PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1993 Commission File Number 132-3
CONSOLIDATED FREIGHTWAYS, INC.
Incorporated in the State of Delaware
I.R.S. Employer Identification No. 94-1444798
3240 Hillview Avenue, Palo Alto, California 94304
Telephone Number (415) 494-2900
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
------------------------------ ------------------------
Common Stock ($.625 par value) New York Stock Exchange
Pacific Stock Exchange
$1.54 Depositary Shares each
representing one-tenth of a share
of Series C Conversion Preferred
Stock New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
9-1/8% Notes Due 1999
Medium-Term Notes, Series A
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. Yes ___X___ No _______
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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__________
Aggregate market value of voting stock held by persons other than Directors,
Officers and those shareholders holding more than 5% of the outstanding
voting stock, based upon the closing price per share Composite Tape on
January 31, 1994: $730,765,672
Number of shares of Common Stock outstanding
as of January 31, 1994: 35,816,779
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV
Consolidated Freightways, Inc. 1993 Annual Report to Shareholders (only those
portions referenced herein are incorporated in this Form 10-K).
Part III
Proxy Statement dated March 18, 1994, (only those portions referenced herein
are incorporated in this Form 10-K).
<PAGE>
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CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-K
Year Ended December 31, 1993
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
INDEX
-----
Item Page
- ---- ----
PART I
------
1. Business 3
2. Properties 11
3. Legal Proceedings 12
4. Submission of Matters to a Vote of Security Holders 12
PART II
-------
5. Market for the Company's Common Stock and
Related Security Holder Matters 13
6. Selected Financial Data 13
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
8. Financial Statements and Supplementary Data 13
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 13
PART III
--------
10. Directors and Executive Officers of the Company 14
11. Executive Compensation 15
12. Security Ownership of Certain Beneficial
Owners and Management 15
13. Certain Relationships and Related Transactions 15
PART IV
-------
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 16
SIGNATURES 17
INDEX TO FINANCIAL INFORMATION 19
<PAGE>
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CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-K
Year Ended December 31, 1993
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
PART 1
------
ITEM 1. BUSINESS
(a) General Development of Business
- -----------------------------------
Consolidated Freightways, Inc. is a holding company which participates
through subsidiaries in various forms of long-haul and regional trucking,
intermodal rail and ocean services, domestic and international air cargo
delivery services and related transportation activities. These operations
are organized into three primary business groups: Long-Haul Trucking (CF
MotorFreight), Regional Trucking and Intermodal (Con-Way Transportation
Services), and Air Freight (Emery Worldwide). Consolidated Freightways, Inc.
was incorporated in Delaware in 1958 as a successor to a business originally
established in 1929. It is herein referred to as the "Registrant" or
"Company".
(b) Financial Information About Industry Segments
- -------------------------------------------------
The operations of the Company are primarily conducted in the U.S. and Canada
and to a lesser extent in major foreign countries. An analysis by industry
group of revenues, operating income (loss), depreciation and capital
expenditures for the years ended December 31, 1993, 1992 and 1991, and
identifiable assets as of those dates is presented in Note 11 on pages 43 and
44 of the 1993 Annual Report to Shareholders and is incorporated herein by
reference. Geographic group information is also presented therein.
Intersegment revenues are not material.
(c) Narrative Description of Business
- -------------------------------------
The Company has designated three principal operating groups: the CF
MotorFreight Group provides intermediate and long-haul, less-than-truckload
freight service in the U.S. and portions of Mexico, Canada, the Caribbean,
Latin and Central America and Europe; the Con-Way Transportation Services
Group provides regional trucking, intermodal movements of truckload freight,
non-vessel operating common carriage and ocean container freight services;
and, the Emery Worldwide Group is responsible for all domestic and
international air freight activities.
PAGE 4
CF MOTORFREIGHT
----------------
CF MotorFreight (CFMF), the Company's largest single operating unit, is based
in Menlo Park, California. The group is composed of Consolidated Freightways
Corporation of Delaware (CFCD), which includes CF MotorFreight and three
other operating units, and three non-carrier component operations. Its
carrier group provides general freight services nationwide and in portions of
Canada, Mexico, the Caribbean area, Latin and Central America and Europe.
General freight is typically shipments of manufactured or non-perishable
processed products having high value and requiring expedited service,
compared to the bulk raw materials characteristically transported by
railroads, pipelines and water carriers. The basic business of the general
freight industry is to transport freight that is less-than-truckload (LTL),
an industry designation for shipments weighing less than 10,000 pounds. CFMF
is one of the nation's largest motor carriers in terms of 1993 revenues.
Competition within the industry has intensified since the passage of the
Motor Carrier Act of 1980. Consequently, pricing has become increasingly
important as a competitive factor. To retain market share, CFMF is also
evolving to provide faster, more time definite, higher quality and lower cost
services as shippers seek to compress production cycles and cut distribution
costs.
As a large carrier of LTL general commodity freight, CFMF has pick-up and
delivery fleets in each area served, and a fleet of intercity tractors and
trailers. It has a network of 539 U.S. and Canadian freight terminals
including 28 regional consolidation centers. CFMF is supported by a
sophisticated data processing system for the control and management of the
business.
CFMF provides a regular route, common and contract carrier freight service
between points in all 50 states, the Caribbean area, Mexico, Latin and
Central America and Europe and to points served by Canadian subsidiaries as
discussed below. There is a broad diversity in the customers served, size of
shipments, commodities transported and length of haul. No single customer or
commodity accounts for more than a small fraction of total revenues.
CFMF operates daily schedules utilizing primarily relay drivers driving
approximately eight to ten hours each. Some schedules operate with sleeper
teams driving designated routes. Road equipment consists of one tractor
pulling two 28-foot double trailers or, to a limited extent, one semi-trailer
or three 28-foot trailers. Legislation enacted in 1982 has provided for the
use of 28-foot double trailers and 48-foot semi-trailers throughout the
United States. (See "State Regulation" below.) Trailers in double or triple
combination are more efficient and economical than a tractor and single
semi-trailer combination. CFMF utilizes trailer equipment 102-inches in
width. In 1993, the Company operated in excess of 537 million linehaul miles
in North America, about 90% of which was conducted by equipment in doubles
and triples configuration. The accident frequency of the triples
configuration was better than all other types of vehicle combinations used by
the Company.
CFMF and other subsidiaries of CFCD serve Canada through terminals in the
provinces of Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia,
Ontario, Quebec, Saskatchewan and in the Yukon Territory.
PAGE 5
Non-Carrier Operations
----------------------
Menlo Logistics provides logistics management services for industrial and
retail businesses including carrier management, dedicated fleet and warehouse
operations, just-in-time delivery programs, customer order processing and
freight bill payment and auditing. The other non-carrier operations within
the CF MotorFreight Group generate a majority of their sales from other
companies within the CF Group. Road Systems, Inc. primarily manufactures
trailers. Willamette Sales Co. serves as a distributor of heavy-duty truck,
marine and construction equipment parts.
Employees
---------
Approximately 88% of CFMF's domestic employees are represented by various
labor unions, primarily the International Brotherhood of Teamsters (IBT).
CFMF and the IBT are parties to a National Master Freight Agreement. The
current agreement with the IBT expires on March 31, 1994.
Labor costs, including fringe benefits, average approximately 65% of
revenues. This results in a relatively high proportion of variable costs,
which allows CFMF flexibility to adjust certain costs to fluctuations in
business levels. CFMF's domestic employment has declined to 21,000 employees
at December 31, 1993 from approximately 22,000 at December 31, 1992,
primarily the result of declining tonnage and several programs to streamline
operations during 1993.
Fuel
----
Fuel prices have fluctuated during the last three years with prices declining
in 1991 following a resolution of the Middle East conflict and fuel prices
continued to decline in 1992. Fuel prices declined slightly in 1993 despite
increased fuel taxation and stricter environmental regulations. CFMF's
average annual diesel fuel cost per gallon (without tax) declined from $.671
in 1991 to $.632 and $.615 in 1992 and 1993, respectively.
Federal and State Regulation
----------------------------
On July 1, 1980, the Motor Carrier Act of 1980 became effective. The Act
made substantial changes in federal regulation of the motor carrier industry.
It provided for easier access to the industry by new trucking companies and
eased restrictions on expansion of services by existing carriers. In
addition, CFMF's operations are subject to a variety of economic regulations
by state authorities. Historically, such regulations also covered, among
other things, size and weight of motor carrier equipment.
PAGE 6
Federal legislation applies to the interstate highway system and to other
qualifying federal-aid primary system highways in all states. Full
implementation of the federal legislation has been hampered by regulations
in certain states, which have imposed trailer length, size and weight
limitations on access and intercity routes. These limitations do not
conform with the federal requirements and therefore are obstacles to
efficient operations. CFMF's mainline operations are designed to avoid
locales with these limitations.
Canadian Regulation
-------------------
The provinces in Canada have regulatory authority over intra-provincial
operations of motor carriers and have been delegated by the federal authority
to regulate inter-provincial motor carrier activity. Federal legislation
to phase in deregulation of the inter-provincial motor carrier industry
took effect January 1, 1988. The new legislation relaxes economic regulation
of inter-provincial trucking by easing market entry regulations, and
implements effective safety regulations of trucking services under Federal
jurisdiction. The Company wrote-off substantially all of the unamortized
cost of its Canadian operating authority in 1992.
CON-WAY TRANSPORTATION SERVICES
-------------------------------
Con-Way Transportation Services, Inc. (CTS) is a holding company for
operations that individually provide various transportation services,
specifically regional trucking, trailer-on-flatcar or containerized movements
of truckload freight, non-vessel operating common carriage and ocean
container freight services. CTS has five operating units and approximately
7,600 employees. The Con-Way's face more competition than in the past as
national LTL companies continue to acquire regional operations, combining
previously independent carriers into an inter-regional network. However,
growth in quick-response logistics and new service product offerings will
provide new market opportunities. Refer to the CF MotorFreight section for
a discussion of other factors affecting surface transportation.
Regional Carriers
-----------------
Each of CTS' four regional carriers operates within a defined geographic area
to provide primarily next-day and second day service for freight moving up to
1,000 miles.
Con-Way Western Express, Inc. (CWX) began operations in May 1983 and
operates in California, Nevada, Arizona, New Mexico, western portions of
Texas, Hawaii and Mexico. At December 31, 1993, CWX served customers from 51
service centers.
Con-Way Central Express, Inc. (CCX) inaugurated operations in June 1983
and provides service in 13 states of the mid-west, east, north-east and
eastern Canada. CCX operated 156 service centers at December 31, 1993.
PAGE 7
Con-Way Southern Express, Inc. (CSE) began operations in April 1987 and
operates in Florida, Alabama, Tennessee, Virginia, North and South Carolina,
Maryland, Georgia and Puerto Rico. CSE served customers from 54 service
centers at December 31, 1993.
Con-Way Southwest Express, Inc. (CSW) began operations in November 1989 and
operates in seven southwestern states and Mexico. CSW operated 41 service
centers at December 31, 1993.
A joint service program initiated by CTS allows the regional carriers to move
freight in two-day lanes from a region serviced by one operating unit to
regions serviced by other of the operating units within the existing
infrastructure. The program allows CTS to compete for second day business
not individually serviced by regional carriers.
Con-Way Intermodal Inc.
-----------------------
The Company offers truckload service and ocean container freight handling.
The truckload portion of the Company provides door-to-door intermodal
movement of full truckload shipments via rail trailer, and with dedicated
containers and pick-up and delivery resources in a nationwide stack train
network. The ocean service portion provides international shipping services
through offices in more than two dozen international trade centers and serves
the U.S., Europe, Hong Kong, Australia, other Pacific Rim nations and most
recently Latin America.
EMERY WORLDWIDE
---------------
Emery Worldwide (EWW), the Company's air freight unit, was formed when the
Company purchased Emery Air Freight Corporation in April 1989 and merged it
with its air freight operation, CF AirFreight, Inc. The combined companies
immediately expanded EWW's ability to deliver air freight within North
America and to 88 countries worldwide.
EWW provides global air cargo services through an integrated freight system
designed for the movement of parcels and packages of all sizes and weights.
In North America, EWW provides these services through a system of branch
offices and overseas through foreign subsidiaries, branches and agents.
EWW provides door-to-door service within North America by using its own
airlift system, supplemented with commercial airlines. International
services are performed by operating as an air freight forwarder, using
commercial airlines, and with controlled lift, only when necessary. Emery
also operates approximately 1,590 trucks, vans and tractors.
As of December 31, 1993, EWW utilized a fleet of 50 aircraft, 28 of which are
leased on a long-term basis, 9 are owned and 13 are contracted on a short-
term basis to supplement nightly volumes and to provide feeder services. The
nightly lift capacity of the aircraft fleet, excluding charters, is
approximately 3.3 million pounds.
PAGE 8
Emery Worldwide's hub-and-spoke system is centralized at the Dayton
International Airport where a leased air cargo facility (Hub) and related
support facilities are located. The Hub handles all types of shipments,
ranging from small packages to heavyweight cargo, with a total effective sort
capacity of approximately 1 million pounds per hour. The operation of the
Hub in conjunction with EWW's airlift system enables it to maintain a high
level of service reliability.
In addition to its nightly Prime Time system, the Company added a new
transcontinental daylight service. In the daylight program, two DC-8
freighters crisscross between Hartford, CT and Los Angeles, CA
transconnecting the Dayton HUB. These originating cities then connect with
their respective regional HUBs. The company added capacity and scheduled the
daylight flights to handle increased business levels, respond to customer
service needs in key market lanes. The two daylight aircraft are also used
in the Prime Time schedule thus achieving better utilization of our assets.
Through a separate subsidiary of the Company, Emery Worldwide Airlines, Inc.
(EWA), the Company provides nightly cargo airline services under a contract
with the U.S. Postal Service (USPS) to carry Express and Priority Mail, using
21 aircraft, 6 of which are leased on a long-term basis and 15 are owned.
The original contract for this operation was awarded to EWA in 1989 and had
been renewed and extended through early January 1994. A new ten year USPS
contract was awarded to the Company during 1993 with service beginning in
January 1994. The contract is similar to the previous USPS contract with the
exception that the sortation function is not included.
The Company has recognized approximately $138 million, $141 million and $199
million of revenue in 1993, 1992 and 1991, respectively, from contracts to
carry Express and Priority Mail for the U.S. Postal Service.
Customers
---------
EWW services, among others, the aviation, automotive, machinery, metals,
electronic and electrical equipment, chemical, apparel and film industries.
Service industries and governmental entities also utilize EWW's services.
Both U.S. and International operations of EWW have wide customer bases.
Competition
-----------
The heavy air-freight market within North American is highly competitive and
price sensitive. Emery has the largest market share in the heavy air-freight
segment. EWW competes with other integrated air freight carriers as well as
freight forwarders.
Competition in the international markets is also service and price sensitive.
In these markets, which are more fragmented than the domestic market, EWW
competes with both United States and international airlines and air freight
forwarders. The North Atlantic market is especially price sensitive due to
the abundance of airlift capacity.
PAGE 9
Customers are seeking companies such as EWW with combined integrated carrier
and freight forwarding capabilities for flexible, cost effective service.
Emery believes this infrastructure and the convenience of its 235 worldwide
service locations are its principal methods of competing in the market in
which it operates.
Regulation
----------
Regulation of Air Transportation
--------------------------------
The air transportation industry is subject to federal regulation by the
Federal Aviation Act of 1958, as amended (Aviation Act) and regulations
issued by the Department of Transportation (DOT) pursuant to the Aviation
Act. EWW, as an air freight forwarder, and EWA, as an airline, are subject
to different regulations. Air freight forwarders are exempted from most DOT
economic regulations and they are not subject to Federal Aviation
Administration (FAA) safety regulations so long as they do not have
operational control of aircraft. Airlines are subject to economic regulation
by DOT and maintenance, operating and other safety-related regulation by FAA.
Thus, EWA and other airlines conducting operations for EWW are subject to DOT
and FAA regulation while EWW, itself, is not covered by most DOT and FAA
regulations.
Regulation of Ground Transportation
-----------------------------------
When EWW provides ground transportation of cargo having a prior or subsequent
air movement, the ground transportation is exempt from regulation by the
Interstate Commerce Commission (ICC). However, EWW holds ICC and intrastate
motor carrier authorities which can be utilized in providing non-exempt
ground transportation. Registration of ICC authorities is required in each
state where a motor carrier conducts non-exempt operations, and some states
also have required EWW to register as an exempt interstate operator.
Environmental Matters
---------------------
During recent years, operations at several airports have been subject to
restrictions or curfews on arrivals or departures during certain night-time
hours designed to reduce or eliminate noise for surrounding residential
areas. None of these restrictions have materially affected EWW's operations.
If such restrictions were to be imposed with respect to the airports at which
EWW's activities are centered and no alternative airports were available to
serve the affected areas, EWW's operations could be more adversely affected.
PAGE 10
As provided in Section 611 of the Aviation Act, the FAA with the assistance
of the Environmental Protection Agency (EPA), is authorized to establish
aircraft noise standards. Under the National Emission Standards Act of 1967,
as amended by the Clean Air Act Amendments of 1970, the administrator of the
EPA is authorized to issue regulations setting forth standards for aircraft
emissions. EWW believes that its present fleet of owned, leased or chartered
aircraft is operating in compliance with the applicable noise and emission
laws.
The Aviation Noise and Capacity Act of 1990 was passed in November of 1990 to
establish a national aviation noise policy. The FAA has promulgated
regulations under this Act regarding the phase-in requirements for
compliance. This legislation and the related regulations will require all of
EWW's and EWA's owned and leased aircraft to either undergo modifications or
otherwise comply with Stage 3 noise restrictions by year-end 1999.
Fuel and Supplies Cost
----------------------
EWW purchases substantially all of its jet fuel from major oil companies,
refiners and trading companies on annual contracts with prepaid and/or volume
discounts. These contract purchases are supplemented by spot purchases. The
weighted average price of domestic jet fuel declined in 1993 and 1992,
respectively. During 1991, the weighted average price of domestic jet fuel
declined following the resolution of the Middle East conflict early in the
year. The 1993 domestic cost per gallon was approximately $.64 compared with
1992 and 1991 weighted average prices of approximately $.67 and $.72 per
gallon, respectively.
EWW believes that it has the flexibility to continue its operations without
material interruption unless there are significant curtailments of its jet
fuel supplies. Neither Emery Worldwide nor the operators of the aircraft it
charters have experienced or anticipate any fuel supply problems. There is
a four-million gallon fuel storage facility at the Hub.
Employees
---------
As of December 31, 1993, Emery Worldwide had approximately 7,500 full and
permanent part-time employees as compared to 6,700 in 1992 and 7,000 in 1991.
Approximately 15% of these employees are covered by union contracts.
GENERAL
- -------
The research and development activities of the Company are not significant.
During 1993, 1992 and 1991 there was no single customer of the Company that
accounted for more than 10% of consolidated revenues.
The total number of employees is presented in the "Ten Year Financial
Summary" on pages 46 and 47 of the 1993 Annual Report to Shareholders and is
incorporated herein by reference.
PAGE 11
The Company has been designated a Potentially Responsible Party (PRP) by the
EPA with respect to the disposal of hazardous substances at various sites.
The Company expects its share of the clean-up cost to be immaterial. The
Company expects the costs of complying with existing and future federal,
state and local environmental regulations to continue to increase. On the
other hand, they do not anticipate that such cost increases will have any
materially adverse effects on capital expenditures, earnings or competitive
position.
(d) Financial Information About Foreign
and Domestic Operations and Export Sales
----------------------------------------
Information as to revenues, operating income (loss) and identifiable assets
for each of the Company's business segments and for its foreign operations
for 1993, 1992 and 1991 is contained in Note 11 on page 43 and 44 of the
1993 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 2. PROPERTIES
The following summarizes the terminals and freight service centers operated
by the Company at December 31, 1993:
Owned Leased Total
----- ------ -----
CF MotorFreight 275 264 539
Con-Way Transportation Services 38 264 302
Emery Worldwide 9 226 235
The following table sets forth the location and square footage of the
Company's principal freight handling facilities:
Location Square Footage
-------- --------------
CFMF - motor carrier LTL consolidation center terminals
Mira Loma, CA 280,672
Chicago, IL 231,159
* Columbus, OH 118,774
Memphis, TN 118,745
Nashville, TN 118,622
Orlando, FL 101,557
* Minneapolis, MN 94,890
St. Louis, MO 88,640
* Pocono, PA 86,285
Chicopee, MA 85,164
Akron, OH 82,494
Sacramento, CA 81,286
Atlanta, GA 77,920
Houston, TX 77,346
Dallas, TX 75,358
* Fremont, IN 73,760
PAGE 12
Location Square Footage
-------- --------------
CFMF - motor carrier LTL consolidation center terminals
* Peru, IL 73,760
Buffalo, NY 73,380
Cheyenne, WY 71,298
Milwaukee, WI 70,661
Salt Lake City, UT 68,480
Charlotte, NC 66,896
Seattle, WA 59,720
* York, PA 56,384
Kansas City, MO 55,288
* Indianapolis, IN 54,716
Portland, OR 47,824
Phoenix, AZ 20,237
CTS - freight assembly centers
Chicago, IL 113,116
Oakland, CA 85,600
Dallas, TX 82,000
Atlanta, GA 56,160
Cincinnati, OH 55,618
Columbus, OH 48,527
Detroit, MI 46,240
Santa Fe Springs, CA 45,936
Aurora, IL 44,235
Ft. Wayne, IN 35,400
Pontiac, MI 34,450
St. Louis, MO 29,625
Milwaukee, WI 22,940
Emery - facilities
*Dayton, OH 620,000
Los Angeles, CA 78,264
Indianapolis, IN 38,500
* Facility partially or wholly financed through the issuance of industrial
revenue bonds. Principal amount of debt is secured by the property.
ITEM 3. LEGAL PROCEEDINGS
The legal proceedings of the Company are summarized in Note 10 on page 43
of the 1993 Annual Report to Shareholders and are incorporated herein by
reference. A discussion of certain environmental matters is presented in
Item 1 and Item 7.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PAGE 13
PART II
-------
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Company's common stock is listed for trading on the New York and Pacific
Stock Exchanges.
The Company's Common Stock Price is included in Note 12 on page 45 of the
1993 Annual Report to Shareholders and is incorporated herein by reference.
Cash dividends on common shares had been paid in every year from 1962 to
1990. In June 1990, however, the Company's Board of Directors suspended the
quarterly dividend to minimize the Company's cash requirements. Under the
terms of the restructured TASP Notes, as set forth on pages 35 and 36 of the
1993 Annual Report to Shareholders, the Company is restricted from paying
dividends in excess of $10 million plus 50% of the cumulative net income
applicable to common shareholders since the commencement of the agreement.
As of December 31, 1993, there were 15,785 holders of record of the common
stock ($.625 par value) of the Company. The number of shareholders is also
presented in the "Ten Year Financial Summary" on pages 46 and 47 of the
1993 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data is presented in the "Ten Year Financial
Summary" on pages 46 and 47 of the 1993 Annual Report to Shareholders and
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations is presented in the "Financial Review and Management Discussion"
on pages 24 through 26, inclusive, of the 1993 Annual Report to Shareholders
and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Auditors' Report are presented on
pages 27 through 33, inclusive, of the 1993 Annual Report to Shareholders and
are incorporated herein by reference. The unaudited quarterly financial data
is included in Note 12 on page 45 of the 1993 Annual Report to Shareholders
and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PAGE 14
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The identification of the Company's Directors is presented on pages 3 through
9, inclusive, of the Proxy Statement dated March 18, 1994 and those pages are
incorporated herein by reference.
The Executive Officers of the Company, their ages at December 31, 1993 and
their applicable business experience are as follows:
Donald E. Moffitt, 61, President and Chief Executive Officer. Mr. Moffitt
joined Consolidated Freightways Corporation of Delaware, the Company's
principal motor carrier subsidiary, as an accountant in 1955 and advanced to
Vice President - Finance in 1973. In 1975, he transferred to the Company as
Vice President - Finance and Treasurer and in 1981 was elected Executive Vice
President - Finance and Administration. In 1983 he assumed the additional
duties of President, CF International and Air, Inc., where he directed the
Company's international and air freight businesses. Mr. Moffitt was elected
Vice Chairman of the Board of the Company in 1986. He retired as an employee
and as Vice Chairman of the Board of Directors in 1988 and returned to the
Company as Executive Vice President - Finance and Chief Financial Officer in
1990. Mr. Moffitt was named President and Chief Executive Officer of the
Company and was elected to the Board of Directors in 1991. Mr. Moffitt
serves on the Executive Committee of the Board of Directors of the Highway
Users Federation and is a member of the Board of Directors of the Bay Area
Council, the Automotive Safety Foundation and the American Red Cross. He is
a member of the California Business Roundtable and a member of the Business
Advisory Council of the Northwestern University Transportation Center. He
also serves on the Advisory Council of the Peninsula Conflict Resolution
Center. Mr. Moffitt is a member of the Advisory Nominating and the Executive
Committees of the Company.
W. Roger Curry, 55, President and Chief Executive Officer of Emery Air
Freight Corporation and Senior Vice President of the Company. Mr. Curry
joined CFCD in 1969 as a Systems Analyst and became Coordinator, On-Line
Systems of the Company in 1970. In 1972 he was named Director of Terminal
Properties for CFCD. He became President of CFAF in 1975 and Chief Executive
Officer in 1984. Mr. Curry relinquished both offices with CFAF in 1986 when
he was elected Senior Vice President - Marketing of the Company. In 1991 he
was elected President of Emery Air Freight Corporation.
Robert H. Lawrence, 56, Executive Vice President - Operations of the Company
and President and Chief Executive Officer of CFCD. Mr. Lawrence joined the
Company in 1969 as an Assistant Terminal Manager and advanced to Vice
President of the Eastern Area by 1977. He became Vice President of
Operations for CFCD in 1979 and President in 1986. In 1989, while continuing
as President of CFCD, he was elected a Senior Vice President of the Company.
In 1991, he was elected as Executive Vice President - Operations of the
Company.
PAGE 15
Gregory L. Quesnel, 45, Executive Vice President and Chief Financial Officer.
Mr. Quesnel joined Consolidated Freightways Corporation of Delaware in 1975
as Director of Financial Accounting. Through several increasingly
responsible financial positions, he advanced to become the top financial
officer of CFCD. In 1989 he was elected Vice President-Accounting for the
Company and in 1990 was named Vice President and Treasurer. Mr. Quesnel
became Senior Vice President-Finance and Chief Financial Officer of the
Company in 1991 and later Executive Vice President and Chief Financial
Officer in 1993.
Robert T. Robertson, 52, President and Chief Executive Officer of Con-Way
Transportation Services, Inc. and Senior Vice President of the Company. Mr.
Robertson joined CFCD in 1970 as a sales representative and advanced to
Manager of Eastern Area Sales by 1973. He transferred to Texas in 1976 where
he became involved in CFCD's operations and was promoted to Division Manager
in 1978. In 1983 he was named Vice President and General Manager of Con-Way
Transportation Services, Inc. In 1986, Mr. Robertson was elected President
of CTS.
Eberhard G.H. Schmoller, 50, Senior Vice President and General Counsel of the
Company. Mr. Schmoller joined CFCD in 1974 as a staff attorney and in 1976
was promoted to CFCD assistant general counsel. In 1983, he was appointed
Vice President and General Counsel of CF Airfreight and assumed the same
position with Emery after the acquisition in 1989. Mr. Schmoller was named
Senior Vice President and General Counsel of the Company in 1993.
ITEM 11. EXECUTIVE COMPENSATION
The required information for Item 11 is presented on pages 13 through 16,
inclusive, of the Proxy Statement dated March 18, 1994, and those pages are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The required information for Item 12 is included on pages 10 and 11 of the
Proxy Statement dated March 18, 1994, and is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PAGE 16
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Exhibits Filed
---------------------------------------
1. Financial Statements
See Index to Financial Information.
2. Financial Statement Schedules
See Index to Financial Information.
3. Exhibits
See Index to Exhibits.
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed for the three months ended
December 31, 1993.
PAGE 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-K Annual
Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED FREIGHTWAYS, INC.
(Registrant)
March 28, 1994 /s/Donald E. Moffitt
--------------------------------------
Donald E. Moffitt
President and Chief Executive
Officer
March 28, 1994 /s/Gregory L. Quesnel
--------------------------------------
Gregory L. Quesnel
Executive Vice President and Chief
Financial Officer
March 28, 1994 /s/Robert E. Wrightson
--------------------------------------
Robert E. Wrightson
Vice President and Controller
<PAGE>
PAGE 18
SIGNATURES
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.
March 28, 1994 /s/Raymond F. O'Brien
-------------------------------------
Raymond F. O'Brien
Chairman of the Board
March 28, 1994 /s/Donald E. Moffitt
-------------------------------------
Donald E. Moffitt
President, Chief Executive Officer and
Director
March 28, 1994 /s/John C. Bolinger, Jr.
-------------------------------------
John C. Bolinger, Jr., Director
March 28, 1994 /s/Earl F. Cheit
-------------------------------------
Earl F. Cheit, Director
March 28, 1994 /s/G. Robert Evans
-------------------------------------
G. Robert Evans, Director
March 28, 1994 /s/Robert Jaunich II
-------------------------------------
Robert Jaunich II, Director
March 28, 1994 /s/John S. Perkins
-------------------------------------
John S. Perkins, Director
PAGE 19
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-K
Year Ended December 31, 1993
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
INDEX TO FINANCIAL INFORMATION
------------------------------
Consolidated Freightways, Inc. and Subsidiaries
- -----------------------------------------------
The following Consolidated Financial Statements of Consolidated
Freightways, Inc. and Subsidiaries appearing on pages 27 through 45,
inclusive, of the Company's 1993 Annual Report to Shareholders are
incorporated herein by reference:
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1993 and 1992
Statements of Consolidated Operations - Years Ended December 31, 1993,
1992 and 1991
Statements of Consolidated Cash Flows - Years Ended December 31, 1993,
1992 and 1991
Statements of Consolidated Shareholders' Equity - Years Ended
December 31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
In addition to the above, the following consolidated financial information
is filed as part of this Form 10-K:
Page
----
Consent of Independent Public Accountants 20
Report of Independent Public Accountants 20
Schedule V - Property, Plant and Equipment -
Years Ended December 31, 1993, 1992 and 1991 21
Schedule VI - Accumulated Depreciation of Property,
Plant and Equipment - Years Ended
December 31, 1993, 1992 and 1991 22
Schedule VIII - Valuation and Qualifying Accounts 23
Schedule X - Supplementary Income Statement Information 24
PAGE 20
The other schedules (Schedules I through IV, VII, IX and XI through
XIV) have been omitted because either (1) they are neither required nor
applicable or (2) the required information has been included in the
consolidated financial statements or notes thereto.
SIGNATURE
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation
of our reports included and incorporated by reference in this Form 10-K,
into the Company's previously filed Registration Statement File Nos.
2-81030, 33-29793, 33-45313 and 33-52599.
/s/Arthur Andersen & Co.
-------------------------
ARTHUR ANDERSEN & CO.
San Francisco, California
March 28, 1994
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Shareholders and Board of Directors of
Consolidated Freightways, Inc.:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Consolidated Freightways,
Inc.'s 1993 Annual Report to Shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated January 28, 1994. Our
audit was made for the purpose of forming an opinion on those statements
taken as a whole. The schedules on pages 21 through 24 are the
responsibility of the Company's management and are presented for the purposes
of complying with the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules have been subjected
to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
/s/Arthur Andersen & Co.
--------------------------
ARTHUR ANDERSEN & CO.
San Francisco, California
January 28, 1994
<TABLE>
PAGE 21
SCHEDULE V
CONSOLIDATED FREIGHTWAYS, INC.
