues, while maintaining the same fixed cost
structure, thereby improving asset utilization.
OPERATIONS
The Company picks up freight with pickup and delivery trucks during the
day and transports the freight to Company service centers by early evening.
Pick-ups and deliveries are typically made within a 70 mile radius of each
service center. Upon arrival at a service center, freight is unloaded, logged
onto the Company's computerized tracing system, and reloaded onto trailers
destined for the Company's other service centers. Trucks depart later in the
evening for their destination service centers. In order to ensure prompt
service, the Company enforces established time schedules for linehaul service
between service centers and utilizes an advanced computer system to track and
coordinate deliveries. Through the Company's wide area computer network, all
vital information relating to shipments is available to each service center on a
real-time basis. Before the cargo arrives at its destination service center, a
manifest showing the contents of each trailer and the sequence in which it is
loaded, along with the delivery bills, is generated by the Company's
computerized tracing system and is available to the destination service center
manager via the Company's computer network. Upon arrival at the destination
service center, the freight is unloaded, sorted and delivered to its final
destination by local delivery trucks.
Instead of utilizing a complete "hub and spoke" system, which is
typically used by large, national LTL carriers, the Company emphasizes direct
loading of freight between service centers with minimal handling. Hub and spoke
systems generally require shipments to be loaded and unloaded several times at a
number of service centers and breakbulk facilities prior to delivery. Direct
loading allows shipments to be transported directly from the originating service
center to the destination service center without intermediate handling. Direct
loading reduces the Company's costs because it requires less loading and
unloading of freight and requires fewer terminals and breakbulk facilities.
The Company uses a single service center, rather than multiple satellite
terminals, in each of the major cities it serves. Single service centers reduce
rehandling of freight, shorten delivery times and thereby reduce the risk of
freight damage or loss.
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In addition to the Company's 27 service centers, the Company also
utilizes independent agents in 26 smaller markets in which the Company does not
operate service centers. These agents are independent businesses which operate
within a specific area as the Company's pick-up and delivery agent. Shipments
are coordinated through these agent's facilities in the same manner as the
Company's service centers. Agents are compensated based upon a percentage of
freight bill revenue and are required to maintain standards established by the
Company. The Company believes that its utilization of agents in smaller markets
helps the Company maintain a lower fixed cost structure and emphasize variable
costs while improving the level of local market presence and allowing the
Company to provide its customer base with broader geographical coverage. The
table indicates the location of each of the Company's service centers and agent
facilities:
<TABLE>
<CAPTION>
SERVICE CENTERS AGENT FACILITIES
--------------- ----------------
<S> <C>
Albuquerque, New Mexico Baker City, Oregon
Bakersfield, California Battle Mountain, Nevada
Boise, Idaho Beatty, Nevada
Colorado Springs, Colorado Bend, Oregon
Dallas, Texas Bishop, California
Denver, Colorado Burns, Oregon
El Paso, Texas Cedar City, Utah
Eugene, Oregon The Dalles, Oregon
Fremont, California Elko, Nevada
Fresno, California Ely, Nevada
Grand Junction, Colorado Flagstaff, Arizona
Kent, Washington Hawthorne, Nevada
Las Vegas, Nevada John Day, Oregon
Medford, Oregon Kennewick, Washington
North Salt Lake, Utah Kingman, Arizona
Oxnard, California Klamath, Oregon
Phoenix, Arizona LaGrande, Oregon
Pico Rivera, California Lakeview, Oregon
Pocatello, Idaho Lovelock, Nevada
Portland, Oregon Pendleton Oregon
Reno, Nevada Redding, California
Rialto, California Ridgecrest, California
Sacramento, California Tonopah, Nevada
San Diego, California Wells, Nevada
Spokane, Washington Wendover, Utah
Tucson, Arizona Winnemucca, Nevada
Twin Falls, Idaho
</TABLE>
Approximately 40% of the Company's shipments are currently delivered
overnight, and an additional 40% of the Company's shipments are delivered within
two days. The Company uses single driver and two-man "sleeper" teams in its
linehaul operations. The Company also contracts with third parties for
transportation services ("purchased linehaul transportation") to supplement peak
demand periods and address lane imbalances. The Company obtains purchased
linehaul transportation from several sources, including truckload carriers and
independent contractors. By utilizing purchased linehaul transportation, the
Company is able to reduce "empty miles" and improve load factors.
The Company selectively solicits business from customers to reduce
operational inefficiencies by improving the mix of shipment and lane density,
shipment size and lane flow. During the year ended December 31, 1999, the
Company handled an average of approximately 3,850 shipments per day with an
average weight per shipment of approximately 1,105 lbs. and average revenue per
bill of approximately $121.80. The Company's revenue per hundredweight was
$11.02 for the year ended December 31, 1999.
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The Company's rates for LTL shipments are typically based on weight and
volume characteristics and the distance traveled. The Company periodically
publishes base rates that are generally applicable to customer shipments. The
Company typically offers special rates to customers based on tonnage levels and
other factors. In certain instances, the Company competes with other carriers
for business by participating in competitive bidding. Customers generally
solicit bids for relatively large shipment and tonnage volumes over a one or two
year period. These customers often enter into contractual relationships with a
limited number of carriers based upon price and service.
SPECIALIZED SERVICES
The Company offers a broad range of services, including service
capabilities beyond the scope of most LTL carriers. These services include
Priority+Plus, an expedited time-definite service; Protective+Plus, a full
temperature-controlled service for LTL shipments within the Company's core
service region; and Canadian+Plus, full points coverage into all major Canadian
markets through an exclusive regional marketing partnership with one of Canada's
leading LTL carriers. The Company also provides less-than-container load service
to Hawaii. The Company consolidates shipments, loads containers and tenders them
to a major transoceanic carrier for transport to Hawaii. The shipments are then
delivered by a local carrier in Hawaii pursuant to an agreement between the
carrier and the Company. The Company intends to continue to evaluate additional
niche service offerings which complement existing operating systems.
In addition to the service offerings described above, the Company offers
customized services tailored to the ongoing needs of a particular customer.
These customized services often involve a high level of coordination between the
Company and the customer and may include time definite delivery, highly
specialized reporting requirements and electronic data interchange, full time
on-site loading by Company employees, return goods consolidation and management,
and specialized handling and equipment requirements.
Through a program referred to as "Motor Cargo USA," the Company also
provides customers with service to points outside its core service region. The
Company enters into interline agreements with other carriers to provide delivery
of freight outside of the Company's core service region.
The Company provides customized logistics, warehousing and distribution
management services through its subsidiary MCDS. MCDS currently provides
"just-in-time" delivery services for a small number of specialty retailers. One
customer currently accounts for more than 85% of the operating revenues of MCDS.
For the year ended December 31, 1999, $4.1 million or 3.3% of the Company's
revenues were generated by MCDS.
CUSTOMERS AND MARKETING
The Company has approximately 3,800 regular customers with an average
monthly revenue billing of $1,000 or more. The Company's customers are not
concentrated in any one area or industry and no one customer accounts for over
6% of total revenues.
The Company has positioned itself in the high service end of the
regional LTL market. The Company targets prospective customers that require high
levels of customized service and are not inclined to select a carrier solely on
the basis of price. The Company emphasizes its ability to provide specialized or
customized services to shippers, including (i) highly flexible scheduling, (ii)
consistent and expedited transit commitments, (iii) strong management
information systems and electronic data interchange capabilities, (iv)
commitment to customer service and responsiveness and (v) a willingness to
provide transportation programs outside the scope of the traditional LTL
industry.
The Company has written contracts with most of its large customers.
These contracts specify rate levels and eliminate the need to negotiate rates
for individual shipments. The Company's contracts typically do not provide for
guaranteed volumes. Although the Company's contracts typically run for a
specified term of one year, they generally may be terminated by either party
upon 30 days' notice. The Company has pricing agreements with
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substantially all of its customers which are not covered by contracts. These
pricing agreements specify rate levels but do not require minimum tonnage
commitments on the part of the customer.
The Company's senior management is actively involved in the Company's
sales and marketing activities. In order to attract new customers, the Company
relies on its ability to provide quality service and on selective targeting of
potential accounts. The Company's account executives are managed by three
regional directors of sales. The account executives are responsible for
developing new business and maintaining relations with existing customers. The
Company also employs three corporate account managers in its corporate account
office in Chicago. These corporate account managers solicit business from
corporate level decision-makers who are responsible for freight shipments to
locations within the Company's service region.
The Company has designed and implemented a sales force automation system
which provides for improved contact and opportunity management, improved sales
forecasting and simplified reporting. The Company maintains comprehensive
customer base profiles of existing and prospective customers. Using this
database, key strategic and account development information is updated daily by
the Company's sales force using automated processes. The Company utilizes this
resource to track emerging opportunities and direct highly targeted and
precisely timed marketing messages to existing and prospective customers.
DRIVERS, INDEPENDENT CONTRACTORS AND OTHER PERSONNEL
At December 31, 1999, the Company employed 1,571 persons in the
following categories:
<TABLE>
<CAPTION>
CATEGORY NO. OF EMPLOYEES
-------- ----------------
<S> <C>
Full time drivers 541
Part time drivers and dock workers 528
Salaried and clerical 365
Warehousemen 8
Mechanics and Maintenance 83
Sales and sales management 46
</TABLE>
At December 31, 1999, the Company employed 145 linehaul drivers and 476
pick-up and delivery drivers. The Company selects its drivers based upon
experience and driving records. Pursuant to DOT regulations, drivers are
required to pass drug tests prior to employment and periodically thereafter. The
trucking industry experiences driver shortages from time to time; however, the
Company has maintained an adequate and qualified driver force. The Company
compensates linehaul drivers on a per mile basis. Pick-up and delivery drivers
are compensated on an hourly basis.
In addition to its employee drivers, the Company utilized approximately
71 linehaul drivers as of December 31, 1999, pursuant to an agreement with FHF
Transportation, Inc. ("FHF"). These drivers operate tractors owned by the
Company but are not employees of the Company. The Company makes payments to FHF
based upon mileage.
The Company supplements its linehaul fleet with the use of approximately
31 independent contractors. Because independent contractors provide their own
tractor, independent contractors provide the Company with an alternative method
of obtaining the use of additional revenue equipment with reduced capital
investment. This approach reduces costs and maximizes flexibility by quickly
providing additional linehaul capacity during periods of peak demand. Further,
because independent contractors are compensated at a contracted rate per mile,
the use of independent contractors helps the Company reduce fixed overhead and
improve asset utilization. Independent contractors also allow the Company to
better adjust to seasonal fluctuations in shipping volumes.
Approximately 13% of the Company's employees are covered by two separate
collective bargaining agreements relating to employees at the Company's North
Salt Lake, Utah and Reno, Nevada service centers. Although these agreements
cover most of the employees at these two facilities, less than half of these
employees are actually members of unions. These unions are affiliated with the
International Brotherhood of Teamsters, but the
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contracts are not tied to the Teamsters National Master Contract. The Company's
agreement with North Salt Lake employees expires on November 30, 2002, and the
Company's Agreement with Reno employees expires on November 30, 2000. Both
agreements provide for automatic renewal from year to year after expiration,
subject to the right of either party to cancel or terminate the agreement upon
at least 60 days' notice prior to the date of expiration.
SAFETY AND INSURANCE
The Company emphasizes safety in all aspects of its operations. The
Company employs a Director of Safety and Compliance who has over 25 years of
safety-related experience with the Company. Each of the Company's terminals
conducts its own safety program and all tractors in use are inspected daily by
Company personnel. The Company has also established guidelines for hauling
hazardous materials. The Company earned the highest DOT safety and fitness
rating of "satisfactory" during its last audit.
The Company currently maintains liability insurance for bodily injury
and property damage in the amount of $30 million, with a self retention amount
of $250,000 per incident, and cargo insurance in the amount of $1 million, with
a self retention amount of $100,000, per incident. An aggregate self retention
amount of $250,000 per incident applies to incidents involving both liability
and cargo claims. The Company maintains various insurance coverage on buildings
and contents and is self-insured with respect to physical damage to other
properties and equipment. The Company also maintains workers' compensation
insurance in all states in which the Company operates. At December 31, 1999, a
deductible of $250,000 was applicable to each state except Washington, which has
no deductible. Subsequent to December 31, 1999, the Company modified the terms
of its workers' compensation insurance to eliminate the deductible in all states
other than Nevada.
REVENUE EQUIPMENT
At December 31, 1999, the Company operated a fleet of 625 tractors and
trucks and 2,469 trailers. The Company uses new linehaul tractors in linehaul
operations for approximately five years. After five years of use, the Company
trades in used linehaul tractors and purchases new linehaul tractors. The table
below reflects, as of December 31, 1999, the average age of the type of
equipment, and the number of respective units:
<TABLE>
<CAPTION>
NUMBER AVERAGE
TYPE OF EQUIPMENT (CATEGORIZED BY PRIMARY USE) OF UNITS AGE
---------------------------------------------- -------- -------
<S> <C> <C>
Linehaul tractors 210 2.9
Pick-up and delivery tractors 361 3.3
Pick-up and delivery trucks 54 5.0
Trailers 2469 8.6
</TABLE>
The Company lowers its cost structure through the use of 28 foot
trailers in doubles combinations and, where permitted by state regulations,
triples combinations in its linehaul operations. These 28 foot trailers allow
for more direct loading and minimize handling costs and exposure. In addition,
the Company improves linehaul trailer utilization and reduces potential damages
and subsequent cargo claims expenses by using logistic deck trailers and pallet
decks. This specialized equipment minimizes damage and maximizes trailer
utilization.
The Company maintains its revenue equipment through the use of its own
maintenance facilities as well as outside vendors. The Company's service centers
in Pico Rivera, Las Vegas, Reno, Denver, Phoenix, Portland and North Salt Lake
have maintenance facilities. In addition to scheduled maintenance on its
equipment, the Company also performs occasional equipment modifications which
are designed to improve operating performance and reduce operating costs of
equipment. All data regarding equipment costs, depreciation, mileage and
maintenance are recorded on the Company's computer system, allowing management
to access equipment records quickly and plan scheduled maintenance efficiently.
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The Company purchases all of its parts through nationally recognized
vendors. To enable management to better control inventory and costs, all orders
are placed through the Company's central purchasing unit at the Company's
headquarters.
FUEL AVAILABILITY AND COST
Fuel, excluding fuel taxes, comprises approximately 2.5% to 4.5% of the
Company's total operating expenses depending on the price of fuel. Generally, in
order to obtain lower fuel costs and greater flexibility in fueling its fleet,
the Company purchases its own fuel in bulk and requires its drivers to fuel at
Company terminals. The Company emphasizes fuel economy through the use of
modern, fuel-efficient equipment, driver and mechanic training programs and
aerodynamic improvements. Although fuel constitutes a much lower percentage of
costs to the Company than it would to a full truckload carrier, increases in
fuel prices or fuel taxes, shortages of fuel or rationing of petroleum products
could have a material adverse effect on the operations and profitability of the
Company. Fuel prices are expected to rise significantly during 2000.
Generally, in times of sharp fuel price increases, the Company
implements fuel surcharges. Because of the highly competitive nature of the
market for LTL services, the Company generally must wait for larger carriers to
implement fuel surcharges before the Company can effectively implement fuel
surcharges. The Company presently has a sliding scale fuel surcharge which is
based on a fuel price index for the west coast. Due to increased fuel costs
first occurring during the third quarter of 1999, the Company implemented a fuel
surcharge in accordance with the fuel price index in order to limit the impact
of fuel costs in future periods. The Company anticipates that fuel costs will
continue to increase through the second quarter of 2000. The Company will
respond to any such further increase with corresponding increases in the fuel
surcharge in accordance with the fuel price index. Although the fuel surcharge
reduces the impact of rising fuel costs, increased fuel prices can nevertheless
have an adverse effect on the operations and profitability of the Company due to
the difficulty of imposing and collecting the surcharge.
COMPETITION
The transportation industry is highly competitive on the basis of both
price and service. The Company competes with regional, interregional and
national LTL carriers and, to a lesser extent, with truckload carriers,
railroads and overnight delivery companies. Several large LTL carriers operate
within the Company's core service region. Some of the Company's competitors are
divisions or subsidiaries of larger trucking companies. Many of the Company's
competitors have greater financial resources, more equipment and greater freight
capacity than the Company. Certain carriers occasionally experience periods of
overcapacity during which these carriers reduce prices in order to increase
utilization of revenue equipment. The Company believes that it is able to
compete effectively in its markets by providing high quality customized service
at competitive prices.
REGULATION
The Motor Carrier Act of 1980 significantly deregulated the trucking
industry and increased competition among motor carriers. Following enactment of
the Motor Carrier Act, applicants have obtained operating authority more easily,
and interstate motor carriers such as the Company are able to change their rates
and services with less regulatory oversight and delay. The Motor Carrier Act
also removed many route and commodity restrictions affecting transportation of
freight.
Effective January 1, 1995, Section 601 of the Federal Aviation
Administrative Authorization Act and the Trucking Industry Regulatory Reform Act
("TIRRA") substantially deregulated intrastate operating authority. Prior to
TIRRA, the Company maintained intrastate authority in California, Nevada and
Utah. Subsequent to TIRRA, the Company obtained intrastate authority in
Colorado, Oregon, New Mexico, Washington and Texas.
The Company was regulated by the ICC until the ICC Termination Act of
1995 abolished the ICC effective January 1, 1996. The Surface Transportation
Board, an independent entity within the DOT, assumed many of the
responsibilities of the ICC. The Company is also regulated by various state
agencies. These regulatory authorities have broad powers, generally governing
matters such as authority to engage in motor carrier operations, rates,
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certain mergers, consolidations and acquisitions, and periodic financial
reporting. The trucking industry is subject to regulatory and legislative
changes that can affect the economics of the industry by requiring changes in
operating practices or influencing the demand for, and the costs of providing
services to, shippers.
Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. Such matters as weight and dimensions of equipment are
also subject to federal and state regulation. The use of triple trailers is
subject to state regulation and is prohibited by several states within the
Company's core service region. The Company is subject to federal, state and
local environmental laws and regulations governing the management of hazardous
wastes, other discharge of pollutants into the air and surface and underground
waters, and the disposal of certain substances. These regulations extend to the
Company's above-ground and underground fuel storage tanks. The Company has
completed modifications of underground storage tanks at several of its
facilities in order to comply with new federal regulations which became
effective at the end of 1998. In most cases, the Company replaced its
underground storage tanks with above ground tanks. The Company believes that all
of its fuel storage tanks are in compliance with the new regulations. The
Company also believes that it is in material compliance with all other
applicable environmental laws and regulations and does not believe that the cost
of future compliance should have a material adverse effect on the Company's
operations or financial condition.
ITEM 2. PROPERTIES
The Company owns its executive offices, located in North Salt Lake,
Utah, consisting of a two-story building of approximately 21,377 square feet. Of
the 27 service centers used by the Company within its core service region as of
December 31, 1999, 10 were owned, 16 were leased and one had multiple facilities
that were partially owned and partially leased by the Company. These facilities
range in size according to the markets served. The Company has not experienced
and does not anticipate difficulties in renewing existing leases on favorable
terms or obtaining new facilities as and when required. The following table sets
forth the location of each service center owned or leased by the Company as of
December 31, 1999.
<TABLE>
<CAPTION>
# OF OWNED OR
LOCATION DOORS LEASED LEASE EXPIRATION
-------- ----- -------- ----------------
<S> <C> <C> <C>
Pico Rivera, CA 102 Leased December 2013
Rialto, CA 78 Owned
North Salt Lake, UT 77 Owned
Denver, CO
Building 1 32 Leased November 2000
Building 2 36 Owned
Fremont, CA 60 Leased August 2007
Portland, OR 34 Owned
Reno, NV 88 Owned
Sacramento, CA 30 Owned
Kent, WA 30 Owned
Boise, Idaho 20 Leased June 2002
Phoenix, AZ 118 Owned
El Paso, TX 20 Owned
Las Vegas, NV 20 Owned
San Diego, CA 20 Leased May 2001
Fresno, CA 20 Leased October 2001
Albuquerque, NM 12 Leased October 2001
Oxnard, CA 9 Leased May 2000
Bakersfield, CA 9 Leased October 2000
Tucson, AZ 28 Leased March 2004
Medford, OR 8 Leased July 2001
Spokane, WA 11 Leased December 2002
Colorado Springs, CO 7 Leased August 2001
Grand Junction, CO 16 Leased May 2003
</TABLE>
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<TABLE>
<CAPTION>
# OF OWNED OR
LOCATION DOORS LEASED LEASE EXPIRATION
-------- ----- -------- ----------------
<S> <C> <C> <C>
Twin Falls, ID 6 Owned
Dallas, TX 23 Leased May 2002
Pocatello, ID 2 Leased September 2000
Eugene, OR 8 Leased November 2004
</TABLE>
The following additional properties are either owned or under lease by
the Company but are not currently being used in its operations.
<TABLE>
<CAPTION>
# OF OWNED OR
LOCATION DOORS LEASED LEASE EXPIRATION
-------- ----- -------- ----------------
<S> <C> <C> <C>
Newark, CA 35 Owned
Chicago, IL 24 Leased November 2001
Benicia, CA 28 Leased August 2001
Boise, ID 12 Leased October 2001
</TABLE>
The Company also leases a sales office in Chicago pursuant to a lease
which expires in November 2001. The Company's subsidiary, MCDS, leases an
aggregate of 108,900 square feet of warehouse space in southern California
pursuant to two leases which expire in January 2001 and February 2001. In
addition, MCDS leases 82,300 square feet of warehouse space in York,
Pennsylvania, pursuant to a lease that expires in June 2001, and 7,400 square
feet of warehouse space in Las Vegas, Nevada pursuant to a month-to-month lease.
ITEM 3. LEGAL PROCEEDINGS
The Company is routinely a party to litigation incidental to its
business, primarily involving claims for personal injury or property damage
incurred in the transportation of freight. The Company maintains insurance to
cover liabilities in excess of self-insured amounts. The Company's management is
not aware of any claims or threatened claims that it believes are likely to
exceed insurance limits or have a materially adverse effect upon the Company's
operations or financial position.
10
<PAGE> 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
The Company did not submit any matter to a vote of security holders
during the fourth quarter of 1999.
ITEM 10. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
present executive officers and certain key employees of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Harold R. Tate 73 Chairman of the Board, Director
Marshall L. Tate 37 President and Chief Executive Officer, Director
William J. Mahan 54 Executive Vice President and Chief Operating
Officer
Louis V. Holdener 61 Vice President, President of Motor Cargo
Marvin L. Friedland 57 Vice President and General Counsel, Secretary,
Director
Lynn H. Wheeler 58 Vice President and Chief Financial Officer
R. Scott Price 36 Vice President of Sales and Marketing
Steven E. Wynn(1) 50 Vice President of Human Resources (Motor Cargo)
Kevin L. Avery(1) 42 Vice President of Traffic (Motor Cargo)
</TABLE>
(1) Messers Wynn and Avery are officers of the Company's principal operating
subsidiary, Motor Cargo, and are not officers of the Company.
Harold R. Tate has over 50 years of experience in the trucking industry
and has served as Chairman of the Board of the Company and its predecessors
since 1947. Mr. Tate served as Chief Executive Officer of the Company and its
predecessors from 1947 to March 1997. Mr. Tate also serves as a member of the
Board of Trustees of the Buffalo Bill Historical Center. Harold R. Tate is the
father of Marshall L. Tate, President and Chief Executive Officer of the
Company.
Marshall L. Tate has over 15 years experience in the trucking industry.
Mr. Tate has been employed by the Company since 1984, has served as its
President and Chief Executive Officer since March 1997, and was appointed to the
Board of Directors of the Company in 1996. Prior to becoming the Company's
President and Chief Executive Officer, Mr. Tate served in various divisional
positions as well as Vice President of Sales and Marketing and Executive Vice
President of Corporate Development for Motor Cargo. In 1995, Mr. Tate directed
the start-up of the Company's logistics warehousing and distribution management
services subsidiary, MC Distribution Services. Marshall L. Tate is the son of
Harold R. Tate, the majority shareholder and Chairman of the Board of Directors
of the Company.
William J. Mahan has over 30 years experience in the trucking industry.
Mr. Mahan joined the Company in February 1999 as Executive Vice President and
Chief Operating Officer. Prior to joining the Company, Mr. Mahan held a series
of positions with Viking Freight, a subsidiary of FDX Corp., including Vice
President of Operations, Senior Vice President of Operations, President of
Spartan Express (a Viking Freight subsidiary) and, most recently, Executive Vice
President of Viking Freight.
11
<PAGE> 12
Louis V. Holdener has over 30 years experience in the trucking industry.
Mr. Holdener has been employed by the Company since 1965, has served as
President of Motor Cargo, the Company's primary operating subsidiary, since
1991, and was named Vice President of the Company in 1997. Prior to 1991, Mr.
Holdener served in various positions with the Company, including Vice President
of Operations of Motor Cargo.
Marvin L. Friedland has served as Vice President and General Counsel of
the Company and its predecessors since 1982. Prior to joining the Company, Mr.
Friedland was an attorney in private practice. Mr. Friedland was appointed to
the Board of Directors in 1996. Mr. Friedland is a Certified Public Accountant
and a member of the California Bar and the Utah Bar.
Lynn H. Wheeler has been employed by the Company since 1983 and has
served as Vice President of Finance of Motor Cargo since 1988. Mr. Wheeler was
appointed Vice President and Chief Financial Officer of the Company in March
1997. Mr. Wheeler is a Certified Public Accountant, a Certified Internal Auditor
and a member of the American Institute of Certified Public Accountants.
R. Scott Price joined the Company in 1986 and has served as a Vice
President of Sales and Marketing of the Company since February 1999. From
October 1997 to February 1999, Mr. Price served as a Vice President of the
Company responsible for overseeing MCDS. From 1995 to 1997, Mr. Price served as
Vice President of Sales of Motor Cargo. From 1986 to 1995, Mr. Price held
various positions with Motor Cargo, including Service Center Manager and
Director of Corporate Accounts.
