PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.
Yes xx No
Number of shares of Common Stock, $.625 par value,
outstanding as of October 31, 1995 : 43,535,593
PAGE 2
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-Q
Quarter Ended September 30, 1995
___________________________________________________________________________
___________________________________________________________________________
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1995 and December 31, 1994 3
Statements of Consolidated Income -
Three and Nine Months Ended
September 30, 1995 and 1994 5
Statements of Consolidated Cash Flows -
Nine Months Ended September 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
PAGE 3
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1995 1994
(Dollars in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 101,955 $ 95,711
Trade accounts receivable, net of
allowances 760,358 659,191
Other accounts receivable 69,649 37,021
Operating supplies, at lower of average
cost or market 50,201 41,719
Prepaid expenses 77,482 71,277
Deferred income taxes 128,807 126,546
Total Current Assets 1,188,452 1,031,465
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 178,340 163,965
Buildings and improvements 543,289 510,568
Revenue equipment 1,065,304 979,002
Other equipment and leasehold improvements 389,036 368,809
2,175,969 2,022,344
Accumulated depreciation and amortization (1,118,923) (1,077,752)
1,057,046 944,592
OTHER ASSETS
Restricted funds 14,213 12,861
Deposits and other assets 75,165 80,626
Unamortized aircraft maintenance, net 113,799 81,010
Costs in excess of net assets of businesses
acquired, net of accumulated amortization 315,159 322,169
518,336 496,666
TOTAL ASSETS $2,763,834 $2,472,723
The accompanying notes are an integral part of these statements.
PAGE 4
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1995 1994
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 273,524 $ 253,584
Accrued liabilities 571,871 542,797
Accrued claims costs 140,933 138,800
Current maturities of long-term debt and
capital leases 4,015 3,712
Short-term borrowings 80,000 --
Federal and other income taxes 11,465 6,275
Total Current Liabilities 1,081,808 945,168
LONG-TERM LIABILITIES
Long-term debt and guarantees 384,522 286,833
Long-term obligations under capital leases 110,981 111,024
Accrued claims costs 164,945 163,849
Deferred income taxes 45,093 38,034
Other liabilities and deferred credits 251,253 254,186
Total Liabilities 2,038,602 1,799,094
SHAREHOLDERS' EQUITY
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 956,011 and
962,748 shares, respectively 10 10
Series C, 8.738% cumulative, convertible,
$.01 stated value; designated and
issued none and 690,000 shares, respectively -- 7
Additional paid-in capital, preferred stock 145,400 264,284
Deferred TASP compensation (116,208) (120,646)
Total Preferred Shareholders' Equity 29,202 143,655
Common stock, $.625 par value; authorized
100,000,000 shares; issued 51,088,547
and 43,955,510 shares, respectively 31,930 27,472
Additional paid-in capital, common stock 232,738 116,209
Cumulative translation adjustment (1,722) (1,170)
Retained earnings 619,475 574,885
Cost of repurchased common stock
(7,559,593 and 7,601,382 shares,
respectively) (186,391) (187,422)
Total Common Shareholders' Equity 696,030 529,974
Total Shareholders' Equity 725,232 673,629
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,763,834 $2,472,723
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
PAGE 5
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(Dollars in thousands except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
<S> 1995 1994 1995 1994
REVENUES <C> <C> <C> <C>
CF MotorFreight $ 593,710 $ 584,398 $ 1,801,227 $ 1,512,894
Con-Way Transportation Services 294,751 259,444 857,763 763,765
Emery Worldwide 434,318 392,641 1,280,462 1,122,820
1,322,779 1,236,483 3,939,452 3,399,479