PROPERTY, PLANT AND EQUIPMENT
Years Ended December 31, 1993, 1992, 1991
(In thousands)
<CAPTION>
Translation
adjustment
Balance at and other Balance at
beginning Additions, changes (a) end of
Classification of period at cost Retirements add (deduct) period
- -------------------------- ----------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
1993
- ----
Land $145,547 $8,964 ($1,918) ($191) $152,402
Buildings and improvements 468,269 25,511 (4,674) (814) 488,292
Revenue equipment 900,653 132,007 (66,013) (31,165)(b) 935,482
Other equipment and leasehold
improvements 336,463 34,728 (23,029) (561) 347,601
----------- --------- --------- --------- -----------
Total $1,850,932 $201,210 ($95,634) ($32,731) $1,923,777
=========== ========= ========= ========= ===========
1992
- ----
Land $145,753 -- ($2,383) $2,177 $145,547
Buildings and improvements 457,166 19,185 (5,684) (2,398) 468,269
Revenue equipment 836,773 104,439 (36,156) (4,403) 900,653
Other equipment and leasehold
improvements 336,398 25,082 (21,658) (3,359) 336,463
----------- --------- --------- --------- -----------
Total $1,776,090 $148,706 ($65,881) ($7,983) $1,850,932
=========== ========= ========= ========= ===========
1991
- ----
Land $138,957 $4,487 ($324) $2,633 $145,753
Buildings and improvements 417,586 34,060 (924) 6,444 457,166
Revenue equipment 821,038 30,823 (24,051) 8,963 836,773
Other equipment and leasehold
improvements 336,406 28,703 (26,184) (2,527) 336,398
----------- --------- --------- --------- -----------
Total $1,713,987 $98,073 ($51,483) $15,513 $1,776,090
=========== ========= ========= ========= ===========
<FN>
(a) Adjustment required as a result of SFAS No. 52 "Foreign Currency Translation"
(b) Consists of purchased overhaul and maintenance reclassified to deferred charges and other assets
</TABLE>
<TABLE>
PAGE 22
SCHEDULE VI
CONSOLIDATED FREIGHTWAYS, INC.
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
Years Ended December 31, 1993, 1992, 1991
(In thousands)
<CAPTION>
Translation
adjustment
Classification Balance at and other Balance at
- -------------------------- beginning Additions, changes (a) end of
1993 of period at cost Retirements add (deduct) period
- ---- ----------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Buildings and improvements $190,256 $20,972 ($2,480) ($740) $208,008
Revenue equipment 573,274 80,091 (59,850) (4,372) 589,143
Other equipment and leasehold
improvements 200,568 35,245 (21,641) 2,010 216,182
----------- --------- --------- --------- -----------
Total $964,098 $136,308 ($83,971) ($3,102) $1,013,333
=========== ========= ========= ========= ===========
1992
- ----
Buildings and improvements $167,462 $21,292 ($2,831) $4,333 $190,256
Revenue equipment 529,455 78,727 (32,670) (2,238) 573,274
Other equipment and leasehold
improvements 182,251 38,784 (19,595) (872) 200,568
----------- --------- --------- --------- -----------
Total $879,168 $138,803 ($55,096) $1,223 $964,098
=========== ========= ========= ========= ===========
1991
- ----
Buildings and improvements $146,057 $20,094 ($570) $1,881 $167,462
Revenue equipment 465,471 84,889 (22,004) 1,099 529,455
Other equipment and leasehold
improvements 148,955 45,081 (20,716) 8,931 182,251
----------- --------- --------- --------- -----------
Total $760,483 $150,064 ($43,290) $11,911 $879,168
=========== ========= ========= ========= ===========
<FN>
(a) Adjustment required as a result of SFAS No. 52 "Foreign Currency Translation"
</TABLE>
PAGE 23
SCHEDULE VIII
CONSOLIDATED FREIGHTWAYS, INC.
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1993
(In thousands)
DESCRIPTION
- -----------
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
---------- ---------- ---------- ---------- ----------
1993 $26,198 $27,127 $ - $(23,545) (a) $29,780
------- ------- -------- --------- -------
1992 $25,742 $29,707 $ - $(29,251) (a) $26,198
------- ------- -------- --------- -------
1991 $30,385 $29,858 $ - $(34,501) (a) $25,742
------- ------- -------- --------- -------
a) Accounts written off net of recoveries.
PAGE 24
SCHEDULE X
CONSOLIDATED FREIGHTWAYS, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Years Ended December 31,
(In thousands)
1993 1992 1991
-------- ------- --------
Maintenance and Repairs $131,512 $146,375 $151,475
======== ======== ========
Taxes, other than Payroll and
Income Taxes:
Fuel $ 63,147 $ 56,066 $ 54,385
Other 43,647 39,675 41,142
-------- -------- --------
$106,794 $ 95,741 $ 95,527
======== ======== ========
PAGE 25
INDEX TO EXHIBITS
ITEM 14(a)(3)
Exhibit No.
- -----------
(3) Articles of incorporation and by-laws:
3.1 Consolidated Freightways, Inc. Certificates of Incorporation, as
amended. (Exhibit 3(a)(2) to the Company's Quarterly Report
Form 10-Q for the quarter ended March 31, 1987*)
3.2 Consolidated Freightways, Inc. By-laws, as amended March 29, 1993.
(4) Instruments defining the rights of security holders, including
debentures:
4.1 Consolidated Freightways, Inc. Stockholder Rights Plan. (Exhibit
1 on Form 8-A dated October 27, 1986*)
4.2 Certificate of Designations of the Series B Cumulative
Convertible Preferred Stock. (Exhibit 4.1 as filed on Form SE
dated May 25, 1989*)
4.3 Indenture between the Registrant and Security Pacific National
Bank, trustee, with respect to 9-1/8% Notes Due 1999 and Medium-
Term Notes, Series A. (Exhibit 4.1 as filed on Form SE dated
March 20, 1990*)
4.4 Form of Security for 9-1/8% Notes Due 1999 issued by Consolidated
Freightways, Inc. (Exhibit 4.1 as filed on Form SE dated August
25, 1989*)
4.5 Officers' Certificate dated as of August 24, 1989 establishing
the form and terms of debt securities issued by Consolidated
Freightways, Inc. (Exhibit 4.2 as filed on Form SE dated August
25, 1989*)
4.6 Form of Security for Medium-Term Notes, Series A to be issued by
Consolidated Freightways, Inc. (Exhibit 4.1 as filed on Form SE
dated September 18, 1989*)
4.7 Officers' Certificate dated September 18, 1989, establishing the
form and terms of debt securities to be issued by Consolidated
Freightways, Inc. (Exhibit 4.2 as filed on Form SE dated
September 19, 1989*)
4.8 Form of Certificate of Designations of the Series C Conversion
Preferred Stock (incorporated by reference to Exhibit 4.3
contained in Form SE dated January 29, 1992*).
4.9 Form of Stock Certificate for Series C Conversion Preferred Stock
(incorporated by reference to Exhibit 4.4 contained in Form SE
dated January 29, 1992*).
4.10 Subsidiary Guaranty Agreement dated July 30, 1993 among
Consolidated Freightways, Inc. and various financial institutions
in connection with the $250 million Credit Agreement of the same
date. (Exhibit 4.1 to the Company's Form 10-Q for the quarterly
period ended June 30, 1993*).
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
PAGE 26
Exhibit No.
- -----------
(4) Instruments defining the rights of security holders, including
debentures (continued):
Instruments defining the rights of security holders of long-term debt
of Consolidated Freightways, Inc., and its subsidiaries for which
financial statements are required to be filed with this Form 10-K,
of which the total amount of securities authorized under each such
instrument is less than 10% of the total assets of Consolidated
Freightways, Inc. and its subsidiaries on a consolidated basis, have
not been filed as exhibits to this Form 10-K. The Company agrees to
furnish a copy of each applicable instrument to the Securities and
Exchange Commission upon request.
(10) Material contracts:
10.1 Consolidated Freightways, Inc. Long-Term Incentive Plan of 1978,
as amended through Amendment No. 4. (Exhibit 10(e) to the
Company's Form 10-K for the year ended December 31, 1983*)
10.2 Amendments 5, 6 and 7 to the Consolidated Freightways, Inc.
Long-Term Incentive Plan of 1978, as amended through Amendment No.
4. (Exhibit 10.1 as filed on Form SE dated March 25, 1991*)
10.3 Consolidated Freightways, Inc. Long-Term Incentive Plan of 1988.
(Exhibit 10(g) to the Company's Form 10-K for the year ended
December 31, 1987*)
10.4 Amendment 3 to the Consolidated Freightways, Inc. Long-Term
Incentive Plan of 1988. (Exhibit 10.2 as filed on Form SE dated
March 25, 1991*)
10.5 Consolidated Freightways, Inc. Stock Option Plan of 1978, as
amended through Amendment No. 1. (Exhibit 10(e) to the Company's
Form 10-K for the year ended December 31, 1981*)
10.6 Consolidated Freightways, Inc. Stock Option Plan of 1988 as
amended. (Exhibit 10(i) to the Company's Form 10-K for the year
ended December 31, 1987 as amended in Form S-8 dated
December 16, 1992*)
10.7 Forms of Stock Option Agreement (with and without Cash Surrender
Rights) under the Consolidated Freightways, Inc. Stock Option Plan
of 1988. (Exhibit 10(j) to the Company's Form 10-K for
the year ended December 31, 1987*)
10.8 Form of Consolidated Freightways, Inc. Deferred Compensation
Agreement. (Exhibit 10(i) to the Company's Form 10-K for the year
ended December 31, 1981*)
10.9 Consolidated Freightways, Inc. Retirement Plan (formerly Emery Air
Freight Corporation Pension Plan), as amended effective through
January 1, 1985, and amendments dated as of October 30, 1987.
(Exhibit 4.22 to the Emery Air Freight Corporation Quarterly
Report on Form 10-Q dated November 16, 1987**)
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
** Incorporated by reference to indicated reports filed under the
Securities Act of 1934, as amended, by Emery Air Freight
Corporation File No. 1-3893.
PAGE 27
Exhibit No.
- -----------
10.10 Emery Air Freight Plan for Retirees, effective October 31, 1987.
(Exhibit 4.23 to the Emery Air Freight Corporation Quarterly
Report on Form 10-Q dated November 16, 1987**)
10.11 Consolidated Freightways, Inc. Common Stock Fund (formerly Emery
Air Freight Corporation Employee Stock Ownership Plan, as
effective October 1, 1987 ("ESOP"). (Exhibit 4.33 to the Emery
Air Freight Corporation Annual Report on Form 10-K dated March 28,
1988**)
10.12 Employee Stock Ownership Trust Agreement, dated as of October 8,
1987, as amended, between Emery Air Freight Corporation and Arthur
W. DeMelle, Daniel J. McCauley and Daniel W. Shea, as Trustees
under the ESOP Trust. (Exhibit 4.34 to the Emery Air Freight
Corporation Annual Report on Form 10-K dated March 28, 1988**)
10.13 Amended and Restated Subscription and Stock Purchase Agreement
dated as of December 31, 1987 between Emery Air Freight
Corporation and Boston Safe Deposit and Trust Company in its
capacity as successor trustee under the Emery Air Freight
Corporation Employee Stock Ownership Plan Trust ("Boston Safe").
(Exhibit B to the Emery Air Freight Corporation Current Report on
Form 8-K dated January 11, 1988**)
10.14 Supplemental Subscription and Stock Purchase Agreement dated as of
January 29, 1988 between Emery Air Freight Corporation and Boston
Safe. (Exhibit B to the Emery Air Freight Corporation Current
Report on Form 8-K dated February 12, 1988**)
10.15 Trust Indenture, dated as of November 1, 1988, between City of
Dayton, Ohio and Security Pacific National Trust Company (New
York), as Trustee and Bankers Trust Company, Trustee. (Exhibit
4.1 to Emery Air Freight Corporation Current Report on Form 8-K
dated December 2, 1988**)
10.16 Bond Purchase Agreement dated November 7, 1988, among the City of
Dayton, Ohio, the Emery Air Freight Corporation and Drexel Burnham
Lambert Incorporated. (Exhibit 28.7 to the Emery Air Freight
Corporation Current Report on Form 8-K dated December 2, 1988**)
10.17 Lease agreement dated November 1, 1988 between the City of Dayton,
Ohio and Emery Air Freight Corporation. (Exhibit 10.1 to the
Emery Air Freight Corporation Annual Report on Form 10-K for the
year ended December 31, 1988**)
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
** Incorporated by reference to indicated reports filed under the
Securities Act of 1934, as amended, by Emery Air Freight
Corporation File No. 1-3893.
PAGE 28
Exhibit No.
- -----------
10.18 Credit Agreement dated January 14, 1993, by and among Emery
Receivables Corporation as the borrower, Emery Air Freight
Corporation, Consolidated Freightways, Inc., individually and as
Servicer and various financial institutions. (Exhibit 10.19 to the
Company's Form 10-K for the year ended December 31, 1992*).
10.19 Purchase and Sale Agreement, dated January 14, 1993, among Emery
Air Freight Corporation and Emery Distribution Systems, Inc., as
Originators, Emery Receivables Corporation, and Consolidated
Freightways, Inc., as Servicer. (Exhibit 10.20 to the
Company's Form 10-K for the year ended December 31, 1992*).
10.20 Consolidated Freightways, Inc. Directors' Election Form for
deferral payment of director's fees.
10.21 Consolidated Freightways, Inc. 1993 Executive Deferral Plan.
(Exhibit 10.22 to the Company's Form 10-K for the year ended
December 31, 1992*).
10.22 Consolidated Freightways, Inc. Executive Incentive Plan for 1994.
10.23 CF MotorFreight Incentive Plan for 1994.
10.24 Con-Way Transportation Services, Inc. Incentive Plan for 1994.
10.25 Emery Worldwide Incentive Plan for 1994.
10.26 $250 million Credit Agreement dated July 30, 1993 among
Consolidated Freightways, Inc. and various financial institutions.
(Exhibit 10.1 to the Company's Form 10-Q for the quarterly period
ended June 30, 1993*).
10.27 Letter of Credit Facility Agreement dated as of July 30, 1993
between Consolidated Freightways, Inc. and Bank of America
National Trust and Savings Association.
(Exhibit 10.2 to the Company's Form 10-Q for the quarterly period
ended June 30, 1993*).
10.28 Official Statement of the Issuer's Special Facilities Revenue
Refunding Bonds, 1993 Series E and F dated September 29, 1993
among the City of Dayton, Ohio and Emery Air Freight Corporation.
(Exhibit 10.1 to the Company's Form 10-Q for the quarterly period
ended September 30, 1993*).
10.29 Trust Indenture, dated September 1, 1993 between the City of
Dayton, Ohio and Banker's Trust Company as Trustee.
(Exhibit 10.2 to the Company's Form 10-Q for the quarterly period
ended September 30, 1993*).
10.30 Supplemental Lease Agreement dated September 1, 1993 between the
City of Dayton, Ohio, as Lessor, and Emery Air Freight
Corporation, as Lessee. (Exhibit 10.3 to the Company's Form 10-Q
for the quarterly period ended September 30, 1993*).
10.31 Supplemental Retirement Plan dated January 1, 1990.
10.32 Directors' 24-Hour Accidental Death and Dismemberment Plan.
10.33 Executive Split-Dollar Life Insurance Plan dated January 1, 1994.
10.34 Board of Directors' Compensation Plan dated January 1, 1994.
10.35 Excess Benefit Plan dated January 1, 1987.
10.36 Directors' Business Travel Insurance Plan.
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
PAGE 29
Exhibit No.
- ----------
10.37 Deferred Compensation Plan for Executives dated October 1, 1993.
10.38 1993 Nonqualified Employee Benefit Plans Trust Agreement dated
October 1, 1993.
(13) Annual report to security holders:
Consolidated Freightways, Inc. 1993 Annual Report to Shareholders
(Only those portions referenced herein are incorporated in this Form
10-K. Other portions such as "To Our Shareholders and Employees" are
not required and, therefore, are not "filed" as part of this Form
10-K.)
(22) Significant Subsidiaries of the Company.
(28) Additional documents:
28.1 Consolidated Freightways, Inc. 1993 Notice of Annual Meeting and
Proxy Statement dated March 18, 1994. (Only those portions
referenced herein are incorporated in this Form 10-K. Other
portions are not required and, therefore, are not "filed" as a
part of this Form 10-K.)
28.2 Note Agreement dated as of July 17, 1989, between the ESOP,
Consolidated Freightways, Inc. and the Note Purchasers named
therein. (Exhibit 28.1 as filed on Form SE dated July 21, 1989*)
28.3 Guarantee and Agreement dated as of July 17, 1989, delivered by
Consolidated Freightways, Inc. (Exhibit 28.2 as filed on Form SE
dated July 21, 1989*).
28.4 Form of Restructured Note Agreement between Consolidated
Freightways, Inc., Thrift and Stock Ownership Trust as Issuer
and various financial institutions as Purchasers named therein,
dated as of November 3, 1992. (Exhibit 28.4 to the Company's
Form 10-K for the year ended December 31, 1992*).
28.5 Form of Restructured Guarantee and Agreement between Consolidated
Freightways, Inc., as Issuer and various financial institutions
as Purchasers named therein, dated as of November 3, 1992.
(Exhibit 28.5 to the Company's Form 10-K for the year ended
December 31, 1992*).
The remaining exhibits have been omitted because either (1) they are
neither required nor applicable or (2) the required information has been
included in the consolidated financial statements or notes thereto.
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
CONSOLIDATED FREIGHTWAYS, INC. EXHIBIT 3.2
BY-LAWS
As Amended March 29, 1993
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered
office of the Corporation in the State of Delaware shall be in the City
of Wilmington, County of New Castle.
SECTION 2. Other Offices. The Corporation shall also
have and maintain a principal office or place of business at such place
as may be fixed by the Board of Directors, and may also have other
offices at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or
as the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 1. Place of Meetings. Meetings of the
stockholders of the Corporation shall be held at such place, either
within or without the State of Delaware, as may be designated from time
to time by the Board of Directors or, if not so designated, then at the
principal office of the Corporation.
SECTION 2. Annual Meetings. The annual meetings of the
stockholders of the Corporation for the purpose of election of
directors and for such other business as may lawfully come before the
meetings shall be held on a date and at a time designated from time to
time by the Board of Directors, or, if not so designated, then at 10:00
a.m. on the last Monday in April in each year, if not a legal holiday,
or, if a legal holiday at the same hour and place on the next
succeeding day not a holiday. At an annual meeting of the stockholders,
only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual
meeting, business must have been (a) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the Board
of Directors, (b) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (c) otherwise properly
brought before the meeting by a stockholder. In addition to any other
applicable requirements, for business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary, Consolidated Freightways,
Inc. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the
Corporation not less than 30 days nor more than 60 days prior to the
meeting; provided, however, that in the event that less than 40 days'
notice or prior public disclosure of the date of the meeting is given
or made to stockholders, notice by the stockholder, to be timely, must
be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure was made. A stockholder's
notice to the Secretary shall set forth as to each matter that the
stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual
meeting, (b) the name and record address of the stockholder proposing
such business, (c) the class and number of shares of the Corporation
that are beneficially owned by the stockholder, and (d) any material
interest of the stockholder in such business.
Notwithstanding anything in the By-Laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 2.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this
Section 2, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting
shall not be transacted.
SECTION 3. Special Meetings. Special meetings of
the stockholders of the Corporation may be called, for any purpose or
purposes, by the Chief Executive Officer or the Board of Directors at
any time. Upon written request of any stockholder or stockholders
holding in the aggregate a majority of the voting power of all
stockholders, the Secretary shall call a special meeting of
stockholders to be held at a place in San Francisco, California
specified in the request for call, at such time as the Secretary may
fix, such meeting to be held not less than ten nor more than 60 days
after the receipt of the request, and if the Secretary shall neglect or
refuse to call the meeting, the stockholder or stockholders making the
request may do so.
SECTION 4. Notice of Meetings. Except as otherwise
provided by law or the Certificate of Incorporation, written notice of
each meeting of stockholders shall be given not less than ten nor more
than 50 days before the date of the meeting to each stockholder
entitled to vote thereat, directed to his address as it appears upon
the books of the Corporation; said notice to specify the place, date
and hour and purpose or purposes of the meeting. When a meeting is
adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken unless the adjournment is for
more than thirty days, or unless after the adjournment a new record
date is fixed for the adjourned meeting, in which event a notice of the
adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting. Notice of the time, place and purpose of any
meeting of stockholders may be waived in writing, either before or
after such meeting, and will be waived by any stockholder by his
attendance thereat in person or by proxy. Any stockholder so waiving
notice of such meeting shall be bound by the proceedings of any such
meeting in all respects as if due notice thereof had been given.
SECTION 5. Quorum. At all meetings of stockholders,
except where otherwise provided by statute or by the Certificate of
Incorporation, or by the By-Laws, the presence, in person or by proxy
duly authorized, of the holders of a majority of the outstanding shares
of stock entitled to vote shall constitute a quorum for the transaction
of business. Shares, the voting of which at said meeting has been
enjoined, or which for any reason cannot be lawfully voted at such
meeting shall not be counted to determine a quorum at said meeting. In
the absence of a quorum any meeting of stockholders may be adjourned,
from time to time, by vote of the holders of a majority of the shares
represented thereat, but no other business shall be transacted at such
meeting. At such adjourned meeting at which a quorum is present or
represented any business may be transacted which might have been
transacted at the original meeting. The stockholders present at a duly
called or convened meeting, at which a quorum is present, may continue
to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum. Except as otherwise
provided by law, the Certificate of Incorporation or these By-Laws, all
action taken by the holders of a majority of the voting power
represented at any meeting at which a quorum is present shall be valid
and binding upon the Corporation.
SECTION 6. Voting Rights. Except as otherwise provided
by law, only persons in whose names shares entitled to vote stand on
the stock records of the Corporation on the record date for determining
the stockholders entitled to vote at said meeting shall be entitled to
vote at such meeting. Shares standing in the names of two or more
persons shall be voted or represented in accordance with the
determination of the majority of such persons, or, if only one of such
persons is present in person or represented by proxy, such person shall
have the right to vote such shares and such shares shall be deemed to
be represented for the purpose of determining a quorum. Every person
entitled to vote or execute consents shall have the right to do so
either in person or by an agent or agents authorized by a written proxy
executed by such person or his duly authorized agent, which proxy shall
be filed with the Secretary of the Corporation at or before the meeting
at which it is to be used. Said proxy so appointed need not be a
stockholder. No proxy shall be voted on after three years from its date
unless the proxy provides for a longer period.
SECTION 7. List of Stockholders. The officer who
has charge of the stock ledger of the Corporation shall prepare and
make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at said meeting,
arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane
to the meeting, during ordinary business hours, for a period of at
least ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held and which place shall be specified
in the notice of the meeting, or, if not specified, at the place where
said meeting is to be held, and the list shall be produced and kept at
the time and place of meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 8. Action Without Meeting. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken
in connection with any corporate action by any provisions of the
statutes or of the Certificate of Incorporation, the meeting and vote
of stockholders may be dispensed with: (1) if all of the stockholders
who would have been entitled to vote upon the action if such meeting
were held shall consent in writing to such corporate action being
taken; or (2) if the Certificate of Incorporation authorizes the action
to be taken with the written consent of the holders of less than all of
the stock who would have been entitled to vote upon the action if a
meeting were held, then on the written consent of the stockholders
having not less than such percentage of the number of votes as may be
authorized in the Certificate of Incorporation; provided that in no
case shall the written consent be by the holders of stock having less
than the minimum percentage of the vote required by statute for the
proposed corporate action, and provided that prompt notice must be
given to all stockholders of the taking of corporate action without a
meeting and by less than unanimous written consent.
SECTION 9. Rules of Conduct. The Board of Directors of
the Company shall be entitled to make such rules or regulations for the
conduct of meetings of stockholders as it shall deem necessary,
appropriate or convenient. Subject to such rules and regulations of the
Board of Directors, if any, the chairman of the meeting shall have the
right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are
necessary, appropriate or convenient for the proper conduct of the
meeting, including, without limitation, establishing an agenda or order
of business for the meeting, rules and procedures for maintaining order
at the meeting and the safety of those present, limitations on
participation in such meeting to stockholders of record of the
Corporation and their duly authorized and constituted proxies, and such
other persons as the chairman shall permit, restrictions on entry to
the meeting after the time fixed for the commencement thereof,
limitations on the time allotted to questions or comments by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless, and to
the extent, determined by the Board of Directors or the chairman of the
meeting, meetings of shareholders shall not be required to be held in
accordance with rules of parliamentary procedure.
ARTICLE III
DIRECTORS
SECTION 1. Powers. The powers of the Corporation
shall be exercised, its business conducted and its property controlled
by the Board of Directors.
SECTION 2. Number, Qualifications and Classification.
(a) A majority of the directors holding office may by
resolution increase or decrease the number of directors, provided,
however, that the number thereof shall never be less than twelve nor
greater than fifteen. A director need not be a stockholder. The
directors shall be divided into three classes, designated Class I,
Class II and Class III, as nearly equal in number as the then total
number of directors permits. At the 1985 annual meeting of
stockholders, Class I directors shall be elected for a one-year term,
Class II directors for a two-year term and Class III directors for a
three-year term. At each succeeding annual meeting of stockholders
beginning in 1986, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term.
If the number of directors is changed, any increase or decrease shall
be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any additional
directors of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide
with the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent director.
A director shall hold office until the annual meeting for the year in
which his term expires and until his successor shall be elected and
shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office. Any vacancy on the
Board of Directors, including any vacancy that results from an increase
in the number of directors, may be filled by a majority of the Board of
Directors then in office, although less than a quorum, or by a sole
remaining director. Any director elected to fill a vacancy shall have
the same remaining term as that of his predecessor.
(b) Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation
shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of
such directorships shall be governed by the terms of the Certificate of
Incorporation applicable thereto, and such directors so elected shall
not be divided into classes pursuant to these By-Laws unless expressly
provided by such terms.
(c) Any amendment, change or repeal of this Section 2 of Article III,
or any other amendment to these By-Laws that will have the effect of
permitting circumvention of or modifying this Section 2 of Article III,
shall require the favorable vote, at a stockholders' meeting, of the
holders of at least 80% of the then-outstanding shares of stock of the
Corporation entitled to vote.
SECTION 3. Special Elections. If, for any cause, the
Board of Directors shall not have been elected at an annual meeting, it
may be elected as soon thereafter as is convenient at a special meeting
of the stockholders called for that purpose in the manner provided in
these By-Laws.
SECTION 4. Vacancies. A vacancy in the Board of
Directors shall be deemed to exist in the case of the death,
resignation or removal of any director, or if the number of directors
constituting the whole Board be increased, or if the stockholders, at
any meeting of stockholders at which directors are to be elected, fail
to elect the number of directors then constituting the whole Board.
SECTION 5. Resignations. Any director may resign at any
time by delivering his written resignation to the Secretary, such
resignation to specify whether it will be effective at a particular
time, upon receipt by the Secretary or at the pleasure of the Board of
Directors. If no such specification is made, it shall be deemed
effective at the pleasure of the Board of Directors.
SECTION 6. Meetings. (a) The annual meeting of the
Board of Directors shall be held immediately after the annual
stockholders' meeting and at the place where such meeting is held. No
notice of an annual meeting of the Board of Directors shall be
necessary and such meeting shall be held for the purpose of electing
officers and transacting such other business as may lawfully come
before it.
(b) Regular meetings of the Board of Directors shall be held at such
place within or without the State of Delaware, and at such times as the
Board may from time to time determine, and if so determined no notice
thereof need be given.
(c) Special meetings may be called at any time and place within or
without the State of Delaware upon the call of the Chief Executive
Officer or Secretary or any two directors. Notice of the time, place
and purposes of each special meeting shall be sent by mail at least
seventy-two hours in advance of the time of the meeting, or by telegram
at least forty-eight hours in advance of the time of the meeting, to
the address of each director. Notice of any special meeting may be
waived in writing at any time before or after the meeting and will be
waived by any director by attendance thereat.
SECTION 7. Quorum and Voting. (a) A majority of the
whole Board of Directors shall constitute a quorum for all purposes,
provided, however, at any meeting whether a quorum be present or
otherwise, a majority of the directors present may adjourn from time to
time and place to place, within or without the State of Delaware,
without notice other than by announcement at the meeting.
(b) At each meeting of the Board at which a quorum is present all
questions and business shall be determined by a vote of a majority of
the directors present, unless a different vote be required by law or by
the Certificate of Incorporation.
SECTION 8. Action Without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these By-Laws, any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting,
if all members of the Board or of such committee, as the case may be,
consent thereto in writing, and such writing or writings are filed with
the minutes of proceedings of the Board or committee.
SECTION 9. Fees and Compensation. Directors shall not
receive any stated salary for their services as directors, but, by
resolution of the Board, compensation in a reasonable amount may be
fixed by the Board, including, without limitation, compensation in the
form of an annual retainer, a fee for each Board or Board Committee
meeting attended, reimbursement for expenses of attendance at any such
meeting, or any combination of any of the foregoing. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation therefor.
SECTION 10. Maximum Age of Directors. Directors who
have attained the age of 72 years shall be ineligible to stand for
election or re-election as a director. A director who has attained the
age of 72 years whose term as a director continues beyond the annual
meeting of shareholders next following attainment of 72 years shall
retire and resign as a director at the first directors' meeting
following such annual meeting of shareholders. For this purpose such
resignation will be automatic and need not meet the requirements for
resignation set forth in SECTION 5 OF THIS ARTICLE III.
SECTION 11. Nominations of Persons for Election to the Board of
Directors. Only persons who are nominated in accordance with
the following procedures shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders by or at the
direction of the Board of Directors, by any nominating committee or
person appointed by the Board of Directors or by any stockholder of the
Corporation who is entitled to vote for the election of directors at
the meeting and who complies with the notice procedures set forth in
this Section 11. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary, Consolidated Freightways, Inc. To
be timely, a stockholder's notice shall be delivered to or mailed and
received at the principal executive offices of the Corporation not less
than 30 days nor more than 60 days prior to the meeting; provided,
however, that in the event that less than 40 days' notice or prior
public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder, to be timely, must be so
received not later than the close of business on the 10th day following
the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate
for election or re-election as a director, (i) the name, age, business
address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class and number of
shares of the Corporation that are beneficially owned by the person and
(iv) any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of directors
pursuant to Regulation 14a under the Securities Exchange Act of 1934;
and (b) as to the stockholder giving the notice, (i) the name and
record address of the stockholder and (ii) the class and number of
shares of the Corporation that are beneficially owned by the
stockholder. A signed written consent of each proposed nominee to serve
as a director of the Corporation shall be appended to the stockholder's
notice. The Corporation may require any proposed nominee to furnish any
other information that may reasonably be required by the Corporation to
determine the qualifications of such proposed nominee to serve as a
director of the Corporation. No person shall be eligible for election
as a director of the Corporation unless nominated in accordance with
the procedures set forth herein. These provisions shall not apply to
nomination of any persons entitled to be separately elected by holders
of Preferred Stock.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
ARTICLE IV
OFFICERS AND COMMITTEES
SECTION 1. Officers Designated. The executive
officers of the Corporation shall be chosen by the Board of Directors
and shall be the Chairman of the Board, the Vice Chairman of the Board,
the President, one or more Vice Presidents, the Secretary, one or more
Assistant Secretaries, the Treasurer, one or more Assistant Treasurers,
and such other executive officers as the Board of Directors from time
to time may designate. The Board of Directors shall designate either
the Chairman of the Board or the President as the Chief Executive
Officer of the Corporation. The officer so designated shall have charge
of the actual conduct and operation of the business of the Corporation,
subject to the control and direction of the Board of Directors. The
Chief Executive Officer shall, with the consent of the Board of
Directors, assign such additional titles to Vice Presidents as he shall
deem appropriate and designate the succession of officers to act in his
stead in his absence or disability. He may appoint additional Vice
Presidents who shall not, however, be executive officers. He shall
assign all duties not otherwise specified by these By-Laws to all
officers and employees of the Corporation.