Steven E. Wynn has been employed by Motor Cargo since 1973 and has
served as Vice President of Human Resources of Motor Cargo since February 1999.
From 1991 to 1999, Mr. Wynn served as Vice President of Operations of Motor
Cargo. From 1973 to 1991, Mr. Wynn served in various positions, including
Director of Linehaul Operations and Director of Operations for Motor Cargo.
Kevin L. Avery joined the Company in 1985 and has served as Vice
President of Traffic of Motor Cargo since 1992. From 1985 to 1992, Mr. Avery
served in various positions, including Director of Pricing, Rate Department
Manager and Director of Quality Assurance for Motor Cargo.
12
<PAGE> 13
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the Nasdaq Stock Market
(National Market) under the symbol "CRGO". At March 8, 2000, there were
approximately 418 holders of the common stock, including 21 shareholders of
record.
The following table sets forth the high and low sales prices for the
Company's common stock as reported by the Nasdaq National Market System by
quarter, for the years ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>
YEAR ENDED
QUARTER -------------------------------------------------------
ENDED DECEMBER 31, 1999 DECEMBER 31, 1998
------- ------------------- -----------------------
HIGH LOW HIGH LOW
---- ---- ------- -------
<S> <C> <C> <C> <C>
3/31 8.500 4.000 $13.750 $10.750
6/30 8.906 5.000 13.00 10.00
9/30 8.500 6.125 12.125 7.875
12/31 7.188 3.375 9.50 6.50
</TABLE>
The Company has never declared or paid any cash dividends on its capital
stock and does not anticipate paying any cash dividends in the foreseeable
future.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data have been summarized from the
Company's consolidated financial statements and are qualified in their entirety
by reference to, and should be read in conjunction with, such consolidated
financial statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," under Item 7 below.
13
<PAGE> 14
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------------
1995 1996 1997 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Operating revenues $ 80,808 $ 92,310 $ 105,381 $ 114,725 125,310
Operating expenses
Salaries, wages and benefits 35,495 39,666 45,247 51,747 59,502
Operating supplies and expenses 12,669 14,947 15,706 15,974 20,342
Purchased transportation 11,532 14,164 15,389 17,974 15,580
Operating taxes and licenses 3,178 3,531 3,519 3,885 4,731
Insurance and claims 1,842 2,785 4,478 3,651 3,826
Depreciation and amortization 5,930 6,578 6,998 7,928 8,822
Communications and utilities 1,521 1,784 1,896 1,924 2,023
Building rents 1,274 1,540 1,745 2,365 3,043
--------- --------- --------- --------- ---------
Total operating expenses 73,441 84,995 94,978 105,448 117,869
--------- --------- --------- --------- ---------
Operating income 7,367 7,315 10,403 9,277 7,441
Other income (expense)
Interest expense (1,500) (1,430) (1,051) (154) (139)
Other, net 107 (32) 221 326 351
--------- --------- --------- --------- ---------
Earnings before income taxes 5,974 5,853 9,573 9,449 7,653
Income taxes 2,094 2,118 3,805 3,660 3,000
--------- --------- --------- --------- ---------
Net earnings $ 3,880 $ 3,735 $ 5,768 $ 5,789 $ 4,653
========= ========= ========= ========= =========
Earnings per common share - basic and diluted $ .83 .67
Weighted-average shares outstanding - diluted 6,992 6,941
Pro forma (1)
Earnings before income taxes $ 5,974 $ 5,853 $ 9,573
Income taxes 2,303 2,256 3,952
--------- --------- ---------
Net earnings $ 3,671 $ 3,597 $ 5,621
========= ========= =========
Earnings per common share - basic $ 0.63 $ 0.62 $ 0.95
========= ========= =========
Weighted-average shares outstanding - basic 5,820 5,820 5,939
========= ========= =========
Earnings per common share - diluted $ 0.63 $ 0.62 $ 0.95
========= ========= =========
Weighted-average
shares outstanding - diluted 5,820 5,820 5,939
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets $20,233 $23,197 $26,965 $26,775 27,090
Current liabilities 14,752 15,752 11,597 10,741 11,641
Total assets 59,507 63,834 68,069 72,660 80,570
Long-term obligations, less current maturities 17,724 16,820 6,492 5,390 8,021
Total liabilities 36,784 37,794 24,618 23,386 26,929
Stockholders' equity 22,723 26,040 43,451 49,275 53,641
</TABLE>
(1) Effective August 28, 1997, the Company acquired the membership interests
of Ute, a Utah limited liability company. A limited liability company
passes through to its members essentially all taxable earnings and
losses and pays no tax at the company level. Accordingly, for
comparative purposes, a pro forma provision for income taxes using an
effective income tax rate of approximately 38% has been determined
assuming Ute had been taxed as a C corporation for all periods
presented.
14
<PAGE> 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The purpose of this section is to discuss and analyze the Company's
consolidated financial condition, liquidity and capital resources and results of
operations. This analysis should be read in conjunction with the consolidated
financial statements and related notes which appear elsewhere in this report.
This section contains certain forward-looking statements that involve risks and
uncertainties, including statements regarding the Company's plans, objectives,
goals, strategies and financial performance. The Company's actual results could
differ materially from the results anticipated in these forward-looking
statements as a result of factors set forth under "Cautionary Statement for
Forward-Looking Information" below and elsewhere in this report.
OVERVIEW
1999 was a challenging year for the Company in many respects. Although
total operating revenues increased 9.2%, this growth did not result in increased
earnings from 1998 due to inadequate profit margins on certain accounts. The
Company took corrective actions during the third and fourth quarters, including
the implementation of an aggressive account rationalization program. By
analyzing each account based upon revenue quality characteristics such as
revenue per bill and revenue per hundredweight, the Company was able to identify
accounts that were not meeting acceptable profit margins. Appropriate rate
adjustments were made to under-performing accounts or alternatively, accounts
were eliminated that could not be adjusted to provide acceptable margins. The
result was a significant improvement in tonnage yield and profitability during
the fourth quarter.
During the second quarter of 1999, the Company carefully examined its
BEA operations in Chicago and Dallas. The Company's Dallas operation continues
to show positive growth and margin yield and is now a full service terminal
providing both pick-up and delivery services. The Company determined that the
Chicago operation was not profitable, and would not produce acceptable levels of
profitability for the near future. The Company discontinued pick-up operations
and closed the Chicago service center in mid-July 1999. Currently, the Company
has no plans to open additional BEA operations.
In order to improve line-haul relay and freight consolidation to and
from the Northwest, the Company converted its pick-up and delivery operations in
Eugene, Oregon and Boise and Twin Falls, Idaho from independent agencies to
Company-owned service centers during the second quarter of 1999. The Company
also secured a service center in Fremont, California. The Newark and Benicia,
California service centers were consolidated into the Fremont service center in
order to reduce line haul expense and rehandling of freight.
15
<PAGE> 16
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain
items to revenues for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1998 1999
------ ------ ------
<S> <C> <C> <C>
Operating revenues 100.0% 100.0% 100.0%
Operating expenses
Salaries, wages and benefits 42.9 45.1 47.5
Operating supplies and expenses 14.9 13.9 16.2
Purchased transportation 14.6 15.7 12.5
Depreciation and amortization 6.6 6.9 7.0
Insurance and claims 4.2 3.2 3.1
Operating taxes and licenses 3.3 3.4 3.8
Communications and utilities 1.9 1.7 1.6
Building rents 1.7 2.0 2.4
------ ------ ------
Total operating expenses 90.1 91.9 94.1
------ ------ ------
Operating income 9.9 8.1 5.9
Other income (expense)
Interest expense (1.0) (0.1) (0.1)
Other, net 0.2 0.3 0.3
------ ------ ------
Earnings before income taxes 9.1 8.3 6.1
Income taxes 3.6 3.2 2.4
------ ------ ------
Net earnings 5.5% 5.1% 3.7%
====== ====== ======
</TABLE>
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Operating revenues increased 9.2% in 1999 to $125.3 million from $114.7
million in 1998. The increase was attributable to the increased volume of
freight. The number of shipments during 1999 increased by 11.8% to 999,563,
compared to 893,957 for 1998. Revenue per hundredweight increased to $11.02 in
1999 from $10.92 for 1998.
The Company's warehousing and distribution management company, MCDS,
contributed $4.1 million of the $125.3 million in operating revenues for the
year ended December 31, 1999 compared to $3.1 million for the year ended
December 31, 1998. This increase was due primarily to the expansion of a
contract with one customer and the addition of several smaller customers.
Tonnage increased by 7.7% to 552,412 in 1999, compared to 512,705 in
1998. Average revenue per bill decreased 2.8% to $121.82 in 1999 compared to
$125.31 in 1998. Fourth quarter average revenue per bill increased to $127.87,
however, as a result of adjustments to pricing on freight that was not producing
sufficient yield.
As a percentage of operating revenues, salaries, wages, and benefits
increased to 47.5% for the year ended December 31, 1999 from 45.1% for 1998.
Salaries and wage rates increased approximately 4% in 1999 compared to 1998. The
increase was due primarily to reduced yield in revenue as evidenced by the
reduction in average revenue per bill and increased staffing of full time
employees with their associated benefits. Additional line drivers were employed
allowing a reduction in the use of purchase transportation.
Operating supplies and expenses, which include agent commissions, tires,
parts, repairs and fuel and other general operating expenses, increased in 1999
to 16.2% of operating revenue compared to 13.9% for 1998. The increase was
primarily attributable to increased expenses, such as fuel, parts, tires and
repairs, associated with the shift from using purchased transportation to using
more company trailers and drivers.
Purchased transportation decreased to 12.5% of operating revenues in
1999 from 15.7% for 1998. The decrease was caused by the shifting of costs from
purchased transportation to other expense categories, such as payroll, operating
supplies and expense, operating taxes and licenses, and depreciation, associated
with having
16
<PAGE> 17
approximately 30 more line drivers during 1999 compared to 1998. The Company has
increased its staff employee drivers in order to provide more reliable and
consistent service.
Interest expense was slightly less during 1999 compared to 1998. At
December 31, 1999, total long-term obligations were $8.1 million compared to
$5.5 million at December 31, 1998.
Building rents increased to 2.4% of operating revenue for 1999 as
compared to 2.0% for 1998. This increase was due primarily to lease payments for
additional facilities in Fremont, California and Boise, Idaho as well as
continuing lease payments on unused facilities in Chicago, Illinois, Benicia,
California, and Boise, Idaho.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Operating revenues increased 8.9% in 1998 to $114.7 million from $105.4
million in 1997. The increase was attributable to new freight from the Company's
BEA expansion facilities in Dallas, Texas and Chicago, Illinois, as well as
increased freight volume within the Company's core service region. The number of
shipments during 1998 increased by 9.5% to 893,957, compared to 816,567 for
1997. Revenue per hundredweight decreased to $10.92 in 1998 from $10.96 for
1997.
The Company's warehousing and distribution management company, MCDS,
contributed $3.1 million of the $114.7 million in operating revenues for the
year ended December 31, 1998 compared to $3.4 million for the year ended
December 31, 1997. The decrease was due primarily to the termination of a
contract with one customer in the first quarter of 1998, which resulted in lower
revenues for the first and second quarters of 1998. Revenues from MCDS increased
during the third and fourth quarters of 1998 due to the expanding of service to
an existing customer.
Tonnage increased by 10.0% to 512,705 in 1998, compared to 466,131 in
1997. Average revenue per bill increased .1% to $125.31 in 1998 compared to
$125.15 in 1997. Demand for freight was sluggish during 1998, limiting the
growth in revenue and increasing the stress on margins.
As a percentage of operating revenues, salaries, wages, and benefits
increased to 45.1% for the year ended December 31, 1998 from 42.9% for 1997.
Salaries and wage rates increased approximately 4% in 1998 compared to 1997. In
addition, staffing increases were made to provide for new facilities in Chicago,
Illinois and Benecia, California, along with staffing increases at other service
centers to maximize quality of service. The Company also incurred additional
labor costs in connection with the Company's efforts to optimize and reorganize
linehaul operations.
Operating supplies and expenses, which include agent commissions, tires,
parts, repairs and fuel and other general operating expenses, decreased in 1998
to 13.9% of operating revenue compared to 14.9% for 1997. The decrease was
primarily due to lower fuel costs and decreased agent commissions. Purchased
transportation increased to 15.7% of operating revenues in 1998 from 14.6% for
1997. This increase was primarily attributable to the use of purchased
transportation providing one-way hauling of freight from the Company's BEA
expansion facilities in Dallas and Chicago into the Company's core service
region for delivery.
Insurance and claims decreased to 3.2% of revenue for 1998 compared to
4.2% for 1997. Insurance and claims expenses were higher in 1997 due to an
increase in insurance reserves in 1997 for two accidents which occurred in prior
years.
Interest expense decreased to .1% as a percentage of operating revenues
in 1998 compared to 1.0% for 1997. The decrease was attributable to lower debt
levels. Approximately $7.3 million of the Company's debt was paid off in
December 1997 with proceeds from the Company's initial public offering. Strong
operating cash flows also contributed to lower debt levels during 1998. At
December 31, 1998, total obligations were $5.5 million compared to $6.6 million
at December 31, 1997.
17
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity have been funds provided by
operations and bank borrowings. Net cash provided by operating activities was
approximately $12.6 million, $12.6 million and $11.7 million in 1997, 1998 and
1999, respectively. Net cash provided by operating activities is primarily
attributable to the Company's earnings before depreciation and amortization
expense.
Capital expenditures net of disposed property totaled approximately $7.3
million, $12.6 million and $16.0 million during 1997, 1998 and 1999,
respectively. The majority of the Company's capital expenditures net of
disposition is financed with cash provided by operating activities and long-term
debt. The Company's budget for total capital expenditures net of disposed
property is approximately $14.7 million for 2000. These capital expenditures
will consist primarily of the acquisition of new revenue equipment and
construction of terminal facilities.
Net cash used in financing activities was $5.4 million and $1.1 million
in 1997 and 1998. In 1999, net cash of $2.3 million was provided by financing
activities. At December 31, 1999, the Company had outstanding long-term
obligations (including current maturities) consisting of approximately $8.1
million, most of which comprised obligations for the purchase of revenue
equipment. See Note F to the Company's Consolidated Financial Statements.
The Company leases a small portion of the revenue equipment used in its
operations. At December 31, 1999, the Company's future minimum lease payments
under operating leases relating to equipment amounted to $4.6 million. See Note
D to the Company's Consolidated Financial Statements.
The Company is a party to a loan agreement with Zions First National
Bank ("Zions") that provides for a revolving line of credit in an amount not
exceeding $5 million. The loan agreement provides for the issuance of letters of
credit and may be used for this purpose, as well as to fund the working capital
needs of the Company. As of December 31, 1999, there was no outstanding balance
under this revolving line of credit.
Zions has also provided a second revolving line of credit to the Company
in an amount not to exceed $20 million. The Company intends to use amounts
available under this credit facility, if necessary, primarily to purchase
equipment used in operations. As of December 31, 1999, the Company had $6.7
million in loans outstanding under this facility.
All amounts outstanding under the two loan facilities described above
accrue interest at a variable rate established from time to time by Zions. The
Company does have the option, however, to request that specific advances accrue
interest at a fixed rate quoted by Zions subject to certain prepayment
restrictions. All amounts outstanding under the two loan facilities are
collateralized by the Company's inventory, chattel paper, accounts receivable
and equipment now owned or hereafter acquired by the Company.
During the first quarter of 1999, the Company announced a share
repurchase program. The Board of Directors of the Company authorized the
repurchase of up to 700,000 shares. As of December 31, 1999, a total of 62,780
shares had been repurchased by the Company for approximately $325,900.
Subsequent to the end of the year, the Company repurchased an additional 124,200
shares for approximately $578,600.
INFLATION
Inflation has had a minimal effect upon the Company's profitability in
recent years. Most of the Company's operating expenses are inflation sensitive,
with inflation generally producing increased costs of operation. Although the
Company historically has been able to pass through most increases in fuel prices
and taxes to customers in the form of fuel surcharges or higher rates, the
Company generally must wait for larger carriers to implement fuel surcharges
before the Company can effectively implement fuel surcharges. Fuel prices
increased significantly during the third quarter of 1999. Accordingly, the
Company implemented a fuel surcharge in mid-August to limit the impact of fuel
costs in future periods. Although the fuel surcharge reduces the impact of
rising fuel costs, increased fuel prices can nevertheless have an adverse effect
on the operations and profitability of the Company due to the difficulty of
imposing and collecting the surcharge. See Item 1 "Business-Fuel Availability
and Cost." The Company expects that inflation will affect its costs no more than
it affects those of other regional LTL carriers.
18
<PAGE> 19
SEASONALITY
The Company experiences some seasonal fluctuations in freight volume.
Historically, the Company's shipments decrease during the winter months. In
addition, the Company's operating expenses historically have been higher in the
winter months due to decreased fuel efficiency and increased maintenance costs
for revenue equipment in colder weather. The Company's operating revenue and net
earnings may vary as a result of seasonal factors, and accordingly, results of
operations are subject to fluctuation, and results in any period should not be
considered indicative of the results to be expected for any future period.
THE YEAR 2000 ISSUE
The Company has performed an analysis of its computer systems and has
implemented procedures to address year 2000 issues. During 1997, 1998 and 1999,
the Company spent a total of $105,000 to upgrade and test computer systems and
applications. The Company has not experienced any significant year 2000 related
problems. Based upon current information, the Company does not anticipate any
future year 2000 related computer problems or additional costs to upgrade
computer systems related to the year 2000 issue.
CAUTIONARY STATEMENT FOR FORWARD LOOKING INFORMATION
Certain information set forth in this Annual Report on Form 10-K
contains "forward-looking statements" within the meaning of federal securities
laws. Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events, future revenues or performance,
capital expenditures, financing needs, plans or intentions relating to
acquisitions by the Company and other information that is not historical
information. When used in this report, the words "estimates," "expects,"
"anticipates," "forecasts," "plans," "intends," "believes" and variations of
such words or similar expressions are intended to identify forward-looking
statements. Additional forward-looking statements may be made by the Company
from time to time. All such subsequent forward-looking statements, whether
written or oral and whether made by or on behalf of the Company, are also
expressly qualified by these cautionary statements.
The Company's forward-looking statements are based upon the Company's
current expectations and various assumptions. The Company's expectations,
beliefs and projections are expressed in good faith and are believed by the
Company to have a reasonable basis, including without limitation, management's
examination of historical operating trends, data contained in the Company's
records and other data available from third parties, but there can be no
assurance that management's expectations, beliefs and projections will result or
be achieved or accomplished. The Company's forward-looking statements apply only
as of the date made. The Company undertakes no obligation to publicly update or
revise forward-looking statements which may be made to reflect events or
circumstances after the date made or to reflect the occurrence of unanticipated
events.
There are a number of risks and uncertainties that could cause actual
results to differ materially from those set forth in, contemplated by or
underlying the forward-looking statements contained in this report. In addition
to the other factors and matters discussed elsewhere in this report, the
following factors are among the factors that could cause actual results to
differ materially from the forward-looking statements. Any forward-looking
statements made by or on behalf of the Company should be considered in light of
these factors.
Economic Factors and Fuel Price Fluctuations
The availability and price of fuel, insurance costs, interest rates,
fluctuations in customers' business cycles and national and regional economic
conditions are economic factors over which the Company has little or no control.
Significant increases in fuel prices, interest rates or increases in insurance
costs, to the extent not offset by increases in freight rates, or disruptions in
fuel supply, would adversely affect the Company's results of operations. A
significant downturn in customers' businesses, temporary inventory imbalances
(resulting from a recession or otherwise), or decreased demand for LTL carrier
services could also have a materially adverse effect on the Company.
19
<PAGE> 20
Availability of Employee Drivers and Independent Contractors
The Company utilizes the services of both employee drivers and
independent contractors. Competition for employee drivers and independent
contractors is intense in the trucking industry, and the Company occasionally
experiences difficulty attracting or retaining enough qualified employee drivers
and independent contractors. There can be no assurance that the Company will not
be affected by a shortage of qualified employee drivers or independent
contractors in the future, which could result in temporary underutilization of
revenue equipment, difficulty in meeting shipper demands and increased
compensation levels. Prolonged difficulty in attracting or retaining qualified
employee drivers or independent contractors could have a materially adverse
effect on the Company's operations.
Capital Requirements
The trucking industry is very capital intensive. If in the future the
Company were unable to borrow sufficient funds, enter into acceptable operating
lease arrangements, or raise additional equity, the resulting capital shortage
would impair the Company's ability to acquire additional revenue equipment and
adversely affect the Company's growth and profitability.
Claims Exposure and Insurance Costs
Trucking companies, including the Company, face multiple claims for
personal injury and property damage relating to accidents, cargo damage and
workers' compensation. To the extent that the Company experiences a material
increase in the frequency or severity of accidents or workers' compensation
claims, or an unfavorable development on existing claims, the Company's
operating results and financial condition could be materially adversely
affected. Significant increases in the Company's claims and insurance costs, to
the extent not offset by rate increases, would reduce the Company's
profitability.
Competition
The trucking industry is highly competitive and fragmented. Competition
for freight transported by the Company is based primarily on service, efficiency
and on freight rates. The Company competes with regional, interregional and
national LTL carriers of varying sizes and, to a lesser extent with truckload
carriers, railroads and overnight delivery companies. Some of the Company's
competitors are divisions or subsidiaries of larger trucking companies. Many of
the Company's competitors have greater financial resources, more equipment and
greater freight capacity than the Company.
Environmental Hazards
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 and hazardous wastes, discharge of
stormwater, and underground fuel storage tanks. The Company transports certain
commodities that are or may be deemed hazardous substances. The Company also
currently maintains above-ground and underground fuel storage tanks on several
of its properties. The Company is not aware of any fuel spills or hazardous
substance contamination on its properties that would have a material adverse
effect on the Company and the Company believes that its operations are in
material compliance with existing environmental laws and regulations. If,
however, the Company should be involved in a fuel spill, or a spill or other
accident involving hazardous substances, if any such substances were found on
the Company's properties, or if the Company were found to be in violation of
applicable laws and regulations, the Company could be responsible for clean-up
costs, property damage, and fines or other penalties, any one of which could
have a materially adverse effect on the Company.
20
<PAGE> 21
Other Factors
In addition to the factors described above, the Company may be impacted
by a number of other matters and uncertainties, including: (i) changes in demand
for LTL carrier services; (ii) potential legislation and regulatory changes;
(iii) changes in competitive conditions in the Company's service region; and
(iv) increases in the cost of compliance with regulations, including
environmental regulations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not use financial instruments for trading purposes and
is not a party to any derivative financial instruments or derivative commodity
instruments. The Company is exposed to a variety of market risks, including the
effects of changes in interest rates and fuel prices. The Company's short-term
and long-term financing is generally at variable rates; however, these
obligations may be repaid or converted to a fixed rate at the Company's option.
For more information regarding the Company's debt obligations see Note F to the
Company's consolidated financial statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data required by this Item 8 are
set forth at the pages indicated in Item 14(a) below.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information to be included under the caption "Election of Directors"
in the Company's definitive proxy statement to be filed with the Commission
pursuant to Regulation 14A of the Exchange Act in connection with the 2000
Annual Meeting of Shareholders of the Company (the "Proxy Statement") is
incorporated herein by reference. In addition, reference is made to Item 10 in
Part I of this Report.
ITEM 11. EXECUTIVE COMPENSATION
The information to be included under the caption "Executive
Compensation" in the Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information to be included under the caption "Present Beneficial
Ownership of Common Stock" in the Proxy Statement is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information to be included under the caption "Executive
Compensation--Certain Relationships and Related Transactions" in the Proxy
Statement is incorporated herein by reference.
21
<PAGE> 22
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
<TABLE>
<S> <C>
(a)(1) Consolidated Financial Statements
Report of Independent Certified Public
Accountants F-1
Consolidated Balance Sheets at December 31,
1999 and 1998 F-2
Consolidated Statements of Earnings for the
years ended December 31, 1999, 1998 and 1997 F-4
Consolidated Statement of Stockholders'
Equity for the years ended December 31,
1999, 1998 and 1997 F-5
Consolidated Statements of Cash Flows for
the years ended December 31, 1999, 1998 and
1997 F-6
Notes to Consolidated Financial Statements F-8
(a)(2) Financial Statement Schedules
Schedules are omitted because they are not
required or are not applicable or the required
information is shown in the financial statements
or notes thereto
</TABLE>
(a)(3) The following exhibits are filed herewith or incorporated by reference:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------ -------
<S> <C>
3.1 Articles of Incorporation of the Company (filed as Exhibit 3.1 to
the Company's Registration Statement on Form S-1 (File No.
333-37211) and incorporated herein by reference).
3.2 Bylaws of the Company (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (File No. 333-37211) and
incorporated herein by reference).
10.1 Loan Agreement, dated November 25, 1998, between the Company,
Motor Cargo and Zions First National Bank (filed as Exhibit 10.1
to the Company's Annual Report for 1998 on Form 10-K (File No.
333-37211) and incorporated herein by reference).
10.2 $20,000,000 Promissory Note, dated November 26, 1998, to the
order of Zions First National Bank (filed as Exhibit 10.2 to the
Company's Annual Report for 1998 on Form 10-K (File No.
333-37211) and incorporated herein by reference).