COSTS AND EXPENSES
CF MotorFreight
Operating Expenses 523,770 500,745 1,565,465 1,312,732
Selling and Administrative Expenses 58,661 65,406 178,802 181,582
Depreciation 16,899 17,988 50,129 56,552
599,330 584,139 1,794,396 1,550,866
Con-Way Transportation Services
Operating Expenses 227,916 191,948 647,794 562,140
Selling and Administrative Expenses 33,207 30,633 100,267 90,546
Depreciation 10,500 9,288 29,488 25,831
271,623 231,869 777,549 678,517
Emery Worldwide
Operating Expenses 349,745 313,975 1,042,379 894,935
Selling and Administrative Expenses 57,898 51,748 167,384 154,290
Depreciation 6,939 6,387 20,247 19,050
414,582 372,110 1,230,010 1,068,275
1,285,535 1,188,118 3,801,955 3,297,658
OPERATING INCOME (LOSS)
CF MotorFreight (5,620) 259 6,831 (37,972)
Con-Way Transportation Services 23,128 27,575 80,214 85,248
Emery Worldwide 19,736 20,531 50,452 54,545
37,244 48,365 137,497 101,821
OTHER INCOME (EXPENSE)
Investment income 158 661 680 1,882
Interest expense (9,342) (7,206) (24,760) (20,865)
Miscellaneous, net 1,443 93 1,999 (1,362)
(7,741) (6,452) (22,081) (20,345)
Income Before Income Taxes and Extraordinary Charge 29,503 41,913 115,416 81,476
Income Taxes 13,988 21,632 53,508 40,732
Net Income Before Extraordinary Charge 15,515 20,281 61,908 40,744
Extraordinary charge from write off of
intrastate operating rights, net
of tax benefits of $4,056 5,522 5,522
NET INCOME 15,515 14,759 61,908 35,222
Preferred Stock Dividends 2,155 4,768 8,620 14,265
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 13,360 $ 9,991 $ 53,288 $ 20,957
Primary average shares outstanding (1) 44,561,758 37,218,928 44,362,108 37,261,289
PRIMARY EARNINGS PER SHARE
Net Income Before Extraordinary charge $ 0.30 $ 0.42 $ 1.25 $ 0.71
Extraordinary charge (0.15) (0.15)
Net income $ 0.30 $ 0.27 $ 1.25 $ 0.56
FULLY DILUTED EARNINGS PER SHARE
Net Income Before Extraordinary charge $ 0.28 $ 0.37 $ 1.17 $ 0.63
Extraordinary charge (0.13) (0.13)
Net income $ 0.28 $ 0.24 $ 1.17 $ 0.50
<FN>
(1) Includes the dilutive effect of stock options. The three and nine months ended September 30, 1995 also reflect
the conversion of Series C Preferred stock to Common stock.
The accompanying notes are an integral part of these statements.
</TABLE>
PAGE 6
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
Nine Months Ended
September 30,
1995 1994
(Dollars in thousands)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 95,711 $ 139,044
CASH FLOWS FROM OPERATING ACTIVITIES
Net income before extraordinary charge 61,908 40,744
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 108,963 109,313
Increase (decrease) in deferred income taxes 5,218 (5,523)
(Gains) losses from property disposals, net (2,423) 772
Changes in assets and liabilities:
Trade receivables (101,167) (90,663)
Other receivables (32,628) (36,147)
Prepaid expenses (6,205) (14,171)
Accrued claims costs 3,229 (4,473)
Accounts payable 19,940 48,931
Accrued liabilities 29,074 118,721
Federal and other income taxes 5,190 14,299
Other (31,432) (37,016)
Net Cash Provided by Operating Activities 59,667 144,787
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (219,340) (138,768)
Purchases of marketable securities -- (292)
Proceeds from sales of property 8,704 5,493
Net Cash Used by Investing Activities (210,636) (133,567)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 98,890 --
Repayment of long-term debt and capital
lease obligations (942) (795)
Net borrowings under revolving line of credit 80,000 --
Proceeds from issuance of common stock 3,126 8,438
Payments of common dividends (12,332) --
Payments of preferred dividends (11,529) (17,333)
Net Cash Provided (Used) by
Financing Activities 157,213 (9,690)
Increase in Cash and Cash Equivalents 6,244 1,530
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 101,955 $ 140,574
The accompanying notes are an integral part of these statements.