SECTION 2. Election, Qualification, Tenure of Office, and
Duties of Executive Officers and Other Officers. (a) At the
annual meeting of the Board of Directors following their election by
the stockholders, the directors shall elect all executive officers of
the Corporation. Any one person may hold any number of offices of the
Corporation at any one time unless specifically prohibited therefrom by
law. The Chairman of the Board shall be a director but no other officer
need be a director.
(b) Each executive officer shall hold office from the date of his
election either until the date of his voluntary resignation, or death,
or until the next annual meeting of the Board of Directors and until a
successor shall have been duly elected and qualified, whichever shall
first occur; provided that any such officer may be removed by the Board
of Directors whenever in its judgment the best interest of the
Corporation will be served thereby, and the Board may elect another in
the place and stead of the person so removed.
(c) Chairman of the Board: The Chairman of the Board shall
preside at all meetings of the stockholders, of the Board of Directors,
and of the Executive Committee. He shall have the responsibility of
keeping the directors informed on all policy matters, and shall have
such other powers and perform such other duties as may be prescribed by
the Board.
(d) Vice Chairman of the Board: The Vice Chairman of the
Board shall, in the absence of the Chairman of the Board, preside at
all meetings of the stockholders, the Board of Directors and the
Executive Committee. He shall perform such other duties as may be
prescribed by the Chairman of the Board.
(e) President: The President shall, in the absence of the
Chairman of the Board and the Vice Chairman of the Board, preside at
all meetings of the stockholders, the Board of Directors and the
Executive Committee. He shall exercise all of the powers and discharge
all of the other duties of the Chairman of the Board in the absence of
the Chairman of the Board. He shall perform such other duties as may be
prescribed by the Chairman of the Board.
(f) Vice Presidents: The Vice Presidents shall have such
duties and have such other powers as shall be prescribed by the Chief
Executive Officer.
(g) Secretary: The Secretary shall record all the
proceedings of the meetings of the Corporation and of the directors in
a book or books kept for that purpose. He shall attend to the giving
and serving of all notices on behalf of the Corporation. He shall have
the custody of the corporate seal and affix the same to such
instruments as may be required. He shall have such other powers and
perform such other duties as may be prescribed by the Chief Executive
Officer.
(h) Assistant Secretaries: Assistant Secretaries shall
assist the Secretary in the performance of his duties and any one of
the Assistant Secretaries may perform all of the duties of the
Secretary if at any time he shall be unable to act. Assistant
Secretaries shall have such other powers and perform such other duties
as may be prescribed by the Chief Executive Officer.
(i) Treasurer: The Treasurer shall have charge of the
custody, control and disposition of all funds of the Corporation and
shall account for same. He shall have such other powers and perform
such other duties as may be prescribed by the Chief Executive Officer.
(j) Assistant Treasurers: Assistant Treasurers shall assist
the Treasurer in the performance of his duties and any one of the
Assistant Treasurers may perform all of the duties of the Treasurer if
at any time he shall be unable to act. Assistant Treasurers shall have
such other powers and perform such other duties as may be prescribed by
the Chief Executive Officer.
SECTION 3. Committees. (a) Executive Committee.
The Board of Directors shall, by resolution passed by a majority
of the whole Board, appoint an Executive Committee of not less than
three members, all of whom shall be directors. The Executive Committee,
to the extent permitted by law, shall have and may exercise when the
Board of Directors is not in session all powers of the Board in the
management of the business and affairs of the Corporation and may
authorize the seal of the Corporation to be affixed to all papers which
may require it. It shall be the duty of the Secretary of the
Corporation to record the minutes of all actions of the Executive
Committee.
(b) Other Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, from time to time
appoint such other committees as may be permitted by law. The Chief
Executive Officer may appoint such other committees as he finds
necessary to the conduct of the Corporation's business. Such other
committees appointed by the Board of Directors or the Chief Executive
Officer shall have such powers and perform such duties as may be
prescribed by the body or person appointing such committee.
(c) The members of all committees of the Board of Directors shall serve
a term co-existent with that of the Board of Directors which shall have
appointed such committee. The Board, subject to the provisions of
sub-section (a) or (b) of this Section 3 may at any time increase or
decrease the number of members of a committee or terminate the
existence of a committee; provided, that no committee shall consist of
less than three members. The membership of a committee member shall
terminate on the date of his death or voluntary resignation, but the
Board may at any time for any reason remove any individual committee
member and the Board may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the
committee. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member of a committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member.
ARTICLE V
CAPITAL STOCK
SECTION 1. Form and Execution of Certificates.
Certificates for the shares of stock of the Corporation shall
be in such form as are consistent with the Certificate of Incorporation
and applicable law. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by, or in the name of the
Corporation by, the Chairman of the Board, President or any Vice
President and by the Treasurer or Assistant Treasurer or the Secretary
or Assistant Secretary, certifying the number of shares owned by him in
the Corporation. Where such certificate is countersigned by a transfer
agent other than the Corporation or its employee, or by a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
SECTION 2. Lost Certificates. The Board of Directors
may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation
alleged to have been lost or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost
or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost
or destroyed.
SECTION 3. Transfers. Transfers of record of shares of
the capital stock of the Corporation shall be made upon its books by
the holders thereof, in person or by attorney duly authorized, and upon
the surrender of a certificate or certificates for a like number of
shares, properly endorsed or accompanied by a properly endorsed stock
power.
SECTION 4. Fixing Record Dates. In order that the
Corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect
of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a
record date, which shall not be more than sixty nor less than ten days
before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the
meeting is held; and (2) the record date for determining stockholders
for any other purpose shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 5. Registered Stockholders. The Corporation
shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends,
and to vote as such owner, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the
part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VI
OTHER SECURITIES OF THE CORPORATION
All bonds, debentures and other corporate securities of the
Corporation, other than stock certificates, may be signed by the
Chairman of the Board, the President or any Vice President, or such
other person as may be authorized by the Board of Directors, and the
corporate seal impressed thereon or a facsimile of such seal imprinted
thereon and attested by the signature of the Secretary or an Assistant
Secretary, or the Treasurer or an Assistant Treasurer, or such other
person as may be authorized by the Board of Directors; provided,
however, that where any such bond, debenture or other corporate
security shall be authenticated by the manual signature of a trustee
under an indenture pursuant to which such bond, debenture or other
corporate securities shall be issued, the signatures of the persons
signing and attesting the corporate seal on such bond, debenture or
other corporate security may be the imprinted facsimile of the
signatures of such persons. Interest coupons appertaining to any such
bond, debenture or other corporate security, authenticated by a trustee
as aforesaid, shall be signed by the Treasurer or an Assistant
Treasurer of the Corporation, or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile
signature of such person. In case any person who shall have signed or
attested any bond, debenture or other corporate security, or whose
facsimile signature shall appear thereon or on any such interest
coupon, shall have ceased to be an officer before the bond,
debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture
or other corporate security nevertheless may be adopted by the
Corporation and issued and delivered as though the person who signed
the same or whose facsimile signature shall have been used thereon had
not ceased to be such officer of the Corporation.
ARTICLE VII
SECURITIES OWNED BY THE CORPORATION
Power to Vote. Unless otherwise ordered by the
Board of Directors, the Chief Executive Officer, or any officer
designated in writing by the Chief Executive Officer, shall have full
power and authority in the name and on behalf of the Corporation, to
vote and to act either in person or by proxy at any meeting of the
holders of stock or securities in any corporation upon and in respect
of any securities therein which the Corporation may hold, and shall
possess and may exercise in the name of the Corporation any and all
rights and powers incident to the ownership of such stock or securities
which, as the owner thereof, the Corporation shall possess and might
exercise including the right to give written consents in respect to
action taken or to be taken. The Board of Directors may from time to
time confer like powers upon any other person or persons.
ARTICLE VIII
CORPORATE SEAL
The corporate seal shall consist of a die bearing the
inscription, ``Consolidated Freightways, Inc.-
Corporate Seal-Delaware.''
ARTICLE IX
AMENDMENTS
These By-Laws may be repealed, altered or amended or new By-Laws
adopted by written consent of stockholders in the manner authorized by
Section 8 of Article II or at any meeting of the stockholders, either
annual or special, by the affirmative vote of a majority of the stock
entitled to vote at such meeting. The Board of Directors shall also
have the authority to repeal, alter or amend these By-Laws or adopt new
By-Laws by unanimous written consent or by the affirmative vote of a
majority of the whole Board at any annual, regular, or special meeting
subject to the power of the stockholders to change or repeal such
By-Laws.
ARTICLE X
MISCELLANEOUS
SECTION 1. Definitions. As used in these By-Laws
and wherever the context shall require, the word ``person'' shall
include associations, partnerships and corporations as well as
individuals; words in the masculine gender shall include the feminine
and associations, partnerships and corporations; words in the singular
shall include the plural and words in the plural may mean only the
singular, and words ``additional compensation'' shall mean and
include all bonus, profit sharing, retirement, deferred compensation,
and all other additional compensation plans or arrangements affecting
persons individually or as a group.
SECTION 2. Notices. Whenever, under any provisions of
these By-Laws, notice is required to be given to any stockholder, the
same shall be given in writing, timely and duly deposited in the United
States Mail, postage prepaid, and addressed to his last known post
office address as shown by the stock record of the Corporation or its
transfer agent. Any notice required to be given to any director may be
given by the method hereinabove stated, by personal delivery, or by
telegram, except that such notice, other than one which is delivered
personally, shall be sent to such address as such director shall have
filed in writing with the Secretary of the Corporation, or, in the
absence of such filing, to the last known post office address of such
director. If no address of a stockholder or director be known, such
notice may be sent to the principal office of the Corporation. An
affidavit of mailing, executed by a duly authorized and competent
employee of the Corporation or its transfer agent appointed with
respect to the class of stock affected, specifying the name and address
or the names and addresses of the stockholder or stockholders, director
or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence of
the statements therein contained. All notices given by mail, as above
provided, shall be deemed to have been given as at the time of mailing
and all notices given by telegram shall be deemed to have been given as
at the sending time recorded by the telegraph company transmitting the
same. It shall not be necessary that the same method of giving be
employed in respect of all directors, but one permissible method may be
employed in respect of any one or more, and any other permissible
method or methods may be employed in respect of any other or others.
The period or limitation of time within which any stockholder may
exercise any option or right, or enjoy any privilege or benefit, or be
required to act, or within which any directors may exercise any power
or right, or enjoy any privilege, pursuant to any notice sent him in
the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive
such notice. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation, or
of these By-Laws, a waiver thereof in writing signed by the person or
persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Whenever notice is
required to be given, under any provision of law or of the Certificate
of Incorporation or By-Laws of the Corporation, to any person with whom
communication is unlawful, the giving of such notice to such person
shall not be required and there shall be no duty to apply to any
governmental authority or agency for a license or permit to give such
notice to such person. Any action or meeting which shall be taken or
held without notice to any such person with whom communication is
unlawful shall have the same force and effect as if such notice had
been duly given. In the event that the action taken by the Corporation
is such as to require the filing of a certificate under any provision
of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to
all persons entitled to receive notice except such persons with whom
communication is unlawful.
SECTION 3. Indemnification of Officers, Directors, Employees
and Agents. (a) Right to Indemnification. Each
person who was or is made a party or is threatened to be made a party
to or is involved in any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a ``Proceeding''), by reason of the fact
that he, or a person of whom he is the legal representative, is or was
a director, officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation or of a partnership, joint
venture, trust, or other enterprise, including service with respect to
employee benefit plans, whether the basis of the Proceeding is alleged
action in an official capacity as a director, officer, employee, or
agent or in any other capacity while serving as a director, officer,
employee, or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification
rights than were permitted prior to amendment) against all expenses,
liability, and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties, and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in
connection therewith; provided, however, that except as to
actions to enforce indemnification rights pursuant to paragraph (c) of
this Section, the Corporation shall indemnify any such person seeking
indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article shall be a contract right for
the benefit of the Corporation's directors, officers, employees, and
agents.
(b) Authority to Advance Expenses. Expenses incurred
(including attorneys' fees) by an officer or director (acting in his
capacity as such) in defending a Proceeding shall be paid by the
Corporation in advance of the final disposition of such Proceeding,
provided, however, that if required by the Delaware General Corporation
Law, as amended, such expenses shall be advanced only upon delivery to
the Corporation of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the Corporation as authorized
in this Article or otherwise. Such expenses incurred by other employees
or agents of the Corporation (or by the directors or officers not
acting in their capacity as such, including service with respect to
employee benefit plans) may be advanced upon such terms and conditions
as the Board of Directors deems appropriate.
(c) Right of Claimant to Bring Suit. If a claim under
paragraph (a) or (b) of this Section is not paid in full by the
Corporation within sixty days after a written claim has been received
by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and,
if successful in whole or in part, the claimant shall be entitled to be
paid also the expense (including attorneys' fees) of prosecuting such
claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending a
Proceeding in advance of its final disposition where the required
undertaking has been tendered to the Corporation) that the claimant has
not met the standards of conduct that make it permissible under the
Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed. The burden of proving such a defense
shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper under the
circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had
not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that claimant has not met the applicable
standard of conduct.
(d) Provisions Nonexclusive. The rights conferred on any
person by this Section shall not be exclusive of any other rights that
such person may have or hereafter acquire under any statute, provision
of the Certificate of Incorporation, By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while
holding such office.
(e) Authority to Insure. The Corporation may purchase and
maintain insurance to protect itself and any person who is or was a
director, officer, employee, or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against any liability, expense, or loss
asserted against or incurred by such person, whether or not the
Corporation would have the power to indemnify him against such
liability, expense, or loss under applicable law or the provisions of
this Article.
(f) Survival of Rights. The rights provided by this Section
shall continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
(g) Effect of Amendment. Any amendment, repeal, or
modification of this Section shall not (a) adversely affect any right
or protection of any director, officer, employee, or agent existing at
the time of such amendment, repeal, or modification, or (b) apply to
the indemnification of any such person for liability, expense, or loss
stemming from actions or omissions occurring prior to such amendment,
repeal, or modification.
CERTIFICATE
The undersigned, Secretary of CONSOLIDATED
FREIGHTWAYS, INC., does hereby certify that the foregoing is a
true and correct copy of the By-Laws of CONSOLIDATED FREIGHTWAYS, INC.,
as amended to date hereof.
In witness whereof the undersigned has hereunto set his hand and
affixed the seal of said corporation
this 29th day of March 1993.
/s/Maryla R. Boonstoppel
Vice President and
Secretary of Consolidated Freightways, Inc.
CONSOLIDATED FREIGHTWAYS, INC.
INCORPORATED IN DELAWARE AUGUST 13, 1958
UNDER THE CORPORATE NAME OF
CONSOLIDATED FREIGHTWAYS COMPANY
BY-LAWS
As Amended March 29, 1993
CFI-0014 (5/93) Litho in
U.S.A.
EXHIBIT 10.20
-------------
CONSOLIDATED FREIGHTWAYS, INC.
------------------------------
1994 Director's Election Form
-----------------------------
Indicate amount of deferral under (A), timing of deferral under (B),
or select (C) if no deferral is elected.
In the event I earn any Consolidated Freightways, Inc. director's fees
in 1994, I hereby elect to defer payment of such fees and any interest
equivalent as follows:
A. ( ) To defer annual retainer and all meeting fees and chair fees,
if applicable.
( ) To defer the annual retainer portion of such fees.
B. ( ) To be paid in the year following the year in which I cease to
be a director of Consolidated Freightways, Inc.
( ) To be paid in equal annual installments for _____ year(s) but
not to exceed five (5) years, commencing in the year following
the year in which I cease to be a director of Consolidated
Freightways, Inc.
( ) To be paid in the year following _____ year(s) (insert 1 or
any multiple of years) after the year in which fees are
deferred (but in no event later than the year following the
year I cease to be a director of Consolidated Freightways, Inc.).
( ) To be paid in equal annual installments for _____ year(s) but
not to exceed five (5) years, commencing in the year following
_______ year(s) (insert 1 or any multiple of years) after the
year in which fees are deferred (but in no event later than
the year I cease to be a director of Consolidated Freightways,
Inc.).
I understand that payment of any amount deferred hereunder will be
made by January 31st of the year in which such payment is to be made. I
further understand that any amount deferred will be credited with interest
equivalents at the end of each calendar quarter following the date of
deferral and continuing until such deferred amount is paid to me. Interest
equivalents shall be calculated at the published Bank of America NT & SA
prime rate as of the date credited and shall be paid on prior interest
equivalents credited on amounts deferred. I also understand that no trust
is created hereby and that in the event of my death, any amounts unpaid
shall be paid to my designated beneficiary in a lump sum.
I designate as my beneficiary ________________________________________
C. ( ) I do not elect to defer payments of any fees earned in 1994.
________________________ ________________________
Date of this Election Signature of Director
Exhibit 10.22
CONSOLIDATED FREIGHTWAYS, INC.
EXECUTIVE INCENTIVE PLAN FOR 1994
THE PLAN
In order to motivate certain of its employees more effectively and
efficiently, Consolidated Freightways, Inc. (CF, Inc.) establishes an
Incentive Plan (Plan) under which payments will be made to eligible
executive personnel out of calendar year 1994 Incentive Profits.
DESIGNATION OF PARTICIPANTS
Participants in this Plan shall be all full-time executive personnel of CF,
Inc. A master list of all Plan participants will be maintained in the office
of the Chief Executive Officer of CF, Inc.
ELIGIBILITY FOR PAYMENT
Participants will commence participation at the beginning of the first full
calendar quarter following becoming eligible. Calendar quarters begin
January 1, April 1, July 1, and October 1. An employee who commences
participation in the 1994 Plan during the 1994 Plan year, and who
participates less than four full quarters, will receive a pro rata payment
based on the number of full calendar quarters of Plan participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently (i) employed by
Consolidated Freightways, Inc. or any of its subsidiaries and (ii) a Plan
participant.
EXCEPTION 1. A Plan participant who is employed by CF, Inc. or any
of its subsidiaries through December 31, 1994 but leaves that employment
or otherwise becomes ineligible after December 31, 1994 but before the
final payment is made relating to 1994, unless terminated for cause,
shall be entitled to receive payments under this Plan resulting from
1994 Incentive Profits.
EXCEPTION 2. An appropriate pro rata payment will be made (1) to a
Plan participant who retires prior to December 31, 1994 pursuant to the
Consolidated Freightways, Inc. Non-Contractual Employees Pension Plan
or to the provisions of the Social Security Act and who, at the time
of retirement, was an eligible participant in this Plan, (2) to the
heirs, legatees, administrators or executors of a Plan participant who
dies prior to December 31, 1994 and who, at the time of death, was an
eligible participant in this Plan, (3) to an eligible Plan participant
who is placed on an approved Medical, Sabbatical, or Military Leave of
Absence prior to December 31, 1994, or (4) to an eligible Plan
participant who is transferred to another subsidiary of CF, Inc. and who
remains an employee through December 31, 1994.
METHOD OF PAYMENT
Each Plan participant will be assigned an incentive participation factor
as a percent of Annual Salary. Participants will have their participation
factor based on CF, Inc. Incentive Profit.
Minimum and Incentive Factor Profit Goals are shown on Schedule A.
Incentive compensation for the assigned profit goals will be earned on a pro
rata basis for accomplishments between the Minimum level and the Incentive
Factor Goal and will continue to be earned ratably for performance over
the Incentive Factor Goals.
No incentive will be earned by a participant until CF, Inc. has
achieved its Minimum Profit Goal.
PERSONAL DATA SHEET
A "Personal Data Sheet" for calculation of incentive earnings will be
prepared for each Plan participant which designates (1) the unit to which
participant is assigned, (2) his assigned incentive participation factor, (3)
the minimum level of achievement required for the profit goal, (4) the
incentive factor level of achievement for the profit goal, and (5) the
incentive earnings at the incentive factor level for the profit goal.
DATE OF PAYMENT
The Chief Executive Officer of CF, Inc. may authorize a partial payment of
the estimated annual earned incentive, in December, 1994. The final payment
to eligible participants, less any previous partial payment, will be made on
or before March 15, 1995.
INCENTIVE PROFIT
Incentive Profit is defined as the earnings of CF, Inc. before deducting any
amounts expensed under this or any similar incentive, bonus and/or profit
sharing plans and before deducting income taxes.
ANNUAL COMPENSATION
Annual Compensation for incentive purposes for each Plan participant is
his annualized salary before any incentive or other special
compensation as of the first pay period following the date the
participant becomes eligible to participate in this Plan. The term
"special compensation" used herein does not include deferred salary
arrangements wherein the participant could have chosen to receive the
deferred salary in the Plan year.
MAXIMUM PAYMENT
Payments under this Plan are limited to double each participant's
Participation Factor.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is prohibited by
law.
AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN
The Board of Directors of CF, Inc. may at any time amend, suspend, or
terminate the operation of this Plan, by thirty-day written notice to the
Plan participants, and will have full discretion as to the administration and
interpretation of this Plan. No participant in this Plan shall at any time
have any right to receive any payment under this Plan until such time, if
any, as any payment is actually made.
DURATION OF PLAN
This Plan is for the calendar year 1994 only.
SCHEDULE A
CONSOLIDATED FREIGHTWAYS, INC.
INCENTIVE PLAN FOR 1994
PROFIT GOALS
Incentive
Minimum Factor
Incentive Plan Unit Profit Goal Profit Goal
Consolidated Freightways, Inc. $108,000,000 $180,000,000
EXHIBIT 10.23
CF MOTORFREIGHT
INCENTIVE PLAN FOR 1994
THE PLAN
In order to motivate certain employees of CF MotorFreight (CFMF) more
effectively and efficiently, Consolidated Freightways Corporation of
Delaware (CFCD) establishes an Incentive Plan (Plan) under which
payments will be made to eligible supervisory, managerial and regular
full-time nonsalaried, noncontractual personnel out of calendar year 1994
Incentive Profits.
DESIGNATION OF PARTICIPANTS
Participants in the Plan shall be all full-time supervisory, managerial and
regular nonsalaried, noncontractual personnel of CFMF. A master list of Plan
participants will be maintained in the office of the President of CFCD.
ELIGIBILITY FOR PARTICIPATION
Participants will commence participation at the beginning of the first full
calendar quarter following becoming eligible. Calendar quarters begin
January 1, April 1, July 1, and October 1. An employee who commences
participation in the 1994 Plan during the 1994 Plan year, and who
participates less than four full quarters, will receive a pro rata payment
based on the number of full calendar quarters of Plan participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently (i) employed by CFCD or any of
its subsidiaries and (ii) a Plan participant.
EXCEPTION 1. A Plan participant who is employed by CFCD or any of its
subsidiaries through December 31, 1994 but leaves that employment
or otherwise becomes ineligible after December 31, 1994, unless
terminated for cause, shall be entitled to receive payments under this
Plan resulting from 1994 Incentive Profits.
EXCEPTION 2. An appropriate pro rata payment will be made (1) to a
Plan participant who retires prior to December 31, 1994 pursuant to the
Consolidated Freightways, Inc. Non-Contractual Employees Pension Plan
or to the provisions of either the Social Security Act or the Old Age
Security Acts (of Canada), as applicable, and who, at the time of
retirement, was an eligible participant in this Plan, (2) to the
heirs, legatees, administrators or executors
of a Plan participant who dies prior to December 31, 1994 and who, at
the time of death, was an eligible participant in this Plan,(3) to an
eligible Plan participant who is placed on an approved Medical,
Sabbatical, or Military Leave of Absence prior to December 31, 1994,
or (4) to an eligible Plan participant who is transferred to
another subsidiary of Consolidated Freightways, Inc. and who remains
an employee through December 31, 1994.
METHOD OF PAYMENT
Each participant will be assigned an incentive participation factor as a
percent of annual compensation in accordance with Schedule A, attached.
Each plan participant will be assigned to an operating unit (such as
total company, divisions, terminal, etc.) to earn incentive. Incentive
earnings may be further allocated to specific Performance Goals for the
participant's operating unit such as revenue, profit, service, etc.
Incentive Factor Plan goals and Minimum levels of accomplishment will be
established for all Performance Goals. As an example, the Minimum and
Incentive Factor Plan Profit Goals for CF MotorFreight are shown on Schedule
B, attached.
Incentive for the assigned Performance Goals will be earned on a
prorata basis for accomplishment between Minimum Level and Incentive Factor
Plan Goal. The same prorata relationship will apply to any Goal
performance over the Incentive Factor Plan goal.
No incentive will be earned by a participant until CFMF has achieved its
Minimum Profit Goal and his unit achieves its Minimum Profit Goal. Incentive
earned from the attainment of Performance Goals other than profit will be
restricted to the same percent of accomplishment as profit, until his
unit has reached its Incentive Factor Plan Profit Goal.
PERSONAL DATA SHEET
A "Personal Data Sheet" for calculation of incentive earnings will be
prepared for each Plan participant which designates (1) the unit to which
the participant is assigned, (2) his assigned incentive partici- pation
factor and the allocation of that factor to specific Perfor- mance Goals,
(3) the minimum level of achievement required for each assigned goal, (4)
the incentive factor level of achievement for each assigned goal, and (5)
the incentive point potential at the incentive factor level for each assigned
goal.
DATE OF PAYMENT
The President of CFCD may authorize a partial payment of the estimated annual
earned incentive, in December 1994. The final payment to eligible
participants, less any previous partial payment, will be made on or before
March 15, 1995.
INCENTIVE PROFIT
Incentive Profit is defined as the earnings of CF MotorFreight before
deducting any amounts expensed under this or any similar incentive or bonus
plan and before deducting income taxes.
ANNUAL COMPENSATION
Annual Compensation for incentive purposes for each Plan participant in his
annualized salary or hourly base pay before any incentive, overtime,
shift premium, or other special compensation as of the first pay period
following the date the participant becomes eligible to participate in
this Plan.
MAXIMUM PAYMENT
Payments under this Plan are limited to double each participant's
Participation Factor.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is prohibited by
law.
AMENDMENT, SUSPENSION AND ADMINISTRATION OF PLAN
The Board of Directors of CFCD may at any time amend, suspend, or
terminate the operation of this Plan, by thirty-day written notice to the
Plan participants, and will have full discretion as to the
administration and interpretation of this Plan. No participant in this
Plan shall at any time have any right to receive any payment under this
Plan until such time, if any, as any payment is actually made.
DURATION OF PLAN
This Plan is for the calendar year 1994 only.
SCHEDULE A
CF MOTORFREIGHT
INCENTIVE COMPENSATION PLAN
PARTICIPATION FACTORS
Terminal Reg Non-
Quality -------------Hay Points-------------- Contractual
Weight Over 621- 380- 301- Under Hourly
Accomplishment 925 924 620 379 300
Personnel
Over
60 Million
Lbs 29.5% 24.0% 18.5% 15.2% 13.0% 7.0%
30-60
Million
Lbs 18.5 15.2 13.0 10.8 7.0
Under 30
Million
Lbs 15.2 13.0 10.8 8.6 7.0
Adminis-
trative
Positions 29.5 24.0 18.5 15.2 13.0 7.0
SCHEDULE B
CF MOTORFREIGHT
INCENTIVE COMPENSATION PLAN FOR 1994
PROFIT GOALS
Incentive
Minimum Factor
Profit Goal Profit Goal
CF Motorfreight (Note A) $ 42,000,000 $ 98,000,000
Note A - This unit consists of Consolidated Freightways Corporation of
Delaware and Canadian Freightways Eastern, Ltd., net of
intercompany eliminations.
EXHIBIT 10.24
CON-WAY TRANSPORTATION SERVICES, INC.
INCENTIVE PLAN FOR 1994
THE PLAN
In order to motivate certain of its employees more effectively and
efficiently, Con-Way Transportation Services, Inc. (CTS) establishes
an Incentive Plan (Plan) under which payments will be made to eligible
supervisory, managerial, and regular full-time nonsalaried personnel
out of calendar year 1994 Incentive Profits.
DESIGNATION OF PARTICIPANTS
Participants in the Plan shall be all full-time supervisory,
managerial and regular nonsalaried personnel of CTS. A master list of
all Plan participants will be maintained in the office of the
President of CTS.
ELIGIBILITY FOR PARTICIPATION
Participants will commence participation at the beginning of the first
full calendar quarter following becoming eligible. Calendar quarters
begin January 1, April 1, July 1, and October 1. An employee who
commences participation in the 1994 Plan during the 1994 Plan year,
and who participates less than four full quarters, will receive a pro
rata payment based on the number of full calendar quarters of Plan
participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently (i) employed by CTS or any
of its subsidiaries and (ii) a Plan participant.
EXCEPTION 1. A Plan participant who is employed by CTS or any of
its subsidiaries through December 31, 1994 but leaves that
employment or otherwise becomes ineligible after December 31, 1994
but before the final payment is made relating to 1994, unless
terminated for cause, shall be entitled to receive payments under
this Plan resulting from 1994 Incentive Profits.
EXCEPTION 2. An appropriate pro rata payment will be made (1) to
a Plan participant who retires prior to December 31, 1994 pursuant
to the Consolidated Freightways, Inc. Non-Contractual Employees
Pension Plan or to the provisions of the Social Security Act
and who, at the time of retirement, was an eligible participant in
this Plan, (2) to the heirs, legatees, administrators or executors
of a Plan participant who dies prior to December 31, 1994 and who,
at the time of death, was an eligible participant in this Plan,
(3) to an eligible Plan participant who is placed on an approved
Medical, Sabbatical, or Military Leave of Absence prior to
December 31, 1994, or (4) to an eligible Plan participant who is
transferred to another subsidiary of Consolidated Freightways,
Inc. and who remains an employee through December 31, 1994.
METHOD OF PAYMENT
Each Plan participant will be assigned an incentive participation
factor as a percent of Annual Compensation in accordance with the
enclosed Personal Data Sheet.
The Minimum and Incentive Factor Profit Goals for CTS are shown on
Schedule A, attached.
Incentive for assigned goals will be earned on a pro rata basis for
accomplishment between the Minimum level and the Incentive Factor
Goal. Incentive earnings over the Incentive Factor Goal will continue
to earn at the same pro rata relationship that exists between minimum
level and factor goal.
No incentive will be earned by a participant until CTS has achieved
its Minimum Profit Goal.
PERSONAL DATA SHEET
A "Personal Data Sheet" for calculation of incentive earnings will be
prepared for each Plan participant which designates (1) the unit to
which the participant is assigned, (2) his assigned incentive par-
ticipation factor, (3) the minimum level of achievement required for
the profit goal, (4) the incentive factor level of achievement for
the profit goal, and (5) the incentive earnings at the incentive
factor level for the profit goal.
DATE OF PAYMENT
The President of CTS may authorize a partial payment of the estimated
annual earned incentive, in December 1994. The final payment to
eligible participants, less any previous partial payment, will be made
on or before March 15, 1995.
INCENTIVE PROFIT
Incentive profit is defined as the consolidated earnings of all of the
companies comprising CTS, before deducting any amounts expensed under
this or any similar incentive or bonus plan and before deducting in-
come taxes.
ANNUAL COMPENSATION
Annual Compensation for incentive purposes for each Plan participant
is his annualized salary or hourly base pay before any incentive,
overtime, or other special compensation as of the first pay period
following the date the participant becomes eligible to participate in
this Plan.
MAXIMUM PAYMENT
Payments under this Plan are limited to double each participant's
Participation Factor.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is
prohibited by law.
AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN
The Board of Directors of CTS may at any time amend, suspend, or
terminate the operation of this Plan, by thirty-day written notice to
the Plan participants, and will have full discretion as to the
administration and interpretation of this Plan. No participant in
this Plan shall at any time have any right to receive any payment
under this Plan until such time, if any, as the payment is actually
made.
DURATION OF PLAN
This Plan is for the calendar year 1994 only.
SCHEDULE A
CON-WAY TRANSPORTATION SERVICES, INC.