10.3 1997 Stock Option Plan (filed as Exhibit 10.2 to the Company's
Registration Statement on Form S-1 (File No. 333-37211) and
incorporated herein by reference).1
10.4 Pension Plan of Employees of Motor Cargo and Trust Agreement
(filed as Exhibit 10.3 to the Company's Registration Statement on
Form S-1 (File No. 333-37211) and incorporated herein by
reference).1
10.5 Motor Cargo Profit Sharing Plan (filed as Exhibit 10.4 to the
Company's Registration Statement on Form S-1 (File No. 333-37211)
and incorporated herein by reference).1
</TABLE>
22
<PAGE> 23
<TABLE>
<S> <C>
10.6 Restricted Stock Agreement, dated October 2, 1997, between the
Company and Louis V. Holdener (filed as Exhibit 10.5 to the
Company's Registration Statement on Form S-1 (File No. 333-37211)
and incorporated herein by reference).1
10.7 Agreement to Purchase and Sell Leasehold Interest dated October
2, 1990 between Leonard L. Gumport and Motor Cargo (filed as
Exhibit 10.6 to the Company's Registration Statement on Form S-1
(File No. 333-37211) and incorporated herein by reference).
10.8 Lease Agreement dated December 23, 1996 between Channing, Inc.
and Motor Cargo (filed as Exhibit 10.7 to the Company's
Registration Statement on Form S-1 (File No. 333-37211) and
incorporated herein by reference).
10.9 Lease Agreement dated as of January 1, 1989 between Andrea
Tacchino Company and Motor Cargo (filed as Exhibit 10.8 to the
Company's Registration Statement on Form S-1 (File No. 333-37211)
and incorporated herein by reference).
10.10 First Amendment to Lease dated March 1, 1990 between Andrea
Tacchino Company and Motor Cargo (filed as Exhibit 10.9 to the
Company's Registration Statement on Form S-1 (File No. 333-37211)
and incorporated herein by reference).
10.11 Lease Agreement dated October 31, 1995 between Pete Aardema and
Motor Cargo (filed as Exhibit 10.10 to the Company's Registration
Statement on Form S-1 (File No. 333-37211) and incorporated
herein by reference).
10.12 Lease Agreement dated September 29, 1995 among Colburn R.
Thomason, Michael Tolladay, Kevin Tweed and Motor Cargo (filed as
Exhibit 10.11 to the Company's Registration Statement on Form S-1
(File No. 333-37211) and incorporated herein by reference).
10.13 Form of Salary Continuation Agreement (filed as Exhibit 10.12 to
the Company's Registration Statement on Form S-1 (File No.
333-37211) and incorporated herein by reference).1
10.14 Management Agreement between the Company and FHF Transportation,
Inc. (filed as Exhibit 10.18 to the Company's Registration
Statement on Form S-1 (file No. 333-37211 and incorporated herein
by reference).
10.15 Master Truck Agreement between Motor Cargo, Reno, Nevada and
Teamsters, Chauffeurs, Warehousemen & Helpers and Professional
Clerical, Public and Miscellaneous Employees, Local Union No.
533, affiliated with the International Brotherhood of Teamsters.*
10.16 Master Truck Agreement between Motor Cargo, Salt Lake City, Utah
and the International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America, Local Union No. 222. *
11 Pro Forma Earnings Per Share Calculation*
21 Subsidiaries of the Company (filed as Exhibit 21 to the Company's
Registration Statement on Form S-1 (file No. 333-37211 and
incorporated herein by reference).
23 Consent of Grant Thornton LLP.*
</TABLE>
23
<PAGE> 24
<TABLE>
<S> <C>
27 Financial Data Schedule.*
</TABLE>
- --------------
1 Management contracts and compensatory plans and arrangements identified
pursuant to Item 14(a)(3) of Form 10-K.
* Filed with this report.
(b) Reports on Form 8-K
Not Applicable.
24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MOTOR CARGO INDUSTRIES, INC.
Date: March 23, 2000 By /s/ Lynn H. Wheeler
-----------------------------------------
Lynn H. Wheeler
Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
Date: March 23, 2000 By /s/ Harold R. Tate
------------------------------------------
Harold R. Tate, Director and
Chairman of the Board
Date: March 23, 2000 By /s/ Marshall L. Tate
------------------------------------------
Marshall L. Tate, Director
(Principal Executive Officer)
Date: March 23, 2000 By /s/ Lynn H. Wheeler
------------------------------------------
Lynn H. Wheeler, Chief Financial Officer
(Principal Financial and Accounting
Officer)
Date: March 23, 2000 By /s/ Marvin L. Friedland
------------------------------------------
Marvin L. Friedland, Director
Date: March 23, 2000 By /s/ Robert Anderson
------------------------------------------
Robert Anderson, Director
Date: March 23, 2000 By /s/ James Clayburn LaForce, Jr.
------------------------------------------
James Clayburn La Force, Jr., Director
</TABLE>
25
<PAGE> 26
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Motor Cargo Industries, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Motor Cargo
Industries, Inc. and Subsidiaries (the Company) as of December 31, 1999 and
1998, and the related consolidated statements of earnings, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Motor Cargo
Industries, Inc. and Subsidiaries as of December 31, 1999 and 1998, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1999, in conformity
with generally accepted accounting principles.
/s/ Grant Thorton LLP
Salt Lake City, Utah
January 28, 2000
F-1
<PAGE> 27
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
ASSETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (Notes E and M) $ 5,508,809 $ 7,514,654
Receivables (Notes B and E) 16,570,062 14,182,974
Prepaid expenses 2,720,084 2,630,416
Supplies inventory (Note E) 568,430 459,711
Deferred income taxes (Note G) 1,723,000 1,365,000
Income taxes receivable - 622,648
----------- -----------
Total current assets 27,090,385 26,775,403
PROPERTY AND EQUIPMENT, AT COST
(Notes C, E, and F) 99,459,949 85,954,356
Less accumulated depreciation
and amortization 46,644,471 40,560,113
----------- -----------
52,815,478 45,394,243
Other assets
Deferred charges 606,250 426,461
Unrecognized net pension obligation (Note H) 58,071 63,861
----------- -----------
664,321 490,322
----------- -----------
$80,570,184 $72,659,968
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE> 28
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term obligations (Note F) $ 109,151 $ 99,990
Accounts payable 3,361,660 2,958,371
Accrued liabilities (Note O) 6,323,095 6,300,430
Accrued Claims (Note P) 1,727,391 1,382,085
Income Taxes Payable 119,931 -
----------- -----------
Total current liabilities 11,641,228 10,740,876
LONG-TERM OBLIGATIONS, less current
maturities (Note F) 8,020,523 5,389,852
DEFERRED INCOME TAXES
(Note G) 7,267,000 7,255,000
COMMITMENTS AND CONTINGENCIES
(Notes D, E, F, H, I, K, and L) - -
STOCKHOLDERS' EQUITY (Notes F, I and N)
Preferred stock, no par value; Authorized -
25,000,000 shares - none issued - -
Common stock, no par value; Authorized -
100,000,000 shares - issued and outstanding
6,925,040 shares in 1999 and 6,987,820 shares in 1998 11,849,600 12,135,490
Retained earnings 41,791,833 37,138,750
----------- -----------
53,641,433 49,274,240
----------- -----------
$80,570,184 $72,659,968
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 29
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Year ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Operating revenues $ 125,309,633 $ 114,724,798 $ 105,381,447
------------- ------------- -------------
Operating expenses
Salaries, wages and benefits 59,502,114 51,746,567 45,247,186
Operating supplies and expenses 20,341,773 15,973,557 15,706,124
Purchased transportation 15,580,049 17,975,515 15,388,965
Operating taxes and licenses 4,730,417 3,884,923 3,519,313
Insurance and claims 3,826,130 3,651,217 4,477,747
Depreciation and amortization 8,822,260 7,927,663 6,997,498
Communications and utilities 2,022,974 1,923,707 1,896,379
Building rents 3,043,136 2,365,006 1,744,877
------------- ------------- -------------
Total operating expenses 117,868,853 105,448,155 94,978,089
------------- ------------- -------------
Operating income 7,440,780 9,276,643 10,403,358
Other income (expense)
Interest expense (138,810) (153,673) (1,050,791)
Other, net 351,113 325,891 220,909
------------- ------------- -------------
212,303 172,218 (829,882)
------------- ------------- -------------
Earnings before income taxes 7,653,083 9,448,861 9,573,476
Income taxes (Note G) 3,000,000 3,660,000 3,805,000
------------- ------------- -------------
Net earnings $ 4,653,083 $ 5,788,861 $ 5,768,476
============= ============= =============
Pro forma (Note All)
Earnings before income taxes $ 9,573,476
Income taxes 3,952,000
-------------
Net earnings $ 5,621,476
=============
Earnings per common share - basic $ 0.67 $ 0.83 $ 0.95
============= ============= =============
Weighted-average shares outstanding - basic 6,938,365 6,987,820 5,938,602
============= ============= =============
Earnings per common share - diluted $ 0.67 $ 0.83 $ 0.95
============= ============= =============
Weighted-average shares outstanding - diluted 6,940,656 6,991,820 5,938,602
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 30
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Preferred Stock Common Stock
---------------------------- -----------------------------
Number Number
of of Retained
Shares Amount Shares Amount earnings Total
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 -- $ -- 5,820,000 $ 1,000 $ 26,039,414 $ 26,040,414
Distributions to LLC members -- -- -- -- (458,001) (458,001)
Public sale of common stock -- -- 1,150,000 12,100,298 -- 12,100,298
Issuance of 20,000 shares
pursuant to Restricted Stock
Agreement (Note N) -- -- 20,000 -- -- --
Net earnings for the year -- -- -- -- 5,768,476 5,768,476
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1997 -- -- 6,990,000 12,101,298 31,349,889 43,451,187
Vesting of shares pursuant to
Restricted Stock Agreement
(Note N) -- -- (2,180) 34,192 -- 34,192
Net earnings for the year -- -- -- -- 5,788,861 5,788,861
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1998 -- -- 6,987,820 12,135,490 37,138,750 49,274,240
Vesting of shares pursuant to
Restricted Stock Agreement
(Note N) -- -- (2,180) 22,560 -- 22,560
Repurchase of shares (Note N) -- -- (60,600) (308,450) -- (308,450)
Net earnings for the year -- -- -- -- 4,653,083 4,653,083
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1999 -- $ -- 6,925,040 $ 11,849,600 $ 41,791,833 $ 53,641,433
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
F-5
<PAGE> 31
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net earnings $ 4,653,083 $ 5,788,861 $ 5,768,476
------------ ------------ ------------
Adjustments to reconcile net earnings
to net cash provided by operating activities
Depreciation and amortization 8,822,260 7,927,663 6,997,498
Provision for losses on receivables 282,100 217,500 220,000
Loss (gain) on disposition of
property and equipment (241,084) (103,110) (156,914)
Amortization of unrecognized
pension obligation (benefit) 5,790 5,790 5,790
Charge associated with stock
issuance to an officer 40,000 60,625 --
Deferred income taxes (346,000) 942,000 800,971
Changes in assets and liabilities
Receivables (2,669,188) (1,228,754) (2,633,264)
Prepaid expenses (89,668) (220,892) (323,335)
Supplies inventory (108,719) 43,787 (164,668)
Income taxes receivable/payable 742,579 60,385 (516,050)
Other assets (179,789) (52,044) (6,862)
Accounts payable 403,289 939,194 1,142,106
Accrued liabilities and claims 350,531 (1,831,874) 1,457,923
------------ ------------ ------------
Total adjustments 7,012,101 6,760,270 6,823,195
------------ ------------ ------------
Net cash provided by
operating activities 11,665,184 12,549,131 12,591,671
------------ ------------ ------------
Cash flows from investing activities
Purchase of property and equipment (16,764,220) (13,720,140) (7,935,965)
Proceeds from disposition of property
and equipment 761,809 1,160,558 630,080
------------ ------------ ------------
Net cash used in
investing activities (16,002,411) (12,559,582) (7,305,885)
------------ ------------ ------------
</TABLE>
(Continued)
F-6
<PAGE> 32
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Year ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from financing activities
Distributions to LLC members -- -- (458,001)
Proceeds from public sale of common stock -- -- 12,100,298
Repurchase of common stock (308,450) -- --
Proceeds from issuance of long-term
obligations 2,742,822 -- 48,385,000
Principal payments on long-term
obligations (102,990) (1,091,597) (65,468,268)
------------ ------------ ------------
Net cash provided by (used in)
financing activities 2,331,382 (1,091,597) (5,440,971)
------------ ------------ ------------
Net decrease in
cash and cash equivalents (2,005,845) (1,102,048) (155,185)
Cash and cash equivalents at beginning of year 7,514,654 8,616,702 8,771,887
------------ ------------ ------------
Cash and cash equivalents at end of year $ 5,508,809 $ 7,514,654 $ 8,616,702
============ ============ ============
Supplemental cash flow information
Cash paid during the year for
Interest $ 137,953 $ 154,751 $ 1,102,819
Income taxes 2,593,128 2,537,933 2,811,000
</TABLE>
Noncash investing and financing activities
During 1999, in connection with the shares issued per the restricted stock
agreement, 2,180 shares valued at $17,440 were withheld by the Company as tax
withholdings.
During 1998, in connection with the shares issued per the restricted stock
agreement, 2,180 shares valued at $26,433 were withheld by the Company as tax
withholdings.
The accompanying notes are an integral part of these statements.
F-7
<PAGE> 33
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies consistently applied in the
preparation of the accompanying consolidated financial statements
follows.
1. Financial statement presentation
In preparing the Company's financial statements, in accordance with the
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
significantly from those estimates. Significant estimates include
accrued claims and allowance for doubtful accounts.
2. Principles of consolidation
The consolidated financial statements include the accounts of Motor
Cargo Industries, Inc. (MCI) and its wholly-owned subsidiary, Motor
Cargo and its wholly-owned subsidiaries, MC Leasing, Inc., MC
Distribution Services, Inc., Ute Trucking and Leasing, LLC (Ute) and
ICC, Inc. All significant intercompany accounts and transactions have
been eliminated.
3. Business activity
The Company is a regional less-than-truckload carrier which provides
transportation and logistics services to shippers within its core
service region.
4. Cash equivalents
The Company considers all highly liquid debt instruments with a maturity
of three months or less when purchased to be cash equivalents.
5. Supplies inventory
Supplies inventory consists primarily of fuel and equipment parts and is
stated at the lower of cost (first-in, first-out method) or market.
F-8
<PAGE> 34
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
6. Depreciation and amortization
Depreciation of property and equipment is provided on the straight-line
method over the estimated useful lives of the assets. Accelerated
methods of depreciation of property and equipment are used for income
tax purposes.
Leasehold improvements are amortized over the lesser of the useful life
of the asset or term of the lease.
Maintenance, repairs, and renewals which neither materially add to the
value of the property nor appreciably prolong its life are charged to
expense as incurred. Gains or losses on disposition of property and
equipment are included in earnings.
7. Income taxes
The Company utilizes the liability method of accounting for income
taxes. Under the liability method, deferred income tax assets and
liabilities are provided based on the difference between the financial
statement and tax bases of assets and liabilities as measured by the
currently enacted tax rates in effect for the years in which these
differences are expected to reverse. Deferred tax expense or benefit is
the result of changes in deferred tax assets and liabilities.
8. Insurance coverage and accrued claims
The Company is self-insured for health costs, cargo damage claims, and
automobile and general liability claims up to $70,000, $100,000, and
$250,000 respectively, per single occurrence. The Company also maintains
workers' compensation insurance, with a deductible of $250,000 per
occurrence in all states except Washington which has no deductible.
Liabilities in excess of the deductibles are assumed by insurance
companies up to applicable policy limits.
The Company estimates and accrues a liability for its share of final
settlements using all available information including the services of a
third-party insurance risk claims administrator to assist in
establishing reserve levels for each occurrence based on the facts and
circumstances of the incident coupled with the Company's past history of
such claims. The Company accrues for workers' compensation and
automobile liabilities when reported, usually the same day as the
occurrence. Additionally, the Company accrues an estimated liability for
incurred but not reported claims. Expense depends upon actual loss
experience
F-9
<PAGE> 35
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
and changes in estimates of settlement amounts for open claims which
have not been fully resolved. The Company provides for adverse loss
developments in the period when new information becomes available.
9. Revenue recognition
Freight charges are generally recognized as revenue in the period
relative to the average transit time for that period. Expenses
associated with the operating revenue are recognized when incurred.
10. Prepaid tires
The Company capitalizes tires purchased with new equipment and
depreciates them over the estimated useful life of the equipment (5 - 10
years). Replacement tires are expensed upon placement into service.
11. Pro forma financial information (unaudited)
Effective August 28, 1997, MCI acquired the membership interests of Ute
(Note N). A limited liability company passes through to its members
essentially all taxable earnings and losses and pays no tax at the
company level. Accordingly, for comparative purposes, a pro forma
provision for income taxes using an effective income tax rate of 38
percent has been determined assuming Ute had been taxed as a C
Corporation for 1997.
12. Earnings per share
Basic earnings per common share are based upon the weighted-average
number of common shares outstanding during each period presented.
Diluted earnings per common share are based on shares outstanding
(computed as under basic EPS) and dilutive potential common shares.
Potential common shares include the options to acquire 400,000 and
291,500 shares of common stock for 1999 and 1998, respectively.
Pro forma basic and diluted earnings per share for 1997 are calculated
using pro forma net earnings.
F-10
<PAGE> 36
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
13. Fair value of financial instruments
The fair value of the Company's cash and cash equivalents, receivables,
accounts payable and accrued liabilities approximate carrying value due
to the short-term maturity of the instruments. The fair value of
long-term obligations approximate carrying value based on their
effective interest rates compared to current market prices.
14. Certain reclassifications
Certain nonmaterial reclassifications have been made to the 1998 and
1997 financial statements to conform to the 1999 presentation.
F-11
<PAGE> 37
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE B - RECEIVABLES
Receivables consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Trade receivables $ 17,004,970 $ 14,570,942
Other receivables 210,707 253,296
------------ ------------
17,215,677 14,824,238
Allowance for doubtful accounts (645,615) (641,264)
------------ ------------
$ 16,570,062 $ 14,182,974
============ ============
</TABLE>
The history of the allowance for doubtful accounts is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 641,264 $ 572,801 $ 505,794
Provisions for losses 282,100 217,500 220,000
Write-offs, net (277,749) (149,037) (152,993)
--------- --------- ---------
Balance, end of year $ 645,615 $ 641,264 $ 572,801
========= ========= =========
</TABLE>
NOTE C - PROPERTY AND EQUIPMENT
Cost of property and equipment and estimated useful lives are as
follows:
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998 Years
----------- ----------- -------------
<S> <C> <C> <C>
Land $ 7,130,385 $ 5,155,289 --
Buildings 18,492,100 9,751,496 20-45
Revenue equipment 56,850,948 53,379,665 5-10
Service cars and equipment 697,909 620,279 3-10
Shop and garage equipment 264,075 153,350 3-10
Office furniture and fixtures 2,670,329 2,301,104 3-10
Other property and equipment 9,904,137 8,151,580 3-10
Leasehold improvements 3,450,066 2,375,771 Life of lease
Construction in progress -- 4,065,822 --
----------- -----------
$99,459,949 $85,954,356
=========== ===========
</TABLE>
F-12
<PAGE> 38
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE D - LEASES
The Company leases buildings and revenue equipment under operating lease
agreements. The following is a schedule of future minimum lease payments
under operating leases:
<TABLE>
<CAPTION>
Total
Buildings Equipment leases
----------- ----------- -----------
<S> <C> <C> <C>
Year ending December 31,
2000 $ 2,816,015 $ 988,206 $ 3,804,221
2001 1,798,869 941,097 2,739,966
2002 1,176,224 756,661 1,932,885
2003 1,115,374 738,049 1,853,423
2004 1,051,680 441,930 1,493,610
Thereafter 6,550,824 712,160 7,262,984
----------- ----------- -----------
Total minimum lease payments $14,508,986 $ 4,578,103 $19,087,089
=========== =========== ===========
</TABLE>
The leases generally provide that property taxes, insurance, and
maintenance expenses are obligations of the Company. It is expected that
in the normal course of business, operating leases that expire will be
renewed or replaced by leases on other properties. The total rent
expense for the years ended December 31, 1999, 1998, and 1997, was
approximately $3,043,000, $2,365,000 and $1,744,000, respectively.
NOTE E - REVOLVING BANK LOAN
The Company has a revolving bank loan. Under the loan agreement,
borrowings are limited to the lesser of 70 percent of allowable trade
receivables, or $5,000,000. Any outstanding amounts accrue interest at
.25 percentage points below the lending institution's prime rate, and is
payable monthly. No principal payments are required until maturity
(April 2001) as long as the loan does not exceed the required limits.
The agreement is collateralized by cash and cash equivalents,
receivables, supplies inventory, and all documents, instruments, and
chattel paper now owned or hereafter acquired by the Company. At
December 31, 1999 and 1998, there were no draws against the loan.
The Company also has a line of credit with a limit of $20,000,000 as of
December 31, 1999. This line is collateralized by revenue equipment. As
of December 31, 1999, there was $6,739,822 drawn against the line (Note
F).
F-13
<PAGE> 39
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE F - LONG-TERM OBLIGATIONS
Long-term obligations consist of the following:
<TABLE>
<CAPTION>
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Prime less .25% (8.25% at December 31, 1999) note
payable on a line of credit (up to $20,000,000)
to a bank, due in 2001, interest payments
due monthly and unpaid balance of principal due in
2001, collateralized by revenue equipment (Note E) $ 6,739,822 $ 4,000,000
8.75-8.85% notes payable to a corporation, due in 2003,
payable in monthly installments of $18,964, including
interest, balloon payment of $971,258 due at maturity,
collateralized by real property 1,389,852 1,489,842
------------ ------------
8,129,674 5,489,842
Less current maturities 109,151 99,990
------------ ------------
$ 8,020,523 $ 5,389,852
============ ============
</TABLE>
Maturities of long-term obligations are as follows:
<TABLE>
<S> <C>
Year ending December 31,
2000 $ 109,151
2001 6,858,974
2002 130,069
2003 1,031,480
Thereafter -
----------
$8,129,674
==========
</TABLE>
The line of credit agreements contain various restrictive covenants
including provisions relating to the maintenance of net worth, earnings
to debt ratio, and liability insurance coverage. As of December 31,
1999, the Company was in compliance with all covenants under the line of
credit agreements.
F-14
<PAGE> 40
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE G - INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Current
Federal $ 2,825,541 $ 2,280,862 $ 2,507,112
State 520,459 437,138 496,917
----------- ----------- -----------
3,346,000 2,718,000 3,004,029
----------- ----------- -----------
Deferred
Federal (287,744) 781,860 664,806
State (58,256) 160,140 136,165
----------- ----------- -----------
(346,000) 942,000 800,971
----------- ----------- -----------
$ 3,000,000 $ 3,660,000 $ 3,805,000
=========== =========== ===========
</TABLE>
The income tax provision reconciled to the tax computed at the federal
statutory rate of 34 percent is as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Federal income taxes at statutory rate $ 2,602,000 $ 3,212,000 $ 3,255,000
State income taxes, net of federal tax
benefit 332,000 392,000 402,000
One time charge attributed to Ute (1) -- -- 238,000
Income taxes attributed to Ute -- -- (147,000)
All other 66,000 56,000 57,000
----------- ----------- -----------
$ 3,000,000 $ 3,660,000 $ 3,805,000
=========== =========== ===========
</TABLE>
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------
1999 1998
---------- ----------
<S> <C> <C>
Current deferred tax assets
Allowance for doubtful accounts $ 247,000 $ 245,000
Vacation accrual 572,000 508,000
Accrued claims 609,000 477,000
Deferred revenue 295,000 135,000
---------- ----------
Net current deferred tax assets $1,723,000 $1,365,000
========== ==========
</TABLE>
F-15
<PAGE> 41
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE G - INCOME TAXES - CONTINUED
<TABLE>
<CAPTION>
December 31,
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Long-term deferred tax assets (liabilities)
Unfunded pension $ (35,000) $ (120,000)
Accrued compensation 111,000 88,000
Equipment temporary differences (7,343,000) (7,223,000)
----------- -----------
Net deferred tax liability $(7,267,000) $(7,255,000)
=========== ===========
</TABLE>
(1) Effective August 28, 1997, Ute was acquired by MCI and became a
taxable entity (Note N). Previously, its earnings and losses
were included in the personal tax returns of the members, and
Ute did not record an income tax provision. Effective with the
change in ownership, in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes," income taxes will be provided for the tax effects of
transactions reported in the financial statements and consist of
taxes currently due plus deferred taxes related primarily to
differences between the bases of property and equipment for
financial and income tax reporting. The deferred tax liability
represents the future tax return consequences of these
differences, which will be taxable when the liabilities are
settled. Accordingly, a deferred tax liability at the date of
the change of approximately $238,000 was recorded through a one
time noncash charge to the deferred tax provision.