PAGE 7
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements of Consolidated
Freightways, Inc. and subsidiaries (the Company) have been prepared by the
Company, without audit by independent public accountants, pursuant to the
rules and regulations of the Securities and Exchange Commission. In the
opinion of management, the consolidated financial statements include all
normal recurring adjustments necessary to present fairly the information
required to be set forth therein. Certain information and note disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
from these statements pursuant to such rules and regulations and,
accordingly, should be read in conjunction with the consolidated financial
statements included in the Company's 1994 Annual Report to Shareholders.
There have been no significant changes in the accounting policies of
the Company. There were no significant changes in the Company's
commitments and contingencies as previously described in the 1994 Annual
Report to Shareholders and related annual report to the Securities and
Exchange Commission on Form 10-K other than that described in Note 3 below.
2. On March 15, 1995, the Company's 6,900,000 depository shares, each
representing one-tenth of a share of Series C Conversion Preferred stock,
were converted to 6,900,000 shares of the Company's Common stock.
3. On June 27, 1995, the Company filed a registration statement with the
Securities and Exchange Commission to register $100 million of unsecured,
unsubordinated notes which on September 11, 1995, were exchanged for $100
million of privately placed notes which were issue on June 1, 1995. The
registered notes bear interest at 7.35% per annum, payable semiannually,
and are due June 1, 2005. The proceeds of the private placement notes were
used to retire short-term debt, for capital expenditures and other general
corporate purposes.
4. Also on June 27, 1995, the Company filed a shelf registration statement
with the Securities and Exchange Commission covering $150 million of debt
and equity securities for future issuance with terms to be decided at time
of issuance. The $150 million of securities includes $45 million of
securities registered under a prior registration statement and $105 million
of newly registered securities.
5. On November 7, 1995, the Company redeemed its preferred stock purchase
rights. Under certain conditions, each right enabled the holder, upon
exercise of the right, a specified number of shares of common stock.
6. 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.
PAGE 8
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's third quarter and nine-month revenues increased 7.0% and
15.9%, respectively, over the comparable periods in 1994. Con-Way
Transportation Services (Con-Way) increased revenues through, among other
things, geographic expansion and by offering more second-day service with a
longer length of haul. Emery Worldwide (Emery) continued to gain business
internationally, while CF MotorFreight (CFMF) was able to offset declines
in its domestic long-haul revenues with increased revenues from non-carrier
logistics operations. All of the Company's operations were affected by
price discounting throughout the industry. Year-to-date comparative
results were affected by a 24-day strike against CFMF and other unionized
LTL carriers in April 1994.
Operating income in the third quarter 1995 decreased 23.0% from the same
period last year while year-to-date operating income increased 35.0% or
$35.7 million to $137.5 million. The quarterly decline is attributable to
price discounting affecting all operations, lower business levels at CFMF
and the lower margins Emery earned on its increased international business.
Operating income for the first nine months of 1994 included second quarter
operating losses of $42.1 million at CFMF from the strike in April 1994.
The 1994 quarterly and year-to-date results include a non-cash,
extraordinary charge of $5.5 million net of income tax benefits. This
represents the write-off of intrastate operating rights as a result of the
passage of the Federal Aviation Administration Authorization Act of 1994.
Significant variations in segment revenues and operating income are as
follows:
CF MOTORFREIGHT
CFMF revenues for the third quarter 1995 increased 1.6% despite a total
tonnage decline of 4.1%. This increase is attributable to a significant
growth in revenues from the non-carrier logistics operation, partial
retention of the recent August 1, 1995 rate increase and because the higher
rated LTL tonnage was virtually unchanged from the prior period. Year-to-
date, revenues increased 19.1% over the same period last year on total and
LTL tonnage increases of 13.2% and 17.4%, respectively. The 1994 results
include the impact of the strike against CFMF and other unionized LTL
carriers.
CFMF's third quarter operating loss of $5.6 million compares to operating
income of $259,000 in the comparable period in 1994. The loss underscores
the need for CFMF to balance its freight system capacity to current
business levels and is a result of the previously mentioned rate discounting.