INCENTIVE PLAN FOR 1994
_____________________________________
PROFIT GOALS
Minimum Profit
Goal $ 55,000,000
Incentive Factor
Profit Goal $ 99,640,000
EXHIBIT 10.25
EMERY WORLDWIDE
____________________________
INCENTIVE PLAN FOR 1994
THE PLAN
In order to motivate certain employees more effectively and
efficiently, Emery Worldwide (EWW) establishes an Incentive Plan
(Plan) under which payments will be made to designated participants
out of calendar year 1994 Incentive Profits.
DESIGNATION OF PARTICIPANTS
Participants in the Plan shall be all supervisory, managerial, and
regular full-time and part-time non-contractual (time-sheet) personnel
of EWW. A master list of Plan participants will be maintained in the
office of the President of EWW.
ELIGIBILITY FOR PARTICIPATION
Participants will commence participation at the beginning of the first
full calendar quarter following becoming eligible. Calendar quarters
begin January 1, April 1, July 1 and October 1. An employee who
commences participation in the 1994 Plan during the 1994 Plan year,
and who participates less than four full quarters, will receive a pro
rata payment based on the number of full calendar quarters of Plan
participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently (i) employed by EWW or any
of its subsidiaries and (ii) a Plan participant.
EXCEPTION 1. A Plan participant who is employed by EWW through
December 31, 1994 but leaves that employment or otherwise becomes
ineligible after December 31, 1994 but before the final payment is
made relating to 1994, unless terminated for cause, is entitled to
receive payments under this Plan resulting from 1994 Incentive
Profits.
EXCEPTION 2. An appropriate pro rata payment will be made (1) to
a Plan participant who retires prior to December 31, 1994 pursuant
to the Consolidated Freightways, Inc. Non-Contractual Employees
Pension Plan, The Purolator Courier Corporation Hourly Employee
Pension Plan or to the provisions of the Social Security Act and
who, at the time of retirement, was an eligible participant in
this Plan, (ii) to the heirs, legatees, administrators or
executors of a Plan participant who dies prior to December 31,
1994 and who, at the time of death, was an eligible participant in
this Plan, (iii) to an eligible Plan participant who is placed on
an approved Medical, Sabbatical, or Military Leave of Absence
prior to December 31, 1994, or (iv) to an eligible Plan
participant who is transferred to another subsidiary of
Consolidated Freightways, Inc. and who remains an employee through
December 31, 1994.
METHOD OF PAYMENT
Each Plan participant will be assigned an incentive participation
factor as a percent of annual compensation. The President of Emery
will assign each Plan participant to an operating unit (terminal,
division, total company, etc.) to earn incentive. The participation
factor may be further indexed to specific performance goals such as
revenue, profit, service, etc.
The Minimum and Incentive Factor Profit Goals for EWW are shown on
Schedule A, attached. Incentive compensation will be paid from an ICP
pool earned ratably between the Minimum and Incentive Factor Profit
Goals and will continue to be earned ratably over the Incentive Factor
Goal. Incentive Factor Plan Goals and minimum levels of
accomplishment will be established for all performance goals.
No incentive will be earned by a participant until their terminal or
appropriate unit meets the entry level for the various Performance
Goals established.
Actual incentive payout is subject to the ICP pool. Incentive
Compensation will be adjusted proportionately to the amount in the ICP
pool.
PERSONAL DATA SHEET
A "Personal Data Sheet" for calculation of incentive earnings will be
prepared for each Plan participant which designates (1) the unit to
which the participant is assigned, (2) his assigned incentive par-
ticipation factor and the allocation of that factor to specific
Performance Goals, (3) the minimum level of achievement required for
the profit goal, (4) the incentive factor level of achievement for
each assigned goal, and (5) the incentive point potential at the
incentive factor level for each assigned goal.
DATE OF PAYMENT
The President of EWW may authorize a partial payment of the estimated
annual earned incentive, in December 1994. The final payment to
eligible participants, less any previous partial payment, will be made
on or before March 15, 1995.
INCENTIVE PROFIT
Incentive Profit is defined as the earnings of Emery Worldwide, Emery
Custom Brokers, and Emery Worldwide Airlines before deducting any
amounts expensed under this or any similar incentive or bonus plan and
before deducting income taxes and excluding interest income and
expense.
ANNUAL COMPENSATION
Annual Compensation for incentive purposes for each Plan participant
is his annual earnings for 1994 before any incentive or bonus payments
earned during the period of Plan participation eligibility.
MAXIMUM PAYMENT
Payments under this plan are limited to double each participant's
Participation Factor.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is
prohibited by law.
AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN
The Board of Directors of EWW may at any time amend, suspend, or
terminate the operation of this Plan, by thirty-day written notice to
the Plan participants, and will have full discretion as to the
administration and interpretation of this Plan. No participant in
this Plan shall at any time have any right to receive any payment
under this Plan until such time, if any, as any payment is actually
made.
DURATION OF PLAN
This Plan is for the calendar year 1994 only.
SCHEDULE A
EMERY WORLDWIDE, INC.
INCENTIVE PLAN FOR 1994
______________________________
PROFIT GOALS
Minimum Profit Goal $ 38,500,000
Incentive Factor Profit Goal 65,300,000
EXHIBIT 10.31
CONSOLIDATED FREIGHTWAYS, INC.
SUPPLEMENTAL RETIREMENT PLAN
(As amended and restated effective January 1, 1990)
Preamble
Consolidated Freightways, Inc. (the "Company") hereby
amends and restates the Consolidated Freightways, Inc.
Supplemental Retirement Plan (the "Plan") for the purpose of
providing key executives of the company with retirement
benefits in excess of those benefits provided under the
Consolidated Freightways, Inc. Retirement Plan, as amended and
restated effective January 1, 1990 and the Consolidated
Freightways, Inc. Pension Plan, as amended and restated
effective January 1, 1988. This Plan is effective January 1,
1990.
SECTION 1
DEFINITIONS AND CONSTRUCTION
Except as follows or as otherwise provided, all
capitalized terms used in this Plan have the same meanings as
in the Retirement Plan.
1.1 Adjusted Pension Accrued Benefit means a
Participant's Accrued Benefit under the Pension Plan
calculated (i) without regard to the limitations imposed by
Code Section 415 or Section 14 of the Pension Plan and (ii)
using Supplemental Basic Compensation in lieu of Basic
Compensation.
1.2 Adjusted Retirement Accrued Benefit means a
Participant's Accrued Benefit under the retirement Plan
calculated (i) without regard to the limitations imposed by
Code Section 415 or Section 14 of the retirement Plan, (ii)
using Supplemental Basic Compensation in lieu of Basic
Compensation.
1.3 Excess Accrued Benefit has the same meaning as under
the Excess Benefit Plan.
1.4 Excess Benefit Plan means the Consolidated
Freightways, Inc. Excess Benefit Plan.
1.5 Pension Accrued Benefit has the same meaning as
"Accrued Benefit" under the Pension Plan.
1.6 Pension Plan means the Consolidated Freightways,
Inc. Pension Plan.
1.7 Retirement Accrued Benefit has the same meaning as
"Accrued Benefit" under the Retirement Plan.
1.8 Retirement Plan means the Consolidated Freightways,
Inc. Retirement Plan.
1.9 Supplemental Basic Compensation means a
Participant's Basic Compensation increased to include (i) any
compensation that would have been included in Basic
Compensation but for the limitations imposed by Section
401(a)(17); and (ii) any compensation deferred by the
Participant pursuant to a nonqualified deferral arrangement
that, but for such arrangement, would have been included in
Basic Compensation. In the case of compensation described in
(i), it shall be included in the year paid, and in the case of
compensation described in (ii), it shall be included in the
year in which it would have been paid but for such deferral.
SECTION II
PARTICIPATION
The persons entitled to benefits under this plan are
those Participants who are credited with an Hour or Service on
or after January 1, 1987, and either (i) have elected to defer
compensation under the Company's Incentive Compensation/Stock
Appreciation Rights Plan or other nonqualified deferral
arrangement, or (ii) have Basic Compensation in excess of the
limit imposed by Code Section 401(a)(17) for any Plan Year
beginning after 1988.
SECTION III
VESTING
A Participant's benefit under this Plan shall become
nonforfeitable when the Participant's Accrued Benefit becomes
nonforfeitable.
SECTION IV
AMOUNT OF BENEFITS
A Participant's benefit under the Plan shall be the sum
of his Adjusted Retirement Accrued Benefit and his Adjusted
Pension Accrued Benefit reduced by the sum of his Excess
Accrued Benefit and Retirement Accrued Benefit and Pension
Accrued Benefit.
SECTION V
PAYMENT OF BENEFITS
5.1 Any benefit payable pursuant to this Plan shall be
paid at the same time and in the same manner as benefits are
payable to the Participant under the Retirement Plan.
5.2 If a Participant dies before benefits commence under
the Retirement Plan, the Participant's spouse shall be
entitled to a survivor benefit equal to (i) the applicable
survivor benefit provided in Section 11.2 of the Retirement
Plan calculated for this purpose using the Participant's
Supplemental Basic Compensation in lieu of his Basic
Compensation and without regard to Section 415 of the Code and
Section 14 of the Retirement Plan, reduced by (ii) the sum of
(A) the survivor benefit paid to the spouse pursuant to
Section 5.2 of the Excess Benefit Plan and (B) the applicable
survivor benefit paid to the spouse pursuant to Section 11.2
of the retirement Plan and the Section 11.2 of the Pension
Plan. Survivor benefits under this Plan shall be paid at the
same time and in the same manner as benefits are paid under
Section 11.2 of the Retirement Plan and Section 11.2 of the
Pension Plan.
5.3 If a Participant dies after benefits under this Plan
commence, survivor benefits, if any, shall be paid in
accordance with the form of benefit being paid to the
Participant.
SECTION VI
AMENDMENT AND TERMINATION
The Board of Directors of the Company shall have the
authority to amend or terminate this Plan at any time and from
time to time, in whole or in part. Notwithstanding the
foregoing, no amendment shall adversely affect the benefits
under this Plan of a Participant who would be entitled to
benefits under this Plan (whether or not payment would be
deferred) if he terminated employment or died on the date of
such amendment.
SECTION VII
MISCELLANEOUS PROVISIONS
7.1 PLAN ADMINISTRATION
The general administration of this Plan shall be the
responsibility of the Committee. The Committee is authorized
to delegate its responsibilities to an administrator or an
administrative committee. All actuarial determinations shall
be made by the actuary for the Retirement Plan, and the
Committee shall be entitled to rely on the determinations of
such actuary as conclusive for purposes of determining benefit
entitlements under this Plan.
7.2 No Employment Contract
The adoption of this plan is not a contract between any
employer and any employee, nor does it give any employee any
right to continue employment with any employer, or interfere
with the right of any employer to discharge any employee with
or without cause.
7.3 Non-Alienation of Benefits
No benefit payable under this Plan may be assigned,
pledged, mortgaged, or hypothecated, or shall be subject to
legal process or attachment for the payment of claims of any
creditor of a Participant or the surviving spouse of a
Participant.
7.4 No Funding Obligation
This Plan shall not be construed to require the Company
to fund any of the benefits payable under this Plan nor to
require the establishment of a trust. The Company, in its
sole discretion, may make such arrangements as it desires to
provide for the payment of any benefits hereunder, and no
person shall have any claim against a particular fund or asset
owned by the Company or in which it has an interest to secure
the payment of the Company's obligations hereunder.
7.5 Governing Law
The provisions of this Plan shall be construed according
to the laws of the State of California.
Dated: March 26, 1991 CONSOLIDATED FREIGHTWAYS, INC.
By /s/John M. Kelly
Its Senior Vice President,
General Counsel and
Secretary
EXHIBIT 10.32
DIRECTORS
24-HOUR ACCIDENTAL DEATH
AND DISMEMBERMENT PLAN
BENEFITS
You are automatically insured against accidental death and
dismemberment. Coverage begins as soon as you are eligible.
The principal sum for which you are insured is $500,000.
(Note - The maximum payment under this Plan and the Directors
Business Travel Insurance Plan for all losses arising from any
one accident is $5,000,000. If several directors are involved
in one accident, and the total indemnity exceeds $5,000,000,
each individual payment will be reduced proportionately.)
ELIGIBILITY
You are covered if you are a director of Consolidated
Freightways, Inc. and are not covered by CF's 24-Hour
Accidental Death and Dismemberment Plan for employees.
COST
The full cost of this plan is paid by Consolidated
Freightways, Inc.
TERMINATION
Your coverage will terminate when you cease to be an eligible
director of Consolidated Freightways, Inc.
SUMMARY OF BENEFITS
When an accidental injury results in any of the following
losses within twelve months from the date of the accident, the
insurance company will pay for the loss of :
Life...................................The principal sum
Both hands or both feet or
sight of both eyes....................The principal sum
One hand and one foot..................The principal sum
One hand and the sight of one eye......The principal sum
One foot and the sight of one eye......The principal sum
One hand or one foot..............Half the principal sum
Sight of one eye..................Half the principal sum
Speech or hearing of both ears....Half the principal sum
Hearing of one ear.........One Quarter the principal sum
Thumb and Index Finger of
same hand................One Quarter the principal sum
"Loss" as used with reference to a hand or foot means complete
severance at or above the wrist joint or ankle joint, as used
with reference to an eye means the irrevocable loss of its
entire sight and as used with reference to the thumb and index
finger means the severance of two or more entire phalanges of
both the thumb and the index finger.
The loss of hearing or speech means the total and irrevocable
loss of hearing or speech. In the event of multiple injuries
to an insured person resulting from any one accident, only one
amount is payable....the largest applicable.
BENEFICIARY
You may designate and from time to time thereafter change your
beneficiary by completing and returning a beneficiary
designation form, which can be obtained from the offices of
Consolidated Freightways, Inc. If your named beneficiary or
beneficiaries do not survive you, benefits will be paid to
your estate, or at the option of the insurance company, to
your surviving relations.
EXCLUSIONS
Benefits are not payable for loss resulting from:
1. Suicide or any attempt thereat while sane or insane; an
act of declared or undeclared war or participation in any
maneuvers or training exercises of an armed service;
2. Air travel except as a passenger (not a pilot or a crew
member) in any properly licensed and operated civil
aircraft, any transport type aircraft operated by the
Military Air Transport Service of the United States or by
similar air transport service of Canada or Great Britain,
or any properly operated United States Department of
Defense aircraft (other than a single engine jet); making
a flight for the purpose of transporting passengers or
passengers and cargo and not used for any tactical or
test purpose.
CLAIMS PROCEDURE
If you suffer an injury covered by the Directors 24-Hour
Accidental Death and Dismemberment Insurance Plan (accidental
death or dismemberment) written notice of the loss should be
given to the Administrative Benefits Office, Consolidated
Freightways, Inc., P. O. Box 3988, Portland, Oregon 97208
within 20 days or as soon thereafter as is reasonably
possible.
If you have any questions or complaints regarding the
Directors Business Travel Insurance Plan, please contact
Eberhard Schmoller or David Slate.
Complete terms and conditions of the 24-Hour Accidental Death
and Dismemberment Insurance Plan are set forth in the master
contract issued to CF by the Hartford Life Insurance Company.
Consolidated Freightways, Inc. reserves the right to change or
discontinue the Plan at any time.
EXHIBIT 10.33
CONSOLIDATED FREIGHTWAYS, INC.
EXECUTIVE SPLIT-DOLLAR LIFE INSURANCE PLAN
Effective January 1, 1994
Preamble
Consolidated Freightways, Inc. established the Executive
Split-Dollar Life Insurance Plan, effective January 1, 1994,
for the purpose of providing life insurance for certain
valuable employees of the Company while they are employed and
into their retirement years. The Company reserves the right
to determine those employees eligible to participate in the
Plan.
SECTION 1
Definitions
Annual Compensation means the weekly salary of a Participant
as determined by using week 1 payroll processing for the
calendar year multiplied by 52. Annual Compensation does not
include any payments made under the Employer's Incentive
Compensation Plan, or any other bonus plan. Annual
Compensation is used to determine the initial Face Value of
the Policy.
Beneficiary means the person or persons who are to receive
benefits after the death of the participant.
Board of Directors means the Board of Directors of the Company
or any committee to which the Board of Directors specifically
delegates any authority granted to it under the Plan.
Cash Surrender Value of the Policy means the cash value of the
Policy, plus the cash value of any paid-up additions, plus any
dividend accumulations and unpaid dividends, less any policy
loan balance.
Cash Value of the Policy means the cash value as illustrated
in the table of values shown in the Policy plus the cash value
of any paid up additions credited to the Policy.
Committee means the Pension and Employee Benefits Committee.
Company means Consolidated Freightways, Inc., a Delaware
corporation.
Current Loan Value of the Policy means the loan value of the
Policy reduced by any outstanding policy loan balance.
Disability means inability to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a
continuous period of not less than twelve months.
Early Retirement has the same meaning as defined in the
Retirement Plan.
Early Retirement Age means the day on which a Participant
attains age 55.
Effective Date means January 1, 1994 with respect to the
Executive Split-Dollar Life Insurance Plan.
Eligible Spouse means that spouse to whom a Participant is
married on the date of his death. To the extent provided
under a "qualified domestic relations order," the term
Eligible Spouse shall mean a former spouse in place of the
participant's current spouse.
Employee means a person employed by the Employer, any portion
of whose income is subject to withholding of income tax and/or
for whom Social Security contributions are made by an
Employer, as well as any other person qualifying as a common
law employee of an Employer.
Employer means the Company or any subsidiary thereof who has
adopted the Plan.
Employer's Interest in the Policy means the Employer's
accumulated premium payments less the accumulated amount
reimbursed by the Participant and less any Policy loan
balance.
Equivalent Compensation means Annual Compensation indexed by
5% compounded annually, except in the third through fifth
years where indexing is 33 1/3% annually.
ERISA means the Employee Retirement Income Security Act of
1974, as amended from time to time.
Face Value means the amount of life insurance indicated on an
individual Policy or as indexed within the Policy.
Incentive Compensation Plan means the short-term annual
incentive bonus plan or plans adopted by an Employer from time
to time.
Insurer means The Northwestern Mutual Life Insurance Company.
Loan Value of the Policy means the amount which with loan
interest will equal the Cash Value of the Policy and of any
paid-up additions on the next loan interest due date or on the
next premium due date whichever is the smaller amount.
Normal Retirement has the same meaning as defined in the
Retirement Plan.
Normal Retirement Age means the day on which the Participant
attains age 65.
Participant means an Employee selected by the Committee who
elects to enroll in the Plan.
Plan means the Consolidated Freightways, Inc. Executive Split-
Dollar Life Insurance Plan set forth herein, and as amended
from time to time.
Plan Year means the calendar year.
Policy means the split-dollar life insurance issued in the
name of a Participant.
Policy Loan Balance means the policy loans outstanding plus
interest accrued to date.
Retirement Plan means the Consolidated Freightways, Inc.
Retirement Plan, as it may be amended from time to time.
Severance Date means the earlier of the date a Participant
quits, retires, is discharged or dies.
Masculine pronouns used herein shall include the feminine, the
singular number shall include the plural, and the plural shall
be read as the singular.
SECTION 2
Eligibility and Participation
Only an Employee selected by the Board of Directors or the
Committee is eligible to participate in the Plan.
SECTION 3
Allocation of Payment of Premium and Dividends
Each premium on the policies shall be paid by the Employer as
it becomes due. By weekly payroll deduction (over the first
50 pay periods of the Plan Year) the Participant shall
reimburse the Employer for a portion of the premium paid by
the Employer. The amount of the reimbursement shall equal the
value of the economic benefit attributable to the life
insurance protection provided to the Participant under the
Plan. The value of the economic benefit shall be calculated
by using the lower of the Internal Revenue Service table P.S.
58 rates or the Insurer's term rates times the excess of the
current death benefit over the Employer's total value of its
share of the premium.
Dividends shall be applied as required according to the Policy
form chose by the Company.
SECTION 4
Assignment of Policy
The Employee shall be the sole owner of the Policy. The
Employee may exercise all rights, options, and privileges of
ownership in the Policy except those granted to the Employer
in the assignment.
However, to secure premiums paid by the Employer as described
above, the Participant shall execute an assignment of the
Policy to the Employer as collateral for amounts to be
advanced by the Employer by an instrument of assignment,
recorded with the Insurer. The Employer will have those
rights in the policy given to it in the assignment, except
that the Employer will not surrender the Policy for
cancellation except upon expiration of the thirty (30) day
period described in Section 11, and except that the Employer
will not, without written consent of the Employee, assign its
rights in the Policy, other than for the purpose of obtaining
a loan against the Policy, to anyone other than the Employee.
Any payments under the Policy to the Employer in connection
with the rights granted to the Employer in the assignment
referred to in the prior paragraph shall first be made from
Policy cash values attributable to the paid up additional life
insurance purchased by Policy dividends. The Employee shall
have no interest in the paid up additional life insurance
protection except to the extent the death benefit or cash
value thereof exceeds the total Employer's share of premiums
paid.
SECTION 5
Disability and Death
In the event a Participant in the Plan suffers a Disability,
the Employer will continue to make premium payments under the
Plan. The Participant's reimbursement obligations shall be
waived during such time of Disability.
In the event the Policy becomes a claim by reason of the
Participants death, the Employer shall have an interest in the
proceeds of the Policy to the total value of its share of the
premiums paid under Section 3 of this Plan less any Policy
indebtedness to the Insurer. The balance, if any, of the
proceeds of the Policy shall be paid directly by the Insurer
to the Beneficiary designated by the Participant.
SECTION 6
Approved Leaves of Absence
A participant on an approved leave of absence, from the
Employer shall be required to reimburse the Company, at least
monthly, an amount equal to the economic value of the benefit
as determined in Section 3.
SECTION 7
Possession of the Policy
A Participant who becomes ineligible to participate in the
Plan or who is not selected by the Committee for further
participation in the Plan, shall have the right to take
possession of his Policy and continue premium payments, if
any, directly to the Insurer. The Cash Surrender Value of the
Policy, if any, will be reduced by the Employer's Interest in
the Policy.
A Participant who retires from the Employer, as defined in the
Retirement Plan, shall be entitled to take possession of his
Policy. The Company will continue to make premium payments
under the terms of the Policy, if necessary. The
Participant's Cash Value of the Policy, if any, will be
reduced by the Employer's Interest in the Policy. The Face
Value of the Policy available to the retiree should equal the
Equivalent Compensation of the Participant calculated as of
the beginning of the most recent Plan Year. The Company
retains the sole right to maintain a lower amount of
insurance.
At all other times, the Policy will be assigned to the
Employer by the Participant in a collateral assignment
agreement provided for this purpose.
SECTION 8
Loans
The Employer shall have the right to borrow on the Policy up
to the lesser of (a) the Employer's Interest in the Policy or
(b) the Loan Value of the Policy.
SECTION 9
Face Value of the Split-Dollar Life Insurance
The Company will purchase on behalf of each Participant a Face
Value Policy equal to the Annual Compensation of the
Participant. In the third through fifth years of the Policy,
the face value of the Policy will be increased in
approximately equal increments to that the fifth year face
value of the Policy will equal twice the Equivalent
Compensation of the Participant. In all other years, the Face
Value of the Policy will increase at a rate of 5% per annum.
During the first four years of the Policy, the Company will
coordinate benefits under this plan with benefits payable
under the Company's Group Life Insurance Plan so that the
Participant will continually have a combined life insurance
benefit equal to twice the Annual Compensation of the
Participant. Upon reaching twice the Equivalent Compensation
on the face value of this policy, coverage in the Company's
Basic Group Life Insurance Plan will cease. This will not
affect the Employee's eligibility to participate in the
Company's Optional Group Life Insurance Plan.
SECTION 10
Obligations of the Insurer
The Insurer shall be bound only by the provisions of and
endorsements on the Policy, and any payments made or action
taken by it in accordance therewith shall fully discharge the
Insurer from all claims, suits and demands of all persons
whatsoever. It shall in no way be bound by or deemed to have
notice of the provisions of this Plan.
SECTION 11
Termination of Agreement
The agreement entered into between the Employer and the
Participant under this Plan may be terminated at any time
while the Participant is living by written notice thereof by
either the Employer or the Participant to the other; and, in
any event, said agreement will terminate at the Participant's
Severance Date.
This agreement may be terminated, by the Employee, subject to
the conditions expressed below, with or without the consent of
the Employer by giving notice in writing to the Employer. The
Employer acknowledges that its present intent is to maintain
this agreement with the Employee for the indefinite future but
expressly reserves the right to amend or terminate this Plan
at any time upon 30 days written notice to the employee if the
Employer in good faith determines that such continuation is no
longer in its best interest or consistent with its policies.
Such amendment or termination, however, shall not reduce or
eliminate any benefit or interest that the Employee may have
in such Policy subject to the Plan determined as of the
effective date of such amendment or termination. In the event
that either the Employer or Employee terminates the agreement
or it is terminated as of the Employee's Severance Date, the
Participant shall take possession of the Policy, and at his
discretion, can continue the Policy under the terms and
conditions prescribed by the Insurer. The Participant's
interest in the Cash Value of the Policy shall be reduced by
the Employer's Interest in the Policy in accordance with the
collateral assignment agreement.
In the event of termination of this agreement as provided
above, the Employee shall have the right to repay the Employer
within 90 days of the date of termination an amount equal to
the Employer's share of the premiums paid under the Policy
less and Policy indebtedness to the Insurer or other
indebtedness secured by the cash value of the Policies. The
Employee will be obligated for all future premium payments
under the Policy. If the Employee fails to repay the Employer
within 90 days of the date of termination of the agreement,
Employee shall execute any and all instruments that may be
required to vest ownership of said Policy in the Employer.
SECTION 12
Claiming Benefits
If the Participant should die while an active Employee, the
Retirement Plans Administration Office will notify the
Participant's Beneficiary of any necessary documents required.
The amount of life insurance payable under the Plan will be
paid when the necessary documents have been received and
approved. The Retirement Plans Administration Office will
file the claim, on behalf of the Beneficiary, with the
Insurer.
If the Participant should die after his Severance Date, but
while the Policy remains in force, his Beneficiary should
contact the Retirement Plans Administration Office. That
office will instruct the Beneficiary on the necessary
documents needed to file a claim against the Policy. The
Retirement Plan Administration Office will file the claim, on
behalf of the Beneficiary, with the Insurer.
SECTION 13
Denial of a Benefit
If for any reason a claim for benefits under this Plan is
denied by the Employer, the Committee shall deliver to the
claimant a written explanation setting forth the specific
reasons for the denial, pertinent to the Plan Section on which
the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant
in obtaining a review of his claim, all written in a manner
calculated to be understood by the claimant.
For this purpose the claimant's claim shall be deemed filed
when presented in writing to the Retirement Plans
Administration Office, P. O. Box 3680, Portland, OR 97208.
The committee's explanation of the denial shall be in writing,
delivered to the claimant within 90 days of the date the claim
was filed.
The claimant shall have 60 days following his receipt of the
denial of the claim to file with the Committee a written
request for review of the denial. For such review, the
claimant or his representative may submit pertinent documents
and written issues and comments.
The Committee shall decide the issue on review and furnish the
claimant's request for review of his claim. The decision on
review shall be in writing and shall include specific reasons
for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to
the pertinent Plan provisions on which the decision is based.
If a copy of the decision is not furnished to the claimant
within such 60 days, the claim shall be deemed denied on
review.
EXHIBIT 10.34
CONSOLIDATED FREIGHTWAYS, INC.
BOARD OF DIRECTORS
DIRECTORS' COMPENSATION PLAN
The new directors' compensation package is designed to:
o Bring directors' compensation into the mainstream of
current corporate practice;
o Recognize attendance at Board and Committee meetings and
the inherent responsibilities of Committee Chairmanships;
o Approximate current annual cash compensation; and
o Provide significant long-term gain potential through
restricted stock grants in lieu of a portion of the
existing pension accrual.
The specific elements of the new plan are:
Annual Retainer $15,000
Board Meeting Fees @ 1,000
Committee Fees @ 500
Standing Committee Chair Fees:
Audit 3,000
Compensation 3,000
Finance 3,000
Pension and Employee Benefits 3,000
Advisory Nominating 2,000
Charitable Contributions 2,000
Executive 0
Annual Restricted Stock Grant 12,500
(5 years or upon retirement)
Annual Retirement Accrual 15,000
The plan is intended to be "tax neutral" relative to the existing
directors' compensation plan. It is anticipated that after a 5-
year restriction period and assuming annual appreciation of 6-8%,
the tax liability (based on the then current market value) arising
from "constructive receipt" of the shares could be met by sale of
a portion of these shares.
Annual stock grants will not be subject to the 20-year limit on
retirement accrual.
The restricted stock grant is non-discretionary. Vesting occurs
automatically in 5 years and, as such, does not constitute a
Section 16(B) event, and therefore does not otherwise impact a
director's ability to purchase or sell shares.
The restricted stock grant is subject to shareholder approval and,
accordingly, will be submitted to shareholders for vote at the 1994
annual meeting.
The new plan is to become effective January 1, 1994. It is our
intention to make the stock grant also effective January 1, subject
to shareholder approval. If this is not legally possible, the
stock grant will be made at the Annual Meeting of Directors,
immediately following the Annual Shareholders Meeting. In the
unlikely event that this plan is not approved by shareholders, we
would continue to accrue $30,000 per year up to a maximum of 20
years, for each directors' retirement, as is provided for under the
current plan.
EXHIBIT 10.36
DIRECTORS
BUSINESS TRAVEL INSURANCE PLAN
BENEFITS
You are automatically insured against accidental death and
dismemberment that occurs when you are in travel status on CF
business.
Coverage begins when you leave your home, office, or other
location (whichever occurs last) on CF business and continues
until you return to your home or office (whichever occurs
first) at the end of your trip. During this period, you are
covered against all accidents, 24 hours a day, subject to the
exclusions listed in the Directors Business Travel Insurance
Plan.
The principal sum for which you are insured is $500,000. This
amount is payable in addition to any benefit you may be
entitled to receive under CF's Directors 24-Hour Accidental
Death and Dismemberment Plan.
(Note - The maximum payment under this plan and the Directors
24-Hour Accidental Death and Dismemberment Plan for all losses
arising from any one accident is $5,000,000. If several
directors are involved in one accident, and the total
indemnity exceeds $5,000,000, each individual payment will be
reduced proportionately.)
ELIGIBILITY
You are covered if you are a director of Consolidated
Freightways, Inc. and are not covered by CF's Business Travel
Insurance Plan for employees.
COST
The full cost of this plan is paid by Consolidated
Freightways, Inc.
TERMINATION
Your coverage will terminate when you cease to be an eligible
director of Consolidated Freightways, Inc.
SUMMARY OF BENEFITS
When injury results in any of the following losses within one
year after the accident happens, the insurance company will
pay for the loss of:
Life....................................The principal sum
Both hands or both feet or sight
of both eyes..........................The principal sum
One hand and one foot...................The principal sum
One hand and the sight of one eye.......The principal sum
One foot and the sight of one eye.......The principal sum
One hand or one foot...............Half the principal sum
Sight of one eye...................Half the principal sum
Thumb and index finger of
either hand...............One Quarter the principal sum
Speech or hearing of both ears.....Half the principal sum
Hearing of one ear..........One Quarter the principal sum
"Loss" as used with reference to hand or foot means complete
severance, and as used with reference to eye means the
irrecoverable loss of its entire sight.
BENEFICIARY
You may designate and from time to time thereafter change your
beneficiary by completing and returning a beneficiary designation
form, which can be obtained from the offices of Consolidated
Freightways, Inc. If your named beneficiary or beneficiaries do
not survive you, benefits will be paid to your estate, or at the
option of the insurance company, to your surviving relatives.