NOTE H - PENSION AND PROFIT-SHARING PLANS
1. Pension plan
The Company participates in a defined benefit pension plan covering
substantially all of its employees. The benefits are based on years of
service and hours of service in the current year. A participant is fully
vested after five years. Contributions are intended to provide not only
for benefits attributed to service to date, but also for those expected
benefits to be earned in the future. Information pertaining to the
activity in the plan is as follows:
<TABLE>
<CAPTION>
Pension Benefits
-----------------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $ 5,449,623 $ 4,413,501 $ 4,111,673
Service cost 407,540 268,884 248,967
Interest cost 348,756 346,433 318,316
Actuarial loss (gain) (347,746) 586,993 --
Benefits paid (168,281) (166,188) (265,455)
----------- ----------- -----------
Benefit obligation at end of year $ 5,689,892 $ 5,449,623 $ 4,413,501
=========== =========== ===========
</TABLE>
F-16
<PAGE> 42
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE H - PENSION AND PROFIT-SHARING PLANS - CONTINUED
<TABLE>
<CAPTION>
Pension Benefits
-----------------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Change in plan assets
Fair value of plan assets at beginning of
year $ 5,328,226 $ 4,929,225 $ 4,125,240
Actual return on plan assets 837,636 440,189 769,440
Employer contribution 239,000 125,000 300,000
Benefits paid (168,281) (166,188) (265,455)
----------- ----------- -----------
Fair value of plan assets at end of year $ 6,236,581 $ 5,328,226 $ 4,929,225
=========== =========== ===========
Funded status $ 546,669 $ (121,397) $ 77,685
Unrecognized net actuarial gain (950,210) (206,611) (356,767)
Unrecognized net transition amount 58,071 63,861 69,651
----------- ----------- -----------
Accrued pension cost $ (345,470) $ (264,147) $ (209,431)
=========== =========== ===========
</TABLE>
The components of net periodic pension cost are as follows:
<TABLE>
<S> <C> <C> <C>
Service cost $ 407,540 $ 268,884 $ 248,967
Interest cost 348,756 346,433 318,316
Expected return on plan assets (441,763) (440,189) (769,440)
Amortization of prior service cost 5,790 4,588 420,617
----------- ----------- -----------
Net periodic pension cost $ 320,323 $ 179,716 $ 218,460
=========== =========== ===========
Weighted-average assumptions as of December 31,
Discount rate 7.50% 6.50% 8.00%
Expected return on plan assets 8.00 6.50 8.00
Rate of compensation increase -- -- --
</TABLE>
F-17
<PAGE> 43
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE H - PENSION AND PROFIT-SHARING PLANS - CONTINUED
2. 401(k) profit-sharing plan
The Company has a qualified 401(k) profit-sharing plan (the Plan) for
its employees. All employees who have completed one year of service with
the Company are eligible to participate in the Plan. Under the Plan,
employees are allowed to make contributions of between 1 percent and 15
percent of their annual compensation. The Company matches certain
percentages of employee contributions up to 6 percent, depending on the
Company's operating ratio. All amounts contributed by a participant are
fully vested at all times. A participant becomes vested over time and is
fully vested in any Company matching contributions after 7 years of
service. Expenses for Company contributions approximated $421,000,
$475,000 and $525,000, for the years ended December 31, 1999, 1998 and
1997, respectively.
NOTE I - STOCK OPTIONS
In January of 1999, the Company's Board of Directors and stockholders
adopted the Motor Cargo Industries, Inc. 1999 Stock Option Plan for
non-employee Directors (the 1999 Option Plan). The Company reserved
100,000 shares of common stock under the 1999 Option Plan. Accordingly,
the Board of Directors has approved the granting of options under the
Option Plan as follows:
Non-employee Directors have been granted options to acquire 35,000
shares of common stock. The options were granted at $7.50 per share,
which was the market price of the Company's common shares on the day of
grant. The options vest periodically through January 2003 and expire in
2010.
In October 1997, the Company's Board of Directors and stockholders
adopted the Motor Cargo Industries, Inc. 1997 Stock Option Plan (the
Option Plan). The Company reserved 500,000 shares of common stock under
the Option Plan. Accordingly, the Board of Directors has approved the
granting of options under the Option Plan as follows:
Directors, officers and key employees have been granted options to
acquire 365,000 shares of common stock. The options were granted at
$7.50 per share, which was the market price of the Company's shares on
the date granted. The options vest periodically through January of 2003.
The options expire upon the earlier of an expiration date fixed by the
committee responsible for the administering of the Plan or 10 years from
the date of the grant.
During 1999, all original stock option agreements under the 1997 option
plan were canceled and new options were granted at an exercise price of
$7.50 per share.
F-18
<PAGE> 44
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE I - STOCK OPTIONS - CONTINUED
Fair market value of options granted
The Company has adopted only the disclosure provisions of Financial
Accounting Standard No. 123, "Accounting for Stock-Based Compensation"
(FAS 123). Therefore, the Company accounts for stock based compensation
under Accounting Principles Board Opinion No. 25, under which no
significant compensation cost has been recognized. Had the compensation
cost for the stock based compensation been determined based upon the
fair value of the options at the grant date consistent with the
methodology prescribed by FAS 123, the Company's net earnings and
earnings per share would have been reduced to the following pro forma
amounts:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Net earnings As reported $ 4,653,083 $ 5,788,861 $ 5,621,476
Pro forma 4,326,056 5,337,141 5,580,655
Net earnings per common share - basic
Net earnings $ 0.67 $ 0.83 $ 0.95
Pro forma 0.62 0.76 0.94
Net earnings per common share -
assuming dilution
Net earnings $ 0.67 $ 0.83 $ 0.95
Pro forma 0.62 0.76 0.94
</TABLE>
The fair value of these options was estimated at the date of grant using
the Black-Scholes American option-pricing model with the following
weighted-average assumptions for 1999, 1998 and 1997: expected
volatility of 79, 67 and 36 percent; risk-free interest rate of 5.03,
5.65 and 6.66 percent; and expected life of 7.5 for each of the three
years. The weighted-average fair value of options granted was $5.79,
$8.90 and $6.44 in 1999, 1998 and 1997, respectively.
Option pricing models require the input of highly sensitive assumptions,
including the expected stock price volatility. Also, the Company's stock
options have characteristics significantly different from those of
traded options, and changes in the subjective input assumptions can
materially affect the fair value estimate. Management believes the best
input assumptions available were used to value the options and that the
resulting option values are reasonable.
F-19
<PAGE> 45
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE I - STOCK OPTIONS - CONTINUED
Fair market value of options granted- continued
Changes to the Company's stock options are as follows:
<TABLE>
<CAPTION>
Weighted-average
Stock options Exercise price Exercise price
------------- ---------------- --------------
<S> <C> <C> <C>
Outstanding at
January 1, 1997 -- $ -- $ --
Granted 249,500 12.00 12.00
Exercised -- -- --
Canceled/expired -- -- --
------------
Outstanding at
December 31, 1997 249,500 $ 12.00 $ 12.00
Granted 42,000 12.50 12.50
Exercised -- -- --
Canceled/expired -- -- --
------------
Outstanding at
December 31, 1998 291,500 12.00 to 12.50 12.07
Canceled/expired (291,500) 12.00 to 12.50 12.07
Granted 400,000 7.50 7.50
Exercised -- -- --
------------
Outstanding at
December 31, 1999 400,000 $ 7.50 $ 7.50
============ =============== ============
Exercisable at
December 31, 1999 -- $ -- $ --
============ =============== ============
</TABLE>
Additional information about stock options outstanding and exercisable
at December 31, 1999:
Options outstanding
<TABLE>
<CAPTION>
Weighted-average
Number Weighted-average remaining contractual
Exercise price outstanding exercise price life (years)
-------------- ----------- ---------------- ---------------------
<S> <C> <C> <C>
$7.50 400,000 $7.50 9.1
</TABLE>
Options exercisable
<TABLE>
<CAPTION>
Number Weighted-average
Exercise price Exercisable exercise price
-------------- ----------- ----------------
<S> <C> <C>
$ - - $ -
</TABLE>
F-20
<PAGE> 46
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE J - RELATED PARTY TRANSACTIONS
Related parties include the Company's officers, directors, stockholders
and other entities under their common control.
During the years ended December 31, 1997 the Company made payments for
consulting services of $160,000 to an entity in which the Company's
Chairman is a 50 percent owner. The agreement terminated April 1997 and
was not renewed.
Guaranteed payments to members of Ute were $140,000 for the year ended
December 31, 1997.
NOTE K - DEFERRED COMPENSATION
The Company has salary continuation agreements with certain key
management employees. Under the agreements, the Company is obligated to
provide for each such employee or his beneficiaries, during a period of
not more than ten years after the employee's death, disability, or
retirement, annual benefits ranging from $17,000 to $23,000. The Company
has purchased universal life insurance policies on the lives of these
participants. These insurance policies, which remain the sole property
of the Company, are payable to the Company upon the death of the
participant or maturity of the insurance policy.
The Company separately contracts with the participants to pay stated
benefits substantially equivalent to those received or available under
the insurance policies upon retirement, death, or permanent disability.
The expense incurred for the years ended December 31, 1999, 1998 and
1997, was approximately $58,000, $54,000 and $36,000, respectively.
NOTE L - COMMITMENTS AND CONTINGENCIES
1. Letters of credit
At December 31, 1999, the Company had outstanding letters of credit
totaling 1,280,000 ($1,530,000 at December 31, 1998). There were no
draws against these letters of credit during any of the periods
presented.
F-21
<PAGE> 47
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE L - COMMITMENTS AND CONTINGENCIES - CONTINUED
2. Litigation
The Company is involved in litigation arising in the normal course of
business. It is not possible to state the ultimate liability, if any, in
these matters. In the opinion of management, such litigation will have
no material effect on the financial position and results of operations
of the Company, in excess of amounts accrued.
NOTE M - CONCENTRATION OF CREDIT RISK
The Company maintains cash and cash equivalents at several financial
institutions. At December 31, 1999, uninsured amounts held in these
financial institutions totaled approximately $6,270,000, (approximately
$8,187,000 as of December 31, 1998).
NOTE N - CAPITAL TRANSACTIONS
Effective August 28, 1997, the membership interests of Ute were acquired
in exchange for 700,000 shares of common stock of the Company. Because
of the common ownership of the two entities this transaction was
accounted for in a manner similar to a pooling of interests. Ute is
included in the consolidated financial statements for all periods
presented. All revenue generated in Ute is from the renting and
contracting, under an independent operating agreement, of revenue
equipment to Motor Cargo. Therefore, Ute's related operations are
eliminated in the consolidated financial statements.
In October 1997, the Company's Board of Directors awarded an officer of
the Company 20,000 shares of the Company's common stock. The award was
made pursuant to a Restricted Stock Agreement which states that 20,000
shares of the Company's common stock will be issued in the officer's
name. The Company will hold the certificates for the shares, which will
be released in four installments, each consisting of 25 percent of the
shares issued based on the officer's continued employment. In the event
the officer voluntarily ceases his employment with the Company or the
Company terminates his employment for cause, the shares not previously
released will be forfeited. Termination of employment by the Company
without cause, or termination due to disability or death will result in
the prompt release of some or all shares not previously released,
depending upon the date of the relevant event. During 1999 and 1998,
5,000 shares vested annually, resulting in compensation expense in the
amount of $40,000 and $60,625, respectively. Of the 5,000 shares vested
annually, 2,180 shares were simultaneously redeemed by the Company. The
remaining 2,820 shares were released to the officer's name.
During the first quarter of 1999, the Company announced a share
repurchase program. The Board of Directors of the Company authorized the
repurchase of up to 700,000 shares of outstanding common stock. As of
December 31, 1999, a total of 60,600 shares had been repurchased by the
Company for approximately $308,000.
F-22
<PAGE> 48
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
NOTE O - ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Salaries, wages, and payroll taxes $2,611,473 $2,573,792
Accrued employee benefits 823,340 855,889
Vacation accrual 1,498,511 1,333,469
All other 1,389,771 1,537,380
---------- ----------
$6,323,095 $6,300,430
========== ==========
</TABLE>
NOTE P - ACCRUED CLAIMS
The history of accrued claims is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year $ 1,382,085 $ 2,956,911 $ 2,028,631
Provision 2,635,711 4,703,340 4,148,866
Claims (2,290,405) (6,278,166) (3,220,586)
----------- ----------- -----------
Balance at end of year $ 1,727,391 $ 1,382,085 $ 2,956,911
=========== =========== ===========
</TABLE>
F-23
<PAGE> 49
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits
- --------
<S> <C>
3.1 Articles of Incorporation of the Company (filed as Exhibit 3.1 to
the Company's Registration Statement on Form S-1 (File No.
333-37211) and incorporated herein by reference).
3.2 Bylaws of the Company (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (File No. 333-37211) and
incorporated herein by reference).
10.1 Loan Agreement, dated November 25, 1998, between the Company,
Motor Cargo and Zions First National Bank (filed as Exhibit 10.1
to the Company's Annual Report for 1998 on Form 10-K (File No.
333-37211) and incorporated herein by reference).
10.2 $20,000,000 Promissory Note, dated November 26, 1998, to the
order of Zions First National Bank (filed as Exhibit 10.2 to the
Company's Annual Report for 1998 on Form 10-K (File No.
333-37211) and incorporated herein by reference).
10.3 1997 Stock Option Plan (filed as Exhibit 10.2 to the Company's
Registration Statement on Form S-1 (File No. 333-37211) and
incorporated herein by reference).(1)
10.4 Pension Plan of Employees of Motor Cargo and Trust Agreement
(filed as Exhibit 10.3 to the Company's Registration Statement on
Form S-1 (File No. 333-37211) and incorporated herein by
reference).(1)
10.5 Motor Cargo Profit Sharing Plan (filed as Exhibit 10.4 to the
Company's Registration Statement on Form S-1 (Filed No.
333-37211) and incorporated herein by reference).(1)
10.6 Restricted Stock Agreement, dated October 2, 1997, between the
Company and Louis V. Holdener (filed as Exhibit 10.5 to the
Company's Registration Statement on Form S-1 (File No. 333-37211)
and incorporated herein by reference).(1)
10.7 Agreement to Purchase and Sell Leasehold Interest dated October
2, 1990 between Leonard L. Gumport and Motor Cargo (filed as
Exhibit 10.6 to the Company's Registration Statement on Form S-1
(File No. 333-37211) and incorporated herein by reference).
10.8 Lease Agreement dated December 23, 1996 between Channing, Inc.
and Motor Cargo (filed as Exhibit 10.7 to the Company's
Registration Statement on Form S-1 (File No. 333-37211) and
incorporated herein by reference).
10.9 Lease Agreement dated as of January 1, 1989 between Andrea
Tacchino Company and Motor Cargo (filed as Exhibit 10.8 to the
Company's Registration Statement on Form S-1 (File No. 333-37211)
and incorporated herein by reference).
10.10 First Amendment to Lease dated March 1, 1990 between Andrea
Tacchino Company and Motor Cargo (filed as Exhibit 10.9 to the
Company's Registration Statement on Form S-1 (File No. 333-37211)
and incorporated herein by reference).
10.11 Lease Agreement dated October 31, 1995 between Pete Aardema and
Motor Cargo (filed as Exhibit 10.10 to the Company's Registration
Statement on Form S-1 (File No. 333-37211) and incorporated
herein by reference).
</TABLE>
<PAGE> 50
<TABLE>
<S> <C>
10.12 Lease Agreement dated September 29, 1995 among Colburn R.
Thomason, Michael Tolladay, Kevin Tweed and Motor Cargo (filed as
Exhibit 10.11 to the Company's Registration Statement on Form S-1
(File No. 333-37211) and incorporated herein by reference).
10.13 Form of Salary Continuation Agreement (filed as Exhibit 10.12 to
the Company's Registration Statement on Form S-1 (File No.
333-37211) and incorporated herein by reference).(1)
10.14 Management Agreement between the Company and FHF Transportation,
Inc. (filed as Exhibit 10.18 to the Company's Registration
Statement on Form S-1 (file No. 333-37211 and incorporated herein
by reference).
10.15 Master Truck Agreement between Motor Cargo, Reno, Nevada and
Teamsters, Chauffeurs, Warehousemen & Helpers and Professional
Clerical, Public and Miscellaneous Employees, Local Union No.
533, affiliated with the International Brotherhood of Teamsters.*
10.16 Master Truck Agreement between Motor Cargo, Salt Lake City, Utah
and the International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America, Local Union No. 222.*
11 Pro Forma Earnings Per Share Calculation*
21 Subsidiaries of the Company (filed as Exhibit 21 to the Company's
Registration Statement on Form S-1 (file No. 333-37211 and
incorporated herein by reference).
23 Consent of Grant Thornton LLP.*
27 Financial Data Schedule.*
</TABLE>
- --------------
(1) Management contracts and compensatory plans and arrangements identified
pursuant to Item 14(a)(3) of Form 10-K.
* Filed with this report.
<PAGE> 1
EXHIBIT 10.15
MASTER TRUCK AGREEMENT
MOTOR CARGO, RENO, NEVADA
1996 - 2000
This agreement, deemed made and entered into by and between MOTOR CARGO, INC.,
Reno, Nevada, hereinafter referred to as the COMPANY, and TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN & HELPERS AND PROFESSIONAL, CLERICAL, PUBLIC AND MISCELLANEOUS
EMPLOYEES, LOCAL UNION N0. 533, affiliated with the International Brotherhood of
Teamsters, AFL-C1O, hereinafter referred to as the UNION.
ARTICLE I - SCOPE OF AGREEMENT
Section 1 MASTER AGREEMENT. The execution of this master Agreement and any
attached Supplements on the part of the Company shall cover all truck operations
of the Company which are covered by this Agreement and shall have application to
the employees within the bargaining unit defined below.
Section 2 This Agreement shall not be applicable to those operations of the
Company which are covered by a collective bargaining agreement with a Union not
signatory to this Agreement or to those employees not designating a signatory
union as their collective bargaining agent nor to any other employee or
non-employee. Except as expressly provided, nothing herein or in the attached
supplements shall be construed as implying either a limitation or a guarantee of
work or assignment of any employee or group of employees.
ARTICLE II - RECOGNITION
Section 1 The Employer recognizes the Union as the sole and exclusive collective
bargaining representative of, all full-time and part-time Reno, Nevada based
pick-up and delivery employees, dock employees, and drivers employed by the
Employer, excluding mechanics, truck servicemen, office clerical employees,
watchmen, guards, and supervisors as defined in the Act.
Section 2 The Union recognizes that all of the powers, rights, functions, and
authority of the Employer, other than those expressly restricted or regulated by
one or more of the specific (as distinct from any implied) provisions of this
Agreement are retained by the Employer. Management shall be allowed broad
application of retained rights in making decisions and taking action during the
term of the Agreement. Retained rights shall not be the subject of further
bargaining without the prior written voluntary consent of the Employer.
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ARTICLE III - STEWARDS
Section 1 The Company recognizes the right of the Union to designate employee
job stewards and alternates. Duties as a Steward shall not interfere with his
duties as an employee nor with the work of other employees.
ARTICLE IV - LEAVES OF ABSENCE
Section 1 The Company may grant a leave of absence without pay or benefits to an
employee. An employee desiring a leave of absence shall secure written
permission in advance from the Company. The leave of absence shall be for ninety
(90) days and map be extended fox like periods up to a maximum of one (1) year.
An employee on an approved leave may retain insurance coverage provided he pays
the monthly insurance premiums in advance. The Company will notify the Union of
all approved leaves of absence. The Union agrees that in making request for time
off for Union business, due consideration shall be given to the men affected in
order that there shall be no disruption of the Company's operations.
Section 2 The Company agrees to grant the necessary and reasonable time off
without discrimination or loss of seniority rights and without pay, to any
employee designated by the Union to attend a labor convention, or serve in any
capacity or other short tern official union business, provided forty-eight (48)
tours written notice is given to the Company by the Union, specifying length of
tire off. The Union agrees that, in making requests for time off for union
activities, due consideration shall be given to the number of men affected in
order that there shall be no disruption of the Company's operations due to the
lace of available employees.
Section 3 During the period of any leave, an employee shall not engage in
gainful employment in the same industry, unless agreed to by the Company in
writing. Failure to comply with this provision shall result in complete loss of
any further job rights and immediate termination of the employee involved.
ARTICLE V - SENIORITY
Section 1 Seniority rights for employees shall be in accordance with the
provisions outlined in the supplements of this Agreement.
Section 2 The extent to which seniority shall be applied as well as the methods
and procedures of such application shall be as clearly set forth in each of the
supplemental agreements.
ARTICLE VI - MAINTENANCE OF STANDARDS
Section 1 No employee shall suffer reduction in his basic hourly wage rate now
being paid prior to the execution or adoption of this Agreement.
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Section 2 The Company agrees not to enter into any written agreement or contract
with his employees, individually or collectively, which conflicts with the terms
and provisions of this Agreement. Any such agreement shall be null and void.
Section 3 Where new types of equipment for which rates of pay are not
established by this Agreement are put into use within operations covered by this
Agreement, rates covering such operations shall be subject to negotiations
between the parties. Rates agreed upon shall be effective as of the date
equipment is put into use if agreement can be reached within thirty (30) days,
if not then, rates agreed upon shall be effective as of the date they are agreed
upon.
ARTICLE VII - DISCHARGE OR SUSPENSION
Section 1 The Company shall have the right to terminate casual and probationary
employees (less than ninety (90) days) for any reason and to lay off any other
employee due to lack of work, shortage of equipment, emergencies over which the
Company has no control, or for other similar business reasons or for just cause.
However, nothing in this Agreement shall be construed as giving a person the
right to get or retain a job for which he is not qualified, not physically
capable, or which he neglects or refuses to do.
Section 2 Each employee will do his part to do the work assigned to him in a
workmanlike manner satisfactory to the customer and the Employer, realizing that
safe, economical, and reliable service to customers is the basis of existence
both for employees and the Company. The Company reserves the exclusive right to
direct and control employees and, where it deems necessary, reprimand,
discipline, and/or discharge an employee, for just cause. In the event of minor
failures or infractions by a regular, full-time employee, he shall not be
suspended or discharged without having received at feast one (7 ) prior written
warning notice for the same or similar infraction within the prior nine (9)
months. Three or more warning notices (not necessarily for the same or similar
infraction) within a nine (9) month period shall be considered just cause for
suspension or discharge.
Warning notices under this Agreement shall be issued within ten (10)
calendar days after the event occurs or is discovered by the Company and, when
issued, a copy shall be mailed to the Union within five (5) days. An employee
shall have the right to protest a warning notice he feels is unjustified within
ten (70) calendar days from the receipt of said warning notice.
Section 3 It is understood that no prior warning notice need be given in the
event of such things as (but not limited to):
Drunkenness on the job.
Use, being under the influence, possession
or sale of drugs or narcotics on the job.
Dishonesty,
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Unexcused failure to show up for work for three (3) consecutive
working days.
Careless operation of equipment resulting in serious loss or
damage of equipment or load or upset of a unit or trailer.
Speeding in excess of Company rules resulting in damage or
recklessness resulting in damage.
Carrying of unauthorized persons, materials, or goods.
Section 4 If a suspended or discharged employee feels the suspension or
discharge was without just cause, the employee may request a hearing before the
operations manager or his representative provided such request is made within
five (5) working days after the suspension or discharge. Upon such timely
request, the employee shall be granted a hearing. At that time, the employee,
the Union, and any other interested party may present evidence or testimony or
argument in support of the contention that the discipline or discharge was
without just cause. After hearing all such evidence and testimony, the Company
shall give the employee and the Union within seven (7) Calendar days an answer
that confirms, modifies, or reverses the original discipline or discharge. If
this answer is not acceptable, the Union may request arbitration on the matter,
provided such request is made within five (5) working days after the answer is
given. Arbitration will be based on the same evidence and testimony that eras
given to the operations manager anal upon which he predicated his answer, except
upon proof that such testimony was not available at the time of original
hearing.
ARTICLE VIII - GRIEVANCE AND ARBITRATION
Section 1 Every reasonable attempt will be made by both parties to resolve any
grievance without arbitration. However, if the parties cannot arrive at an
understanding, the grievance may be submitted to a jointly acceptable neutral
arbitrator, provided arbitration is requested within thirty (30) days of the
event giving rise to the grievance. Arbitrable grievances shill be limited to a
claim of a violation of one or more of the specific (as distinct from any
implied) provisions of this agreement or a claim of unjust discharge or
disciplinary suspension unless prior voluntary agreement to arbitrate is
obtained in writing from both parties prior to proceeding to arbitration. If the
Union and the Company are unable to agree on an arbitrator, each shall designate
a qualified arbitrator and invest him with power to select a qualified
arbitrator. Any qualified arbitrator agreed upon jointly by such representatives
of the Union and the Company shall be the arbitrator and shall be empowered to
make a final and binding decision in conformity with the submission agreement
and the terms of this Agreement. Section 2 The arbitrator shall have no power to
change this agreement in any way, nor to impose conditions on the parties he
thinks the parties did or should have agreed upon. He shall be limited to
findings of facts and applying the provisions of this Agreement to those facts.
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Except in the event of an unjust discharge, the Company shall not be required to
pay twice or to pap one employee for work done and paid for to another employee.
The arbitrator shall render his award thirty (30) days after the closing
of the hearings. The decision of the arbitrator shall be final and binding and
shall determine the subject of the arbitration for the duration of this
Agreement.
The compensation and expenses of the neutral arbitrator shall be borne
jointly by the parties to this Agreement.
ARTICLE IX - BONDS
Section 1 Should the Company require any employee to give bond, cash bond shall
not be compulsory, and any premium involved shall be paid by the Company. The
primary obligation to procure bond shall be on the Company. If the Company
cannot arrange for a bond within ninety (90) days, it must so notify the
employee in writing. If proper notice is given, the employee shall be allowed
thirty (30) days for the date of such notice to make his own bonding
arrangements.
Standard premium shall be the minimum paid by the Company for bonds
applicable to all other of its employees in similar classification. Any excess
premium is to be paid by the employee.
Section 2 In cases where bond cannot be arranged, or bond is cancelled,
the employee shall be on standby until he can obtain bond or replacement bond at
no extra cost to the Company.
ARTICLE X - EXAMINATION AND IDENTIFICATION FEES
Section 1 Physical, mental or other examinations required by a government body
or the Company shall be promptly complied with by all such employees, provided,
however, the Company shall pay for all such examinations, except in the case of
driver's or chauffeurs' license examination. Examinations are to be taken at the
employee's home terminal. Employees will not be required to take examinations
during their working hours, without pay for time so consumed.
The Company reserves the right to select its own medical examiner or
physician, and the Union may, if it believes an injustice has been done an
employee, have said employee reexamined at the employee's expense.
In the event of disagreement between the doctor selected by the Employer
and the doctor selected by the Union, the Company and the Union doctors shall
together select a third doctor within thirty (30) days whose opinion shall be
final.