EXCLUSIONS
This Plan does not cover losses which result from:
1. Suicide or intentionally self-inflicted injuries;
2. Illness, disease, pregnancy, childbirth, miscarriage, or
any bacterial infection other than bacterial infection
occurring as a result of an accidental cut or wound;
3. War or act of war, whether declared or not;
4. Injuries sustained while on full-time active duty in the
armed forces of any country or international body;
5. Commuter travel to and from work;
6. Injuries sustained while riding as a passenger in any
aircraft owned, leased or operated by or on behalf of CF,
a member of your household or yourself; or any aircraft
operated by or for or under the direction of any military
authority, other than by the Military Airlift Command
(MAC) of the United States of America or the similar air
transport service of any other country, or any aircraft
while being used for firefighting, pipeline inspection,
powerline inspection, aerial photography, exploration or
any test for experimental purpose; or any aircraft not
operated by a properly certified pilot; or any aircraft
without a current unrestricted airworthiness certificate;
or while operating or serving as a crew member of any
aircraft.
CLAIMS PROCEDURE
If you suffer an injury covered by the Directors Business Travel
Insurance Plan (accidental death or dismemberment that occurs when
you are in travel status on CF business), written notice of the
loss should be given to the Administrative Benefits Office,
Consolidated Freightways, Inc., P. O. Box 3988, Portland, Oregon
97208 within 20 days or as soon thereafter as is reasonably
possible.
If you have any questions or complaints regarding Directors
Business Travel Insurance Plan, please contact Eberhard Schmoller
or David Slate.
Complete terms and conditions of the Business Travel Insurance Plan
are set forth in the master contract issued to CF by the Hartford
Life Insurance Company.
Consolidated Freightways, Inc. reserves the right to change or
discontinue the Plan at any time.
EXHIBIT 10.35
CONSOLIDATED FREIGHTWAYS, INC.
EXCESS BENEFIT PLAN
(Effective January 1, 1987)
Preamble
Consolidated Freightways, Inc. (the "Company") hereby
establishes the Consolidated Freightways, Inc. Excess Benefit
Plan (the "Plan") for the purpose of providing certain
participants in the Consolidated Freightways, Inc. Non-
Contractual Employees Pension Plan, effective January 1, 1984,
as amended (the "Pension Plan"), with retirement benefits in
excess of the limitations on contributions and benefits
imposed by Section 415 of the Internal Revenue Code of 1986
and Section 15 of the Pension Plan. This Plan is effective
January 1, 1987.
SECTION I
DEFINITIONS AND CONSTRUCTION
Except as follows or as otherwise provided, all
capitalized terms used in this plan have the same meanings as
in the Pension Plan.
1.1 Excess Accrued Benefit means the Participant's
Accrued Benefit calculated without regard to the limitations
on contributions and benefits imposed by Section 415 of the
Code or Section 15 of the Pension Plan, reduced by the
Participant's Accrued Benefit.
SECTION II
PARTICIPATION
The persons entitled to benefits under this Plan shall be
those Participants (i) who are credited with an Hour of
Service on or after January 1, 1987, and (ii) whose benefits
under the Pension Plan would be reduced by operation of
Section 415 of the Code (or the regulations thereunder) or
Section 15 of the Pension Plan if the benefits were to become
payable at the time of the Participant's retirement or death.
SECTION III
VESTING
A Participant's benefit under this Plan shall become
nonforfeitable when the Participant's Accrued Benefit under
the Pension Plan becomes nonforfeitable.
SECTION IV
AMOUNT OF BENEFITS
A Participant's benefits under this Plan shall be the
Participants's Excess Accrued Benefit.
SECTION V
PAYMENT OF BENEFITS
5.1 Any benefit payable pursuant to this Plan shall be
paid at the same time and in the same manner as benefits are
paid to the Participant under the Pension Plan.
5.2 If a Participant dies before benefits commence under
the Pension Plan, the Participant's spouse shall be entitled
to a survivor benefit equal to (i) the applicable survivor
annuity provided in paragraph 12.2 of the Pension Plan,
calculated for this purpose without regard to Section 415 of
the Code and Section 15 of the Pension Plan, reduced by (ii)
the survivor benefit paid to the spouse pursuant to paragraph
12.2 of the Pension Plan. Survivor benefits paid under this
Plan shall be paid at the same time and in the same manner as
benefits are paid under paragraph 12.2 of the Pension Plan.
5.3 If a Participant dies after benefits under this Plan
commence, survivor benefits, if any, shall be paid in
accordance with the form of benefit being paid to the
Participant.
SECTION VI
AMENDMENT AND TERMINATION
The Board of Directors of the Company shall have
authority to amend or terminate this Plan, at any time and
from time to time, in whole or in part. Notwithstanding the
foregoing, no amendment shall adversely affect the benefits of
a Participant who would be entitled to benefits under this
Plan (whether or not payment would be deferred) if he
terminated employment or died on the date of such amendment.
SECTION VII
MISCELLANEOUS PROVISIONS
7.1 Plan Administration
The general administration of the Plan shall be the
responsibility of the Committee. The Committee is authorized
to delegate its responsibilities to an administrator or
administrative committee. All actuarial determinations shall
be made by the actuary appointed for the Pension Plan, and the
Committee shall be entitled to rely on the good faith
determinations of such actuary.
7.2 No Employment Contract
The adoption of this Plan is not a contract between any
employer and any employee, nor does it give any employee any
right to continue employment with any employer, or interfere
with the right of an employer to discharge any employee with
or without cause.
7.3 Non-Alienation of Benefits
No benefit payable under this Plan may be assigned,
pledged, mortgaged or hypothecated, or shall be subject to
legal process or attachment for the payment of claims of any
creditor of a Participant of surviving spouse of a
Participant.
7.4 No Funding Obligation
This Plan shall not be construed to require the Company
to fund any of the benefits payable under this Plan nor to
require the establishment of a trust. The Company, it its
sole discretion, may make such arrangements as it desires to
provide for the payment of benefits hereunder, and no person
shall have any claim against a particular fund or asset owned
by the Company or in which it has an interest to secure the
payment of the Company's obligations hereunder.
7.5 Governing Law
This Plan shall be construed according to the laws of the
State of California.
Dated: December 23, 1987 CONSOLIDATED FREIGHTWAYS, INC
By /s/John P. Kelly
Its Senior Vice President,
General Counsel and Secretary
EXHIBIT 10.37
CONSOLIDATED FREIGHTWAYS, INC.
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
(Effective as of October 1, 1993)
Preamble
The purpose of this Plan is to enhance the
motivational value of the salaries and incentive
compensation of a select group of management and
highly compensated employees who contribute
materially to the continued growth, development
and future business success of the Company and its
subsidiaries by providing them the opportunity to
defer cash compensation. The Plan is intended to
aid the Company and its subsidiaries in attracting
and retaining key employees and give them an
incentive to increase the profitability of the
Company and its subsidiaries. In the future, the
Company, in its discretion, may amend the Plan to
include a Company contribution.
ARTICLE 1
Definitions
For purposes hereof, unless otherwise
clearly apparent from the context, the following
phrases or terms shall have the following
indicated meanings:
1.1 "Account Balance" means the sum of (i) the
total of a Participant's Annual Deferral
Amounts, plus (ii) the return credited in
accordance with the Plan, reduced (iii) by
all distributions made in accordance with the
terms and conditions of this Plan. This
account shall be a bookkeeping entry only and
shall be utilized solely as a device for the
measurement and determination of the amounts
to be paid to a Participant pursuant to this
Plan.
1.2 "Annual Bonus" means any bonus or incentive
compensation earned by a Participant in each
Plan Year under all cash bonus and incentive
plans of the Company, and any subsidiary,
whether or not paid in such Plan Year.
1.3 "Annual Deferral Amount" means that portion
of a Participant's Base Annual Salary and
Annual Bonus that a Participant elects to
have and is deferred, in accordance with
Article 3, for any one Plan Year. In the
event of Retirement, Disability, death or a
Termination of Employment prior to the end of
a Plan Year, such year's Annual Deferral
Amount shall be the actual amount withheld
prior to such event.
1.4 "Base Annual Salary" means a Participant's
base annual salary that is to be paid to a
Participant for each Plan Year, determined as
of the first day of that year, excluding
bonuses, commissions, overtime, incentive
payments, non-monetary awards, and other
fees, before reduction for compensation
deferred pursuant to all qualified,
nonqualified and Internal Revenue Code
Section 125 plans of the Company or any
subsidiary.
1.5 "Beneficiary" means one or more persons,
trusts, estates or other entities, designated
in accordance with Article 9, that are
entitled to receive benefits under this Plan
upon the death of a Participant.
1.6 "Beneficiary Designation Form" means the form
established from time to time by the
Committee that a Participant completes, signs
and returns to the Committee to designate one
or more Beneficiaries.
1.7 "Board" means the Board of Directors of the
Company.
1.8 "Change in Control" means a change in control
of the Company described as follows:
(a) Any "Person" or "group" (as such terms
are used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934
("Exchange Act")) is or becomes the
"beneficial owner" (as that term is used
in Rule 13(d)3 of the Exchange Act),
directly or indirectly, of 20% or more of
the total voting power of all classes of
such stock of the Company then
outstanding which is normally entitled to
vote in the election of directors,
provided that such 20% shall be 40% with
respect to any "employee benefit plan"
(as such term is defined in section 3(3)
of the Employee Retirement Income
Security Act of 1974) maintained by the
Company, or any subsidiary, or trust
vehicle maintained thereunder;
(b) During any period of two consecutive years,
individuals who at the beginning of such
period constitute the Board (together with
any new director whose election by the Board
or whose nomination for election by the
Company's stockholders was approved by a vote
of at least two-thirds of the directors then
still in office who either were directors at
the beginning of the period or whose election
or nomination was previously so approved)
cease for any reason to constitute at least a
majority thereof;
(c) The consolidation or merger of the Company
with or into another corporation or the
conveyance, transfer or lease by the Company
of all or substantially all of its assets to
any person, or the consolidation or merger of
any other corporation with or into the
Company, in either event pursuant to a
transaction in which voting stock of the
Company is changed into or exchanged for
cash, securities or other property, provided
that any such transaction that is between the
Company and its subsidiaries or between any
of its subsidiaries, or involves the exchange
of the Company's voting stock as
consideration in the acquisition of another
business or businesses (without change or
exchange of the Company's outstanding voting
stock into or for cash, securities or other
property) shall be excluded from the
operation of this clause; or
(d) The shareholders of the Company approve any
plan or proposal for the liquidation or
dissolution of the Company.
1.9 "Claimant" means any Participant or
Beneficiary of a deceased Participant who
makes a claim for determination under Section
13.1.
1.10 "Code" means the Internal Revenue Code of
1986, as amended.
1.11 "Committee" means the Compensation Committee
of the Board or its delegates.
1.12 "Company" means Consolidated Freightways,
Inc., a Delaware corporation.
1.13 "Disability" means a disability for which a
Participant qualifies for benefits under the
Consolidated Freightways, Inc. Extended Sick
Pay Plan as it may be amended from time to
time.
1.14 "Election Form" means the form established
from time to time by the Committee that a
Participant completes, signs and returns to
the Committee to make an election under the
Plan.
1.15 "Employer" means the Company or any of its
subsidiaries that employs a Participant.
1.16 "Moody's Seasoned Corporate Bond Rate," means
the arithmetic average of yields of
representative bonds, including industrials,
public utilities, Aaa, Aa, A and Baa bonds as
published by Moody's Investors Service, Inc.
or any successor to that service. For each
Plan Year, this rate shall be determined by
the Committee using the rate most recently
published prior to the last day of the
November preceding the Plan Year.
1.17 "Participant" for any Plan Year means any
employee of an Employer (i) who is selected
to participate in the Plan for such Plan Year
by the Committee, (ii) who elects to
participate in the Plan, (iii) who signs a
Plan Agreement, an Election Form and a
Beneficiary Designation Form and returns such
documents to the Committee within the time
required by the Committee, but in no event
later than the Plan Entry Date, (iv) whose
signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by
the Committee, (v) who commences
participation in the Plan on his Plan Entry
Date, and (vi) whose participation has not
terminated.
1.18 "Plan" means the Company's Deferred
Compensation Plan for Executives (effective
as of October 1, 1993), evidenced by this
instrument and by each Plan Agreement, as
amended from time to time.
1.19 "Plan Agreement" means a written agreement,
as may be amended from time to time, which is
entered into by and between the Company and a
Participant.
1.20 "Plan Entry Date" means the date on which an
employee selected by the Committee to
participate in the Plan commences
participation in the Plan in accordance with
Article 2. The Plan Entry Date shall be
January 1 of the Plan Year following
selection by the Committee; provided,
however, for 1993 the Plan Entry Date shall
be October 1, 1993. If an employee is first
selected for participation in the Plan
subsequent to January 1 of a Plan Year, but
prior to July 1, the Committee may, in its
sole discretion, authorize a Plan Entry Date
for that Plan Year of July 1.
1.21 "Plan Year" means the period beginning on
January 1 of each year (or, in certain
limited cases, July 1) and continuing through
December 31 of that year. Notwithstanding
the foregoing, the initial Plan Year shall be
the period beginning on October 1, 1993 and
continuing through December 31, 1993.
1.22 "Pre-Retirement Distribution" means the
payout set forth in Section 4.1 below.
1.23 "Pre-Retirement Survivor Benefit" means the
benefit set forth in Article 6 below. "Prior
Plan" means the Plan immediately in effect
prior to October 1, 1993.
1.24 "Retirement", "Retires" or "Retired" means
early retirement having attained at least age
55 and completed at least 10 years of service
as defined in the Consolidated Freightways,
Inc. Retirement Plan, or normal retirement
under such Retirement Plan.
1.25 "Retirement Benefit" means the benefit set
forth in Article 5.
1.26 "Termination Benefit" means the benefit set
forth in Article 7.
1.27 "Termination of Employment" means the ceasing
of employment with the Company and its
subsidiaries, voluntarily or involuntarily,
for any reason other than Retirement,
Disability or death.
1.28 "Unforeseeable Financial Emergency" means an
unanticipated emergency that is caused by an
event beyond the control of the Participant
that would result in severe financial
hardship to the Participant resulting from
(i) a sudden and unexpected illness or
accident of the Participant or a dependent of
the Participant, (ii) a loss of the
Participant's property due to casualty, or
(iii) such other extraordinary and
unforeseeable circumstances arising as a
result of events beyond the control of the
Participant, all as determined in the sole
discretion of the Committee.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the
Plan shall be limited to a select group of
management and highly compensated employees
(employees whose Base Annual Salary is equal
to or exceeds $100,000) of the Company and
its subsidiaries. From that group, the
Committee shall select for each Plan Year, in
its sole discretion, those employees eligible
to participate in the Plan for that Plan
Year.
2.2 Enrollment Requirement. As a condition to
participation, a selected employee shall
complete, execute and return to the Committee
a Plan Agreement, an Election Form and a
Beneficiary Designation Form for each Plan
Year. In addition, the Committee shall
establish from time to time such other
enrollment requirements as it determines in
its sole discretion are necessary.
2.3 Commencement of Participation. Provided an
employee selected to participate in the Plan
has met all enrollment requirements set forth
in the Plan and required by the Committee,
that employee shall commence participation in
the Plan on the Plan Entry Date that
immediately follows his election to
participate in the Plan.
ARTICLE 3
Deferral Commitments/Returns
3.1 Minimum Deferral.
(a) Minimum. To defer compensation under
the Plan in any Plan Year, a Participant
must elect to defer a minimum of $2,000
of Base Annual Salary, or a minimum of
$2,000 of Annual Bonus.
(b) Short Participation Year. If a
Participant's Plan Entry Date is July 1
of any Plan Year, he must defer a minimum
of $1,000 of Base Annual Salary or a
minimum of $1,000 of Annual Bonus.
(c) First Plan Year. For the Plan Year
commencing on October 1, 1993, only
Annual Bonus may be deferred, and a
Participant must elect to defer a minimum
of $2,000 of such Annual Bonus.
3.2 Maximum Deferral. For each Plan Year, a
Participant may defer up to 100% of his Base
Annual Salary stated as a dollar amount and
up to 100% of his Annual Bonus stated as a
percentage amount. The amount of Base Annual
Salary and/or Annual Bonus that a Participant
elects to defer shall be reduced by the
Committee, without the consent of the
affected Participant, to the extent necessary
to provide for (i) other deferrals of Base
Annual Salary and/or Annual Bonus, as the
case may be, by such Participant under all
qualified and nonqualified plans of the
Company or any subsidiary and Code
Section 125 plans of the Company or any
subsidiary, (ii) any taxes that are required
to be withheld with respect to deferrals
under the Plan, and (iii) any other amounts
deducted from Base Annual Salary and/or
Annual Bonus pursuant to applicable law or
authorization by Participant.
3.3 Election to Defer. In connection with a
Participant's first participation in the
Plan, the Participant shall make a deferral
election by delivering to the Committee a
completed and signed Election Form at least
20 days prior to the intended Plan Entry
Date, which election form must be accepted by
the Committee prior to the Plan Entry Date
for a valid election to exist. The Committee
shall notify a Participant within ten days of
its receipt of the Election Form if the
Committee rejects the Election Form. For
each succeeding Plan Year, a new Election
Form must be delivered to and accepted by the
Committee, in accordance with the rules set
forth above, before the end of the Plan Year
preceding the Plan Year for which the
election is made. If the Election Form is
not delivered prior to the Plan Entry Date
for a Plan Year, no Annual Deferral Amount
shall be deferred for that Plan Year.
3.4 Withholding of Deferral Amounts. For each
Plan Year, the Base Annual Salary portion of
the Annual Deferral Amount shall be withheld
each payroll period in equal amounts from the
Participant's Base Annual Salary. The Annual
Bonus portion of the Annual Deferral Amount
shall be withheld at the time or times the
Annual Bonus is or otherwise would be paid to
the Participant.
3.5 FICA Tax. Any applicable FICA and other
payroll taxes on amounts deferred under this
Article shall be withheld from that portion
of the Participant's Base Annual Salary and
Annual Bonus that is not being deferred. If
necessary, the Committee shall reduce the
amount of Base Annual Salary and/or Annual
Bonus deferred, in order to comply with this
Section 3.5.
3.6 Returns Prior to Distribution. Prior to any
distribution of benefits under Articles 4, 5,
6, or 7, returns shall be credited to a
Participant's Account Balance and compounded
annually on a Participant's Account Balance
as though the Annual Deferral Amount for that
Plan Year was withheld on the Participant's
Plan Entry Date. The rate of return on the
Account Balance for each Plan Year shall be
the Moody's Seasoned Corporate Bond Rate, or
such higher rate as the Committee may
determine in its sole discretion prior to the
beginning of a Plan Year. In the event of
Retirement, death or a Termination of
Employment prior to the end of a Plan Year,
that Plan Year's return will be calculated
using a fraction of a full Plan Year's
return, based on the number of days that
Participant was employed with the Employer
during the Plan Year prior to the occurrence
of such event.
3.7 Date on Which Crediting Occurs. Account
Balances will be credited with returns in
accordance with Section 3.6 up to the date of
distribution for a lump sum payment and up to
the first date of distribution for
installment payments. For purposes of
crediting subsequent returns in the event
that installment payments are made, the
Account Balance shall be reduced as of the
day on which the distribution is made.
3.8 Returns and Installment Distributions. In
the event a benefit is paid in installments,
a Participant's unpaid Account Balance shall
be credited as follows:
(a) Crediting. For each Plan Year, the
undistributed Account Balance shall be
credited with a return equal to the
Moody's Seasoned Corporate Bond Rate or
such higher rate as the Committee may
determine in its sole discretion prior to
the beginning of a Plan Year. Returns
shall start to accrue under this Section
3.8 as of the date that returns cease to
accrue under Section 3.7 above.
(b) Installments. The installment payments
shall be determined by dividing the
Participant's Account Balance at the time
of the commencement of the installment
payments by the number of payments over
the installment period. Each payment
determined above will be considered the
principal portion of the installment
payment. In addition, each installment
payment will include a return calculated
for the preceding quarter using the rate
determined in Section 3.8(a) above.
Installment payments shall commence on
the first day of the quarter following
the first full quarter following such
Participant's date of Retirement, or when
permitted by the Committee in its sole
discretion, Termination of Employment or
death. All additional installment
payments shall be paid on the first day
of the remaining calendar quarters of the
payment period.
3.9 Statement of Accounts. The Committee shall
send to each Participant, within 120 days
after the close of each Plan Year, a
statement in such form as the Committee deems
desirable setting forth the balance standing
to the credit of each Participant in his
Account Balance.
ARTICLE 4
Pre-Retirement Distribution/
Unforeseeable Financial Emergencies
4.1 Pre-Retirement Distributions. In connection
with each election to defer an Annual
Deferral Amount, a Participant may elect to
receive a future distribution from the Plan
with respect to that Annual Deferral Amount
prior to Retirement. This Pre-Retirement
Distribution shall be a lump sum payment in
an amount, as chosen by the Participant on
the Election Form prior to making the
applicable year's deferral, that is equal to
either (a) the Annual Deferral Amount, or (b)
the sum of: (i) the Annual Deferral Amount
and (ii) returns credited in accordance with
Section 3.6 above. If a Participant elects
to receive only the Annual Deferral Amount,
the returns credited on the Annual Deferral
Amount shall be distributed to the
Participant (or, in the case of the
Participant's death, to the Participant's
Beneficiary) in accordance with Articles 5,
6, and 7. The Pre-Retirement Distribution
shall be paid within 60 days of the first day
of the Plan Year chosen by the Participant on
the Election Form for distribution. The
earliest date that a Participant may receive
a Pre-Retirement Distribution is 5 years
after the first day of the Plan Year in which
the Annual Deferral Amount is actually
deferred.
4.2 Withdrawal Payout/Suspensions for
Unforeseeable Financial Emergencies. If the
Participant experiences an Unforeseeable
Financial Emergency, the Participant may
petition the Committee to (i) suspend any
deferrals required to be made by a
Participant and/or (ii) receive a partial or
full payout from the Plan. The Committee
may, in its sole discretion, accept or deny
such petition. Any payout shall not exceed
the lesser of the Participant's Account
Balance, calculated as if such Participant
were receiving a Termination Benefit, or the
amount reasonably needed to satisfy the
Unforeseeable Financial Emergency. The
suspension shall continue for such period of
time and/or the reinstatement of deferrals
shall occur at a date, as specified by the
Committee, in its sole discretion. If
reinstated, the deduction in each pay period
shall not exceed that made immediately prior
to the suspension. If the petition for a
suspension and/or payout is approved,
suspension shall take effect upon the date of
approval and any payout shall be made within
60 days of the date of approval.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. A Participant who
Retires shall receive, as a Retirement
Benefit, his Account Balance.
5.2 Payment of Retirement Benefit. A Participant
shall elect on an Election Form prior to the
beginning of a Plan Year to receive the
Retirement Benefit for such Plan Year in a
lump sum or in quarterly payments over a
period of 5, 10, 15 or 20 years. The lump
sum payment shall be made within 60 days of
the Participant's Retirement. Any
installment payment shall be made in
accordance with Section 3.8 above.
5.3 Death Prior to Completion of Retirement
Benefit. If a Participant dies after
Retirement but before the Retirement Benefit
is paid in full, the Participant's unpaid
Retirement Benefit payments shall continue
and shall be paid to the Participant's
Beneficiary (i) over the remaining number of
calendar quarters and in the same amounts as
that benefit would have been paid to the
Participant had the Participant survived, or
(ii) the then current Account Balance as of
the date of death, in a lump sum, if allowed
in the sole discretion of the Committee.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. If a
Participant dies before he Retires,
experiences a Termination of Employment or
suffers a Disability, the Participant's
Beneficiary shall receive a Pre-Retirement
Survivor Benefit equal to the Participant's
Account Balance.
6.2 Payment of Pre-Retirement Survivor Benefit.
The Pre-Retirement Survivor Benefit shall be
the then current Account Balance as of the
date of death, paid in a lump sum or, in the
Committee's sole discretion, in installments
according to the original election of the
Participant. The lump sum payment shall be
made within 60 days of the Committee's
receiving proof of the Participant's death.
ARTICLE 7
Termination Benefit
7.1 Termination Benefit. If a Participant
experiences a Termination of Employment prior
to his Retirement, death or Disability, the
Participant shall receive a Termination
Benefit which shall be equal to the
Participant's Account Balance determined as
of the date of his Termination of Employment.
7.2 Payment of Termination Benefit. The
Termination Benefit shall be the then current
Account Balance as of the date of Termination
of Employment, paid in a lump sum or
installments as the Participant originally
designated in the applicable Election
Form(s), or paid in a lump sum within 60 days
of the Termination of Employment if the
Participant so elected in the applicable
Election Form(s). Notwithstanding the
foregoing, if the Participant incurs a
Termination of Employment within one year
after a Change in Control, the Termination
Benefit shall be paid in a lump sum within 20
days of the Termination of Employment.
ARTICLE 8
Disability Waiver and Permit
8.1 Disability Waiver. A Participant who is
determined by the Committee to be suffering
from a Disability shall be excused from
fulfilling that portion of the Annual
Deferral Amount commitment that would
otherwise have been withheld from a
Participant's Base Annual Salary or Annual
Bonus for the Plan Year or portion thereof
during which the Participant has a
Disability.
8.2 Disability Benefit. A Participant suffering
a Disability shall for benefit purposes under
this Plan, continue to be considered an
employee and shall be eligible for the
benefits provided for in Articles 4, 5, 6 or
7 in accordance with the provisions of those
Articles. Notwithstanding, the Committee
shall have the right, in its sole discretion,
to terminate a Participant's participation in
the Plan at any time during which such
Participant has a Disability and pay the
Account Balance in a lump sum.
ARTICLE 9
Beneficiary Designation
9.1 Beneficiary. Each Participant shall
designate a Beneficiary to receive any
benefits payable under the Plan upon the
Participant's death.
9.2 Beneficiary Designation. A Participant shall
designate his Beneficiary by completing and
signing the Beneficiary Designation Form, and
submitting it to the Committee or its
delegate. A Participant shall have the right
to change a Beneficiary at any time without
the consent of the Beneficiary, by
completing, signing and otherwise complying
with the terms of the Beneficiary Designation
Form and the Committee's rules and
procedures, as in effect from time to time.
Upon the receipt by the Committee of a new
Beneficiary Designation Form, all Beneficiary
designations previously filed shall be
canceled. The Committee shall be entitled to
rely on the last Beneficiary Designation Form
filed by the Participant with the Committee
prior to his death.
9.3 Spousal Consent. In the case of a married
Participant, if the Participant names someone
other than his spouse as a primary
Beneficiary, a spousal consent, in the form
designated by the Committee, must be signed
by that Participant's spouse and returned to
the Committee. No consent is required if it
is established to the satisfaction of the
Committee that consent cannot be obtained
because the spouse cannot be located.
9.4 No Beneficiary Designation. If a Participant
fails to designate a Beneficiary as provided
above, the Participant's designated
Beneficiary shall be deemed to be his
surviving spouse. If the Participant has no
surviving spouse, the benefits otherwise
payable to a Beneficiary shall be paid to the
Participant's estate.
9.5 Doubt as to Beneficiaries. If the Committee
has any doubt as to the proper Beneficiary to
receive payments pursuant to this Plan, the
Committee shall have the right, exercisable
in its discretion, to withhold such payments
until the matter is resolved to the
Committee's satisfaction, and/or to require
indemnification.
9.6 Discharge of Obligations. The payment of
benefits under the Plan to a Participant or
Participant's Beneficiary shall fully and
completely discharge the Company and the
Participant's Employer from all obligations
under this Plan with respect to the deceased
Participant and all of his Beneficiaries and
any others that may be entitled to such
benefits.
ARTICLE 10
Leave of Absence
10.1 Paid Leave of Absence. If a Participant is
authorized by the Company to take a paid
leave of absence, the Participant shall
continue to be considered employed by the
Employer and the Base Annual Salary and
Annual Bonus deferred by the Participant
shall continue to be withheld during such
paid leave of absence in accordance with
Section 3.4.
10.2 Unpaid Leave of Absence. If a Participant is
authorized by the Company to take an unpaid
leave of absence, the Participant shall
continue to be considered employed by the
Employer and the Participant shall be excused
from making deferrals until the earlier of
the date the leave of absence expires or the
Participant returns to a paid employment
status. Upon such expiration or return,
deferrals shall resume for the remaining
portion of the Plan Year in which the
expiration or return occurs, based on the
deferral election, if any, made for that Plan
Year.
ARTICLE 11
Termination, Amendment or Modification
11.1 Termination. The Company reserves the right
to terminate the Plan at any time. Prior to
a Change in Control, the Committee shall have
the right, at its sole discretion, and
notwithstanding any elections made by the
Participant to pay the then outstanding
Account Balance in a lump sum. After a
Change in Control the Company shall be
required to pay such benefits in a lump sum.
11.2 Amendment. The Company may, at any time,
amend or modify the Plan in whole or in part,
provided, however, that no amendment or
modification shall decrease or restrict a
Participant's Account Balance at the time the
amendment or modification is made, calculated
as if the Participant had experienced a
Termination of Employment as of the effective
date of the amendment or modification, or, if
the amendment or modification occurs after
the date upon which the Participant was
eligible to Retire, the Participant had
Retired as of the effective date of the
amendment or modification. The amendment or
modification of the Plan shall not affect the
payment of benefits to any Participant or
Beneficiary who has become entitled to the
payment of benefits under the Plan as of the
date of the amendment or modification.
11.3 Effect of Payment. The full payment of the
applicable benefit under Articles 4, 5, 6 or
7 of the Plan shall completely discharge all
obligations to a Participant under this Plan
and the Plan Agreement, and the Participant's
Plan Agreement shall terminate.
ARTICLE 12
Administration
12.1 Committee Duties. This Plan shall be
administered by the Committee or its
delegates. The Committee shall also have the
discretion and authority to make, amend,
interpret, and enforce all appropriate rules
and regulations for the administration of
this Plan and decide or resolve any and all
questions including interpretations of this
Plan, as may arise in connection with the
Plan. A majority of the Committee shall
constitute a quorum and a majority of the
members present at any meeting at which a
quorum is present or acts approved in writing
or in a telephone meeting by all of the
members shall constitute a decision by the
entire Committee.
12.2 Agents. In the administration of this Plan,
the Committee may, from time to time,
delegate to such persons as it deems
appropriate such administrative duties as it
sees fit and may from time to time consult
with counsel who may be counsel to the
Company or a subsidiary.
12.3 Binding Effect of Decisions. The decision or
action of the Committee with respect to any
question arising out of or in connection with
the administration, interpretation and
application of the Plan and the rules and
regulations promulgated hereunder shall be
final and conclusive and binding upon all
persons having any interest in the Plan.
12.4 Indemnification. The Company shall indemnify
and hold harmless the named fiduciaries and
any officers or employees of the Company and
its subsidiaries to which fiduciary
responsibilities have been delegated from and
against any and all liabilities, claims,
demands, costs and expenses including
attorneys fees, arising out of an alleged
breach in the performance of their fiduciary
duties under the Plan and ERISA, other than
such liabilities, claims, demands, costs and
expenses as may result from the gross
negligence or willful misconduct of such
person. The Company shall have the right,
but not the obligation, to conduct the
defense of such person in any proceeding to
which this paragraph applies.
ARTICLE 13
Claims Procedures
13.1 Presentation of Claim. Any Participant or
Beneficiary of a deceased Participant may
deliver to the Committee a written claim for
a determination with respect to the amounts
distributable to such Claimant from the Plan.
If such a claim relates to the contents of a
notice received by the Claimant, the claim
must be made within 60 days after such notice
was received by the Claimant. All other
claims must be made within 180 days of the
date on which the event that caused the claim
to arise occurred. The claim must state with
particularity the determination desired by
the Claimant.
13.2 Notification of Decision. The Committee
shall consider a Claimant's claim within a
reasonable time, and shall notify the
Claimant in writing:
(a) that the Claimant's requested
determination has been made, and that the
claim has been allowed in full; or
(b) that the Committee has reached a
conclusion contrary, in whole or in part,
to the Claimant's requested
determination, and such notice must set
forth in a manner calculated to be
understood by the Claimant:
(i) the specific reason(s) for the denial
of the claim, or any part of it;
(ii) specific reference(s) to pertinent
provisions of the Plan upon which
such denial was based;
(iii) a description of any additional
material or information necessary for
the Claimant to clarify or perfect
the claim, and an explanation of why
such material or information is
necessary; and
(iv) an explanation of the claim review
procedure set forth in Section 13.3
below.