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Section 2 DRUG TESTING POLICY The Union fully supports the substance abuse
prevention and testing program as published by the Company in accordance with
applicable state and federal laws and D.O.T, regulations which the Company has
the full right to administer, enforce and to amend from time to time as it eight
deem necessary. The Employer will keep the Union fully informed of any changes
in the program. The Union reserves the right to file a grievance in an
individual case upon reasonable showing that the Employer's enforcement was
without justification or was discriminatory.
ARTICLE XI - UNIFORMS
Section 1 The Company agrees that if any employee is required to wear any kind
of uniform as a condition of his continued employment, such uniform shall be
furnished and maintained by the Company free of charge, at the standard required
by the Company.
Section 2 Voluntary pooling arrangement for the purchase of uniforms shall not
come within the scope of this Article.
ARTICLE XII - PASSENGERS
Section 1 No driver shall allow anyone, other than employees of the Company who
are on duty, to ride on his truck, except by written authorization of the
Company. This shall not prohibit drivers from picking up other drivers or
helpers in wrecked or broken down equipment for transportation to the first
available point of communication or repair.
ARTICLE XIII - COMPENSATION CLAIMS
Section 1 The Company agrees to cooperate toward the prompt settlement of
employee on-the-job injury claims when such claims are due and owing.
Section 2 The Company shall provide Workmen's Compensation for all employees as
required by State Law.
Section 3 When an employee is injured on the job, he shall receive full pay for
that day or his current tour of duty, as the case may be, with a minimum of
eight (8) hours' pay.
Section 4 In the event an employee is injured or becomes ill while on a run away
from his home terminal and return to his home terminal is deemed reasonably
necessary by an attending physician, the Company shall arrange and pay for
transportation by plane, or as directed by the doctor, to his home. In case of
death away from home terminal the Company shall bear the cost of bringing the
body home.
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ARTICLE XlV - MILITARY CLAUSE
Section 1 An employee enlisting in or entering the Armed Forces of the United
States shall be granted all rights and privileges provided by applicable laws.
ARTICLE XV - DEFECTIVE EQUIPMENT AND DANGEROUS CONDITIONS
Section 1 The Company shall not require employees to take out on the streets or
highways any vehicle that is not in safe operating condition or equipped with
the safety appliances prescribed by law. It shall not be a violation of this
Agreement for an employee to refuse to operate such equipment unless such
refusal is unjustified. The employee may be assigned other duties or equipment
at the Company's option.
Section 2 Line or pick-up and delivery equipment, used in short line, peddle or
local operation, shall have steps or some other suitable device to enable
drivers to get in and out of the body.
Section 3 The Company shall install and maintain heaters and defrosters on all
trucks and tractors, except where climactic conditions make this unnecessary.
ARTICLE XVI - TIME SHEET, PAY PERIODS AND PAY DAYS
Section 1 Pay day shall be at least semi-monthly, not more than seven (7) days
after the close of the pay period provided, however, that present arrangements
shall not be disturbed by this provision except by mutual agreement.
The Company shall have a regularly designated pay day for employees, in
each of the various classifications.
When a regular designated pay day falls on Sunday or a holiday, the pay
checks for the employee not designated to work on such Sunday or holiday shall
be made available on the preceding day.
Upon quitting or discharge, the Company shall pay all money due the
employee in accordance with applicable Nevada State Law.
Section 2 The Company shall furnish each employee with an itemized statement of
earnings and deductions which are included in the check.
Section 3 Employees in line operations shall be required to complete all
required Company time sheets showing the arrival and departure at terminal and
intermediate stops and the cause and duration of all delays, time spent loading
and unloading, and same shall be turned in at the end of each trip.
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Employees in local operations will record their time as required by the
Company.
Section 4 All claims for wages or complaints thereof which an employee might
nave against the Company shall be filed within thirty (30) days of the payday
where the complaint occurred; otherwise, the Union, the employee, and the
Company agree that payment shall have been made in full.
ARTICLE XVII - POSTING AND BULLETIN BOARDS
Section 1 A copy of this Agreement, together with all supplements applicable to
work performed on or from the premises, shall be posted in a conspicuous place
in each terminal.
Section 2 The Company agrees to provide suitable space for the Union bulletin
board in each terminal. Postings by the Union on such boards are to be confined
to official business of the Union.
Section 3 The authorized business representative of the Union shall have access
to Company premises at reasonable times during regular business hours after
obtaining prior permission from the terminal manager to discuss Union matters
with employees. Interviews with employees shall be carried on in a place
designated by the Company and shall not interfere with the work or operations of
the Company. This privilege shall not be abused.
ARTICLE XVIII - SUB-CONTRACTING
Section 1 The Company reserves the right to sub-contract any work or services
performed by employees of the collective bargaining unit; however, the Company
shall not contract out work for the purpose of laying off regular full-time
employees or retaining such employees in laid off status.
Section 2 It is expressly understood that owner-operators, lessors, or
subcontractors of any kind and the men they employ are not to be considered
employees of the Company covered under this contract, nor are their operations
covered, controlled, or restricted in any way by this Agreement.
ARTICLE XIX - SEPARABILITY AND SAVINGS CLAUSE
Section 1 If any Article or Section of this Agreement or any Supplements or
Riders thereto should be held invalid by operation of law or by any tribunal of
competent jurisdiction or if compliance with or enforcement of any Article or
Section should be restrained by such tribunal pending a final determination as
to its validity, the remainder of this Agreement and of any Supplements or
Riders thereto, or the application of such Article or Section to persons or
circumstances other than those as to which it has been held invalid or as to
which compliance with or enforcement of has been restrained, shall not be
affected thereby.
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ARTICLE XX - COMPANY RULES
Section 1 The Union recognized the right of the Company from time to tine upon
reasonable notice to establish such reasonable Company rules as it may deem
necessary, provided that such rules are not in conflict with the terms of this
Agreement. A copy of any Company rules reduced to writing shall be given each
employee and the Union. Employees will abide by reasonable rules arid
instructions of the Company not in conflict with the terns of this Agreement as
a condition of continued employment.
ARTICLE XXI - VACATIONS AND VACATION COMPENSATION
Section 1 A regular, full-time employee shall receive one (I) week of paid
vacation after completing one (1) near of continuous employment with the
Company. After two (2) years of continuous employment, a regular, full-time
employee shall receive two (2) weeks of paid vacation, three (3) weeks after ten
(10) years of continuous employment, and four (4) weeks after twenty (20) years
of continuous employment.
Service means continuous employment with the Company uninterrupted by
termination. In the event of any termination and subsequent rehire, vacation and
vacation pay shall begin anew as in the case of a NEVI HIRE. Vacation rights and
related vacation pay is earned and vested on each annual anniversary date of
employment pertinent to the affected employee.
Section 2 Vacation pay shall be computed as follows: Pay for one (1) week ot
vacation shall be in the amount of one fifty-second (1/52) of the gross annual
earnings of the employee during the twelve (12) month period immediately prior
to the employee's anniversary date.
Pay for two (2) weeks vacation shall be in the amount of two
fifty-seconds (2/52nds) of the gross annual earnings of the employee during the
twelve (12) month period immediately prior to the employee's anniversary date.
Pay for the three (3) weeks vacation shall be in the amount of three
fifty-seconds (3/52nds) of the gross annual earnings of the employee during the
twelve (I2) month period immediately prior to the employee's anniversary date.
Pay for four (4) weeks vacation shall be in the amount of four
fifty-seconds (4/52nds) of the gross annual earnings of the employee during the
twelve (7.2) month period immediately prior to the employee's anniversary date.
Vacation pay shall be due and payable when the vacation is taken. Time
off for vacation shall be as agreed between the employee and the Company but the
Company shall have the final right to determine when vacations are taken.
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An employee who quits, or who is discharged after the completion of one
(1) full year of employment shall be entitled to a pro-rated vacation pay
allowance upon severance of employment, computed upon the same formula he would
have received had he completed such year of employment.
Pro-rated vacation pay shall be paid with final check upon severance of
employment.
Laid off employees, who have completed at least one (1 ) year of
service, who are qualified to receive pro-rata vacation pay at the time of
lay-off, shall have option of collecting accumulated pro-rata vacation pay for
the portion of employment year worked at the end of thirty (30) days following
the date of such lay-off. Lay-off status of more than thirty (30) days duration
shall not be counted in qualification for future vacation benefits should such
laid off employee later be recalled and returned to work.
Should a laid-off employee be recalled and returned to work within one
hundred and twenty (120) days of layoff, all time accumulated prior to the date
of lay-off shall be used in establishing qualifications for future vacation
benefits.
An employee transferred from one supplemental agreement and/or terminal
under this Agreement to another shall suffer no loss of vacation, provided the
employment is continuous.
ARTICLE XXII - PAID HOLIDAYS
Section 1 A regular full-time employee with seniority who has completed the
probationary period shall receive eight (8) hours' pay at his regular hourly
rate of pay for NEW YEARS DAY, WASHINGTON'S BIRTHDAY, MEMORIAL DAY, FOURTH OF
JULY, LABOR DAY, THANKSGIVING DAY, FRIDAY AFTER THANKSGIVING, CHRISTMAS EVE, and
CHRISTMAS DAY.
Should any regular full-time employee work one of the above holidays or
any day celebrated in lieu thereof, he shall receive his holiday pay plus the
pay earned during that day. No employee shall be called on the above-named
holidays for less than a full day.
When any of the above holidays fall on Sunday, the Monday following
shall be considered the holiday. If a holiday falls during an employee's
vacation, he shall receive pay for the holiday in addition to his vacation pay.
ARTICLE XXIII - CHECK OFF
Section 1 The Employer will deduct Union dues from the payroll payments for each
employee who authorized the deduction by voluntarily executing a written,
revokable statement requesting the Employer to make such deductions. The
Employer will forward the amounts so
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deducted to the Union. The authorization may be cancelled at any time by the
employee by notifying the Company and the Union in writing.
ARTICLE XXIV - HEALTH AND WELFARE PROGRAM
Section 1 The Company will pay into the Teamsters Local 533 Health and Welfare
Plan the amount of $290.00 per month for each eligible employee for the Health s
Welfare benefits (medical, dental, vision 6 prescription) effective October 1,
1996 based on September hours.
Section 2 There will be no increase in benefits, but should the Trust determine
on or after October 7, 1996 additional premium is needed to maintain existing
benefits the Company will pay up to a maximum of $350.00 per month. Rates may go
up to a maximum $365.00 per month any time after January 9, 1998, $380.00
January 1, 1999, and $395,00 January 1, 2000. The Company agrees to payroll
deduction for any additional amounts needed by the Trust to maintain existing
benefits.
ARTICLE XV - PENSION PLAN
Section 1 The Company will maintain its own existing Pension Plan during term of
this Agreement. The Company may change and/or improve the program without prior
notice or bargaining, but may not eliminate the program during the terra of this
Agreement.
ARTICLE XXVI - NON DISCRIMINATION
Section 1 Membership in the Local Union is not compulsory. Employees have the
right to join, not join, maintain, or drop their membership in the Local Union
as they see fit. Neither party shall exert any pressure on or discriminate
against an employee as regard to such matters. The parties agree there shall be
no discrimination on the basis of race, creed, sex, national origin, or age as
required by law.
ARTICLE XXVII - PICKET LINES AND STRUCK GOODS
Section 1 There shall be no work stoppage or lock out during the term of this
Agreement. The Union recognizes that the Company has an obligation to serve the
public. It is understood that the Company must handle all goods and provide
uninterrupted service for any shipper, consignee, or other person who so desires
this service, The Union and all employees will cooperate to this end. In the
event of any action prohibited by this Article, the Union, its officers or
agents agree that it will use its best efforts affirmatively to end such
prohibited conduct.
The Union voluntarily waives all rights to support or engage in sympathy
strikes.
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Section 2 It shall not be cause for discharge or other disciplinary action in
the event an individual employee refuses to enter upon any property involved in
a primary labor dispute or refuses to go through or work behind any primary
picket line including the primary picket line of the Union and including the
primary picket lines at the Employers place of business provided the primary
picket line involved has been reviewed and approved by the Joint Council,
however, any such employee need not be paid for any work, run or shift not
completed and may be replaced by the Company.
ARTICLE XXVIII - UNION WAIVER
Section 1 All matters not otherwise limited or prescribed by the terms of this
Agreement shall be under the exclusive and total control of management. In
accepting the considerations and limitations herein agreed to by the Employer,
the Union unqualifiedly waives all present and/or future rights during the term
of this Agreement to require the Company to bargain collectively on any other
aspect of wages, hours, and working conditions affecting employment, whether
specifically contained herein or not, thus giving the Company the unilateral
right to manage the business subject only to the express terms of this
Agreement.
ARTICLE XXIX - TERM OF AGREEMENT
Section 1 This Agreement shall be in full force and effect from October 1, 1996
to and including November 30, 2000 and shall continue from year to year
thereafter unless written notice of desire to cancel or terminate the Agreement
is served by either party upon the other at least sixty (60) days prior to date
of expiration.
Where no such cancellation or termination notice is served and the
parties desire to continue said Agreement but also desire to negotiate changes
or revisions in this Agreement, either party may serve upon the other a notice
at least sixty (60) days prior to November thirtieth (30th) of any subsequent
contract year, advising that such party desires to revise or change the terms or
conditions of such Agreement.
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Date of Ratification 19th Day of September, 1996
MOTOR CARGO, INC. TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN AND HELPERS AND
PROFESSIONAL, CLERICAL, PUBLIC AND
MISCELLANEOUS EMPLOYEES, LOCAL
UNION #533
By: /s/ By: /s/
--------------------------- ----------------------------
By:
----------------------------
By:
----------------------------
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MOTOR CARGO
Reno, Nevada
LOCAL AND SHORT LINE SUPPLEMENT
1996 - 2000
This agreement deemed made and entered into by and between MOTOR CARGO, INC.,
Reno, Nevada, hereinafter referred to as the COMPANY, and TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN & HELPERS AND PROFESSIONAL, CLERICAL, PUBLIC AND MISCELLANEOUS
EMPLOYEES, LOCAL UNION N0, 533, affiliated with the International Brotherhood of
Teamsters, AFL-CIO, hereinafter referred to as the UNION.
ARTICLE 1 - SCOPE OF AGREEMENT
Section 1 The execution of this agreement on the part of the Company shall cover
all full-time truck drivers, helpers, dockmen, warehousemen, checkers, hostlers,
and such other employees as may be presently or hereafter engaged in pickup,
delivery and assembling of freight within the jurisdiction of a signatory union
to this contract as outlined herein.
Pick-up, Delivery, Local Cartage and Short Line as covered by this
Agreement shall mean those operations designated by the Company as short line
operations. This shall not be construed as preventing short line employees from
performing work that might otherwise be done by long line employees or vice
versa.
Section 2 Employees covered by this Agreement shall include, but not be limited
to, drivers, chauffeurs, or driver-helpers operating any vehicle operated on the
highway, street, or private road for transportation purposes. The term employee
also includes, but is not limited to, employees used in dock work, checking,
stacking, loading, unloading, shipping, receiving, assembling, and allied work.
Regular employees are those employees that work continuously for the
Company and have completed their ninety (90) day probationary period. All terms
and conditions of this Agreement apply to these employees.
Casual employees are "on call" and are not granted seniority or benefits
(other than wages) under this Agreement. Part-time employees are those normally
working less than forty (40) hours per week.
Probationary employees are those full-time employees with less than
ninety (90) days of continuous service with the Company. After this ninety (90)
day trial period, full-time employees shall be placed on the seniority list.
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ARTICLE II - GENERAL PROVISIONS
Section 1 There shall be no split shifts for full-time employees.
Section 2 The Company agrees to maintain a clean, sanitary washroom, having hot
and cold running water and with toilet facilities unless otherwise mutually
agreed to.
Section 3 A daily time record shall be maintained by the Company at its place of
business. All terminals with five (5) or more employees shall have time clocks.
Section 4 Individual meal periods shall be established by the Company at either
thirty minutes or one hour. Employees will be notified as far in advance as
reasonably possible of a change.
No employee shall be compelled to take more than one continuous meal
period during his shift. Meal periods will begin no sooner than four nor more
than six hours after reporting. Meal periods shall not be compulsory at stops
where driver is responsible for equipment or cargo, nor shall the meal period be
compulsory when or where there is no accessible eating place.
Section 5 All employees shall be granted a fifteen (15) minute coffee break,
approximately half-way through the first half of their shift, and a fifteen (15)
minute coffee break approximately half way through the second half of their
shift. Such coffee breaks shall be taken without loss of pay and the employee
shall not be required to make up such time.
Section 6 Employees may be assigned to any work on an emergency, training,
temporary, or intermittent basis. Employees working in a higher pay
classification in any given day shall receive the higher rate of pay for all
hours worked during that day.
ARTICLE III - SENIORITY
Section 1 Seniority shah be established upon successful completion of the
probationary period of ninety (90) days continuous service with the Company by a
full-time employee. All terms and conditions of the Agreement shall apply to
regular, full-tine employees who have completed the probationary period. After
completing the ninety (90) day probationary period, an employee shall be placed
on the seniority list as of his date of employment.
Terminal seniority, as measured by length of service at such terminal,
shall prevail over Company seniority or seniority under another supplement
except where the Company and Union agree to the contrary.
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Section 2 When it becomes necessary to reduce the working force, the last
employee hired shall be laid off first and when the force is again increased,
the employees shah be returned to work in the reverse order in which laid off.
A laid off employee shall be given ten (10) days' notice of recall
mailed to his last known address. The employee must respond to such notice
within three (3) days after receipt thereof and actually report to work in seven
t7) days after receipt of notice unless otherwise mutually agreed. An employee
shall lose all seniority rights and right of recall if on layoff longer than
twelve (12) months or upon failure to comply with recall as provided above.
Section 3 Seniority shall not apply to probationary, part-time or casual
employees. Probationary, part-time and casual employees shall not be used in
order to lap off currently working full-tine employees and further in the event
of a reduction of force, regular full-time employees shall have the right to
transfer to part-time or casual employee jobs without losing seniority if they
wish, rather than being laid off.
Section 4 The Company shall not require, as a condition of continued employment,
that an employee purchase truck, tractor and/or tractor and trailer or other
vehicular equipment or that any employee purchase or assume any proprietary
interest or other obligation in the business.
Section 5 All regular runs and positions are subject to seniority and shall be
and for bids. Posting will be at a conspicuous place so that all eligible and
qualified employees will receive notice of the vacancy. Such posting of bids
shall be made not more than once each calendar year, unless mutually agreed
upon, excepting bids for new runs, new positions or vacancies. The Company has
full authority to determine qualifications of any bidder.
Section 6 The Employer shall post in a conspicuous place at the employee's home
terminal and shall mail to the Union within thirty (30) days after the signing
of this Supplemental Agreement, a list of the regular employees covered by this
Supplemental Agreement arranged according to their seniority. The above list
shall be kept current. Protest to any future employee's seniority date or
position. On such list must be made in writing to the Employer within thirty
(130) days after such seniority date or position first appears, and if no
protests are timely made, the dates and positions as posted shall be deemed
correct. Any such protest which is timely made may be submitted to the grievance
procedure.
Section 7 In the event that the Company absorbs the business of another private
contract or common carrier, or is a party to a merger of line, the seniority of
the employees absorbed or affected thereby shall be determined by mutual
agreement between the parties, or the parties may agree to submit it to the
grievance procedure.
Section 8 Where any full-time employee is required by the Company to change
residence in order to follow employment as a result of an approved change of
operation, the Company shall move the employee or pay his moving expenses. This
shall not apply to moves within a
3
<PAGE> 17
radius of one hundred fifty (150) miles. The Company shall not be responsible
for moving or moving expenses if employee changes his residence as a result of
voluntary transfer.
Section 9 Employees may be assigned to any work as required by the Company to
serve the customers. Any employee who neglects or refuses the work assigned by
the Company may be relieved and sent home from duty or reassigned by the
Company.
ARTICLE IV - EXTRA BOARDS
Section 1 Short Line Extra Board: Employees with seniority under this supplement
shall have the opportunity to bid for the number of extra board positions
designated by the Company for assignment on mileage paid work. Employees will
have the opportunity of having their names placed or. the extra board as a
secondary job. Successful bidders will be used on their regular work assignment
and be "on call" as extra mileage paid runs are needed. Where e:ctra board
mileage paid drivers are used at a terminal, the Company will assign runs on a
first-in, first-out basis wherever practicable.
Section 2 Long Line Extra Board: Short line supplement employees shall also have
the opportunity to bid on long line extra board positions, as designated by the
Company, to do extra board work as it comes up and still retain their Short line
supplement seniority and regular job. At such time as an opening occurs and the
employee elects to transfer to a regular position (not extra board) under the
long line supplement, he shall cease to accrue seniority under this supplement
and begin to accrue seniority under the long line supplement. In the event of a
subsequent reduction of force, he shall exert his seniority under the long line
supplement only.
ARTICLE V - HOURS OF WORK AND PAY
Section 1 Except as expressly provided in this Agreement, flexibility in methods
of payments, hours of work, and extra pay for extra wore or other reasons is
retained by the Company, any rates of pay or pay practices which are not in
conflict with the express provisions of the Agreement, may be continued and will
be posted in each terminal. When changes occur in such published rates, a copy
will be provided to the steward and the Union upon request. Such changes may be
made by the Company at any time.
Section 2 Except as expressly provided in this Agreement, present practices with
respect to scheduling work may be maintained. If changes become necessary, the
employees involved will be notified as far in advance as practicable.
Section 3 Wherever employees or work is specifically assigned on an hourly basis
by the Company such as on the dock or in local driving the following shall
apply:
4
<PAGE> 18
Sub Section A. An Employee assigned on an hourly basis shall be paid for all
time spent in service of the Company as outlined in Sub Sections A through D
herein. Rates of pay provided for by this Agreement shall be minimums. Time
shall be computed from the time that the employee is ordered to report for work
and registers in and until he is effectively released from duty. All time lost
due to delays as a result of overloads or certificate violations involving
federal, state, or city regulations, which occur through no fault of the driver,
shall be paid for exclusive of meal periods.
Sub Section B. Any full-time regular employee called and reporting for duty
shall be paid four (4) hours' pay at his regular hourly rate if he is not given
work. If worked more than four (4) hours he shall be guaranteed eight (8) hours'
work or pay.
Sub Section C. When an emergency "call back" occurs, the employee shall be
guaranteed not less than two (2) hours' pay.
Sub Section D. All hours worked in excess of eight (8) hours in one (1) day or
forty (40) hours in any work week shall be paid for at one and one-half times
(1 1/2 X) the employee's regular rate. Overtime shall not be pyramided.
Sub Section E. Work shall be scheduled for five (5) consecutive days with a
limit of four (4) work weeks. The Union will be supplied at all tines with an
up-to-date listing of work weeks, start times and bid jobs.
Sub Section F. Holidays falling outside the regular scheduled work week shall be
paid in. addition to pay for actual hours worked in the week.
Sub Section G. Minimum hourly rates of pay for hourly assigned employees under
his supplement are as listed below:
<TABLE>
<CAPTION>
10/01/96 12/01/96 12/01/97 12/01/98 12/01/99
<S> <C> <C> <C> <C> <C>
Regular Full Time
Drivers - TOP $15.86 $16.16 $16.66 $17.17 $17.66
1st 6 months 10.95 11.50 12.00 12.50 13.00
2nd 6 months 11.80 12.20 12.70 13.20 13.70
3rd 6 months 12.70 13.10 13.60 14.10 14.60
4th 6 months 14.00 14.40 14.90 15.40 15.90
</TABLE>
5
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C> <C>
Regular Part Time
Drivers - TOP $10.95 $11.50 $12.00 $12.50 $13.00
First 500 hours 9.35 10.50 1.50 11.00 11.00
Dock - TOP 10.75 11.25 11.25 11.75 11.75
First 500 hours 9.20 9.65 9.65 10.15 10.15
Casual
Drivers - TOP $ 8.80 9.25 9.25 9.75 9.75
Dock - TOP 8.65 9.15 9.15 9.65 9.65
</TABLE>
Note #1 No employee, regular, part-time or casual, who prior to the date of
this Agreement was receiving more than the rate of wages designated in
this schedule herein for the class of work in which he was engaged,
shall suffer a reduction through the operation of this Agreement.
Section 4. Mileage Rates and Work. Whenever employees or work is specifically
assigned on a mileage basis by the Company such as line run, the Sub Sections A
through C shall apply:
Sub Section A. Minimum mileage rates for assignments under this supplement are:
<TABLE>
<CAPTION>
MILEAGE 10/01/96 12/01/96 12/01/97 12/01/98 12/01/99
- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SINGLE 37.03(cent) 37.53(cent) 38.03(cent) 38.53(cent) 39.03(cent)
SLEEPER (Split) 39.03(cent) 39.53(cent) 40.03(cent) 40.53(cent) 41.03(cent)
Triples and 2 40's add 2(cent) 2(cent) 2(cent) 2(cent) 2(cent)
48' and pup 2(cent) 2(cent) 2(cent) 2(cent) 2(cent)
OTHER
Work Time $15.02 $15.52 $16.02 $16.52 $17.02
Break Down $7.51 $7.76 $8.01 $8.26 $8.51
Holiday $15.36 $16.16 $16.66 $17.17 $17.66
</TABLE>
6
<PAGE> 20
ARTICLE VI - TERM OF AGREEMENT
The term of this Supplemental Agreement is subject to and controlled by the
MASTER AGREEMENT.
MOTOR CARGO, INC. TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN AND HELPERS AND
PROFESSIONAL, CLERICAL, PUBLIC AND
MISCELLANEOUS EMPLOYEES, LOCAL
UNION #533
By: /s/ By: /s/
---------------------- -------------------------------
By:
-------------------------------
By:
-------------------------------
7
<PAGE> 21
MOTOR CARGO
Reno, Nevada
LONG LINE SUPPLEMENT
1996 - 2000
This agreement, deemed made and entered into by and between MOTOR CARGO, INC.,
Reno, Nevada, hereinafter referred to as the COMPANY, and TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN & HELPERS AND PROFESSIONAL, CLERICAL, PUBLIC AND MISCELLANEOUS
EMPLOYEES, LOCAL UNION NO. 533, affiliated with the international Brotherhood of
Teamsters, AFL-CIO, hereinafter referred to as the UNION.
ARTICLE I - SCOPE OF AGREEMENT
Section 1 For the purpose of this supplement, the term "Long Line" is any dry
freight operation so designated by the Company as under this supplement and not
within the scope of the Local and Short Line Supplement between the parties.
This shall not preclude long line employees from performing work that might
otherwise be done by local and short fine employees or vice versa.
Section 2 Employees covered by this Agreement shall include any employee driver,
chauffeur or driver-helper operating any vehicle operated on the highway, street
or private road for transportation purposes.
Regular employees are those employees other than extra employees that
work continuously for the Company and have completed their ninety (90) day
probationary period. All terms and conditions of this Agreement apply to these
employees.
Extra employees are those employees who normally work less than forty
(40) hours per week and have other employment and students enrolled in any
institution of learning and extra board employees having seniority under the
Short Line Supplement, or any of them. Long Line Extra Board employees (except
those under the Short Line Supplement) are on call and are not granted seniority
or other benefits (other than wages) under this Agreement.
Probationary employees are those employees with less than ninety (90)
days of continuous service with the Company. After this ninety (90) day trial
period, full-time employees shall be placed on the regular seniority list.
Section 3 The Company expressly reserves the right to control the manner, means
and details if any, by which the owner-operator performs his services as well as
the means to be accomplished. They shall not be considered employees under this
contract. The Company reserves the right to sub-contract any work or services
performed; however, the Company shall not contract out work for the purpose of
laying off regular full-time employees or retaining such employees in laid off
status.
1
<PAGE> 22
ARTICLE II - RATES OF PAY
Section 1 Except as expressly provided in this Agreement, flexibility in methods
of payment, hours of work and extra pay for extra work or other reasons is
retained by the Company. Any rates of pay or practices which are not in conflict
with the express provisions of this Agreement may be continued and will be
posted in each terminal. When changes occur in such published rates, a copy will
be provided to the steward and the Union upon request.
Such changes may be made by the Company at any time.
Section 2 Except as expressly provided in this Agreement, present practices with
respect to scheduling work may be maintained. If change becomes necessary, the
employees involved will be notified as far in advance as practicable.
Section 3 The minimum mileage rates of pay for all miles driven under this
agreement where such rates apply shall be:
<TABLE>
<CAPTION>
MILEAGE 10/01/97 12/01/96 12/01/97 12/01/98 12/01/99
- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SINGLE 37.02(cent) 37.53(cent) 38.03(cent) 38.53(cent) 39.03(cent)
SLEEPER (split) 39.03(cent) 39.53(cent) 40.03(cent) 40.53(cent) 41.03(cent)
Triples & 40's add 2(cent) 2(cent) 2(cent) 2(cent) 2(cent)
48' and pup 2(cent) 2(cent) 2(cent) 2(cent) 2(cent)
OTHER
Work Time $15.02 $15.52 $16.02 $16.52 $17.02
Break Down $ 7.51 $ 7.76 $ 8.01 $ 8.26 $ 8.51
Holiday $15.86 $16.16 $16.66 $17.17 $17.66
</TABLE>
Sub Section A. Determination. Mileage shall be paid over the shortest practical
route traveled from point of origin to point of destination with the Company
realizing that conditions reasonably beyond the control of the Company or
employee may dictate alternate routes.
Mileage will be paid by mileage shown on official state highway maps.
When final destination is not shown on the maps available, actual miles traveled
will be logged from the last point shown. Mileage shown plus actual miles shall
be used. In the event an error in mileage has been made, this error will be
corrected immediately.
All runs or trips shall be paid for at the mileage rate for miles
driven.
2
<PAGE> 23
Section 4 When an employee is called and reports for duty and no work is
provided, the employee shall be guaranteed a minimum of four (4) hours pay. The
four (4) hour guarantee shall not apply where an employee has been given at
least two (2) hours notice that no work is to be provided. Employees shall be
given at least two (2) hours notice when ordered to report for duty, at both the
hone terminal and at the end of the run where he has been effectively released
from duty by the Company.
Section 5 In all cases where an employee is instructed to ride or drive on
Company or leased equipment, he shall receive full pay as specified in the
Agreement. When instructed to deadhead on other than, Company or leased
equipment, he shall receive hourly rate of pay for time spent with a minimum of
eight (8) hours plus cost of transportation.
Section 6 On a turnaround operation involving the interchange of equipment in a
continuous through movement of schedules, the interchange of such equipment
shall be made at a regular designated point. Drivers shall not be released from
duty at such turnaround point.
Section 7 On breakdowns or impassable highways, each driver on all runs shall be
paid one-half (1/2) the hourly rate for all tine spent on such delay, commencing
with the first hour or fraction thereof, but not to exceed eight (8) hours out
of each twenty-four (24) hour period, except that when an employee is required
to remain with his equipment during such breakdown or impassable highway, he
shall be paid for all such delay time at one-half (1/2) the rate specified in
this Agreement. Where an employee is held longer than an eight (8) hour period,
he shall in addition be furnished clean, comfortable, sanitary lodging, plus
meals. The pay for delay time shall be in addition to ponies earned for miles
driven and/or work performed.
All time lost due to delays as a result of overloads or certificate
violations involving federal, state, or city regulations, which occur through no
fault of the driver, shall be paid for at the regular applicable hourly rate in
this Agreement.
Section 8 The applicable hourly rate shall be paid to each driver for time spent
other than driving, which shall include, but not be limited to chaining tine,
tire changes, loading and/or unloading, dropping and picking up trailers and
hostling.
Section 9 When drivers are required to take a rest period or layover during any
one round trip, away from his home terminal, he shall be compensated as follows:
For the first fourteen (l4) hours of each layover period after the run
end, no pay.
For the next eight (8) hours, beginning with the start of the fifteenth
(15th) hour after arrival at the layover point, at the regular hourly rate of
pay, with a minimum guarantee of three (3) hours if not dispatched at the
beginning of the fifteenth (15th) hour.
3
<PAGE> 24
For the next ten (10) hours, no pay.
For the next eight (8) hours the regular hourly rate of pay.
And continuing on the same basis for each continuing eighteen (18)
hours. Each driver will receive $8.00 for meals after eight (8) hours layover.
These provisions will only apply at one layover point during any one round trip.
Section 10 Holiday pay for Long Line supplement employees shall be calculated
based on the currently applicable Short Line Heavy Duty rate.
Section 11 Drivers of tractor without trailer shall be paid on the same basis as
tractor-trailer drivers.
Section 12 Drivers shall, except by mutual agreement, be allowed one (1)
continuous hour for meals, but in no event less than thirty (30) minutes, nor
mare than one (1) hour in each ten (10) hour period. No driver shall be
compelled to take any part of such continuous hour before he has been on duty
four (4) hours or after he has been on duty six (6) hours. Meal period shall not
be compulsory at terminals where driver is responsible for equipment or cargo,
nor shall meal period be compulsory when or where there is no accessible eating
place.
ARTICLE III - SENIORITY
Section 1 Seniority shall be established upon completion of the probationary
period of ninety (90) days continuous service with the Company by a full-time
employee. All terms and conditions of the Agreement shall apply to regular,
full-time employees who have completed the probationary period. After completing
the ninety (90) day probationary period, an employee shall be placed on the
seniority list as of his date of employment.
Section 2 Terminal seniority under this supplement as measured by length of
service at a terminal shall prevail over Company seniority or seniority under
another supplement, except where the Company and Union agree to the contrary.
Section 3 When it becomes necessary to reduce the working force the last man
hired shall be laid off first and when the force is again increased, the
employees are to be returned to work in the reverse order in which laid off.
A laid off employee shall be given ten (10) days notice of recall mailed
to his last known address. The employee must respond to such notice within three
(3) days after receipt thereof and actually report to work in seven (7) days
after receipt of notice unless otherwise mutually agreed. An employee shall lose
all seniority rights and rights of recall if on layoff longer than twelve (12)
months or upon failure to comply with recall as provided above.
4
<PAGE> 25
Section 4 The Company shall not require, as a condition of continuing
employment, that an employee purchase truck, tractor, and/or tractor and trailer
or other vehicular equipment or that any employee purchase or assume any
proprietary interest or other obligation of the business.
Section 5 All regular runs and new positions are subject to seniority and shall
be posted for bids. Posting shall be in a conspicuous place so that all eligible
employees shall receive notice of the vacancy. Such posting of bids shall be
made not more than once each calendar year, unless mutually agreed, except bids
for new runs, new positions or vacancies.
If either party at any time may find the present methods of bidding
inoperative as outlined, negotiations may be requested to correct any problems
arising under these procedures.
Section 6 The Employer shall post in a conspicuous place at the employee's home
terminal, and shall mail to the Union within thirty (30) days after the signing
of this Supplemental Agreement, a list of the regular employees covered by this
Supplemental Agreement arranged according to their seniority. The above list
shall be kept current. Protest to any future employee's seniority date or
position on such list must be made in writing to the Employer within thirty (30
) days after such seniority date or position first appears, and in no protests
are timely made, the dates and positions as posted shall be deemed correct. Any
such protest which is timely made may be submitted to the grievance procedure.
Section 7 In the event that the Company absorbs the business of another private
contract or common carrier, or is a party to a merger of line, the seniority of
the employees absorbed or affected thereby shall be determined by mutual
agreement between the parties, or the parties may agree to submit it to the
grievance procedure.
Section 8 When a branch, terminal, division or operation is closed and the work
of the branch, terminal, division, or operation is eliminated, an employee who
was formerly employed at another branch, terminal, division or operation shall
have the right to transfer back to such former branch, terminal, division or
operation and exercise his seniority based on the date of hire at the branch,
terminal, division or operation into which he is transferring, provided he has
not been away from such original terminal for more than two (2) years.
When a branch, terminal, division or operation is closed or partially
closed and the work of the branch, terminal, division or operation is
transferred to another branch, terminal, division or operation in whole or in
part, an employee at the closed or partially closed down branch, terminal,
division or operation shall have the right to transfer to the branch, terminal,
division or operation in which the work was transferred if work is available
there. Such employee, however, shall go to the bottom of the seniority board and
shall have the right of job selection only in accordance with his seniority at
such terminal. However, he shall exercise his Company seniority for layoff
purposes and all other contract benefits.
5
<PAGE> 26
In all transfers referred to above, the employee must be qualified to
perform the job by experience in the classification.
Section 9 Where any full-time regular employee is required by one company to
change residence in order to follow employment as a result of an approved change
of operation, the Company shall move the employee or pay his moving expenses.
This shall not apply to moves within one hundred fifty (150) miles. The Company
shall not be responsible for moving or moving expenses if the employee changes
his residence as a result of voluntary transfer.
ARTICLE IV - EXTRA BOARD DRIVERS
Section 1. - Long Line Extra Board: An extra board shall be established by the
Company in accordance with the number of extra board positions it may from time
to time determine are necessary. Short Line Supplement employees shall have the
opportunity to bid on long line extra board positions as designated by the
Company, do the extra board work as it comes up and still retain their short
line supplement seniority and regular job. At such time as a regular (not extra
board) opening occurs and the employee elects to transfer to a regular position
under this supplement, he shall begin to accrue seniority under this supplement
and shall then exert seniority under this supplement only. This shall not be
interpreted to mean the Employer may not hire new regular long line drivers as
it determines openings exist.
Section 2 Where extra long line drivers are regularly used at a terminal, the
Company will assign runs on a first in, first out basis.
Section 3 Employees may be assigned to any work as required by the Company to
serve the customers. Any employee who neglects or refuses the work assigned may
be relieved and sent hone or reassigned by the Company.
6
<PAGE> 27
ARTICLE V - TERM OF AGREEMENT
The term of this Supplemental Agreement is subject to and controlled by the
MASTER AGREEMENT.
MOTOR CARGO, INC. TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN AND HELPERS AND
PROFESSIONAL, CLERICAL, PUBLIC AND
MISCELLANEOUS EMPLOYEES, LOCAL
UNION #533
By: /s/ By: /s/
-------------------------- ------------------------------
By:
------------------------------
By:
------------------------------
7
<PAGE> 1
EXHIBIT 10.16
1999 - 2002
MASTER TRUCK AGREEMENT
MOTOR CARGO, SALT LAKE CITY, UTAH
THIS AGREEMENT deemed made and entered into by and between MOTOR CARGO, Salt
Lake City, Utah, hereinafter referred to as the COMPANY, and the INTERNATIONAL
BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, LOCAL
UNION NO. 222, hereinafter referred to as the UNION.
ARTICLE I - SCOPE OF AGREEMENT
SECTION 1. MASTER AGREEMENT. The execution of this Master Agreement and any
attached Supplements on the part of the Company shall cover all truck operations
of the Company which are covered by this Agreement and shall have application to
the employees within the bargaining unit defined below.
SECTION 2. This Agreement shall not be applicable to those operators of the
Company which are covered by a collective bargaining agreement with a Union not
signatory to this Agreement or to those employees not designating a signatory
union as their collective bargaining agent nor to any other employee or
non-employee. Except as expressly provided, nothing herein or in the attached
supplements shall be construed as implying either a limitation or a guarantee of
work or assignment of any employee or group of employees.
ARTICLE II - RECOGNITION
SECTION 1. The Employer recognizes the Union as the sole and exclusive
collective bargaining representative of all full-time and regular part-time,
Utah-based Pick-Up and Delivery Employees, Dock Employees, and Drivers employed
by the Employer and all Employees employed by the Employer at its Truck Service
Center, including Mechanics, Tire Men, Fuelers, Lube Men, and Parts Men,
excluding all Office Clerical Employees, Professional Employees, Janitors,
Guards, and Supervisors as defined in the Act.
SECTION 2. The Union recognizes that all of the powers, rights, functions, and
authority of the Employer, other than those expressly restricted or regulated by
one or more of the specific (as distinct from any implied) provisions of this
Agreement are retained by the Employer. Management shall be allowed broad
application of retained rights in making decisions and taking action during the
term of the Agreement. Any claim of a violation of this subsection of the
contract shall not be a proper subject for arbitration nor within the authority
of an arbitrator to a upon without the prior written voluntary consent of the
Employer during the term of this Agreement. Retained rights shall not be the
subject of further bargaining without the prior written voluntary consent of the
Employer.
<PAGE> 2
ARTICLE III - STEWARDS
SECTION 1. The Company recognizes the right of the Union to designate employee
job stewards and alternates. Duties as a Steward shall not interfere with his
duties as an employee nor with the work of other employees.
ARTICLE IV - LEAVES OF ABSENCE
SECTION 1. The Company may grant a leave of absence without pay or benefits to
an employee. An employee desiring a leave of absence shall secure written
permission in advance from the Company. The maximum leave of absence shall be
for ninety (90) days and may be extended for like periods up to a maximum of one
(1) year. The Company will notify the Union of all approved leaves of absence.
The Union agrees that in making requests for time off for Union business, due
consideration shall be given to the men affected in order that there shall be no
disruption of the Company's operations.
SECTION 2. The Company agrees to grant the necessary and reasonable time off
without discrimination or loss of seniority rights and without pay, to any
employee designated by the Union to attend a labor convention, or serve in any
capacity or other short term official union business, provided forty-eight hours
written notice is given to the Company by the Union, specifying length of time
off. The Union agrees that, in making requests for time off for union
activities, due consideration shall be given to the number of men affected in
the order that there shall no disruption of the Company's operations due to the
lack of available employees.
SECTION 3. During the period of any leave, an employee shall not engage in
gainful employment in the same industry, unless agreed to by the Company in
writing. Failure to comply with this provision shall result in complete loss of
any further job rights and immediate termination of the employee involved.
SECTION 4. Employees may take unpaid family leave of up to twelve (12) weeks per
year in accordance with the Family Medical Leave Act. The employees seniority
shall continue as if the employee had not taken a leave under this section. The
Employer will maintain health coverage in the normal manner during the period of
the leave. Any state or local laws which provide for greater employees rights
shall supersede this section.
ARTICLE V - SENIORITY
SECTION 1. Seniority rights for employees shall be in accordance with the
provisions outlined in the supplements of this Agreement.
SECTION 2. The extent to which seniority shall be applied as well as the methods
and procedures of such application shall be as clearly set forth in each of the
supplemental agreements.
2
<PAGE> 3
ARTICLE VI - MAINTENANCE OF STANDARDS
SECTION 1. No employee shall suffer a reduction in his basic hourly wage rate
now being paid prior to the execution or adoption of this Agreement.
SECTION 2. The Company agrees not to enter into any written agreement or
contract with its employees, individually or collectively, which conflicts with
the terms and provisions of this Agreement. Any such agreement shall be null and
void.
SECTION 3. Where new types of equipment for which rates of pay are not
established by this Agreement are put into use within operations covered by this
Agreement, rates covering such operations shall be subject to negotiations
between the parties. Rates agreed upon shall be effective as of the date
equipment is put into use if agreement can be reached within thirty (30) days,
if not then, rates agreed upon shall be effective as of the date they are agreed
upon.
ARTICLE VII - DISCHARGE OR SUSPENSION
SECTION 1. The Company shall have the right to terminate part-time (normally
scheduled less than forty (40) hours per week) and probationary employees (less
than ninety (90) days) for any reason and to terminate arty other employee due
to lack of work, shortage of equipment, emergencies over which the Company has
no control, or for other similar business reasons or for just cause. However,
nothing in this Agreement shall be construed as giving a person the right to get
or retain a job for which he is not qualified, not physically capable, or which
neglects or refuses to do.
SECTION 2. Each employee will do his part to do the work assigned to him in a
workmanlike manner satisfactory to the customer and the Employer, realizing that
safe, economical, and reliable service to customers is the basis of existence
both for employees and the Company. The Company reserves the exclusive right to
direct and control employees and, where it deems necessary, reprimand,
discipline, and/or discharge an employee, for just cause. In the event of minor
failures or infractions by a regular, full-time employee, he shall not be
suspended or discharged without having received at least one (1) prior written
warning notice for the same or similar infraction within the prior nine (9)
months. Three or more earning notices (not necessarily for the same or similar
infraction) within a nine (9) month period shall be considered just cause for
suspension or discharge. Warning notices under this Agreement shall be issued
within ten (10) days after the event occurs or is discovered by the Company and,
when issued, a copy shall be mailed to the Union within five (5) days. An
employee shall have the right to protest a warning notice he feels is
unjustified within ten (10) days.
SECTION 3. It is understood that no prior warning notice need be given in the
event of such things as (but not limited to):
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o Drunkenness on the job.
o Use, being under the influence, possession or sale of drugs or
narcotics on the job or when in possession of or responsible for
a company truck or similar equipment.
o Dishonesty.
o Unexcused failure to show up for work for three (3) consecutive
working days.
o Careless operation of equipment resulting serious loss or damage
of equipment or load upset of a unit or trailer.
o Speeding in excess of Company rules resulting in damage or
recklessness resulting in damage.
o Carrying of unauthorized persons, materials, or goods.
SECTION 4. If a suspended or discharged employee feels the suspension or
discharge was without just cause, the employee may request a hearing before the
operations manager or his representative provided such request is made within
five (5) working days after the suspension or discharge. Upon such timely
request, the employee shall be granted a hearing. At that time, the employee,
the Union, and any other interested party may present evidence or testimony or
argument in support of the contention that the discipline or discharge was
without just cause. After hearing all such evidence and testimony, the Company
shall give the employee and the Union an answer that confirms, modifies, or
reveres the original discipline or discharge. If this answer is not acceptable,
the Union may request arbitration on the matter, provided such request is made
within five (5) working days after the answer is given. Arbitration will be
based on the same evidence and testimony that was given to the operations
manager and upon which he predicated an answer, except upon proof that such
testimony was not available at the time of original hearing.
ARTICLE VIII - GRIEVANCE AND ARBITRATION
SECTION 1. Every reasonable attempt will be made by both parties to resolve any
grievance without arbitration. However, if the parties cannot arrive at an
understanding, the grievance may be submitted to a jointly acceptable neutral
arbitrator, provided arbitration is requested within thirty (30) days of the
event giving rise to the grievance. Arbitrable grievances shall be limited to a
claim of a violation of one or more of the specific (as distinct from any
implied) provisions of this Agreement or a claim of unjust discharge or
disciplinary suspension unless prior voluntary agreement to arbitrate is
obtained in writing from both parties prior to proceeding to arbitration. If the
Union and the Company are unable to agree on an arbitrator, each shall designate
a qualified arbitrator and invest him with power to select a qualified
arbitrator. Any qualified arbitrator agreed upon jointly by such representatives
of the Union and the Company shall be the arbitrator and shall be empowered to
make a final and binding decision in conformity with the submission agreement
and the terms of this Agreement.
SECTION 2. The arbitrator shall have no power to change this agreement in any
way, nor to impose conditions on the parties he thinks the parties did or should
have agreed upon. He shall
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be limited to findings of facts and applying the provisions of this agreement to
those facts. Except in the event of an unjust discharge, the Company shall not
be required to pay twice or to pay one employee for work done and paid for to
another employee.
The arbitrator shall render his award within thirty (30) days after the closing
of the hearings. The decision of the arbitrator shall final and binding and
shall determine the subject of the arbitration for the duration of this
Agreement.
The compensation and expenses of the neutral arbitrator shall be borne jointly
by the parties to this Agreement.
ARTICLE IX - BONDS
SECTION 1. Should the Company require any employee to give bond, cash bond shall
not be compulsory, and any premium involved shall be paid by the Company. The
primary obligation to procure bond shall be on the Company. If the Company
cannot arrange for a bond within ninety (90) days, it must so notify the
employee in writing. Failure to so notify shall relieve the employee of the
bonding requirement. If proper notice is given, the employee shall be allowed
thirty (30) days from the date of such notice to make his own bonding
arrangements. Standard premium shall be the premium paid by the Company for
bonds applicable to all other of its employees in similar classifications. Any
excess premium is to be paid by the employee.
SECTION 2. In cases where bond cannot be arranged, or bond is canceled, the
employee shall be on standby until he can obtain bond or replacement bond at no
extra cost to the Company.
ARTICLE X - EXAMINATION AND IDENTIFICATION FEES
SECTION 1. Physical, mental or other examinations required by a government body
or the Company shall be promptly complied with by all such employees, provided,
however, the Company shall pay for all such examinations, except in the case of
driver's or chauffeurs' license examination. Examinations are to be taken at the
employee's home terminal. Employees will not be required to take examinations
during their working hours, without pay for the time consumed.
The Company reserves the right to select its own medical examiner or physician,
and the Union may, if it believes an injustice has been done an employee, have
said employee re-examined at the union's expense.
In the event of disagreement between the doctor selected by the Employer and the
doctor selected by the Union, the Company and the Union doctors shall together
select a third doctor within thirty (30) days whose opinion shall be final.
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SECTION 2. Should the Company find it necessary to require employees to carry or
record full personal identification, such requirement shall be complied with by
the employees. The cost of such requirement shall be borne by the Company.
ARTICLE XI - UNIFORMS
SECTION 1. The Company agrees that if any employee is required to wear any kind
of uniform as a condition of his continued employment, such uniform shall be
furnished and maintained by the Company free of charge, at the standard required
by the Company.
SECTION 2. Voluntary pooling arrangements for the purchase of uniforms shall not
come within the scope of this Article.
ARTICLE XII - PASSENGERS
SECTION 1. No driver shall allow anyone, other than employees of the Company who
are on duty, to ride on his truck, except by written authorization of the
Company. This shall not prohibit drivers from picking up other drivers or
helpers in wrecked or broken down equipment for transportation to the first
available point of communication or repair.
ARTICLE XIII - COMPENSATION CLAIMS
SECTION 1. The Company agrees to cooperate toward the prompt settlement of
employee on-the-job injury claims when such claims are due and owing.
SECTION 2. The Company shall provide Workmen's Compensation far all employees as
required by State Law.
SECTION 3. When an employee is injured on the job, he shall receive full pay for
that day or his current tour of duty, as the case may be, with a minimum of
eight (8) hours pay.
SECTION 4. In the event an employee is injured or becomes ill while on a run
away from his home terminal and return to his home terminal is deemed reasonably
necessary by an attending physician, the Company shall arrange and pay for
transportation by plane, or as directed by the doctor, to his home. In case of
death away from home terminal the Company shall bear the cost of bringing the
body home.
ARTICLE XIV - MILITARY CLAUSE
SECTION 1. An employee enlisting in or entering the Armed Forces of the United
States shall be granted all rights and privileges provided by applicable laws.
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ARTICLE XV - DEFECTIVE EQUIPMENT AND DANGEROUS CONDITIONS
SECTION 1. The Company shall not require employees to take out on the streets or
highways any vehicle that is not in safe operating condition or equipped with
the safety appliances prescribed by law. It shall not be a violation of this
Agreement for any employee to refuse to operate such equipment unless such
refusal is unjustified. The employee may be assigned other duties or equipment
at the Company's option.
SECTION 2. Line or pick-up and delivery equipment, used in short line, peddle or
local operation, shall have steps or some other suitable device to enable
drivers to get in and out of the body.
SECTION 3. The Company shall install and maintain heaters and defrosters on all
trucks and tractors, except where climatic conditions make this unnecessary.
ARTICLE XVI - TIME SHEETS, PAY PERIODS AND PAY DAYS
SECTION 1. Pay day shall be at least semi-monthly, not more than seven (7) days
after the close of the pay period provided, however, that present arrangements
shall not be disturbed by this provision except by mutual agreement.
The Company shall have a regularly designated pay day for employees, in each of
the various classifications.
When a regular designated pay day falls on Sunday or a holiday, the pay checks
for the employee not designated to work on such Sunday or holiday shall be made
available on the preceding day.