13.3 Review of a Denied Claim. Within 60 days
after receiving a notice from the Committee
that a claim has been denied, in whole or in
part, a Claimant (or the Claimant's duly
authorized representative) may file with the
Committee a written request for a review of
the denial of the claim. Thereafter, but not
later than 30 days after the review procedure
began, the Claimant (or the Claimant's duly
authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other
documents; and/or
(c) may request a hearing, which the
Committee, in its sole discretion, may
grant.
13.4 Decision on Review. The Committee shall
render its decision on review promptly, and
not later than 60 days after the filing of a
written request for review of the denial,
unless a hearing is held or other special
circumstances require additional time, in
which case the Committee's decision must be
rendered within 120 days after such date.
Such decision must be written in a manner
calculated to be understood by the Claimant
and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent
Plan provisions upon which the decision
was based; and
(c) such other matters as the Committee
deems relevant.
13.5 Legal Action. A Claimant's compliance with
the foregoing provisions of this Article 13
is a mandatory prerequisite to a
Participant's right to commence any legal
action with respect to any claim for benefits
under this Plan.
ARTICLE 14
Miscellaneous
14.1 Unsecured General Creditor. Participants and
their Beneficiaries, heirs, successors and
assigns shall have no legal or equitable
rights, interest or claims in any property or
assets of the Company or an Employer. Any
and all of the Company's assets shall be, and
remain, its general, unpledged and
unrestricted assets. The Company's
obligation under the Plan shall be merely
that of an unfunded and unsecured promise to
pay money in the future.
14.2 Employer's Liability. An Employer other than
the Company shall have no liability to a
Participant or a Participant's Beneficiary
for payment of any benefits under the Plan.
14.3 Company's Liability. Amounts payable to a
Participant on his Account Balance under
Article 3 shall be paid from the general
assets of the Company (including without
limitation the assets of any trust
established to fund payment of obligations
hereunder) exclusively.
14.4 Nonassignability. Neither a Participant nor
any other person shall have the right to
commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber,
transfer, hypothecate or convey in advance of
actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are,
and all rights to which are expressly
declared to be unassignable and non-
transferable, except that the foregoing shall
not apply to any family support obligations
set forth in a court order. No part of the
amounts payable shall, prior to actual
payment, be subject to seizure or
sequestration for the payment of any debts,
judgments, alimony or separate maintenance
owed by a Participant or any other person,
nor be transferable by operation of law in
the event of a Participant's or any other
person's bankruptcy or insolvency.
14.5 Not a Contract of Employment. The terms and
conditions of this Plan nor any actions taken
hereunder shall not be deemed to constitute a
contract of employment between the Company or
an Employer and the Participant, nor give
Participant any right to be retained as an
employee of the Company or its subsidiaries.
Such employment relationship can be
terminated at any time for any reason, with
or without cause, unless expressly provided
in a written employment agreement. This Plan
shall only create a contractual obligation on
the part of the Company, and shall not be
construed as creating a trust or any
fiduciary relationship.
14.6 Furnishing Information. A Participant will
cooperate with the Committee by furnishing
any and all information requested by the
Committee and take such other actions as may
be requested in order to facilitate the
administration of the Plan and the payments
of benefits hereunder, including but not
limited to taking such physical examinations
as the Committee may deem necessary.
14.7 Captions. The captions of the articles,
sections and paragraphs of this Plan are for
convenience only and shall not control or
affect the meaning or construction of any of
its provisions.
14.8 Governing Use. The provisions of this Plan
shall be construed and interpreted according
to the laws of the State of California.
14.9 Pronouns. Masculine pronouns wherever used
shall include feminine pronouns.
14.10 Notice. Any notice or filing required or
permitted to be given to the Committee under
this Plan shall be sufficient if in writing
and hand-delivered, or sent by registered or
certified mail, return receipt requested, to:
Consolidated Freightways, Inc.
Compensation Committee
Deferred Compensation Plan for
Executives
3240 Hillview Avenue
Palo Alto, California 94304
Such notice shall be deemed given as of the
date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on
the receipt for registration or
certification.
Any notice or filing required or permitted to
be given to a Participant under this Plan
shall be sufficient if in writing and hand-
delivered, or sent by mail, to the last known
address of the Participant.
14.11 Successors. The provisions of this Plan
shall be binding upon and inure to the
benefit of the Participant's Company and its
successors and assigns and the Participant,
the Participant's Beneficiaries, and their
permitted successors and assigns.
14.12 Spouse's Interest. The interest in the
benefits hereunder of a spouse of a
Participant who has predeceased the
Participant shall automatically pass to the
Participant and shall not be transferable by
such spouse in any manner, including but not
limited to such spouse's will, nor shall such
interest pass under the laws of intestate
succession.
14.13 Incompetent. If the Committee determines
in its discretion that a benefit under this
Plan is to be paid to a minor, a person
declared incompetent or to a person incapable
of handling the disposition of that person's
property, the Committee may direct payment of
such benefit to the guardian, legal
representative or person having the care and
custody of such minor, incompetent or
incapable person. The Committee may require
proof of minority, incompetency, incapacity
or guardianship, as it may deem appropriate
and/or such indemnification of the Committee,
the Company and the Participant's Employer
and security, as it deems appropriate, in its
sole discretion, prior to distribution of the
benefit. Any payment of a benefit shall be a
payment for the account of the Participant
and the Participant's Beneficiary, as the
case may be, and shall be a complete
discharge of any liability under the Plan for
such payment amount.
14.14 Distribution in the Event of Taxation. If,
for any reason, all or any portion of a
Participant's benefit under this Plan becomes
taxable to the Participant prior to receipt,
a Participant may petition the Committee for
a distribution of assets sufficient to meet
the Participant's tax liability (including
additions to tax, penalties and interest).
Upon the grant of such a petition, which
grant shall not be unreasonably withheld, the
Company shall distribute to the Participant
immediately available funds in an amount
equal to that Participant's federal, state
and local tax liability associated with such
event of taxation (which amount shall not
exceed a Participant's accrued benefit under
the Plan), such tax liability shall be
measured by using that Participant's then
current highest federal, state and local
marginal tax rate, plus the rates or amounts
for the applicable additions to tax,
penalties and interest. If the petition is
granted, the tax liability distribution shall
be made within 90 days of the date when the
Participant's petition is granted. Such a
distribution shall reduce the benefits to be
paid under this Plan.
14.15 Legal Fees To Enforce Rights. If the
Company has failed to comply with any of its
obligations under the Plan or any agreement
thereunder or, if the Company, the
Participant's Employer or any other person
takes any action to declare the Plan void or
unenforceable or institutes any litigation or
other legal action designed to deny, diminish
or to recover from any Participant the
benefits intended to be provided, then the
Company irrevocably authorizes such
Participant to retain counsel of his choice
and agrees to pay the reasonable legal fees
and expenses of the Participant
incurred in connection with the initiation or
defense of any litigation or other legal
action, whether by or against the Company, or
any director, officer, shareholder or other
person affiliated with the Company, or any
successor thereto in any jurisdiction,
provided that such Participant prevails in
such action.
14.16 Payment of Withholding. As a condition of
receiving benefits under the Plan, the
Participant shall pay the Company and/or the
applicable Employer not less than the amount
of all applicable federal, state, local and
foreign taxes required by law to be paid or
withheld relating to the receipt or
entitlement to benefits hereunder. The
Company may withhold taxes from any benefits
paid and/or from Base Annual Salary or Annual
Bonus, in its sole discretion.
14.17 Coordination with Other Benefits. The
benefits provided for a Participant and
Participant's Beneficiary under the Plan are
in addition to any other benefits available
to such Participant under any other plan or
program for employees of the Company and its
subsidiaries. The Plan shall supplement and
shall not supersede, modify or amend any
other such plan or program except as may
otherwise be expressly provided. In no event
shall distributions under the Plan prior to
Retirement have the effect of increasing
payments otherwise due under the various
retirement plans of the Company and its
subsidiaries.
IN WITNESS WHEREOF, the Company has signed
this Plan document as of August 27, 1993
Consolidated Freightways,
Inc.,
a Delaware corporation
By: \s\ David F. Morrison
Its: Vice President and Treasurer
EXHIBIT 10.38
CONSOLIDATED FREIGHTWAYS, INC.
1993 NONQUALIFIED EMPLOYEE BENEFIT PLANS
TRUST AGREEMENT
(a) This Agreement, effective this 1st day of
October, 1993, by and between CONSOLIDATED
FREIGHTWAYS, INC., a Delaware corporation
(Company) and MELLON BANK, N.A., (Trustee);
(b) WHEREAS, Company has adopted the
nonqualified deferred compensation Plan(s) as
listed in Appendix A;
(c) WHEREAS, Company has incurred or expects to
incur liability under the terms of such Plan(s)
with respect to the individuals participating in
such Plan(s);
(d) WHEREAS, Company now wishes to establish
and contribute to this trust (the "Trust") assets
that shall be held therein, subject to the claims
of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan
participants and their beneficiaries in such
manner and at such times as specified in the
Plan(s);
(e) WHEREAS, it is the intention of the parties
that this Trust shall constitute an unfunded
arrangement and shall not affect the status of the
Plan(s) as an unfunded plan maintained for the
purpose of providing deferred compensation for a
select group of management or highly compensated
employees for purposes of Title I of the Employee
Retirement Income Security Act of 1974;
(f) WHEREAS, it is the intention of Company to
make contributions to the Trust to provide itself
with a source of funds to assist it in the meeting
of its liabilities under the Plan(s);
NOW, THEREFORE, the parties do hereby establish
the Trust and agree that the Trust shall be
comprised, held and disposed of as follows:
Section 1. Establishment of Trust
(a) Company hereby deposits with Trustee in
trust $100.00, which shall become the principal of
the Trust to be held, administered and disposed of
by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be
irrevocable.
(c) The Trust is intended to be a grantor
trust, of which Company is the grantor, within the
meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be construed
accordingly.
(d) The principal of the Trust, and any
earnings thereon shall be held separate and apart
from other funds of Company and shall be used
exclusively for the uses and purposes of Plan
participants and general creditors as herein set
forth. Plan participants and their beneficiaries
shall have no preferred claim on, or any
beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plan(s)
and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their
beneficiaries against Company. Any assets held by
the Trust will be subject to the claims of
Company's general creditors under federal and
state law in the event of Insolvency, as defined
in Section 3(a) herein.
(e) Within 90 days following the end of each
Plan Year, and within 30 days following any change
in control, as defined in Section 14(e), below,
Company shall irrevocably deposit additional cash
or other property to the Trust in an appropriate
amount sufficient to pay each Plan participant or
beneficiary the benefits payable pursuant to the
terms of the Plan(s) as of the close of such Plan
Year based on the distributions elected by Plan
participants other than upon termination of
employment, or as of the date of such change in
control (as the case may be).
(f) Trustee accepts the Trust established under
this Trust Agreement on the terms and subject to
the provisions set forth herein, and it agrees to
discharge and perform fully and faithfully all of
the duties and obligations imposed upon it under
this Trust Agreement.
Section 2. Payments to Plan Participants and
Their Beneficiaries
(a) Company shall deliver to Trustee a schedule
(the "Payment Schedule") that indicates the
amounts payable in respect of each Plan
participant (and his or her beneficiaries), that
provides a formula or other instructions
acceptable to Trustee for determining the amounts
so payable, the form in which such amount is to be
paid (as provided for or available under the
Plan(s)), and the time of commencement for payment
of such amounts. Except as otherwise provided in
Section 2(c) below or elsewhere herein, Trustee
shall make payments to the Plan participants and
their beneficiaries in accordance with such
Payment Schedule and shall make payments of legal
fees and expenses as required by the Plan(s). The
Trustee shall make provisions for the reporting
and withholding of any federal, state or local
taxes that may be required to be withheld with
respect to the payment of benefits pursuant to the
terms of the Plan(s) and shall pay amounts
withheld to the appropriate taxing authorities or
determine that such amounts have been reported,
withheld and paid by the Company. Company shall
provide Trustee with the rates at which taxes are
to be withheld and shall be responsible for
providing payees with all required state and
federal notices regarding withholding. Company
shall also be responsible for depositing all
withheld amounts with the appropriate taxing
authorities and for providing each Plan
participant (or beneficiary) with the appropriate
information evidencing such withholding payments.
(b) The entitlement of a Plan participant or
his or her beneficiaries to benefits or legal fees
and expenses under the Plan(s) shall be determined
by Company or such party as it shall designate
under the Plan(s), and any claim for such benefits
shall be considered and reviewed under the
procedures set out in the Plan(s).
(c) Company may make payment of benefits and
legal fees and expenses directly to Plan
participants or their beneficiaries as they become
due under the terms of the Plan(s). Company shall
notify Trustee of its decision to make payment of
benefits or legal fees and expenses directly prior
to the time amounts are payable to participants or
their beneficiaries. In addition, if the
principal of the Trust, and any earnings thereon,
are not sufficient to make payments of benefits in
accordance with the terms of the Plan(s), Company
shall make the balance of each such payment as it
falls due. Trustee shall notify Company when
principal and earnings are not sufficient.
(d) Trustee shall not be liable for any failure
by Company to provide contributions sufficient to
pay all benefits and legal fees and expenses under
the Plan(s) in full.
Section 3. Trustee Responsibility Regarding
Payments to Trust Beneficiary When Company Is
Insolvent
(a) Trustee shall cease payment of benefits and
legal fees and expenses to Plan participants and
their beneficiaries if the Company is Insolvent.
Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) Company is
unable to pay its debts as they become due, or
(ii) Company is subject to a pending proceeding as
a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this
Trust, as provided in Section 1(d) hereof, the
principal and income of the Trust shall be subject
to claims of general creditors of Company under
federal and state law as set forth below.
(1) The Board of Directors and the Chief
Executive Officer of Company shall have the duty
to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor
of Company alleges in writing to Trustee that
Company has become Insolvent, Trustee shall
determine whether Company is Insolvent and,
pending such determination, Trustee shall
discontinue payment of benefits and legal fees and
expenses to Plan participants or their
beneficiaries.
(2) Unless Trustee has actual knowledge of
Company's Insolvency, or has received notice from
Company or a person claiming to be a creditor
alleging that Company is Insolvent, Trustee shall
have no duty to inquire whether Company is
Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be
furnished to Trustee and that provides Trustee
with a reasonable basis for making a determination
concerning Company's solvency.
(3) If at any time Trustee has determined
that Company is Insolvent, Trustee shall
discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the
Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall
in any way diminish any rights of Plan
participants or their beneficiaries to pursue
their rights as general creditors of Company with
respect to benefits due under the Plan(s) or
otherwise.
(4) Trustee shall resume the payment of
benefits and legal fees and expenses to Plan
participants or their beneficiaries in accordance
with Section 2 of this Trust Agreement only after
Trustee has determined that Company is not
Insolvent (or is no longer Insolvent).
(5) Provided that there are sufficient
assets, if Trustee discontinues the payment of
benefits and legal fees and expenses from the
Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first
payment following such discontinuance shall
include the aggregate amount of all payments due
to Plan participants or their beneficiaries under
the terms of the Plan(s) for the period of such
discontinuance, less the aggregate amount of any
payments made to Plan participants or their
beneficiaries by Company in lieu of the payments
provided for hereunder during any such period of
discontinuance.
Section 4. Payments to Company
(a) Except as provided in Section 3 hereof or
in subsection (b) below, Company shall have no
right or power to direct Trustee to return to
Company or to divert to others any of the Trust
assets before all payment of benefits have been
made to Plan participants and their beneficiaries
pursuant to the terms of the Plan(s).
(b) If Company elects to make payment of
benefits directly to Plan participants or their
beneficiaries pursuant to the terms of Section
2(c), above, the Trustee shall distribute to
Company within 30 days of such payment an amount
equal to each such payment made by Company.
Section 5. Investment and Administration of
the Trust
(a) Trustee shall have the power:
(i) To invest the assets of the Trust
as directed by the Board of
Directors of Company or a
Committee thereof. Such Board
reserves the right to delegate
this investment authority to
Trustee or an investment manager;
(ii) To collect and receive any and all
money and other property due to
the Trust and to give full
discharge therefor;
(iii) To settle, compromise or submit to
arbitration any claims, debts or
damages due or owing to or from
the Trust; to commence or defend
suits or legal proceedings to
protect any interest of the Trust;
and to represent the Trust in all
suits or legal proceedings in any
court or before any other body or
tribunal;
(iv) Generally to do all acts, whether
or not expressly authorized, which
Trustee may deem necessary or
desirable for the protection of
the Trust.
(b) Persons dealing with Trustee shall be under
no obligation to see to the proper application of
any money paid or property delivered to Trustee or
to inquire into Trustee's authority as to any
transaction.
(c) Company shall have the right at any time,
and from time to time in its sole discretion, to
substitute assets of equal fair market value for
any asset held by the Trust. This right is
exercisable by Company in a nonfiduciary capacity
without the approval or consent of any person in a
fiduciary capacity.
Section 6. Disposition of Income
During the term of this Trust, all income
received by the Trust, net of expenses and taxes,
shall be accumulated and reinvested.
Section 7. Accounting by Trustee
(a) Trustee shall keep accurate and detailed
records of all investments, receipts,
disbursements, and all other transactions required
to be made, including such specific records as
shall be agreed upon in writing between Company
and Trustee. All such accounts, books and records
shall be open to inspection and audit at all
reasonable times by Company or Company's
representatives or agents. Within 120 days
following the close of each calendar year and
within 120 days after the removal or resignation
of Trustee, Trustee shall deliver to Company a
written account of its administration of the Trust
during such year or during the period from the
close of the last preceding year to the date of
such removal or resignation, setting forth all
investments, receipts, disbursements and other
transactions effected by it, including a
description of all securities and investments
purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing
all cash, securities and other property held in
the Trust at the end of such year or as of the
date of such removal or resignation, as the case
may be.
(b) The written approval of any accounting by
Company shall be final as to all matters and
transactions stated or shown therein and shall be
binding upon Company and all beneficiaries of the
Trust and other persons who then shall be or
thereafter become interested in the Trust, except
for Trustee's gross negligence or willful
misconduct. Failure of Company to notify Trustee
within 180 days after receipt of any accounting of
its disapproval of such accounting shall be the
equivalent of written approval.
(c) Trustee shall timely provide Company and
each Plan participant (or beneficiary) with such
information as Trustee possesses as Company or the
Plan participant may need for tax or other
reporting purposes.
Section 8. Responsibility of Trustee
(a) Trustee shall act with the care, skill,
prudence and diligence under the circumstances
then prevailing that a prudent person acting in
like capacity and familiar with such matters would
use in the conduct of an enterprise of a like
character and with like aims, provided, however,
that Trustee shall incur no liability to any
person for any action taken pursuant to a
direction, request or approval given by Company,
which is contemplated by, and in conformity with,
the terms of the Plan(s) or this Trust and is
given in writing by Company, and to that extent,
Trustee shall be relieved of liability for the
prudent person rule for investments. In the event
of a dispute between Company and a party, Trustee
may apply to a court of competent jurisdiction to
resolve the dispute.
(b) Trustee shall not be required to undertake
or to defend any litigation arising in connection
with this Trust Agreement, unless it be first
indemnified by Company against its prospective
costs, expenses and liability, and Company hereby
agrees to indemnify Trustee for such costs,
expenses and liability.
(c) Trustee may hire agents, accountants,
actuaries, investment advisors, financial
consultants or other professionals to assist it in
performing any of its duties or obligations
hereunder. Expenses of such persons shall be
deemed to be expenses of management and
administration of the Trust within the meaning of
Section 9(b), below.
(d) Trustee shall have, without exclusion, all
powers conferred on Trustees by applicable law,
unless expressly provided otherwise herein,
provided, however, that if an insurance policy is
held as an asset of the Trust, Trustee shall have
no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct
from conversion of the policy to a different form)
other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against
such policy.
(e) However, notwithstanding the provisions of
Section 8(d) above, Trustee may loan to Company
the proceeds of any borrowing against an insurance
policy held as an asset of the Trust.
(f) Notwithstanding any powers granted to
Trustee pursuant to this Trust Agreement or to
applicable law, Trustee shall not have any power
that could give this Trust the objective of
carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-
2 of the Procedure and Administrative Regulations
promulgated pursuant to the Internal Revenue Code.
Section 9. Taxes, Compensation and Expenses of
Trustee
(a) Company shall from time to time pay taxes
(references in this Trust Agreement to the payment
of taxes shall include interest and applicable
penalties) of any and all kind whatsoever which at
any time are lawfully levied or assessed upon or
become payable in respect of the Trust, the income
or any property forming a part thereof, or any
security transaction pertaining thereto. To the
extent that any taxes levied or assessed upon the
Trust are not paid by Company or contested by
Company pursuant to the last sentence of this
Section 9(a), Trustee shall pay such taxes out of
the Trust, and Company shall, upon notice by
Trustee, deposit into the Trust an amount equal to
the amount paid from the Trust to satisfy such tax
liability. If requested by Company, and agreed to
by Trustee, Trustee shall at Company's expense,
contest the validity of such taxes in any manner
deemed appropriate by Company or its counsel, but
only if it has received an indemnity bond or other
security satisfactory to it to pay any expenses of
such contest. Alternatively, Company may itself
contest the validity of any such taxes, but any
such contest shall not affect Company's obligation
to reimburse the Trust for taxes paid from the
Trust.
(b) Trustee may be paid compensation by Company
in accordance with any written agreement for this
purpose between them. Trustee shall be reimbursed
by Company for its reasonable expenses of
management and administration of the Trust,
including reasonable compensation of any agent
engaged by Trustee to assist it in such management
and administration. The fees for Legal Counsel,
as defined in Section 10(c), below, and other
reasonable expenses, will be paid by Company.
Trustee shall be able to charge the Trust for such
compensation and for any reasonable expenses
including Legal Counsel, appraisal or accounting
fees, and the same may be deducted from the Trust
unless paid by Company within 60 days after
Company receives written billing by Trustee;
provided that this paragraph shall not apply while
a dispute over the amount of such charges exists.
Section 10. For Protection of Trustee
(a) Company shall certify to Trustee the name
or names of any person or persons authorized to
act for Company. Such certification shall be
signed by the Chief Executive Officer or other
officer of Company duly authorized by the Board of
Directors of Company. Until Company notifies
Trustee, in a similarly signed notice, that any
such person is no longer authorized to act for
Company, Trustee may continue to rely upon the
authority of such person. Trustee may rely upon
any certificate, notice or direction of Company
which Trustee reasonably believes to have been
signed by a duly authorized officer or agent of
Company.
(b) Notices to Trustee shall be sent in writing
to Trustee's office at One Mellon Bank Center,
Room 3346, Pittsburg, Pennsylvania 15258 or to
such other address as Trustee may specify. No
communication shall be binding upon Trust or
Trustee until it is received by Trustee and unless
it is in writing and signed by an authorized
person. Notices to Company shall be sent in
writing, attention General Counsel, to Company's
principal office at 3240 Hillview Avenue, Palo
Alto, California 94304 or to such other address as
Company may specify. No notice shall be binding
upon Company until it is received by Company.
(c) Trustee may consult with any legal counsel
("Legal Counsel") for the purpose of obtaining
advice on topics including but not limited to the
construction of this Trust Agreement, its duties
hereunder, or any act which it proposes to take or
omit, and shall not be liable for any action taken
or omitted in good faith pursuant to such advice.
Expenses of Legal Counsel shall be deemed to be an
expense of management and administration of the
Trust within the meaning of Section 9(b), above.
(d) Trustee shall discharge its duties under
this Trust Agreement in a manner consistent with
the objectives of this Trust Agreement. Trustee
shall not be liable for any loss sustained by the
Trust by reason of the purchase, retention, sale
or exchange of any investment in good faith and in
accordance with the provisions of this Trust
Agreement. Trustee shall have no responsibility
or liability for any failure of Company to make
contributions to the Trust. Trustee shall not be
liable hereunder for any act taken or omitted,
except for its own gross negligence or willful
misconduct. Trustee's duties and obligations
shall be limited to those expressly imposed upon
it by this Trust Agreement, and Trustee shall have
no responsibility under the Plan(s),
notwithstanding any reference to the Plan(s).
(e) Company hereby indemnifies and holds
Trustee harmless from and against any and all
losses, damages, costs, expenses or liabilities
(herein, "Liabilities"), including reasonable
attorneys' fees and other costs of litigation, to
which Trustee may become subject pursuant to, and
arising out of, occasioned by, incurred in
connection with or in any way associated with this
Trust Agreement, except for any act or omission
constituting gross negligence or willful
misconduct of Trustee.
(f) If one or more Liabilities shall arise, or
if Company fails to indemnify Trustee as provided
herein, then Trustee may engage Legal Counsel of
Trustee's choice, but at Company's expense, either
to conduct the defence against such Liabilities or
to conduct such actions as may be necessary to
obtain the indemnity provided for herein, or to
take both such actions. Trustee shall notify
Company within 15 days after Legal Counsel has
been engaged with the name and address of such
Legal Counsel.
Section 11. Resignation and Removal of Trustee
(a) Trustee may resign at any time by written
notice to Company, which shall be effective 60
days after receipt of such notice unless Company
and Trustee agree otherwise.
(b) Trustee may be removed by Company on 60
days' notice or upon shorter notice accepted by
Trustee.
(c) If Trustee resigns or is removed within 2
years of a change in control, as defined in
Section 14(e), below, Trustee shall select a
successor Trustee in accordance with the
provisions of Section 12(b) hereof prior to the
effective date of Trustee's resignation or
removal.
(d) Upon resignation or removal of Trustee and
appointment of a successor Trustee, all assets
shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within
60 days after receipt of notice of resignation,
removal or transfer, unless Company extends the
time limit.
(e) If Trustee resigns or is removed, a
successor shall be appointed, in accordance with
Section 12 hereof, by the effective date of
resignation or removal under paragraph(s) (a) or
(b) of this section. If no such appointment has
been made, Trustee may apply to a court of
competent jurisdiction for appointment of a
successor or for instructions. All expenses of
Trustee in connection with the proceeding shall be
allowed as administrative expenses of the Trust.
Section 12. Appointment of Successor
(a) If Trustee resigns or is removed in
accordance with Section 11(a) or (b) hereof,
Company shall appoint a bank or trust company in
good standing, organized and doing business under
the laws of the United States or a state thereof,
with a combined capital and surplus of not less
that $50,000,000 and authorized under the laws
governing its organization to exercise corporate
trustee powers, as a successor to replace Trustee
upon resignation or removal. The appointment
shall be effective when accepted in writing by the
new Trustee, who shall have all of the rights and
powers of the former Trustee, including ownership
rights in the Trust assets. The former Trustee
shall execute any instrument necessary or
reasonably requested by Company or the successor
Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant
to the provisions of Section 11(c) hereof and
selects a successor Trustee, Trustee shall appoint
a bank or trust company in good standing,
organized and doing business under the laws of the
United States or a state thereof, with a combined
capital and surplus of not less that $50,000,000
and authorized under the laws governing its
organization to exercise corporate trustee powers.
The appointment of a successor Trustee shall be
effective when accepted in writing by the new
Trustee. The new Trustee shall have all the
rights and powers of the former Trustee, including
ownership rights in Trust assets. The former
Trustee shall execute any instrument necessary or
reasonably requested by the successor Trustee to
evidence the transfer.
(c) The successor Trustee need not examine the
records and acts of any prior Trustee and may
retain or dispose of existing Trust assets,
subject to Sections 5, 7 and 8 hereof. The
successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor
Trustee from any claim or liability resulting from
any action or inaction of any prior Trustee or
from any other past event, or any condition
existing at the time it becomes successor trustee.
Section 13. Amendment or Termination
(a) This Trust Agreement may be amended by a
written instrument executed by Trustee and
Company, provided that no amendment which would
materially affect the likelihood that assets of
the Trust will be available to fund benefits
payable under the Plan(s) shall be made unless the
prior written approval of 75% of the Plan
participants (or beneficiaries as the case may be)
has been obtained; and provided further, that no
amendment shall increase the duties or
responsibilities of Trustee unless Trustee
consents thereto in writing.
(b) The Trust shall not terminate until the
date on which Plan participants and their
beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan(s). The Trust
shall terminate at the discretion of Company if
the Internal Revenue Service or any court rules
that Company is not the owner of the Trust, that
Plan participants (or their beneficiaries) are
taxable on payment of Plan benefits prior to their
becoming payable or that Plan participants (or
their beneficiaries) have greater rights to assets
of the Trust than other general creditors of
Company.
(c) Upon written approval of 75 percent of the
Plan participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the
Plan(s), Company may terminate this Trust prior to
the time all benefit payments under the Plan(s)
have been made.
(d) Upon termination of the Trust, after its
final accounting, Trustee shall distribute the net
balance of any assets of the Trust remaining after
all benefits, legal fees and expenses, and
management and administration expenses have been
paid. Upon making such a distribution, Trustee
shall be relieved from all further liability.
Section 14. Miscellaneous
(a) Any provision of this Trust Agreement
prohibited by law shall be ineffective to the
extent of such prohibition, without invalidating
the remaining provisions hereof.
(b) Company shall provide Trustee with a copy
of the Plan(s) listed in Appendix A and with a
copy of all resolutions of the Board of Directors
of Company (and committees thereof) which affect
the Plan(s).
(c) Benefits payable to Plan participants and
their beneficiaries under this Trust Agreement may
not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or
subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(d) This Trust Agreement shall be governed by
and construed in accordance with the laws of the
Commonwealth of Pennsylvania.
(e) For purposes of this Trust, "change in
control" shall have the same meaning as provided
in the Plan(s).
(f) The headings of sections of this Trust
Agreement and defined terms are used herein for
convenience of reference only and in case of any
conflict the text of this Agreement shall control.
(g) This Agreement shall be binding upon and
inure to the benefit of any successor to Company
or its business as the result of merger,
consolidation, reorganization, transfer of assets
or otherwise and any subsequent successor thereto,
and any such successor shall be deemed to be the
"Company" under this Agreement. In the event of
any such merger, consolidation, reorganization,
transfer of asses or other similar transaction,
the successor to Company or its business or any
subsequent successor thereto shall promptly notify
Trustee in writing of its successorship and
furnish the Trustee with the information specified
in Section 10(a) of this Agreement. In no event
shall any such transaction described herein
suspend or delay the rights of Plan participants
(or their beneficiaries) to receive benefits
hereunder.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their duly
authorized officers as of the day and year first
above written.
CONSOLIDATED FREIGHTWAYS, INC. MELLON BANK, N.A.
By: By: _____________________
Name: Name: ____________________
Title: Senior Vice President Title: ___________________
and General Counsel
PAGE 24
Financial Review and Management Discussion
The Company's 1993 operating profit was $120.2 million, a 147.3%
increase from 1992. This significant improvement is the result of
increased shipment levels and cost containment at Emery and record
operating profits at the Con-Ways. Emery achieved its first
profitable year of operations since its acquisition in 1989. The
Company's 1992 operating income includes $17.3 million of non-
recurring charges to restructure CF MotorFreight and write off
substantially all of its Canadian operating rights. Excluding
these charges, operating income improved $54.3 million or 82.4%
over 1992. The 1992 operating income improved $73.2 million from
$1.7 million in 1991 excluding the $17.3 million of restructuring
charges and $9.0 million of incremental charges related to the
Company's 1992 adoption of Statement of Financial Accounting
Standards No. 106 "Employer's Accounting for Post Retirement
Benefits Other than Pensions" (SFAS 106).