Upon discharge the Company shall pay all money due the employee not later than
the end of the next working day if requested by the employee. Upon quitting, the
Company shall pay all money due the employee on the payday in the week following
such quitting, unless governed by more restrictive requirement of State Law.
SECTION 2. The Company shall furnish each employee with an itemized statement of
earnings and deductions which are included in the check.
SECTION 3. Employees in line operations shall be required to complete all
required Company time sheets showing the arrival and departure at terminal and
intermediate stops and the cause and duration of all delays, time spent loading
and unloading, and same shall be turned in at the end of each trip.
Employees in local operations will record their time as required by the Company.
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SECTION 4. All claims for wages or complaints thereof which an employee might
have against the Company shall be filed within thirty (30) days of the payday
where the complaint occurred; otherwise, the Union, the employee, and the
Company agree that payment shall have been made in full.
ARTICLE XVII - POSTING AND BULLETIN BOARDS
SECTION 1. A copy of this Agreement, together with all supplements applicable to
work performed on or from the premises, shall be posted in a conspicuous place
in each terminal.
SECTION 2. The Company agrees to provide suitable space for the Union bulletin
board in each terminal. Postings by the Union on such boards are to be confined
to official business of the Union.
SECTION 3. The authorized business representative of the Union shall have access
to Company premises at reasonable times during regular business hours, upon
making prior arrangements with the terminal manager or whoever is in charge of
employees. Interviews with employees shall be carried on in a place designated
by the Company and shall not interfere with the work or operations of the
Company. This privilege shall not be abused.
ARTICLE XVIII - SUB-CONTRACTING
SECTION 1. The Company reserves the right to sub-contract any work or services
performed by employees of the collective bargaining unit; however, the Company
shall not contract out work for the purpose of laying off regular full-time
employees or retaining such employees in laid off status.
SECTION 2. It is expressly understood that owner-operators, lessors, or
sub-contractors of any kind and the men they employ are not to be considered
employees of the Company covered under this contract, nor are their operations
covered, controlled, or restricted in any way by this Agreement.
ARTICLE XIX - SEPARABILITY AND SAVINGS CLAUSE
SECTION 1. If any Article or Section of this Master Agreement, or any of the
other agreements supplemental hereto should be held invalid by operation of law
or by any tribunal of competent jurisdiction or if compliance with or
enforcement of any article or section of the agreements referred to above,
should be restrained by such tribunal pending a final termination as to its
validity, the remainder of the Agreement or Supplemental Agreement or the
application of same to persons or circumstances other than those as to which it
has been held invalid or as to which compliance with or enforcement of has been
restrained, shall not be affected thereby.
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ARTICLE XX - COMPANY RULES, SAFELY AND DRUG PREVENTION
SECTION 1. The Union recognizes the right of the Company from time to time upon
reasonable notice to establish such reasonable Company rules as it may deem
necessary, provided that such rules are not in conflict with the terms of this
Agreement. A copy of any Company rules reduced to writing shall be given each
employee and the Union. Employees will abide by reasonable rules and
instructions of the Company not in conflict with the terms of this Agreement as
a condition of continued employment.
SECTION 2. The parties agree that safety and health are the responsibility of
each individual and all parties. The Employer agrees to take reasonable measure
to provide a safe and healthy place to work in accordance with existing
government regulations. The employees agree to work in a safe manner, properly
use and care for equipment provided by the Employer, operate equipment safely,
and to observe safety and operating rules as established and posted from time to
time by the Employer as a condition of continued employment. As a condition of
employment the employee agrees not to use, possess, sell or be under the
influence of illegal drugs at work or to possess, drink or be under the
influence of alcohol at work. The Employer shall have the right to establish,
maintain, and enforce reasonable rules and regulations to assure orderly
operations. The Union agrees to support Management's efforts to run a safe, dent
and drug free company.
SECTION 3. Drug prevention. The Union fully supports the substance abuse
prevention and testing program as published the Company under applicable state
and federal laws and regulations which the Employer has the full right to
administer and fully enforce and amend from time to time as it might deem
necessary to conform with law or regulation. The Employer will keep the Union
informed of any changes in the program. The Union reserves the right to file a
grievance upon a claim that the Employer's enforcement was without justification
or was discriminatory.
ARTICLE XXI - VACATIONS AND VACATION COMPENSATION
SECTION 1. A regular, full-time employee shall receive one (1) week of paid
vacation after completing one (1) year of continuous employment with the
Company. After two (2) years of continuous employment, a regular, full-time
employee shall receive two (2) weeks of paid vacation, three (3) weeks after ten
(l0) years of continuous employment, and four (4) weeks after twenty (20) years
of continuous employment.
Service means continuous employment with the Company uninterrupted by
termination. In the event of any termination and subsequent rehire, vacation and
vacation pay shall begin anew as in the case of a NEW HIRE. Vacation rights and
related vacation pay is earned and vested on each annual anniversary date of
employment pertinent to the affected employee.
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SECTION 2. Vacation pay shall be computed as follows:
Pay for one (1) week of vacation shall be paid in the amount of one fifty-second
(1/52nd) of the gross annual earnings of the employee during the twelve (12)
month period immediately prior to a employee's anniversary date.
Pay for two (2) weeks vacation shall be in the amount of two fifty-seconds
(2/52nds) of the gross annual earnings of the employee during the twelve (12)
month period immediately prior to the employee's anniversary date.
Pay for three (3) weeks vacation shall be in the amount of three fifty-seconds
(3/52nds) of the gross annual earnings of the employee during the twelve (12)
month period immediately prior to the employee's anniversary date.
Pay for four (4) weeks vacation shall be in the amount of four fifty-seconds
(4/52nds) of the gross annual earnings of the employee during the twelve (12)
month period immediately prior to the employee's anniversary date.
Vacation pay shall be due and payable when the vacation is taken. Time off for
vacation shall be as agreed between the employee and the Company but the Company
shall have the final right to determine when vacations are taken.
An employee who quits, or who is discharged after the completion of one (1) full
year of employment shall be entitled to a pro-rated vacation pay allowance upon
severance of employment, computed upon the same formula he would have received
had he completed such year of employment.
Pro-rated vacation pay shall be paid with final check upon severance of
employment.
Laid off employees, who have completed at least one (1) year of service, who are
qualified to receive pro-rata vacation pay at the time of lay-off, shall have
the option of collecting accumulated pro-rata vacation pay for the portion of
employment year worked at the end of thirty (30) days following the date of such
lay-off.
An employee transferred from one supplemental agreement and/or terminal under
this Agreement to another shall suffer no loss of vacation, provided the
employment is continuous.
ARTICLE XXII - PAID HOLIDAYS
SECTION 1. A regular full-time employee with seniority who has completed the
probationary period shall receive eight (8) hours' pay at his regular hourly
rate of pay for NEW YEARS DAY, WASHINGTON'S BIRTHDAY, MEMORIAL DAY, FOURTH OF
JULY, LABOR
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DAY, THANKSGIVING DAY, FRIDAY AFTER THANKSGIVING, CHRISTMAS EVE, and CHRISTMAS
DAY.
Should any regular full-time employee work one of the above holidays or any day
celebrated in lieu thereof, he shall receive his holiday pay plus the pay earned
during that day. No employee shall be called on the above-named holidays for
less than a full day.
When any one of the above holidays fall on Sunday, the Monday following shall be
considered the holiday. If a holiday falls during an employee's vacation, he
shall receive pay for the holiday in addition to his vacation pay.
SECTION 2. A regular full time employee with seniority, who has completed the
probationary period and is assigned to a work week schedule of four (4) ten (10)
hour days shall receive ten (10) hours pay at his/her regular hourly rate for
each day listed in Section 1, above, provided the holiday occurs during a
scheduled work week. If the holiday falls outside of the scheduled work week the
employee will receive eight (8) hours pay at their regular hourly rate.
ARTICLE XXIII - CHECK-OFF
SECTION 1. The Employer will deduct Union dues from the payroll payments for
each employee who authorizes the deduction by voluntarily executing a written,
revocable statement requesting to the Employer to make such deductions. The
Employer will forward the amounts so deducted to the Union. The authorization
may be canceled at any time by the employee by notifying the Company and the
Union in writing.
ARTICLE XXIV - HEALTH AND WELFARE PROGRAM: PENSION PLAN
SECTION 1. The Company will continue its own Company wide Health and
Hospitalization Insurance Program during the term of this Agreement. This
program shall be offered to eligible employees on the same basis offered
non-represented employees. Employees who wish to participate may do so in
accordance with the terms of the individual program and company policy provided
they meet the qualifications, sign up and authorize any necessary payroll
deductions. The Employer shall continue to administer the plans in accordance
with whatever detailed terms and conditions are in effect at the appropriate
time. Cafeteria plan extras are voluntary and Employee paid. The Employer shall
be free to amend, alter or terminate any plan it deems necessary during the term
of this Agreement. The Employer will give the Union advance written notice and
the opportunity to bargain on alternatives in the event of a major change in its
basic Health and Hospitalization plan; however, this shall not prevent the
Employer from going forward with the changes in an orderly fashion.
SECTION 2. Each full-time employee eligible for the Company insurance shall have
the option to select either the Company plan or the Utah-Idaho Teamster Security
Fund. Once the
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employee chooses the plan he desires, the option shall remain in effect for a
period of at least one (1) year. An employee who chooses to join either health
plan cannot later join the other plan without first satisfying that plan's
insurance provisions regarding pre-existing conditions.
The Utah-Idaho Teamster Fund payment of the Company is $364.75 per month
December 1, 1999 (up to $404.75 1/1/00; up to $429.75 4/1/01 and up to $454.75
4/1/02) for employees choosing that plan based on working 80 hours the prior
month. Include Teamsters Plan B+, Dental and Vision Care under cafeteria plan
(pre-tax) payroll deduction from incentive or other monthly pay. The company
will authorize payroll deduction of premium in excess of Company contribution.
By the execution of this Agreement, the parties hereto accept the provisions of
the Agreement and Declaration of Trust of the Utah-Idaho Teamsters Fund as it
may be revised from time to time and agree to enter into the appropriate Trust
Agreement and ratify all actions heretofore taken or to be taken hereafter by
the Trustees acting within the scope of their authority thereunder. The Employer
accepts the Employer Trustees under such Agreement.
SECTION 3. The Company wilt maintain its own existing pension plan during the
term of this Agreement. The Company may change and/or improve the program
without prior notice or bargaining, but may not eliminate the program during the
term of this Agreement.
ARTICLE XXV - NONDISCRIMINATION
SECTION 1. Membership in the Local Union is not compulsory. Employees have the
right to join, not join, maintain, or drop their membership in the Local Union
as they see fit. Neither party shall exert any pressure on or discriminate
against an employee as regard to such matters. The parties agree there shall be
no discrimination on the basis of race, creed, sex, national origin, age or
handicap as required by law.
ARTICLE XXVI - PICKET LINES AND STRUCK GOODS
SECTION 1. There shall be no work stoppage or lock out during the term of this
Agreement. The Union recognizes that the Company has an obligation to serve the
public. It is understood that the Company must handle all goods and provide
uninterrupted service for any shipper, consignee, or other person who so desires
this service. The Union and all employees will cooperate to this end. In the
event of any action prohibited by this Article, the Union, its officers or
agents agree that it will use its prohibited efforts affirmatively to end such
prohibited conduct.
The Union voluntarily waives all rights to support or engage in sympathy
strikes.
SECTION 2. It shall not be cause for discharge or other disciplinary action in
the event an individual employee refuses to enter upon any property involved in
a primary labor dispute or
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refuses to go through or work behind any primary picket line including the
primary picket line of the Union and including the primary picket lines at the
Employer's place of business provided the primary picket line involved has been
reviewed and approved by the Joint Council, however, any such employee need not
be paid for any work, run or shift not completed and may be replaced by the
Company.
ARTICLE XXVII - UNION WAIVER
SECTION 1. All matters not otherwise limited or prescribed by the terms of this
Agreement shall be under the exclusive and total control of management. In
accepting the considerations and limitations herein agreed to by the Employer,
the Union unqualifiedly waives all present and/or future rights during the term
of this Agreement to require the Company to bargain collectively on any other
aspect of wages, hours, and working conditions affecting employment, whether
specifically contained herein or not, thus giving the Company the unilateral
right to manage the business subject only to the express terms of this
Agreement.
ARTICLE XXVII - TERM OF AGREEMENT
SECTION 1. This Agreement shall be in full force and effect from December 1,
1999 to and including November 30, 2002 and shall continue from year to year
thereafter unless written notice of desire to cancel or terminate the Agreement
is served by either party upon the other at least sixty (60) days prior to date
of expiration.
Where no such cancellation or termination notice is served and the parties
desire to continue said Agreement but also desire to negotiate changes or
revisions in this Agreement, either party may serve upon the other a notice at
least sixty (60) days prior to November thirtieth (30th) of any subsequent
contract year, advising that such party desires to revise or change the terms or
conditions of such Agreement.
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IN WITNESS WHEREOF the parties hereunto have set their hands and seals this
________ day of ____________, 1999.
MOTOR CARGO, INC. INTERNATIONAL BROTHERHOOD OF
TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN AND HELPERS OF
AMERICA, LOCAL UNION #222
BY: /s/ BY: /s/
------------------------ -------------------------------
BY: /s/ BY: /s/
------------------------ -------------------------------
BY: BY:
------------------------ -------------------------------
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1999 - 2002
MOTOR CARGO
SALT LAKE CITY, UTAH
LOCAL AND SHORT LINE SUPPLEMENT
THIS AGREEMENT deemed made and entered into between MOTOR CARGO, INC., Salt Lake
City, Utah and the INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN, AND HELPERS OF AMERICA, LOCAL UNION NO. 222, is supplemental to
and controlled by the MASTER TRUCK AGREEMENT, between the above parties and
provides for wages and working conditions.
ARTICLE I - SCOPE OF AGREEMENT
SECTION 1. The execution of this Agreement on the part of the Company shall
cover all truck drivers, helpers, dockmen, warehousemen, checkers, hostlers, and
such other employees as may be presently or hereafter engaged in pickup,
delivery and assembling of freight within the jurisdiction of a signatory union
to this contract as outlined herein.
Pick up, Delivery, Local Cartage and Short Line as covered by this Agreement
shall mean those operations designated by the Company as short line operations.
This shall not be construed as preventing short line employees from performing
work that might otherwise be done by long line employees or vice versa.
SECTION 2. Full-time employees covered by this Agreement shall include, but not
be limited to, drivers, chauffeurs, or driver-helpers operating truck tractors,
motorcycles, passenger or horse-drawn vehicles, or any other vehicles operated
on the highway, street, or private road for transportation purposes. The term
employee also includes, but is not limited to, employees used in dock work,
checking, stacking, loading, unloading, shipping, receiving, assembling, and
allied work.
Full-time regular employees are those employees that work continuously for the
Company and have completed their ninety (90) day probationary period. All terns
and conditions of this Agreement apply to these employees.
Part-time and casual employees are "on-call" and are not granted seniority or
benefits (other than wages) under this Agreement. Part-time employees are those
normally working less than forty (40) hours per week.
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Probationary employees are those full-time employees with less than ninety (90)
days of continuous service with the Company. After this ninety (90) day trial
period, full-time employees shall be placed on the seniority list.
ARTICLE II - GENERAL PROVISIONS
SECTION 1. There shall be no split shifts for full-time employees.
SECTION 2. The Company agrees to maintain a clean, sanitary washroom, having hot
and cold running water and with toilet facilities unless otherwise mutually
agreed to.
SECTION 3. A daily time shall be maintained by the Company at its place of
business. All terminals with five (5) or more employees shall have time clocks.
SECTION 4. Meal periods shall be established by the Company at either thirty
(30) minutes or one (1) hour, but not both, and shall not be changed except by
mutual agreement with an employee. Each classification or shift shall have a
uniform meal period.
No employee shall be compelled to take more than one continuous meal period
during shift nor compelled to take any part of such continuous hour before he
has been on duty four (4) hours or after has been on duty five (5) hours. Meal
periods shall not be compulsory at stops where driver is responsible for
equipment or cargo, nor shall the meal period be compulsory when or where there
is no accessible eating place.
SECTION 5. All employees shall be granted a fifteen (15) minute coffee break,
approximately half-way through the first half of their shift, and a fifteen (15)
minute coffee break approximately half way through the second half of their
shift. Such coffee breaks shall be taken without loss of pay and the employee
shall not be required to make up such time.
SECTION 6. Employees may be assigned to any work on an emergency, training,
temporary, or intermittent basis. Employees working in a higher pay
classification in any given day shall receive the higher rate of pay for all
hours worked for that day.
ARTICLE III - SENIORITY
SECTION 1. Seniority shall be established upon successful completion of the
probationary period of ninety (90) days continuous service with the Company by a
full-time employee. All terms and conditions of the Agreement shall apply to
regular full-time employees who have completed the probationary period. After
completing the ninety (90) day probationary period, an employee shall be placed
on the seniority list as of his date of employment.
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Terminal seniority, as measured by length of service at such terminal, shall
prevail over Company seniority or seniority under another supplement except
where the Company and Union agree to the contrary.
SECTION 2. When it becomes necessary to reduce the working force, the last
employee hired shall be laid off first and when the force is again increased,
the employees shall be returned to work in the reverse order in which laid off.
A laid off employee shall be given ten (10) days notice of recall mailed to his
last known address. The employee must respond to such police within three (3)
days after receipt thereof and actually report to work in seven (7) days after
receipt of notice unless otherwise mutually agreed. An employee shall lose all
seniority rights and right of recall if on layoff longer than eighteen (18)
months or upon failure to comply with recall as provided above.
SECTION 3. Seniority shall not apply to probationary, part-time or casual
employees. Probationary, part-time and casual employees shall not be used in
order to lay off currently working full-time employees and further in the event
of a reduction of force, regular full-time employees shall have the right to
transfer to part-time or casual employee jobs without losing seniority if they
wish, rather than being laid off.
SECTION 4. The Company shall not require, as a condition of continued
employment, that an employee purchase truck, tractor and/or tractor and trailer
or other vehicular equipment or that any employee purchase or assume any
proprietary interest or other obligation in the business.
SECTION 5. All regular runs and new positions are subject to seniority and shall
be posted for bids. Posting shall be in a conspicuous place so that all eligible
employees shall receive notice of the vacancy. Such posting of bids shall be
made not more than once each calendar year, unless mutually agreed, except bids
for new runs, new positions or vacancies.
If either party at any time may find the present methods of bidding inoperative
as outlined, negotiations may be requested to correct any problems arising under
these procedures.
SECTION 6. The Employer shall post in a conspicuous place at the employee's home
terminal and shall mail to the Union within thirty (30) days after the signing
of this Supplemental Agreement, a list of the regular employees covered by this
Supplement Agreement arranged according to their seniority. The above list shall
kept current. Protest to any future employee's seniority date or position on
such list must be made in writing to the Employer within thirty (30) days after
such seniority date or position first appears, and if no protests are timely
made, the dates and positions as posted shall be deemed correct. Any such
protest which is timely made may be submitted to the grievance procedure.
SECTION 7. In the event that the Company absorbs the business of another private
contract or common carrier, or is a party to a merger of line, the seniority of
the employees absorbed
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or effected thereby shall be determined by mutual agreement between the parties,
or the parties may agree to submit it to the grievance procedure.
SECTION 8. When a branch, terminal, division or operation is closed and the work
of the branch, terminal, division or operation is eliminated, an employee who
was formerly employed at another branch, terminal, division or operation shall
have the right to transfer back to such former branch, terminal, division or
operation and exercise his seniority based on the date of hire at the branch,
terminal, division or operation into which he is transferring, provided he has
not been, away from such original terminal for more than two (2) years.
When a branch, terminal, division, or operation is closed or partially closed
and the work of the branch, terminal, division, or operation is transferred to
another branch, terminal, division or operation in whole or in part, an employee
at the closed or partially closed down branch, terminal, division or operation
shall have the right to transfer to the branch, terminal, division or operation
into which the work was transferred if work is available there. Such employee,
however, shall go to the bottom of the seniority board and shall have the right
of job selection only in accordance with his seniority at such terminal.
However, he shall exercise his company seniority for layoff purposes and all
other contract benefits.
In all transfers referred to above, the employee must be qualified to perform
the job by experience in the classification.
SECTION 9. Where any full-time employee is required by the Company to change
residence in order to follow employment as a result of an approved change of
operation, the Company shall move the employee or pay his moving expenses. This
shall not apply to moves within a radius of one hundred fifty (150) miles. The
Company shall not be responsible for moving or moving expenses if an employee
changes his residence as a result of voluntary transfer.
SECTION 10. Employees may be assigned to any work as required by the Company to
serve the customers. An employee who neglects or refuses the work assigned by
the Company may be relieved and sent home from duty or reassigned by the
Company.
ARTICLE IV - EXTRA BOARDS
SECTION 1. SHORT LINE EXTRA BOARD: Employees with seniority under this
supplement shall have the opportunity to bid for the number of extra board
positions designated by the Company for assignment on mileage paid work.
Employees will have the opportunity of having their names placed on the extra
board as a secondary job. Successful bidders will be used on their regular work
assignment and be "on call" as extra mileage paid runs are needed. Where extra
board mileage paid drivers are used at a terminal, the Company will assign runs
on a first-in, first-out basis wherever practicable.
18
<PAGE> 19
SECTION 2. LONG LINE EXTRA BOARD: Short line supplement employees shall also
have the opportunity to bid on long line extra board positions, as designated by
the Company, to do extra board work as it comes up and still retain their short
line supplement seniority and regular job. At such time as an opening occurs and
the employee elects to transfer to a regular position (not extra board) under
the long line supplement, he shall cease to accrue seniority under this
supplement and begin to accrue seniority under the long line supplement. In the
event of a subsequent reduction of force, he shall exert his seniority under the
long line supplement only.
ARTICLE V - HOURS OF WORK AND PAY
SECTION 1. Except as expressly provided in this Agreement, flexibility in
methods of payment, hours of work, and extra pay for extra work or other reasons
is retained by the Company, any rates of pay or pay practices which are not in
conflict with the express provisions of the Agreement, may be continued and will
be posted in each terminal. When changes occur in such published rates, a copy
will be provided to the steward and the union upon request. Such changes may be
made by the Company at any time.
SECTION 2. Except as expressly provided in this Agreement, present practices
with respect to scheduling work may be maintained. If changes become necessary,
the employees involved will be notified as far in advance as practicable.
SECTION 3. Wherever employees or work is specifically assigned on an hourly
basis by the Company such as on the dock or in local driving the following shall
apply.
SUB SECTION A. An employee assigned on an hourly basis shall be paid for all
time spent in service of the Company as outlined in subsections A through D
herein. Rates of pay provided for by this Agreement shall be minimums. Time
shall be compute from the time that the employee is ordered to report for work
and registers in and until he is effectively released from duty. All time lost
due to delays as a result of overloads or certificate violations involving
federal, state, or city regulations, which occur through no fault of the driver,
shall be paid for exclusive of meal periods.
SUB SECTION B. Any full-time regular employee assigned to a work week schedule
of five (5) eight (8) hour days, reporting to work pursuant to instructions,
shall be paid four (4) hours pay at his/her regular hourly rate if he/she is not
given work. If worked more than four (4) hours he/she shall be guaranteed eight
(8) hours work or pay.
Any full-time regular employee assigned to a work week schedule of four (4) ten
(10) hour days, reporting to work pursuant to instructions, shall be paid four
(4) hours pay at his/her regular hourly rate if he/she is not given work. If
worked more than four (4) hours he/she shall be guaranteed ten (10) hours work
or pay.
19
<PAGE> 20
SUB SECTION C. When an emergency "call back" occurs the employee shall be
guaranteed not less than two (2) hours pay.
SUB SECTION D. For those employees assigned an eight (8) hour workday, all hours
worked in excess of eight (8) hours in one (1) day or forty (40) hours in any
work week shall be paid for at one and one half (1 1/2) times the employee's
regular rate. For those employees assigned a ten (10) hour workday, all hours
worked in excess of ten (10) hours in one (1) day or forty (40) hours in any
work week shall be paid for at one and one half (1 1/2) times the employee's
regular rate. Overtime shall not be pyramided.
SUB SECTION E. For those employees assigned an eight (8) hour workday, work
shall be scheduled for five (5) consecutive days with a limit of four (4) work
weeks. For these employees assigned a ten (10) hour work day, work shall be
scheduled for four (4) days of the regularly scheduled work week with at least
two (2) consecutive days off with a limit of four (4) work weeks. The Union will
be supplied at all times with an up-to-date listing of work weeks, start times
and bid jobs.
SUB SECTION F. Holidays falling outside the regular scheduled work week shall be
paid in addition to pay for actual hours worked in the week.
SUB SECTION G. Minimum hourly rates of pay for hourly assigned employees under
this supplement are as listed below:
REGULAR FULL TIME
<TABLE>
<CAPTION>
12/01/99 12/01/00 12/01/01
-------- -------- --------
<S> <C> <C> <C>
Drivers - TOP $17.66 $18.16 $18.16
1st 6 months $13.00 $13.50 $14.00
2nd 6 months $13.70 $14.20 $14.70
3rd 6 months $14.60 $15.10 $15.60
4th 6 months $15.90 $16.40 $16.90
</TABLE>
Note #1 Probationary drivers with driver seniority dates prior to
12/1/93 will be paid twenty (20%) less than the top rate far the first
ninety days. No part time employee shall have his hourly rate reduced as
a result of being designated a full time employee by the Company.
20
<PAGE> 21
<TABLE>
<CAPTION>
REGULAR PART TIME 12/01/99 12/01/00 12/01/01
-------- -------- --------
<S> <C> <C> <C>
Drivers - TOP $13.00 $13.50 $14.00
First 500 hours $11.50 $12.00 $12.50
Dock - TOP $12.25 $12.75 $13.25
First 500 hours $10.65 $11.15 $11.65
</TABLE>
Note #2 Regular part time employees employed as of 12/1/93 will be red
circled at their existing rate until the above rates catch up with them.