Total Company revenues increased $136.2 million or 3.4% over 1992
as Emery regained revenues due to various successful marketing
programs while the Con-Ways continued to grow through expansion
into new markets. These increases more than offset CF
MotorFreight's revenue decline of 3.3% which is attributed to
continued rate discounting and tonnage loss associated with market
dilution and a management decision to shed less profitable
business.
Significant variations in segment revenue and operating income are
as follows:
CF MOTORFREIGHT
CF MotorFreight's (CFMF) 1993 revenues decreased 3.3% on a tonnage
decline of 3.1% with higher rated less-than-truckload (LTL) tonnage
declining 3.0%. The decline in revenues reflects continued price
erosion and CFMF's efforts to selectively shed some of its more
unprofitable business. The decline also reflects market dilution
from new competitors and changes in distribution patterns by
customers. In 1992 revenues increased 1.9% on a tonnage increase
of 0.7% in contrast to revenue and tonnage declines of 2.0% and
5.0%, respectively, in 1991.
In 1993, operating income was $31.7 million compared to $27.5
million in 1992, an increase of 15.4%. The 1992 operating income
includes $17.3 million to restructure CFMF operations and write off
substantially all of its Canadian operating authority. Excluding
these charges, CFMF's 1993 operating income decreased $13.1 million
or 29.2% from 1992.
Persistent rate discounting and the previously mentioned market
dilution have impaired CFMF's ability to retain margins comparable
to those in prior years, as margins decreased from 2.4% in 1991 to
2.0% (excluding restructuring charges) in 1992 and 1.5% in 1993.
As shipment volumes stabilize, CFMF will size its freight flow
infrastructure to expected business levels. Additionally, CFMF has
initiated several programs to streamline operations. These include
technology enhancements such as dock automation and programs to
reduce freight handling and allow flexible services which are more
responsive to customer needs. Such programs include utilization of
metropolitan area terminals to consolidate freight and a greater
use of sleeper teams for more direct freight movement. While
short-term margins are expected to remain unsatisfactory, the benefits
of these initiatives should improve margins in the long-term.
CFMF's ability to successfully negotiate greater flexibility in
work-rules and equitable wage increases with various labor unions
should also contribute to improving margins. In addition, CFMF must
maintain business levels with adequate yields. To this end, CFMF
announced a 3% discount rollback in January 1994.
Approximately 88% of CFMF's domestic employees are represented by
various labor unions, primarily the International Brotherhood of
Teamsters (IBT). CFMF and IBT are parties to a National Master
Freight Agreement scheduled to expire on March 31, 1994.
CON-WAY TRANSPORTATION SERVICES
The Con-Way group again produced record revenues for the year.
Revenues increased 13.0% on a tonnage increase of 26.3% from 1992
with the higher rated LTL tonnage increasing 13.9%. All of the
companies in the Con-Way group experienced revenue growth. In 1993
the Con-Ways expanded service in Florida and into Missouri. In
1992, Con-Way revenues increased 13.3% on a 10.0% increase in
tonnage from 1991.
PAGE 25
The continued revenue growth combined with successful cost
containment efforts produced record operating income for the Con-
Way group as operating income increased 33.7% over 1992. The 1993
operating margin was 8.8% compared to 7.4% in the prior year. The
improved operating margin in 1993 occurred despite increased costs
associated with expansion of service into new areas. Operating
income in 1992 increased 61.3% from 1991. The 1992 operating
margin of 7.4% compares with a 5.2% margin in 1991.
The Con-Ways are seeking to increase business through growth in
existing markets and expansion into new geographic markets
including New England. Recent joint service agreements between the
Con-Way carriers will enhance business levels. However, short-term
operating margins may be impacted by start-up costs while
establishing freight levels in these new markets.
EMERY WORLDWIDE
For Emery, 1993 marked the first year of operating profits and the
first year since its acquisition that revenues increased over the
prior year. Revenues in 1993 increased 10.0% from 1992 due
entirely to gains in its commercial business as revenues from the
U.S. Postal Service (USPS) contracts declined. Emery revenues in
1992 declined 11.8% from 1991 following the reconfiguration
management initiated in 1991 to emphasize parcels, packages and
freight shipments 5 lbs. and above, and reduced revenues from USPS
contracts.
Operating income for 1993 was a $49.2 million improvement from the
$32.7 million loss in 1992. These operating results represent a
steady improvement that commenced in 1992. All of the profit
improvement came from the commercial business as USPS contracts
provided 16.7% less income due to lower business levels than in
1992. The successful return to profitability is attributed to
stringent cost control measures coupled with an increase in
business levels resulting from the success of Emery's marketing
initiatives and renewed customer confidence. The 1993 operating
results also include $20.4 million of incentive compensation shared
by over 6000 employees. In 1992, Emery reduced its operating loss
$50.9 million, from $83.6 million in 1991, despite a $13.4 million
reduction in operating income from USPS contracts.
Emery's management plans to continue its strategy of developing new
and existing business while emphasizing cost containment measures,
an approach that returned the company to profitability after four
years of losses. Emery expects to continue to expand its
international and domestic business with marketing programs
tailored to the needs of major accounts.
In January 1994, Emery continued USPS operations under a new
contract that was awarded to them in 1993. The contract provides
revenues of approximately $880 million over a 10 year period and
$26.9 million per year as reimbursement for certain costs.
OTHER INCOME AND (EXPENSE)
Other expense, net, decreased 51.6% for the following reasons.
Interest expense declined 22.0% from 1992 as the Company reduced
borrowing costs with scheduled and early retirement of debt and
debt refinancing. In 1992 other income and expense included $10.5
million of non-recurring expenses to reduce the cost of unused
properties to their market value and the amortization of deferred
financing costs related to credit facilities that have since
lapsed. In 1992 investment income included a $5.0 million
investment loss related to certain pension related investments.
Offsetting the above items is a decline in investment income in
1993 as investments were liquidated to retire debt and purchase
assets.
NET INCOME (LOSS) TO COMMON SHAREHOLDERS
In 1993, net income applicable to common shareholders was $31.6
million. The 1992 net loss applicable to common shareholders of
$97.7 million includes a $7.4 million extraordinary charge for the
early retirement of debt and a $70.0 million one-time charge for
the adoption of SFAS 106 effective January 1, 1992. Also included
is the previously mentioned $17.3 million of CFMF charges, $10.5
million to write down property held for sale and certain
intangibles and related tax benefits. Excluding the above 1992
charges, the net loss applicable to common shareholders was $2.4
million.
PAGE 26
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1993, the Company had $139.0 million in cash and
cash equivalents with an additional $13.7 million in long-term
investments. Although the Company had positive cash flow from
operations, due primarily to income from operations and significant
depreciation and amortization, cash and investments decreased from
last year due to the retirement of debt and increased capital
expenditures. The 1993 capital expenditures include the purchase
of approximately $72.2 million of aircraft and related equipment in
connection with the USPS contract. Of the $72.2 million,
approximately $24.5 million is attributed to acquired maintenance
and is included in deferred charges and other assets on the
accompanying balance sheet. In 1993, all debt retirement, capital
expenditures and dividend requirements were satisfied with cash
from operations and sales of marketable securities. Cash flows
from operations are expected to provide for capital expenditures
and scheduled debt repayments in 1994.
In 1993, Emery entered into a $75 million receivable sale
facility with several banks. At December 31, 1993, $72 million of
letters of credit were issued and secured with eligible Emery
receivables. These needs, along with those of the trucking
subsidiaries, were previously being satisfied by a $250 million
receivable sale facility.
In July 1993, the Company entered into a $250 million unsecured
credit facility to provide standby availability for the Company's
letter of credit and working capital needs. The facility replaces
the previous $250 million receivable sale facility entered into
in December 1990. A second agreement provides for letter of credit
needs of up to $110 million. Letters of credit of $121 million at
December 31, 1993, previously financed under the receivable
sale facility, are refinanced under these new facilities. The
combined cash borrowings and letters of credit outstanding under
these two facilities may not exceed $250 million.
The Company retired $13.2 million of debt, net, in the year ended
December 1993, consisting primarily of industrial revenue bonds.
The bonds were retired at or near par.
In September 1993, the City of Dayton, Ohio issued $16 million
Series E and $16 million Series F, City of Dayton, Ohio, Special
Facilities Revenue Refunding Bonds. These bonds replaced $32
million of 1988 Series B City of Dayton, Ohio, Special Facilities
Revenue Bonds. This refinancing is expected to result in annual
cash savings in borrowing costs of approximately $3 million.
In addition, the Company reduced its long-term obligations by $45
million pursuant to a third party assuming the lease obligation
related to a previously owned facility. The relief of this
obligation also resulted in the removal from the Company's balance
sheet of a related $45 million note receivable.
At December 31, 1993, the Company's ratio of long-term obligations
(including guarantees) to total capital (including long-term
obligations) was 39.6% compared with 46.6% at year end 1992. The
improvement is primarily attributable to net income and the
retirement of debt in 1993. The current ratio at December 31, 1993
and 1992, was 1.1 to 1 and 1.2 to 1, respectively. The Company can
successfully maintain this current ratio because of a high turnover
of accounts receivable.
OTHER
The Company's operations necessitate the storage of fuel in
underground tanks as well as the disposal of substances regulated
by various federal and state laws. The Company adheres to a
stringent site by site tank testing and maintenance program
performed by a qualified independent party to protect the
environment and comply with regulations. Where the need for
environmental clean-up is necessary the Company takes appropriate
action.
The Company has been designated a Potentially Responsible Party
(PRP) by the U.S. Environmental Protection Agency with respect to
the disposal of hazardous substances at various sites. However,
based upon cost studies performed by independent parties, the
Company expects its share of the clean-up costs to be minimal.
PAGE 27
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Consolidated Freightways, Inc.:
We have audited the accompanying consolidated balance sheets
of Consolidated Freightways, Inc. (a Delaware Corporation) and
subsidiaries as of December 31, 1993 and 1992, and the related
statements of consolidated operations, cash flows and shareholders'
equity for each of the three years in the period ended December 31,
1993. 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 financial position of
Consolidated Freightways, Inc. and subsidiaries as of December 31,
1993 and 1992, and the results of their operations and their cash
flows for each of the three years in the period ended December 31,
1993 in conformity with generally accepted accounting principles.
As discussed in Notes 5 and 7 to the consolidated financial
statements, effective January 1, 1992 the Company changed its
method of accounting for income taxes to reflect the adoption of
the Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", and its method of accounting for
post retirement benefits to reflect the adoption of the Statement
of Financial Accounting Standards No. 106, "Employers' Accounting
for Post Retirement Benefits Other than Pensions",
/s/Arthur Andersen & Co.
San Francisco, California
January 28, 1994
PAGE 28
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
(Dollars in thousands)
1993 1992
ASSETS
Current Assets
Cash and temporary cash investments $139,044 $152,064
Trade accounts receivable, net of
allowances (Note 1) 508,669 314,807
Other accounts and notes receivable 35,714 33,820
Notes receivable from sale of trade accounts -- 166,399
Operating supplies, at lower of
average cost or market 34,940 33,426
Prepaid expenses 69,009 64,193
Deferred income taxes (Note 5) 108,458 97,884
Total Current Assets 895,834 862,593
Property, Plant and Equipment, at cost
Land 152,402 145,547
Buildings and improvements 488,292 468,269
Revenue equipment 935,482 900,653
Other equipment and leasehold improvements 347,601 336,463
1,923,777 1,850,932
Accumulated depreciation and amortization (1,013,333) (964,098)
910,444 886,834
Other Assets
Operating rights, net of accumulated amortization 9,129 9,479
Cost in excess of net assets of businesses
acquired net of accumulated amortization 354,076 363,710
Long-term receivables 6,600 51,600
Marketable securities, at lower of cost or market 13,727 47,865
Restricted funds 13,954 17,909
Deferred charges and other assets 102,889 53,077
500,375 543,640
Total Assets $2,306,653 $2,293,067
The accompanying notes are an integral part of these statements.
PAGE 29
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY 1993 1992
Current Liabilities
Accounts payable and accrued liabilities (Note 2) $634,107 $587,246
Accrued claims costs 138,242 119,798
Current maturities of long-term debt and
capital leases (Notes 3 and 4) 39,246 571
Federal and other income taxes (Note 5) 6,158 2,669
Total Current Liabilities 817,753 710,284
Long-Term Liabilities
Long-term debt and guarantees (Note 3) 297,215 393,677
Long-term obligations under capital leases (Note 4) 111,194 111,643
Deferred income taxes (Note 5) 22,085 47,081
Accrued claims costs 173,999 199,843
Other liabilities and deferred credits (Note 7) 261,032 251,378
Total Liabilities 1,683,278 1,713,906
Shareholders' Equity (Note 6)
Preferred stock, no par value; authorized
5,000,000 shares:
Series A, designated 600,000 shares;
none issued -- --
Series B, 8.5% cumulative, convertible,
$.01 stated value; designated 1,100,000
shares issued 968,655 and
974,152 shares, respectively 10 10
Series C, 8.738% cumulative, convertible,
$.01 stated value; designated and issued
690,000 shares 7 7
Additional paid-in capital, preferred stock 265,182 266,019
Deferred TASP compensation (Note 8) (129,276) (133,354)
Total Preferred Shareholders' Equity 135,923 132,682
Common stock, $.625 par value; authorized
100,000,000 shares; issued 43,340,801 and
43,016,319 shares, respectively 27,090 26,887
Additional paid-in capital, common stock 104,666 99,847
Cumulative translation adjustment 1,229 2,927
Retained earnings 542,811 511,207
Cost of repurchased common stock
(7,638,809 and 7,687,539 shares, respectively) (188,344) (189,546)
Deferred EMSOP compensation (Note 7) -- (4,843)
Total Common Shareholders' Equity 487,452 446,479
Total Shareholders' Equity 623,375 579,161
Total Liabilities and Shareholders' Equity $2,306,653 $2,293,067
The accompanying notes are an integral part of these statements.
PAGE 30
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
Years Ended December 31,
(Dollars in thousands except per share data)
1993 1992 1991
REVENUES $4,191,811 $4,055,589 $4,082,257
COSTS AND EXPENSES
Operating expenses 3,407,996 3,306,732 3,310,184
Selling and administrative expenses 528,022 561,581 624,213
Depreciation 135,636 138,695 146,124
4,071,654 4,007,008 4,080,521
OPERATING INCOME 120,157 48,581 1,736
OTHER INCOME (EXPENSE)
Investment income 5,586 5,041 10,558
Interest expense (30,333) (38,893) (46,703)
Miscellaneous, net (3,969) (25,462) (8,928)
(28,716) (59,314) (45,073)
Income (loss) before income taxes (benefits),
extraordinary charge and cumulative effect
of accounting change 91,441 (10,733) (43,337)
Income taxes (benefits) (Note 5) 40,867 (7,077) (2,916)
Net income (loss) before extraordinary charge
and cumulative effect of accounting change 50,574 (3,656) (40,421)
Extraordinary charge from early retirement
of debt, net of related income tax benefits
of $4,561 -- 7,428 --
Cumulative effect of change in method
of accounting for post retirement benefits,
net of related income tax benefits
of $42,899 (Note 7) -- 69,991 --
Net income (loss) 50,574 (81,075) (40,421)
Preferred stock dividends 18,967 16,653 12,691
NET INCOME (LOSS) APPLICABLE TO
COMMON SHAREHOLDERS $ 31,607 $ (97,728) $ (53,112)
Primary average shares outstanding
(Note 1) 36,187,682 35,195,743 35,033,738
PRIMARY EARNINGS (LOSS) PER SHARE
Net income (loss) before extraordinary
charge and cumulative effect of
accounting change $ 0.87 $ (0.58) $ (1.52)
Extraordinary charge -- (0.21) --
Cumulative effect of accounting change -- (1.99) --
Net income (loss) $ 0.87 $ (2.78) $ (1.52)
FULLY DILUTED EARNINGS (LOSS) PER
SHARE (Note 1) $ 0.77 $ (2.78) $ (1.52)
The accompanying notes are an intergral part of these statements.
PAGE 31
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
YEARS ENDED DECEMBER 31
(In thousands)
1993 1992 1991
Cash and Temporary Cash Investments, Beginning
of Period $152,064 $284,645 $217,680
Cash Flows from Operating Activities
Income (loss) before extraordinary charge
and cumulative effect of accounting change 50,574 (3,656) (40,421)
Adjustments to reconcile income (loss) to net
cash provided by operating activities:
Depreciation and amortization 146,297 166,917 168,527
Decrease in deferred income taxes (20,298) (28,661) (8,004)
Losses (gains) from property disposals, net (607) 6,688 (2,370)
Changes in assets and liabilities:
Receivables (194,320) (16,139) 110,403
Notes receivable from sale of trade accounts 166,399 15 (32,441)
Accrued claims costs (7,400) 20,359 24,956
Accounts payable 17,225 (2,254) (40,601)
Income taxes (9,871) (7,313) 8,082
Accrued liabilities, deferred charges
and other 24,809 (4,177) 4,225
Net Cash Provided by Operating Activities 172,808 131,779 192,356
Cash Flows from Investing Activities
Capital expenditures (201,210) (148,706) (98,073)
Purchases of marketable securities (54,749) (47,865) --
Sales of marketable securities 88,887 -- --
Proceeds from sale of property 12,270 4,097 10,563
Net Cash Used by Investing Activities (154,802) (192,474) (87,510)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt 32,000 -- --
Repayment of long-term debt and capital lease
obligations (45,236) (164,008) (25,514)
Premium on early retirement of debt -- (7,586) --
Proceeds from issuance of preferred stock -- 117,867 --
Proceeds from issuance of common stock 5,387 2,808 324
Payments of preferred dividends (23,177) (20,967) (12,691)
Net Cash Used by Financing Activities (31,026) (71,886) (37,881)
Increase (Decrease) in Cash and Temporary
Cash Investments (13,020) (132,581) 66,965
Cash and Temporary Cash Investments,
End of Period $139,044 $152,064 $284,645
Supplemental Disclosure
Cash paid for income taxes $71,036 $19,053 $ --
Cash paid for interest (net of amounts
capitalized) $30,438 $39,035 $45,199
The accompanying notes are an integral part of these statements.
PAGE 32
<TABLE>
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
(Dollars in thousands)
<CAPTION>
Preferred Stock Series B Preferred Stock Series C Common Stock
Number of Number of Number of
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990 984,958 $10 -- -- 42,797,544 $26,750
Exercise of stock options -- -- -- -- 24,000 15
Recognition of deferred compensation -- -- -- -- -- --
Repurchased common stock issued for
conversion of preferred stock (6,272) -- -- -- -- --
Net loss -- -- -- -- -- --
Preferred dividends ($12.93 per share) -- -- -- -- -- --
Translation adjustment -- -- -- -- -- --
Balance, December 31, 1991 978,686 10 -- -- 42,821,544 26,765
Issuance of preferred stock -- -- 690,000 7 -- --
Exercise of stock options -- -- -- -- 194,775 122
Recognition of deferred compensation -- -- -- -- -- --
Repurchased common stock issued for
conversion of preferred stock (4,534) -- -- -- -- --
Net loss -- -- -- -- -- --
Series B, Preferred dividends ($12.93 per share)
net of tax benefits -- -- -- -- -- --
Series C, Preferred dividends ($15.40 per share) -- -- -- -- -- --
Translation adjustment -- -- -- -- -- --
Balance, December 31, 1992 974,152 10 690,000 7 43,016,319 26,887
Exercise of stock options -- -- -- -- 324,482 203
Recognition of deferred compensation -- -- -- -- -- --
Repurchased common stock issued for
conversion of preferred stock (5,497) -- -- -- -- --
Net income -- -- -- -- -- --
Series B, Preferred dividends ($12.93 per share)
net of tax benefits -- -- -- -- -- --
Series C, Preferred dividends ($15.40 per share) -- -- -- -- -- --
Translation adjustment -- -- -- -- -- --
Balance, December 31, 1993 968,655 $10 690,000 $7 43,340,801 $27,090
<FN>
The accompanying notes are an intergral part of these statements.
</TABLE>
PAGE 33
<TABLE>
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY (continued)
Cost of
<CAPTION> Additional Cumulative Repurchased Deferred TASP
Paid-in Translation Retained Common and EMSOP
Capital Adjustment Earnings Stock Compensation Total
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990 $247,716 $7,410 $662,047 ($192,251) ($169,703) $581,979
Exercise of stock options 309 -- -- -- -- 324
Recognition of deferred compensation -- -- -- -- 12,909 12,909
Repurchased common stock issued for
conversion of preferred stock (1,608) -- -- 1,608 -- --
Net loss -- -- (40,421) -- -- (40,421)
Preferred dividends ($12.93 per share) -- -- (12,691) -- -- (12,691)
Translation adjustment -- 4,983 -- -- -- 4,983
Balance, December 31, 1991 246,417 12,393 608,935 (190,643) (156,794) 547,083
Issuance of preferred stock 117,860 -- -- -- -- 117,867
Exercise of stock options 2,686 -- -- -- -- 2,808
Recognition of deferred compensation -- -- -- -- 18,597 18,597
Repurchased common stock issued for
conversion of preferred stock (1,097) -- -- 1,097 -- --
Net loss -- -- (81,075) -- -- (81,075)
Series B, Preferred dividends ($12.93 per share)
net of tax benefits -- -- (8,303) -- -- (8,303)
Series C, Preferred dividends ($15.40 per share) -- -- (8,350) -- -- (8,350)
Translation adjustment -- (9,466) -- -- -- (9,466)
Balance, December 31, 1992 365,866 2,927 511,207 (189,546) (138,197) 579,161
Exercise of stock options 5,184 -- -- -- -- 5,387
Recognition of deferred compensation -- -- -- -- 8,921 8,921
Repurchased common stock issued for
conversion of preferred stock (1,202) -- -- 1,202 -- --
Net income -- -- 50,574 -- -- 50,574
Series B, Preferred dividends ($12.93 per share)
net of tax benefits -- -- (8,343) -- -- (8,343)
Series C, Preferred dividends ($15.40 per share) -- -- (10,627) -- -- (10,627)
Translation adjustment -- (1,698) -- -- -- (1,698)
Balance, December 31, 1993 $369,848 $1,229 $542,811 ($188,344) ($129,276) $623,375
<FN>
The accompanying notes are an intergral part of these statements.
</TABLE>
PAGE 34
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Principal Accounting Policies
Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of Consolidated Freightways, Inc. (the
Company), its wholly-owned subsidiaries, and those of special purpose
financing corporations.
Recognition of Revenues: Transportation freight charges are recognized
as revenue when freight is received for shipment. The estimated costs of
performing the total transportation service are then accrued.
Cash and Temporary Cash Investments: Included within cash and temporary
cash investments are all items considered to be cash equivalents. The
Company considers highly liquid investments with an original maturity of
three months or less to be cash equivalents.
Trade Accounts Receivable, Net: Trade accounts receivable are net of
allowances of $29,780,000 and $26,198,000 at December 31, 1993 and 1992,
respectively.
Property, Plant and Equipment: Property, plant and equipment are
depreciated on a straight-line basis over their estimated useful lives,
which are generally 25 years for buildings and improvements, 10 years or less
for aircraft, 10 years for most other equipment and 6 or 7 years for revenue
equipment. Leasehold improvements are amortized over the shorter of the
terms of the respective leases or the useful lives of the assets.
Expenditures for equipment maintenance and repairs, except for aircraft,
are charged to operating expenses as incurred; betterments are capitalized.
Gains (losses) on sales of equipment are recorded in operating expenses.
The costs to perform required maintenance inspections of engines and
aircraft frames for leased and owned aircraft are capitalized and amortized
to expense over the shorter of the period until the next scheduled
maintenance or the remaining term of the lease agreement. Accordingly, the
Company has recorded unamortized maintenance of $120,204,000 and $118,184,000
at December 31, 1993 and 1992, respectively. Under the Company's various
aircraft lease agreements, the Company is expected to return the aircraft
with a stipulated number of hours remaining on the aircraft and engines until
the next scheduled maintenance. The Company has recorded $55,468,000 and
$101,351,000, at December 31, 1993 and 1992, respectively, to accrue for this
obligation and any anticipated unusable maintenance expected at the date of
lease return or other disposal. The net amount, which represents the
difference between maintenance performed currently and that required or
remaining at the expiration of the lease or other disposal, is included in
deferred charges and other assets.
Operating Rights and Costs in Excess of Net Assets of Businesses Acquired:
The costs of operating rights and excess of purchase price over net assets
acquired are capitalized and amortized on a straight-line basis up to a 40-
year period.
Income Taxes: The Company follows the liability method of accounting
for income taxes whereby deferred income taxes are recognized for the tax
consequences of "temporary differences" to the extent they are not reduced by
net operating loss carryforwards, by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of certain assets and liabilities.
The cumulative undistributed earnings of the Company's foreign
subsidiaries ($60,881,000 at December 31, 1993), which if remitted are
subject to withholding tax, have been reinvested indefinitely in the
respective foreign subsidiaries' operations unless it becomes advantageous
for tax or foreign exchange reasons to remit these earnings. Therefore, no
withholding or U.S. taxes have been provided. The amount of withholding tax
that would be payable on remittance of the undistributed earnings would
approximate $6 million.
PAGE 35
Accrued Claims Costs: The Company provides for the uninsured costs of
medical, casualty, liability, vehicular, cargo and workers' compensation
claims. Such costs are estimated each year based on historical claims and
unfiled claims relating to operations conducted through December 31. The
long-term portion of accrued claims costs relate primarily to workers'
compensation claims which are payable over several years.
Earnings Per Share: Primary earnings per common share are based upon
the weighted average number of common shares outstanding during each period
after consideration of the dilutive effect of stock options. Fully diluted
earnings per share are similarly computed, but include the dilutive effect of
the Company's TASP shares. The number of shares used for the computation of
fully diluted earnings per share for 1993 is 40,857,876 shares. Fully
diluted loss per share computations for 1992 and 1991 exclude stock options
and TASP shares as their inclusion would be anti-dilutive.
2. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consist of the following:
As of December 31,
1993 1992
(Dollars in thousands)
Accounts payable $206,499 $187,800
Other accrued liabilities 172,702 154,172
Accrued holiday and vacation pay 80,661 78,394
Accrued pension costs 50,728 48,651
Estimated revenue adjustments 26,651 27,329
Wages and salaries 38,409 39,883
Accrued taxes other than income taxes 41,785 34,240
Accrued interest 16,672 16,777
Total accounts payable and
accrued liabilities $634,107 $587,246
3. Long-Term Debt and Guarantees
As of December 31, long-term debt and guarantees consisted of the following:
(Dollars in thousands) 1993 1992
8.75% to 8.88% Medium-Term Notes due
1994 to 1995 ($100 million authorized;
interest payable semi-annually) $40,225 $40,225
9-1/8% Notes Due 1999 (interest payable
semi-annually) 117,705 117,705
7.0% to 12.0% Industrial Revenue
Bonds due through 2014 19,900 34,350
Other debt 1,691 106
TASP Notes guaranteed due through 2009 150,000 150,000
Reimbursable obligations related to
previously owned facilities due
2004 and 2014 6,600 51,600
336,121 393,986
Less current maturities of long-term debt (38,906) (309)
Total long-term debt and guarantees $297,215 $393,677
In 1989, the Company issued $55 million of medium-term notes with
variable terms determined at issuance and $150 million of 9 1/8% notes due
1999. These notes contain certain covenants limiting the incurrence of
additional liens.
Of the $150 million Thrift and Stock Plan (TASP) Notes, $117 million
are subject to earlier repurchase by the Company at the option of the
holders, with a yield protection penalty, in the event the Company's long-
term senior unsecured indebtedness should be rated by both Moody's and S&P as
below investment grade. S&P rates the Company's long-term senior unsecured
indebtedness at a rating below investment grade. Moody's rating of such
indebtedness is investment grade.
PAGE 36
In November 1992, the terms of $33 million of the TASP Notes were
modified to exclude the holders' early repurchase option. In exchange, the
interest rates on the notes were enhanced by .5% and additional financial
covenants.
In 1993, the Company entered into an agreement with several banks to
establish a $75 million receivable sale facility. The agreement involves
the sale of eligible Emery receivables to a special purpose corporation,
Emery Receivables Corporation (ERC), for use as collateral for cash or non-
transferrable promissory notes and related letters of credit. The letters of
credit may be issued only on behalf of Emery Air Freight Corporation and for
a term of one year with an option to renew. The letters of credit bear a fee
of 1.5% per annum. At December 31, 1993, there were $72.2 million of letters
of credit issued and collateralized by receivables under this facility.
Under the terms of the agreement, ERC's assets will be available to satisfy
its obligations prior to any distribution to its stockholders. The agreement
contains various covenants, the most restrictive of which requires the
participating companies to maintain specified amounts of tangible net worth.
In July 1993, the Company entered into an agreement with several banks
to establish a $250 million unsecured credit facility to provide for the
Company's letter of credit and working capital needs. The agreement contains
various restrictive covenants which limit the incurrence of additional
indebtedness, require the Company to maintain minimum amounts of tangible net
worth and fixed charge coverage and restrict capital expenditures of
specified subsidiaries. At December 31, 1993, there were $73.1 million of
letters of credit issued under this agreement. This facility replaces a $250
million receivable sale facility which was terminated in 1993. At December
31, 1992, there were $166,399,000 of purchaser's notes due, for receivables
sold, and a comparible amount of letters of credit issued under this
receivable sale facility.
The Company also entered into a related agreement with a bank in July
1993 to establish a $110 million letter of credit facility to provide for the
Company's standby letter of credit needs. At December 31, 1993, there were
$48.0 million of letters of credit issued under this agreement. The
agreement contains covenants substantially the same as those described in the
related $250 million agreement above. The total amounts outstanding under
the unsecured facilities may not exceed $250 million at any one time.
Based on interest rates currently available to the Company for debt with
similar terms and maturities, the fair value of long-term debt is
approximately 5% above the carrying amount at December 31, 1993.
The aggregate annual maturities and sinking fund requirements of long-
term debt for each of the next five years ending December 31 are: 1994,
$38,906,000; 1995, $3,707,000; 1996, $2,403,000; 1997, $3,100,000, and, 1998
$4,200,000.
The Company's consolidated interest expense as presented on the
statements of consolidated operations is net of interest capitalized of
$1,224,000, $543,000 and $1,703,000 for each of the three years in the period
ended December 31, 1993.
The 1992 statement of consolidated operations reflects $7.4 million of
expense for the early retirement of indebtedness under Secured Note Purchase
Agreement. All other debt retirement was at or near par.
PAGE 37
4. Leases
The Company and its subsidiaries are obligated under various non-
cancelable leases which expire at various dates through 2011.
The principal capital lease covers a sorting facility in Dayton, Ohio
(Facility) for a 30-year lease term. Included in other equipment and
leasehold improvements are $83,741,000 as of December 31, 1993 and 1992,
related to this facility. The accumulated depreciation at December 31, 1993
and 1992 was $30,351,000 and $24,677,000, respectively. The Facility was
financed by City of Dayton, Ohio revenue bonds Series A, B, C and D (Bonds).
In September 1993, Emery redeemed the Series B Bonds and subsequently issued
Series E and F Bonds in the same amount, also maturing in 2009. The Series
C, D, E and F Bonds bear variable rates of interest, approximately 3% at
December 31, 1993. The Series A Bonds are due through 2009 with an effective
interest rate of 8%. Rental payments under this lease are equivalent to debt
service on the Bonds. The Bonds have various call provisions at Emery's
option. Series A Bonds are secured by a debt service reserve fund of $7
million which is classified as restricted funds in the consolidated balance
sheets, a first lien on the leasehold interests of Emery in the Facility and
the leased real property pursuant to a mortgage, and a pledge agreement of
the stock of a wholly-owned subsidiary of Emery, which is the lessee or
sublessee of certain aircraft. The Series C, D, E and F Bonds are secured by
irrevocable letters of credit. The Series E and F bonds are also secured by
a junior lien on the Facility.