<TABLE>
CASUAL 12/01/99 12/01/00 12/01/01
-------- -------- --------
<S> <C> <C> <C>
Drivers - TOP $10.25 $10.75 $11.25
Dock - TOP $10.15 $10.65 $11.15
</TABLE>
SECTION 4. MILEAGE RATES AND WORK. Whenever employees or work is specifically
assigned on a mileage basis by the Company such as line run, the sub sections A
through C shall apply.
SUB SECTION A. Minimum mileage rates for assignments under this supplement are:
Regular Full Time Employee Single Man
<TABLE>
<CAPTION>
REGULAR
FULL TIME
EMPLOYEES 12/01/99 12/01/00 12/01/01
-------- -------- --------
<S> <C> <C> <C>
Single Man $0.3953 $0.4053 $0.4153
Dock - TOP $0.02
</TABLE>
SUB SECTION B. MILEAGE DETERMINATION: Mileage shall be paid over the shortest
practical route traveled from point of origin to point of destination with the
Company realizing that conditions reasonably beyond the control of tine Company
or employee may dictate alternate routes.
21
<PAGE> 22
Mileage will be laid by mileage shown on official state highway maps. When final
destination is not shown on the maps available, actual miles traveled will be
logged from the last point shown. Mileage shown plus actual miles shall be used.
In the event an error in mileage has been made, this error will be corrected
immediately.
SUB SECTION C. A11 runs or trips shall be paid for at the mileage rate for miles
driver. The applicable hourly rube shall be paid in addition to mileage for work
time other than check and fuel time, but not limited to chaining time, lire
changes, loading and unloading, waiting to load and unload, breakdown time, time
lost due to impassable highways.
ARTICLE VI - TERM OF AGREEMENT
The term of this Supplemental Agreement is subject to and controlled by the
MASTER AGREEMENT.
MOTOR CARGO, INC. INTERNATIONAL BROTHERHOOD
OF TEAMSTERS, CHAUFFEURS,
WARE-HOUSEMEN AND HELPERS
OF AMERICA, LOCAL UNION #222
BY: /s/ BY: /s/
------------------------ -------------------------------
BY: /s/ BY: /s/
------------------------ -------------------------------
BY: BY:
------------------------ -------------------------------
22
<PAGE> 23
1999 - 2002
MOTOR CARGO
SALT LAKE CITY, UTAH
LONG LINE SUPPLEMENT
THIS AGREEMENT deemed and entered into between MOTOR CARGO, INC, Salt Lake City,
Utah and the INTERNATIONAL BROTHERHOOD OF CHAUFFEURS, WAREHOUSEMEN AND HELPERS
OF AMERICA, LOCAL UNION NO. 222, is supplemental to and controlled by the MASER
TRUCK AGREEMENT between the above parties and provides for wages and working
conditions.
ARTICLE I - SCOPE OF AGREEMENT
SECTION 1. For the purpose of this supplement the term "Long Line" is any dry
freight operation so designated by e Company as under this supplement and not
within the scope of the Local and Short Line Supplement between the parties.
This shall not preclude long line employees from performing work that might
otherwise be done by local and short line employees or vice versa.
SECTION 2. Employees covered by this Agreement shall include any employee
driver, chauffeur or driver-helper operating a truck, tractor, motorcycle,
passenger or horse drawn vehicle, or any other vehicle operated on the highway,
street or private road for transportation purposes.
Regular employees are those employees other than extra employees that work
continuously far the Company and have completed their ninety (90) day
probationary period. All terms and conditions of this Agreement apply to these
employees.
Extra employees are those employees who normally work less than forty (40) hours
her week and have other employment and students enrolled in any institution of
learning and extra board employees having seniority under the Short Line
Supplement, or any of them. Long Line Extra Board employees (except those under
the Short Line Supplement) are on call and are not granted seniority or other
benefits (ether than wages) under this Agreement.
Probationary employees are those employees with less than ninety (90) days of
continuous service with the Company. After this ninety (90) day trial period,
employees shall be placed on the regular seniority list.
SECTION 3. The Company expressly reserves the right to control the manner, means
and details if any, by which the owner-operator performs his services as well as
the means to be
23
<PAGE> 24
accomplished. They shall not be considered employees under this contract The
Company reserves the right to subcontract any work or services performed;
however, the Company shah not contract out work for the purpose of laying off
regular full-time employees or retaining such employees in laid off status.
ARTICLE II - RATES OF PAY
SECTION 1. Except as expressly provided in this Agent, flexibility in methods of
payment, hours of work and extra pay for extra work or other reasons is retained
by the Company. Any rates of pay or practices which are not in conflict with the
express provisions of this Agreement may be continued and will be posted in each
terminal. When changes occur in such published rates, a copy be provided in the
steward and union upon request Such changes may be made by the Company at any
lime.
SECTION 2. Except as expressly provided in this Agreement, present practices
with respect to scheduling work may be maintained. If change becomes necessary,
the employees involved will be notified as far in advance as practicable.
SECTION 3. The minimum mileage rates of pay for all miles driven or hours worked
under this agreement where such rates apply shall be:
REGULAR FULL TIME LONE LINE EMPLOYEES
<TABLE>
<S> <C> <C>
Single 12/01/99 $0.3953
12/01/00 $0.4053
12/01/01 $0.4153
</TABLE>
(Sleeper add $0.02 to rate then split, Triples or 48' plus 28' add $0.02)
<TABLE>
Other 12/01/99 12/01/00 12/01/01
----------- ------------ -----------
<S> <C> <C> <C>
Work Time $ 17.02 $ 17.52 $ 18.02
Break Down $ 8.51 $ 8.76 $ 9.01
Holiday $ 17.66 $ 18.16 $ 18.66
</TABLE>
SUB SECTION A. MILEAGE DETERMINATION. Mileage shall be paid over the shortest
practical route traveled from point of origin to point of destination with the
Company realizing that conditions reasonably beyond the control of the Company
or, employee may dictate alternate routes.
24
<PAGE> 25
Mileage will be paid by mileage shown on official state highway maps. When final
destination is not shown on the maps available, actual miles traveled will be
logged from the last point shown. Mileage shown plus actual miles shall be used.
In the, event an error in, mileage has been made, this error will be corrected
immediately.
All runs or dips shall be paid for at the mileage rate for miles driven.
SECTION 4. Where an employee is called and reports for duty and no work is
provided, the employee shall be guaranteed a minimum of four (4) hours pay. The
four (4) hour guarantee shall not apply where an employee has been given at
least two (2) hours' notice that no work is to be provided. Employees shall be
given at (2) hours' notice when ordered to report for duty, at both the home
terminal and at the end of the run where he has been effectively released from
duty by the Company.
SECTION 5. In all cases where an employee is instructed to ride or drive on
Company or leased equipment, he shah receive full pay as specified in the
agreement When instructed to deadhead on other than Company or leased equipment,
he shall receive hourly rate oft pay for time spent with a minimum of eight (8)
hours plugs cost of transportation.
SECTION 6. On a turnaround operation involving the interchange of equipment in a
continuous through movement of schedules, the interchange shall such equipment
shall be made at a regular designated point Drivers shall not be eased from duty
at such turnaround point.
SECTION 7. On breakdowns or impassable highways, each driver on all tars shall
be paid one-half of the hourly rate for all time spent on such data, comet with
the first hour of fraction thereof, but not to exceed eight (8) hours out o each
twenty-four (24) hour period, except that when an employee is required to remain
with his equipment during such breakdown or impassable highway, he shall be paid
for 2 such delay time at one half (1/2) the rate specified in this Agreement.
Where an employee is held longer than eight (8) hour period, he shall m addition
be furnished clean, comfortable, sanitary lodging, plus meals, not to exceed
three (3) meals in each twenty-four (24) hour delay. The pay for delay time
shall be in addition to movies earned for miles driven and/or work performed.
All time lost due to delays as a result of overloads or certificate violations
involving federal, state, or city regulations, which occur through no fault of
the driver, shall be paid for at the regular applicable hourly rate in s
Agreement.
SECTION 8. The applicable hourly rate shall be paid to each lover for time sent
other than driving, which shall include, but not be limited to chaining time,
the changes, loading and/or unloading, dropping and picking up trailers and
hostling.
25
<PAGE> 26
SECTION 9. When drivers are required to take a rest period or layover doing any
one round trip, away from his home terminal, he shall be compensated as follows:
For the first fourteen (1,4) hours of each layover period after the run end, no
pay.
For the next eight (8) hours, beginning with the start of the fifteenth (I5th)
hour after arrival at the layover point, at the regular hourly rate of pay, with
a minimum guarantee of one (1) hour if not dispatched at the beginning of the
fifteenth (1) hour.
For the next ten (10) hours, no pay.
For the next eight (8) hours the regular hourly rate of pay.
And continuing on the same basis for each continuing eighteen (18) hours. Each
driver will receive $4.00 for meals after eight (8) hours layover. These
provisions will only apply at one layover point during any one round trip.
SECTION 10. Drivers of tractor without trailer shall be paid on the same basis
as tractor/trailer drivers.
SECTION 11. Drivels shall, except by mutual agreement, be allowed one (1)
continuous hour for meals, but in no event less than thirty (30) minutes, nor
more than one (1) hour in each ten (10) hour period. A driver shall be compelled
to take any part of such continuous hour before he has been on duty four (4)
hours or after he has been on duty six (6) hours. Meal period shall not be
compulsory at terminals where driver is responsible for equipment or cargo, nor
shall meat period be compulsory when or where there is no accessible eating
place.
ARTICLE III - SENIORITY
SECTION 1. Seniority shall be established upon successful completion of the
probationary pe period of XXX0 days continuous service with the Company. All
terms and conditions Agreement shall apply to regular full-time employees who
have completed the probationary period. After completing the ninety (90) day
probationary period, an employee shah be placed on the seniority list as of his
date of employment.
SECTION 2. Terminal seniority under this supplement as measured by length of
service at a terminal shall prevail ever Company seniority or seniority under
another supplement, except where the Company and Union agree to the contrary.
SECTION 3. When it becomes necessary to reduce the working force the last man
hired shall be laid off first and when the force is again increased, the
employees are to be returned to work in the reverse order in which laid off.
26
<PAGE> 27
A laid off employee shall be given ten (10) days' notice of recall mailed to his
last known address. The employee must respond to such notice within three (3)
days after receipt thereof and actually report to work in seven (7) days after
the receipt of notice unless otherwise mutually agreed. An employee shall lose
all seniority rights and rights of recall if on layoff longer than eighteen (18)
months or upon failure to comply with recall as provided above.
SECTION 4. The Company shall not require, as a condition of continuing
employment that an employee purchase truck, tractor, and/or tractor and trailer
or other vehicular equipment or that any employee purchase or assume any
proprietary interest or other obligation of the business.
SECTION 5. All Rear runs and new positions are subject to seniority and shall be
posted for bids. Posting shall in a conspicuous place so that all eligible
employees shall receive notice of the vacancy. Such posting of bids shall be
made not more than once each calendar year, unless mutually agreed, except bids
for new runs, new positions or vacancies.
If either party at any time ma find the present methods of bidding inoperative
as outlined, negotiations may requested to correct any problems arising under
these procedures.
SECTION 6. The Employer shall post in a conspicuous place at the employee's home
terminal, and shall mail to the Union within thirty (30) days after the signing
of this Supplemental Agreement, a list of the regular employees covered by this
Supplemental Agreement arranged according to their seniority. The above list
shall be kept current. Protest to any future employee's seniority date or
position on such list must be made in writing to the Employer within thirty (30)
days after such seniority date or position first appears, and if no protests are
timely made, the dates positions as posted shall be deemed correct. Any such
protest which is timely made may be submitted to the grievance procedure.
SECTION 7. In the event that the Company absorbs the business of another private
contract or common carrier, or is a party to merger of line, the seniority of
the employees absorbed or affected thereby shall be determined by mutual
agreement between the parties, or the parties may agree to submit it to the
grievance procedure.
SECTION 8. When a branch, terminal, division, or operation is closed and the
work of the branch, terminal, division or operation is eliminated, an employee
who was formerly employed at another branch, terminal, division or operation
shall have the right to transfer back to such former branch, terminal, division
or operation and exercise his seniority based on the date of hire at the branch,
terminal, division or operation into which he is transferring provided he has
not been away from such original terminal for more than two () years.
When a branch, terminal, division or operation is closed or partially closed and
the work of the branch, terminal, division or operation is transferred to
another branch, terminal, division or operation in whole or in part; an employee
at the closed or partially closed down-branch,
27
<PAGE> 28
terminal, division or operation shall have the right to transfer to the branch,
terminal, division or operation in which the work was transferred if work is
available there. Such employee, however, shall go to the bottom of the seniority
board and shall have the right of job selection only in accordance with his
seniority at such terminal. However, he shall exercise his Company seniority for
layoff purposes and all other contract benefits.
In all transfers refereed to above, the employee must be qualified to perform
the job by experience in the classification.
SECTION 9. Where any full-time regular employee is required by one Company to
change residence in order to follow employment as a result of an approved change
of operation, the Company shall move the employee or pay his moving expenses.
This shall not apply to moves within one hundred (150) miles. The Company shall
not be responsible for moving or moving expenses if the employee changes his
residence as a result of voluntary transfer.
ARTICLE IV - EXTRA BOARD DRIVERS
SECTION 1. LONG LINE EXTRA BEARD: An extra board shall be established by the
Company in accordance with the number of extra board positions it may from time
to time determine are necessary. Short line Supplement employees shall have the
opportunity to bid on long line extra beard positions as designated by the
Company, do the extra board work as it comes up and still retain their short
lire supplement seniority and regular job. At such trine as a regular (not extra
board) opening occurs and the employee elects to transfer to a regular position
under this Supplement he shall begot to accrue seniority under this Supplement
and shall then exert seniority under this Supplement only. This shall not be
interpreted to mean the Employer may not hire new regular long line drivers as
it determines openings exist.
SECTION 2. Where extra long line drivers am regularly used at a terminal, the
Company will assign runs on a first in, first out basis.
SECTION 3. Employees may be assigned to any work as required by the Company to
serve the customers. Any employee who neglects or refuses the work assigned may
be relieved and sent home or reassigned by the Company.
28
<PAGE> 29
ARTICLE V - TERM OF AGREEMENT
The term of this Supplemental Agreement is subject to and controlled by the
MASTER AGREEMENT.
MOTOR CARGO, INC. INTERNATIONAL BROTHERHOOD
OF TEAMSTERS, CHAUFFEURS,
WARE-HOUSEMEN AND HELPERS
OF AMERICA, LOCAL UNION #222
BY: /s/ BY: /s/
------------------------ -------------------------------
BY: /s/
-------------------------------
BY:
-------------------------------
29
<PAGE> 30
1999 - 2002
MOTOR CARGO
SALT LAKE CITY, UTAH
SHOP SUPPLEMENT
THIS AGREEMENT deemed made and entered into between MOTOR CARGO, INC, Salt Lake
City, Utah and the INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN AND HELPERS OF AMERICA, LOCAL UNION NO. 222, is supplemental to and
controlled by the MASTER TRUCK AGREEMENT between the above parties and provides
for wages and working conditions.
ARTICLE I SCOPE OF AGREEMENT
SECTION 1. The execution of this Agreement on the part of the Company shall
cover all employees employed by the Employer at its Truck Service Center,
including--Mechanics, Tire Men, Fuelers, Lube Men, and Parts Men;
excluding--all Office Clerical Employees, Professional Employees, Janitors,
Guards, and Supervisors as defined m the Act.
SECTION 2. Full time regular employees are those employees that work
continuously for the Company and have completed their ninety (90) day
probationary period. All terms and conditions of this Agreement apply to these
employees.
Casual and part-time employees are "on-call" and am not granted seniority or
benefits (ether than wages under this Agreement Part-time employees are those
normally working less than forty (40) hours per week.
Probationary employees are those full-time employees with less than ninety (90)
days of continuous service with the Company. After this ninety (90) day trial
period, full-time employees shall be placed on the seniority list
ARTICLE II - GENERAL PROVISIONS
SECTION 1. There shall be no split shifts for full-time employees.
SECTION 2. The Company agrees to maintain a clean, sanitary washroom, having hot
and cold running water and with toilet facilities unless otherwise mutually
agreed.
SECTION 3. The shop shall have its own time clock.
SECTION 4. Meal periods shall be established by the Company at either thirty
(30) minutes or one (1) hour, but not both, and shall not be changed except by
mutual agreement with an
30
<PAGE> 31
employee. Each classification or shift shall have a uniform meal period. No
employee shall be compelled to eke more than one continuous meal period during
his shift nor compelled to take any part of such continuous hour before he has
been on duty four (4) hours or after he has been on duty five (5) hours.
SECTION 5. All employees shall be granted a fifteen (15) minute coffee break,
approximately half way through the first half of their shift, and a fifteen (15)
minute coffee break approximately half-way through the second half of their
shift. Such coffee breaks shall be taken without loss of pay and the employee
shall not be required to make up such time.
SECTION 6. Employees may be assigned to any work on an emergency training,
temporary, or intermittent bass, but shall be paid at their regular rate not to
exceed three (3) weeks.
ARTICLE III - SENIORITY
SECTION 1. Seniority shall be established upon successful completion of the
probationary period of ninety (90) days continuous service with the Company by a
full-time employee. All terms and conditions of the Agreement shall apply to
regular, full-time employees who have completed the probationary period. After
completing the ninety (90) day probationary period, an employee she placed on
the seniority list as of his date of employment.
Shop seniority as measured by length of service in the Shop, shall prevail four
purposes of layoff and recall over Company seniority or seniority under another
supplement except where the Company and the Union agree to the contrary.
SECTION 2. When it becomes necessary to reduce the working force, the last
employee nixed within a classification, shall be laid off first and when the
force is again increased, the employees shall be returned to work in the reverse
order in which laid off.
A laid off employee shall be given ten (10) days notice of recall mailed to his
last known address. The employee must respond to such notice within three (3)
days after receipt thereof and actually report to work in seven (7) days after
receipt of notice unless otherwise mutually agreed. An employee shall lose all
seniority rights and rights of recall if on layoff longer than eighteen (18)
months or upon failure to comply with recall as provided above.
SECTION 3. Seniority shall not apply to probationary, part-time or casual
employees. Probationary, part time and casual employees shall not be used in
order to lay off currently working full-time employees and further in the event
of a reduction of force, regular full-time employees shall have the right to
transfer to part-time or casual employee jobs without losing seniority if they
wish, rather than being laid off.
SECTION 4. All promotions to higher skilled classifications are subject to
seniority and shall be posted for bids. Posting will be at a conspicuous place
so that all eligible and qualified employees
31
<PAGE> 32
will receive notice of the vacancy. The Company has full authority to determine
qualifications of any bidder.
SECTION 5. The Employer shall post in a conspicuous place at the employee's home
terminal and shall mail to the Union within thirty (30) days after the signing
of this Supplemental Agreement, a list of the regular employees covered by this
Supplemental Agreement arranged according to their seniority. The above list
shall be kept current. Protest to any future employee's seniority date or
position on such list must be made in writing to the Employer within thirty (30)
days after such seniority date or position first appears, and if no protests are
timely made, the dates and positions as posted shall be deemed correct. Any such
protest which is timely made may be submitted to the grievance procedure.
SECTION 6. Where any full-time employee is required by the Company to change
residence in order to follow employment as a result of an approved change of
operation, the Company shall move the employee or pay his moving expenses. This
shall not apply to moves within a radius of 150 miles. The Company shall not be
responsible for moving or moving expenses if an employee changes his residence
as a result of a voluntary transfer.
SECTION 7. Employees play be assigned to any work as required by the Company to
serve the customers. Any employee who neglects or refuses the work assigned by
the Company may be relieved and sent home from duty or be reassigned by the
Company.
ARTICLE IV - HOURS OF WORK AND PAY
SECTION 1. Except as expressly provided in this Agreement, flexibility in
methods of payment, hours of work, and extra pay for extra work or other reasons
is retained by the Company, any rates of pay or practices which are not in
conflict with the express provisions of the Agreement may be continued and will
be posted in each terminal. When changes occur in such published rates, a copy
will be provided to the Steward and the Union upon request. Such changes may be
made by the Company at any time.
SECTION 2. Present practices except as expressly provided in this Agreement with
respect to scheduling work, may be maintained. If a change becomes necessary,
the employees involved will be notified as far in advance as practicable.
SECTION 3. Wherever employees or work is specifically assigned on an hourly
basis by the Company, the following shall apply:
SUB SECTION A. An employee assigned on an hourly basis shall be paid for all
time spent in service of the Company as outlined in sub sections A through D
herein. Rates of pay provided for by this Agreement shall be minimums. Time
shall be computed from the time that the employee is ordered to report for work
and registers in and until he is effectively released from duty.
32
<PAGE> 33
SUB SECTION B. Any full-time regular employee assigned to a work week schedule
of five (5) eight (8) hour days, reporting to work pursuant to instructions,
shall be paid four (4) hours pay at his/her regular hourly rate if he/she is not
given work. If worked more than four (4) hours he/she shall be guaranteed eight
(8) hours work or pay.
Any full-time regular employee assigned to a work week schedule of four (4) ten
(10) hour days, reporting to work pursuant to instructions, shall be paid four
(4) hours pay at his/her regular hourly rate if he/she is not given work. If
worked more than four (4) hours he/she shall be guaranteed ten (10) hours work
or pay.
SUB SECTION C. When an emergency "call back" occurs, the employee shall be
guaranteed not less than two (2) hours pay.
SUB SECTION D. For those employees assigned an eight (8) hour workday, all hours
worked in excess of eight (8) hours in one (1) day or forty (40) hours in any
work week shall be paid for at one and one half (1 1/2) times the employee's
regular rate. For those employees assigned to a ten( (10) hour workday, all
hours worked in excess of ten (10) hours in one (1) day or forty (40) hours in
any work week shall be paid for at one and one half (1 1/2) times the employee's
regular rate.
Overtime shall not be pyramided.
SUB SECTION E. For those employees assigned an eight (8) hour workday, work
shall be scheduled for five (5) consecutive days with a limit of four (4) work
weeks. For those employees assigned a ten (10) hour workday, work shall be
scheduled for four (4) days of the regularly scheduled work week with at least
two (2) consecutive days off with a limit of four (4) work weeks.
SUB SECTION F. Holidays falling outside the regular scheduled work week shall be
paid in addition to pay for actual hours worked in the week.
SUB SECTION G. Hourly rates for employees under this supplement shall be as
determined on an individual basis by the Employer. However, each shop employee
will receive an increase as follows on the date shown:
<TABLE>
<S> <C>
12/01/99 $0.50 per hour
12/01/00 $0.50 per hour
12/01/01 $0.50 per hour
</TABLE>
33
<PAGE> 34
ARTICLE V TERM OF AGREEMENT
The term of this Supplemental Agreement is subject to and controlled by the
MASTER AGREEMENT.
MOTOR CARGO, INC. INTERNATIONAL BROTHERHOOD
OF TEAMSTERS, CHAUFFEURS,
WARE-HOUSEMEN AND HELPERS
OF AMERICA, LOCAL UNION #222
BY: /s/ BY: /s/
------------------------ -------------------------------
BY: /s/
-------------------------------
BY:
-------------------------------
34
<PAGE> 1
Exhibit 11
MOTOR CARGO INDUSTRIES, INC. AND SUBSIDIARIES
EARNINGS PER SHARE CALCULATION
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1999 1998 1997
----------- ----------- -----------
(Pro forma)
<S> <C> <C> <C>
Earnings available to
common shareholders $ 4,653,083 $ 5,788,861 $ 5,621,476
=========== =========== ===========
Basic EPS
Shares
Common shares outstanding entire period 6,987,820 6,987,820 5,820,000
Weighted-average common shares issued (repurchased)
during period (49,455) -- 118,602
----------- ----------- -----------
Weighted-average common shares outstanding
during period - basic 6,938,365 6,987,820 5,938,602
=========== =========== ===========
Earnings per common share - basic $ 0.67 $ 0.83 $ 0.95
=========== =========== ===========
Diluted EPS
Shares
Weighted-average common shares outstanding
during period - basic 6,938,365 6,987,820 5,938,602
Diluted effect of stock options 2,291 4,000 --
----------- ----------- -----------
Weighted-average common shares outstanding
during period - diluted 6,940,656 6,991,820 5,938,602
=========== =========== ===========
Earnings per common share - diluted $ 0.67 $ 0.83 $ 0.95
=========== =========== ===========
</TABLE>
35
<PAGE> 1
EXHIBIT 23
CONSENT
We have issued our report dated January 28, 2000 accompanying the consolidated
financial statements of Motor Cargo Industries, Inc. and Subsidiaries appearing
in the Company's Annual Report on Form 10-K for the year ended December 31,
1999. We consent to the incorporation by reference in Registration Statement No.
333-62577 on Form S-8 of the aforementioned report.
/s/ GRANT THORNTON LLP
Salt Lake City, Utah
March 22, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR MOTOR CARGO INDUSTRIES, INC. FOR THE YEAR ENDED
DECEMBER 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,509
<SECURITIES> 0
<RECEIVABLES> 16,570
<ALLOWANCES> 0
<INVENTORY> 568
<CURRENT-ASSETS> 27,090
<PP&E> 99,460
<DEPRECIATION> 46,644
<TOTAL-ASSETS> 80,570
<CURRENT-LIABILITIES> 11,641
<BONDS> 0
0
0
<COMMON> 11,850
<OTHER-SE> 41,792
<TOTAL-LIABILITY-AND-EQUITY> 80,570
<SALES> 125,310
<TOTAL-REVENUES> 125,310
<CGS> 0
<TOTAL-COSTS> 117,869
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139
<INCOME-PRETAX> 7,653
<INCOME-TAX> 3,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,653
<EPS-BASIC> .67
<EPS-DILUTED> .67
</TABLE>