Future minimum lease payments under all leases with initial or remaining
non-cancelable lease terms in excess of one year, at December 31, 1993, are
as follows:
Capital Operating
(Dollars in thousands) Leases Leases
Year ending December 31
1994 $7,927 $137,915
1995 7,723 115,869
1996 7,723 88,187
1997 7,723 64,897
1998 7,723 43,394
Thereafter 193,880 92,485
Total minimum lease payments 232,699 $542,747
Less amount representing interest (121,165)
Present value of minimum lease
payments 111,534
Less current maturities of obligations
under capital leases (340)
Long-term obligations under capital
leases $111,194
Rental expense for operating leases is comprised of the following:
1993 1992 1991
(Dollars in thousands)
Minimum rentals $185,425 $176,832 $186,909
Less:
Amortization of deferred
gains (1,785) (1,785) (1,785)
Sublease rentals (10,886) (7,727) (10,969)
$172,754 $167,320 $174,155
PAGE 38
5. Income Taxes
The components of pretax income (loss) and income taxes (benefits) are
as follows:
1993 1992 1991
(Dollars in thousands)
Pretax income (loss)
U.S. corporations $84,700 $(10,736) $(48,856)
Foreign corporations 6,741 3 5,519
Total pretax income (loss) $91,441 $(10,733) $(43,337)
Income taxes (benefits)
Current
U.S. federal $ 63,956 $12,681 $ 3,474
State and local 7,089 6,457 4,873
Foreign 5,475 6,090 4,046
76,520 25,228 12,393
Deferred
U.S. federal (31,616) (14,648) (9,580)
Tax credit benefits -- (7,600) --
State and local (3,642) (3,705) 2,130
Foreign (395) (6,352) 232
Utilization of net
operating loss carryover -- -- (8,091)
(35,653) (32,305) (15,309)
Total income taxes
(benefits) $ 40,867 $ (7,077) $ (2,916)
The Company elected to prospectively adopt Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109),
effective January 1, 1992. The adoption had an immaterial effect on the 1991
net loss applicable to common shareholders. However, the 1991 income tax
benefit would be lower by approximately $4.7 million with a corresponding
reduction to the preferred dividends. This offset represents the tax benefit
related to the TASP preferred dividends which SFAS 109 requires to be
reported as a reduction of the preferred dividend.
Under SFAS 109, deferred tax assets and liabilities are adjusted for the
effect changes in tax laws or rates. The increase in U.S. federal tax rate
to 35% effective January 1, 1993 resulted in an increase in the deferred tax
asset of $1.6 million and a corresponding reduction in 1993 deferred tax
expense.
The Company has net operating loss carryforwards from acquired
subsidiaries of approximately $103 million, which expire between 2002 and
2003. The net operating loss carryforwards are restricted to offsetting
future years' U.S. federal income tax liabilities of the subsidiary which
generated the losses. If realized, this benefit will be used to reduce cost
in excess of net assets of businesses acquired.
The components of deferred tax assets and liabilities on the balance
sheets at December 31, relate to the following:
(Dollars in thousands)
Deferred tax assets 1993 1992
Reserves for accrued claims costs $82,663 $67,863
Reserves for post retirement health benefits 50,235 42,899
Other reserves not currently deductible 38,741 25,577
Reserves for employee benefits 35,311 22,954
Foreign tax and alternative minimum tax
credit carryovers 1,011 15,910
Other -- 3,059
207,961 178,262
Deferred tax liabilities
Depreciation 87,971 95,709
Tax benefits from leasing transactions 20,013 20,642
Unearned revenue 9,171 7,129
Other 4,433 3,979
121,588 127,459
Net deferred tax asset $86,373 $50,803
Deferred tax assets and liabilities in the balance sheet are classified
in accordance with SFAS 109, which generally requires the classification be
based on the related asset or liability creating the deferred tax. Deferred
taxes not related to a specific asset or liability are classified based on
the estimated period of reversal.
PAGE 39
Income tax benefits vary from the amounts calculated by applying the
U.S. statutory income tax rate to the pretax income (loss) as set forth in
the following reconciliation:
1993 1992 1991
U.S. statutory tax rate 35.0% (34.0)% (34.0)%
State income taxes (net of
federal income tax benefit) 2.5 5.1 12.9
Foreign taxes in excess of
U.S. statutory rate 3.0 (2.4) 5.5
Dividends paid to TASP (.7) (4.0) (9.9)
Non-deductible operating
expenses 1.9 9.3 5.0
Amortization of cost in excess
of net assets of businesses
acquired 3.7 31.2 7.6
Tax rate change impact on
deferred expense (1.7) -- --
Foreign tax credit benefits, net (1.0) (70.8) --
Other, net 2.0 (.3) 6.2
Effective income tax rate 44.7% (65.9)% (6.7)%
6. Shareholders' Equity
In 1986, the Board of Directors designated a series of 600,000 shares as
Series A Participating Preferred Stock from the Company's 5,000,000 shares of
preferred stock, no par value, which had previously been authorized but
unissued. The Board also declared a dividend of one preferred stock purchase
right for each outstanding share of the Company's common stock. Under
certain conditions, each right may be exercised to purchase one one-hundredth
share of the Company's Series A Participating Preferred Stock at an exercise
price of $140 per right. The rights may be exercisable only after a party
acquires beneficial ownership of 20% or more of the Company's common stock or
announces an offer for 30% or more of the Company's common stock. The
rights, which do not have voting rights, expire November 7, 1996 and may be
redeemed at the Company's option for $.01 per right at any time prior to
their expiration or the acquisition of 20% or more of the Company's common
stock. In the event that the Company is acquired in a merger or other
business combination transaction, each right that has not previously been
exercised will entitle its holder, upon exercise thereof at the exercise
price, that number of shares of common stock of the surviving company which
at the time of such transaction would have a market value of two times the
exercise price of the right. The Company intends to redeem these rights on
November 7, 1995.
In 1989, as part of an amendment to the TASP, the Board of Directors
authorized the expenditure of up to $150,000,000 to repurchase up to
7,500,000 shares of the Company's common stock. Under such authorization,
the Company repurchased 4,859,029 shares of its outstanding common stock in
open market transactions for an aggregate purchase price, including
commissions, of approximately $150 million.
In 1989, as part of an amendment to the TASP, the Board of Directors
designated a series of 1,100,000 preferred shares as Series B Cumulative
Convertible Preferred Stock, $.01 stated value. The Series B preferred stock
is convertible into common stock at the option of the holder at the rate of
four shares for each share of preferred stock subject to antidilution
adjustments in certain circumstances. Holders of the Series B preferred
stock are entitled to vote with the common stock as a single class on all
matters upon which the common stock is entitled to vote and are entitled to
a number of votes in such circumstances equal to the product of (a) 1.3
multiplied by (b) the number of shares of common stock into which the Series
B preferred stock is convertible (as described above) on the record date of
such vote. Holders of the Series B preferred stock are also entitled to vote
separately as a class on certain other matters. The TASP trustee is required
to vote the allocated shares based upon instructions from the participants;
unallocated shares are voted in proportion to the voting instructions
received from the participants with allocated shares. The Series B preferred
stock is senior to the Company's Series A and C preferred stock with respect
to dividends and liquidation. The Series B preferred stock is also subject
to automatic conversion into common stock in the manner described in Note 8.
PAGE 40
In 1992, the Company issued 6,900,000 depository shares each
representing one-tenth of a share of Series C Conversion Preferred Stock, no
par value. The depository shares were sold at a price of $17.625. The net
capital proceeds of $117.9 million were used to retire debt. The depository
shares provide for cumulative quarterly dividends at a per share rate of
$1.54 per annum. Each depository share will automatically convert into one
share of common stock, plus unpaid dividends in the form of cash or
additional common stock, on March 15, 1995. The Company has the option to
call any or all of the depository shares prior to March 15, 1995 in exchange
for shares of common stock having a market value at issuance equal to $30.17
and declining, by January 15, 1995, to $25.55 plus cash or common stock equal
to unpaid dividends. In the event of a merger or consolidation, the holders
will receive amounts substantially the same as the amounts determined under
the terms outlined above for a Company-initiated call. Holders of the shares
will have no voting rights, except as otherwise provided under designated
circumstances. In the event of a liquidation or winding up of the Company,
an amount equal to the initial offering price plus all accrued and unpaid
dividends will be provided to holders of the Series C Preferred Stock after
payment of all amounts due to the holders of the Series B Preferred Stock.
The Series C Preferred Stock is senior to the Company's Series A Preferred
and Common Stock with respect to dividends and liquidation.
7. Employee Benefit Plans
The Company has a non-contributory defined benefit pension plan (the
Pension Plan) covering non-contractual employees in the United States.
Although it is the Company's funding policy to contribute the minimum
required tax-deductible contribution for the year, it may increase its
contribution above the minimum if appropriate to its tax and cash position
and the plan's funded status. Benefits under the Pension Plan are based on
a career average final five-year pay formula.
The Company's annual pension provision is based on an independent
actuarial computation. Based on that computation, a pension provision of
$14,165,000 in 1993, $18,045,000 in 1992 and $21,466,000 in 1991 was
required. Approximately 85% of the Pension Plan assets are invested in
publicly traded stocks and bonds. The remainder is invested in temporary
cash investments, real estate funds and investment capital funds.
Following is additional information relating to the Pension Plan at
December 31:
1993 1992
(Dollars in thousands)
Pension Plan assets at market
value $326,915 $279,516
Less actuarial present value of
projected benefit obligation
Vested benefits (250,564) (212,917)
Non-vested benefits (27,299) (23,200)
Accumulated benefit obligation (277,863) (236,117)
Effect of projected future
compensation levels (88,922) (83,321)
Projected benefit obligation (366,785) (319,438)
Pension Plan assets under projected
benefit obligation (39,870) (39,922)
Unrecognized prior service costs 29,897 32,290
Unrecognized net gain (7,174) (8,999)
Unrecognized net asset at
transition, being amortized
over 18 years (22,329) (24,562)
Pension Plan liability $(39,476) $(41,193)
Weighted average discount rate 7.5% 8.0%
Expected long-term rate of return
on assets 9.5% 10.0%
Rate of increase in future
compensation levels 5.5% 6.0%
PAGE 41
Net pension cost includes the following:
1993 1992 1991
(Dollars in thousands)
Cost of benefits earned during
the year $15,789 $ 18,236 $ 17,266
Interest cost on projected
benefit obligation 26,378 24,857 23,725
Actual gain arising from
plan assets (41,891) (12,976) (44,910)
Amortization of unrecognized net
asset at transition (2,233) (2,233) (2,233)
Amortization of unrecognized
net (gain) loss (111) -- 308
Deferred investment gain (loss) 13,658 (12,397) 24,752
Amortization of unrecognized prior
service cost 2,575 2,558 2,558
Net pension cost $14,165 $ 18,045 $ 21,466
The Company's Pension Plan includes programs to provide additional
benefits for compensation excluded from the basic Pension Plan. The annual
provision for these programs is based on independent actuarial computations
using assumptions consistent with the Pension Plan. In 1993 and 1992, the
total pension liability was $10,202,000 and $10,681,000, respectively, and
the total pension cost was $1,633,000 in 1993, $1,767,000 in 1992 and
$1,584,000 in 1991.
Approximately 55% of the Company's employees are covered by union-
sponsored, collectively bargained, multi-employer pension plans. The Company
contributed and charged to expense $98,090,000 in 1993, $97,048,000 in 1992
and $91,693,000 in 1991 for such plans. Those contributions were made in
accordance with negotiated labor contracts and generally were based on time
worked.
In the fourth quarter of 1992, the Company elected to prospectively
adopt, effective January 1, 1992, the Financial Accounting Standards Board
Statement No. 106, "Employer's Accounting for Post Retirement Benefits Other
Than Pensions" (SFAS 106). This statement requires the accrual of the total
cost of post retirement benefits during the period up to the date employees
are eligible to retire. Previously, those costs were recorded at the time
the benefits were provided. Adoption of SFAS 106 had no impact on the
Company's cash flows and the Company continues to fund benefits as claims are
paid. The Company made benefit payments totaling $3,709,000 in 1993,
$4,170,000 in 1992 and $2,588,000 in 1991.
The Company's retiree health plan provides benefits to all non-
contractual employees at least 55 years of age with 10 years or more of
service. In 1992, the plan was amended to modify benefits for all future
participants unless they were eligible to retire at January 1, 1993. The
most significant amendments limit the benefits for participants to a defined
dollar amount based on age and years of service and eliminate employer-
subsidized retiree health care benefits for employees hired on or after
January 1, 1993.
At adoption of SFAS 106 in 1992, the Company elected to take $112.9
million as a one-time charge in the statement of consolidated operations net
of related income tax benefits. The following information sets forth the
total post retirement benefit amounts accrued in Other Liabilities and
Deferred Credits in the Company's consolidated balance sheets at December 31.
(Dollars in thousands)
1993 1992
Accumulated post retirement benefit obligation
Retirees and other inactives $62,161 $64,094
Participants currently eligible to retire 29,699 32,870
Other active participants 26,085 21,626
117,945 118,590
Unrecognized valuation gain 15,349 --
Accrued post retirement benefit cost $133,294 $118,590
Weighted average discount rate 7.5% 8.0%
Average health care cost trend rate
First year 12.5% 13.5%
Declining to (year 2000) 6.5% 6.5%
PAGE 42
Net periodic post retirement benefit costs include the following
components:
(Dollars in thousands) 1993 1992
Cost of benefits earned during the year $2,877 $3,340
Interest cost on accumulated post retirement
obligation 8,683 9,746
Amortization of unrecognized net gain (411) --
Net periodic post retirement benefit cost $11,149 $13,086
The increase in the accumulated post retirement benefit obligation and
the net periodic post retirement benefit cost, given a 1 percent increase in
the health care cost trend rate assumption, would be 9.6% and 10.8%,
respectively.
In 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 112, "Employer's Accounting for Post-
employment Benefits" (SFAS 112). This statement requires the accrual of
costs for benefits provided to former or inactive employees after
termination, but before retirement. The Company's existing accounting
practice is substantially the same as this new statement. As such, the
adoption of this statement in 1994 will not have a material impact on the
Company's financial statements.
The Company and each of its subsidiaries have adopted various plans
relating to the achievement of specific goals to provide incentive
compensation for designated employees. Total incentive compensation earned
by the participants of those plans is as follows:
(Dollars in thousands) 1993 1992 1991
Incentive compensation $54,600 $22,509 $ 9,365
Participants 17,200 8,900 5,400
All shares under the CF Common Stock Fund (EMSOP) have been allocated to
plan participants at December 31, 1993.
8. Thrift and Stock Plan
On January 1, 1988, the Company adopted a 401(k) Plan for non-
contractual U.S. employees to which it makes contributions to be used to
purchase the Company's common stock. The Company's contribution vests
immediately with the employee and totaled $7,248,000 in 1993, $6,852,000 in
1992 and $6,675,000 in 1991. The Company's contributions were substantially
all in the form of preferred stock as described below.
On May 18, 1989, the Company issued 986,259 shares of Series B
Cumulative Convertible Preferred Stock to the Consolidated Freightways Thrift
and Stock Plan (TASP) for an aggregate purchase price of $150,010,000. The
Series B preferred stock is issuable only to the TASP trustee. Upon
termination of an employee's participation in the TASP, the Series B
preferred stock is automatically converted into common stock at a rate
generally equal to that number of shares of common stock that could be
purchased for $152.10, but not less than the minimum conversion rate of four
shares of common stock for each share of Series B preferred stock.
The preferred stock is allocated among participants by the Company
matching participants' contributions at a rate of 50% of the first three
percent of the participants' basic compensation. The total preferred shares
allocated annually are based upon the principal and interest method. If the
allocated preferred shares do not meet the Company's matching requirement, an
additional cash contribution is made to the TASP. Deferred compensation
expense is recognized as the preferred shares are allocated to participants;
the amount recognized is equivalent to the interest on the TASP debt plus
shares allocated to participants less preferred dividends paid to the TASP.
During 1993, 1992 and 1991, $5,598,000, $5,359,000, and $6,506,000,
respectively, of deferred compensation expense was recognized. The TASP
guarantees are reduced as principal is paid.
At December 31, 1993, the TASP owned 968,655 shares of Series B
preferred stock, of which 137,631 shares have been allocated to employees.
At December 31, 1993,
PAGE 43
the Company has reserved, authorized and unissued
common stock adequate to satisfy the conversion feature of the Series B
preferred stock.
9. Stock Option Plans
Officers and key employees have been granted options under the Company's
stock option plans to purchase common stock of the Company at prices not less
than the fair market value of the stock on the date of grant. Outstanding
options become fully exercisable one year after date of grant; any
unexercised options expire after 10 years.
A stock option plan under which options may be granted to purchase up to
3,000,000 shares of common stock of the Company became effective January 1,
1988. In 1992, the plan was amended to include authority to grant an
additional 3,000,000 options.
Following is a summary of stock option unit data:
1993 1992 1991
Outstanding at January 1 3,552,068 3,516,634 3,186,847
Granted 650,000 300,000 580,000
Exercised (324,482) (194,775) (24,000)
Expired, canceled or
surrendered (63,987) (69,791) (226,213)
Outstanding at December 31 3,813,599 3,552,068 3,516,634
Options which became exercisable
during the year 300,000 580,000 2,211,725
Options exercisable at
December 31 3,163,599 3,252,068 2,936,634
Shares reserved at December 31
For future option grants 2,119,200 2,725,975 87,150
For issuance (including future,
option grants, if any) 5,932,799 6,278,043 3,603,784
Exercise prices related to options outstanding at December 31, 1993
ranged from $10.75 to $32.75 per share and aggregated $65,420,341. Exercise
prices related to options exercised during 1993 ranged from $12.19 to $19.94,
during 1992 were $12.19 to $16.40 and during 1991 were $13.50.
10. Contingencies
The Company and its subsidiaries are defendants in various lawsuits
incidental to their businesses. It is the opinion of management that the
ultimate outcome of these actions will not have a material impact on the
Company's financial position or results of operations.
11. Industry Group Analysis and Foreign Operations
The operations of the Company and its subsidiaries, which are conducted
primarily in the United States and Canada, encompass principally three
business segments: Long-Haul Trucking (CF MotorFreight), Regional Trucking
and Intermodal (Con-Way Transportation Services), and Air Freight (Emery
Worldwide). The activities of these groups are fully described elsewhere in
this Annual Report. Revenues and expenses are allocated between U.S. and
international depending on whether the shipments are between locations within
the United States or between locations where one or both are outside of the
United States.
Following is an analysis by geographic and industry group. Operating
income is net of general corporate expenses, a portion of which has been
allocated to subsidiaries on a revenue and capital basis. Intersegment
revenues are not material. The identifiable assets of the parent consist
principally of cash, temporary cash investments and receivables.
GEOGRAPHIC GROUP INFORMATION
(Dollars in thousands)
Consolidated U.S. International
Year Ended December 31, 1993
Revenues $4,191,811 $3,665,654 $526,157
Operating income 120,157 113,179 6,978
Identifiable assets 2,306,653 2,221,772 84,881
Year Ended December 31, 1992
Revenues $4,055,589 $3,542,521 $513,068
Operating income (loss) 48,581 56,437 (7,856)
Identifiable assets 2,293,067 2,198,386 94,681
Year Ended December 31, 1991
Revenues $4,082,257 $3,561,417 $520,840
Operating income (loss) 1,736 (1,797) 3,533
Identifiable assets 2,285,466 2,140,027 145,439
PAGE 44
<TABLE>
Consolidated Freightways, Inc. and Subsidiaries
INDUSTRY GROUP INFORMATION
<CAPTION>
(Dollars in thousands) Industry Group
----------------------------------------
Con-Way
CF Motor Transportation Emery
Consolidated Corporate Freight Services Worldwide
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Revenues $4,191,811 $2,112,237 $818,301 $1,261,273
Operating expenses 3,407,996 1,770,148 615,585 1,022,263
Selling and administrative expenses 528,022 226,405 101,144 200,473
Depreciation 135,636 83,972 29,718 21,946
Operating income 120,157 $31,712 $71,854 $16,591
Other income (expense) (28,716)
Income before income taxes $91,441
Capital expenditures $201,210 $2,789 $52,470 $63,823 $82,128
Identifiable assets $2,306,653 $195,583 $864,748 $338,567 $907,755
Year Ended December 31, 1992
Revenues $4,055,589 $2,184,190 $724,195 $1,147,204
Operating expenses 3,306,732 1,803,854 532,476 970,402
Selling and administrative expenses 561,581 269,849 105,001 186,731
Depreciation 138,695 83,002 32,971 22,722
Operating income (loss) 48,581 $27,485 $53,747 ($32,651)
Other income (expense) (59,314)
Loss before income tax benefits ($10,733)
Capital expenditures $148,706 $1,267 $91,026 $36,317 $20,096
Identifiable assets $2,293,067 $392,120 $803,300 $228,565 $869,082
Year Ended December 31, 1991
Revenues $4,082,257 $2,142,603 $639,443 $1,300,211
Operating expenses 3,310,184 1,713,201 458,320 1,138,663
Selling and administrative expenses 624,213 292,099 114,778 217,336
Depreciation 146,124 85,312 33,027 27,785
Operating income (loss) 1,736 $51,991 $33,318 ($83,573)
Other income (expense) (45,073)
Loss before income tax benefits ($43,337)
Capital Expenditures $98,073 $15,222 $60,977 $10,598 $11,276
Identifiable assets $2,285,466 $243,033 $935,471 $233,695 $873,267
</TABLE>
PAGE 45
<TABLE>
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
12 Quarterly Financial Data (Unaudited)
(Dollars in thousands except per share data)
<CAPTION>
1993 - Quarter Ended March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
Revenues $992,981 $1,020,224 $1,067,003 $1,111,603
Operating income 21,350 25,315 38,448 35,044
Income before income taxes 15,481 16,937 31,678 27,345
Income taxes 7,213 8,545 14,599 10,510
Net income applicable to common
shareholders 3,519 3,645 12,382 12,061
Net income per share:
Primary 0.10 0.10 0.35 0.33
Fully diluted 0.09 0.09 0.31 0.29
Market price $16.25-$20.38 $14.75-$18.75 $13.63-$16.88 $15.50-$24.00
1992 - Quarter Ended March 31* June 30* September 30* December 31
Revenues $990,627 $1,002,767 $1,037,843 $1,024,352
Operating income 11,093 16,206 17,819 3,463
Income (loss) before income
tax (benefits) (1,652) 5,288 8,334 (22,703)
Income taxes (benefits) (833) (4,510) 6,771 (8,505)
Extraordinary charge -- 7,428 -- --
Cumulative effect of
accounting change 69,991 -- -- --
Net loss applicable to common
shareholders (73,340) (2,495) (3,269) (18,624)**
Net income (loss) per share
Net income (loss) before extraordinary
charge and cumulative effect of
accounting change (0.10) 0.14 (0.09) (0.53)
Extraordinary charge -- (0.21) -- --
Cumulative effect of
accounting change (1.99) -- -- --
Net loss (2.09) (0.07) (0.09) (0.53)
Market price $14.38-$19.63 $12.63-$19.00 $12.50-$14.75 $13.00-$19.13
<FN>
* Restated for the prospective adoption, effective January 1, 1992, of SFAS No. 109 and SFAS No. 106 in the second and
and fourth quarters, respectively. The effects on the losses per common share from what was previously
reported were $(2.00), $(.03) and $(.04) for the first, second and third quarters, respectively.
**Includes special charges of $27.8 million for the restructuring of CF MotorFreight, write off of Canadian operating
authorities , write down of properties and certain other intangibles and related tax benefits.
</TABLE>
PAGE 46
<TABLE>
Ten Year Financial Summary
Consolidated Freightways, Inc. and Subsidiaries
Years Ended December 31
(Dollars in thousands except per share data)
<CAPTION>
SUMMARY OF OPERATIONS: 1993 1992 1991 1990 1989(d)
<S> <C> <C> <C> <C> <C>
Revenues $4,191,811 $4,055,589 $4,082,257 $4,208,527 $3,760,193
CF MotorFreight 2,112,237 2,184,190 2,142,603 2,185,271 1,996,681
Con-Way Transportation Services 818,301 724,195 639,443 638,098 558,517
Emery Worldwide 1,261,273 1,147,204 1,300,211 1,385,158 1,204,995
Operating income (loss) 120,157 48,581 1,736 6,044 50,855
CF MotorFreight 31,712 27,485 (a) 51,991 108,462 107,895
Con-Way Transportation Services 71,854 53,747 33,318 25,547 (c) 40,365
Emery Worldwide 16,591 (32,651) (83,573) (127,965) (97,405)
Depreciation and amortization 146,297 166,917 168,527 170,757 159,282
Investment income 5,586 5,041 10,558 2,531 5,418
Interest expense 30,333 38,893 46,703 40,178 38,471
Income (loss) before income taxes 91,441 (10,733) (43,337) (32,678) 24,297
Income taxes (benefits) 40,867 (7,077) (2,916) (4,697) 15,685
Net income (loss) applicable to common
shareholders 31,607 (97,728)(b) (53,112) (40,727) 12,048(e)
Cash from operations 172,808 131,779 192,356 194,821 81,031
PER SHARE
Net income (loss) applicable to common
shareholders .87 (2.78)(b) (1.52) (1.16) .33(e)
Dividends on common stock -- -- -- .530 1.040
Common shareholders' equity 13.47 12.69 15.33 16.50 17.13
FINANCIAL POSTION
Cash and temporary cash investments 139,044 152,064 284,645 217,680 111,081
Property, plant and equipment, net 910,444 886,834 896,922 953,504 1,016,325
Total assets 2,306,653 2,293,067 2,285,466 2,412,003 2,391,826
Capital expenditures 201,210 148,706 98,073 141,784 255,793
Long-term debt and capital leases 408,409 505,320 646,655 673,611 652,169
Shareholders' equity 623,375 579,161 547,083 581,979 630,122
RATIOS AND STATISTICS
Current ratio 1.1 to 1 1.2 to 1 1.2 to 1 1.2 to 1 1.2 to 1
Income (loss) as % of revenues .75% (2.4)% (1.3)% (1.0)% .3%
Effective income tax rate 44.7% (65.9%) (6.7%) (14.4)% 64.6%
Long-term debt and capital leases as % of
total capitalization 40% 47% 54% 54% 51%
Return on average invested capital 5% -- (3)% (2)% 2%
Return on average shareholders' equity 8% (1)% (7)% (7)% 2%
Common dividends as % of net income (loss) -- -- -- 46% 315%
Average shares outstanding 36,187,682 35,195,743 35,033,738 34,988,778 36,791,182
Market price range $24.00-$13.63 $19.63-$12.50 $21.50-$9.50 $26.88-$10.75 $37.75-$25.25
Number of common shareholders 15,785 15,260 14,300 14,500 13,427
Number of employees 39,100 37,900 37,700 41,300 40,800
<FN>
(a) Includes special charges of $17.3 million related to the restructuring of CFMotorFreight
and write off of Canadian operating authority.
(b) Includes $70 million ($1.99 per share) cumulative effect of change in method of accounting for post retirement
benefits and $7.4 million ($.21 per share) extraordinary charge from early retirement of debt.
Also included are special charges of $17.3 million, $10.5 million of charges for the write down of properties held for
sale and certain other intangibles and related tax benefits.
(c) Includes one-time subsidiary closure costs of $11.3 million.
(d) Includes the results of operations of Emery Air Freight Corporation since its acquisition in April.
(e) Includes $11.3 million ($.31 per share) cumulative effect of change in method of accounting for income taxes.
</TABLE>
PAGE 47
<TABLE>
Ten Year Financial Summary (continued)
<CAPTION>
SUMMARY OF OPERATIONS 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C>
Revenues $2,689,075 $2,296,911 $2,124,467 $1,882,142 $1,704,909
CF MotorFreight 1,836,141 1,621,148 1,524,336 1,382,637 1,330,856
Con-Way Transportation Services 463,918 370,940 318,841 233,930 149,300
Emery Worldwide 389,016 304,823 281,290 265,575 224,753
Operating income (loss) 162,727 101,248 135,045 112,235 118,202
CF MotorFreight 119,116 92,456 128,927 109,005 106,359
Con-Way Transportation Services 33,373 6,404 11,359 (731) (5,667)
Emery Worldwide 10,238 2,388 (5,241) 3,961 17,510
Depreciation and amortization 116,204 102,165 94,262 85,953 71,037
Investment income 13,950 25,182 16,942 22,468 20,991
Interest expense 6,324 6,016 7,298 6,159 7,379
Income (loss) before income taxes 173,330 119,311 147,639 127,408 128,735
Income taxes (benefits) 60,177 44,741 58,530 48,117 54,270
Net income (loss) applicable to common
shareholders 113,153 74,570 89,109 79,291 74,465
Cash from operations 243,595 206,841 224,242 176,356 153,082
PER SHARE
Net income (loss) applicable to common
shareholders 3.00 1.93 2.31 2.06 1.88
Dividends on common stock .960 .880 .798 .717 .650
Common shareholders' equity 20.32 18.16 17.22 15.69 14.42
FINANCIAL POSTION
Cash and temporary cash investments 134,783 161,590 153,334 119,614 141,594
Property, plant and equipment, net 760,349 622,181 573,092 537,659 465,639
Total assets 1,536,099 1,377,329 1,288,063 1,134,430 1,060,574
Capital expenditures 258,368 155,127 136,278 164,862 122,977
Long-term debt and capital leases 47,677 50,935 58,700 62,539 62,645
Shareholders' equity 766,248 687,857 665,048 603,794 552,836
RATIOS AND STATISTICS
Current ratio 1.3 to 1 1.4 to 1 1.5 to 1 1.6 to 1 1.5 to 1
Income (loss) as % of revenues 4.2% 3.2% 4.2% 4.2% 4.4%
Effective income tax rate 34.7% 37.5% 39.6% 37.8% 42.2%
Long-term debt and capital leases
as % of total capitalization 6% 7% 8% 9% 10%
Return on average invested capital 12% 9% 11% 10% 11%
Return on average shareholders' equity 16% 11% 14% 14% 14%
Common dividends as % of
net income (loss) 32% 46% 35% 35% 35%
Average shares outstanding 37,712,402 38,579,572 38,586,375 38,428,242 39,680,006
Market price range $34.75-$25.25 $41.25-$22.75 $36.50-$23.67 $27.50-$18.67 $19.58-$13.42
Number of common shareholders 12,789 12,202 11,622 10,901 10,089
Number of employees 29,400 26,300 24,600 21,700 20,600
</TABLE>
EXHIBIT 22
CONSOLIDATED FREIGHTWAYS, INC.
SIGNIFICANT SUBSIDIARIES OF THE COMPANY
December 31, 1993
The Company and its significant subsidiaries were:
State or
Percent of Province or
Stock Owned Country of
Parent and Significant Subsidiaries by Company Incorporation
- ----------------------------------- --------------- ---------------
Consolidated Freightways, Inc. Delaware
Significant Subsidiaries of Consolidated Freightways, Inc.
- ----------------------------------------------------------
Consolidated Freightways
Corporation of Delaware 100 Delaware
Canadian Freightways, Limited 100 Alberta,
Canada
Milne & Craighead Customs Brokers
(Canada) Ltd. 100 Canada
Canadian Freightways Eastern Limited 100 Ontario,
Canada
Milne & Craighead Customs Brokers
(USA), Inc. 100 Delaware
KAM Container Line (USA), Inc. 100 Delaware
United Terminals LTD. 100 Canada
Menlo Logistics, Inc. 100 California
Road Systems, Inc. 100 California
Willamette Sales Co. 100 Oregon
Con-Way Transportation Services, Inc. 100 Delaware
Con-Way Western Express, Inc. 100 Delaware
Con-Way Central Express, Inc. 100 Delaware
Con-Way Southern Express, Inc. 100 Delaware
Con-Way Southwest Express, Inc. 100 Delaware
Con-Way Intermodal, Inc. 100 Delaware
Emery Air Freight Corporation 100 Delaware
Emery Worldwide Airlines, Inc. 100 Nevada