Included in CFMF's third quarter results for 1995 and 1994 is approximately
$4 million and $2 million, respectively, of income from its Canadian
subsidiary and non-carrier logistics operations. The year-to-date operating
income of $6.8 million is a $44.8 million improvement over
PAGE 9
the prior year and reflects the absence of losses incurred during the 1994
strike and increased income from non-carrier logistics operations.
Included in CFMF's nine-month operating results for 1995 and 1994 is
approximately $10 million and $5 million, respectively, of income related
to its Canadian subsidiary and non-carrier logistics operations.
Management analysis has indicated that customer expectations have increased
and competition has intensified as the historical market segmentation has
been less well defined between regional LTL, national LTL, truckload and
parcel. While management believes that customers desire fast, flexible,
consistent and reliable service, utilizing CFMF's traditional hub-and-spoke
network limited service flexibility while increasing transit times and
handling, thereby increasing costs. In an effort to improve its
competitive position and thereby improve margins, management has initiated
an operational re-engineering plan named Business Accelerator System (BAS).
BAS replaces CFMF's traditional hub-and-spoke network in favor of one that
moves freight directionally from point-to-point and streamlines the freight
network. This is expected to reduce miles and handling and rationalize
system capacity, thereby reducing transit times and costs. With an
improved service offering, management believes it will be able to re-
invigorate its sales and marketing efforts and recapture market share.
BAS was implemented on October 16, 1995 following approval by
representatives of the International Brotherhood of Teamsters. In the
short-term, management expects to incur additional losses due to the costs
associated with maintaining timely service while assimilating the
significant changes required to implement BAS. However, in the long-term,
management believes that implementing BAS will significantly reduce
operating expenses.
CON-WAY TRANSPORTATION SERVICES
Con-Way's third quarter 1995 revenues increased 13.6% over the same period
last year on LTL and total tonnage increases of 7.5% and 6.6%,
respectively. For the nine months ended September 30, 1995, revenues
increased 12.3% on total tonnage improvements of 6.0%, with LTL tonnage
growth of 5.2%. Both the quarterly and year-to-date revenue increases
reflect Con-Way's continued expansion into new markets and the increased
proportion of second-day freight. Second-day freight, as compared to same-
day freight, has a higher average revenue per pound associated with a
longer length of haul. The nine months ended September 30, 1994 included
incremental business obtained during the April 1994 Teamster strike against
CFMF and other unionized LTL carriers.
Third quarter operating income was down 16.1% compared with the same period
in 1994. Operating income for the nine-month period was down 5.9% compared
with the strike benefited 1994 period. The quarterly and nine-month income
declines reflect the industry wide rate discounting, lower margins earned
on business gained during Con-Way's expansion into new geographic regions,
truckload and second-day markets as well as labor cost increases.
As Con-Way increases business levels in these new markets, utilization of
the infrastructure will increase and, consequently, Con-Way should realize
improved margins in these markets. Management will continue emphasizing
cost efficiency measures throughout the organization and enhancement of its
services.
PAGE 10
EMERY WORLDWIDE
Emery revenues for the third quarter and nine months ended September 30,
1995, increased 10.6% and 14.0%, respectively. Domestic business in the
comparable nine-month period in 1994 was favorably impacted by the strike
against CFMF and other unionized LTL carriers. Emery's revenue improvement
in 1995 was driven primarily by strong tonnage gains in the international
markets with international revenue up 31.1% on a tonnage increase of 32.0%
during the quarter. Domestically, commercial revenue increased 1.2% on a
tonnage increase of 5.0% during the quarter. For the nine months ended
September 30, 1995, domestic revenue decreased 1.0% on a tonnage increase
of 1.0%, while international revenue and tonnage increased 47.0% and 46.4%,
respectively.
Third quarter and year-to-date operating income declined 3.9% and 7.5%,
respectively, compared to the same periods in 1994. Despite revenue
increases, operating income declined as margins on increased international
tonnage were lower than margins on the slower-growing domestic tonnage.
Emery's margins on international freight are generally lower than domestic
freight as Emery primarily utilizes commercial lift internationally versus
a dedicated fleet for domestic volumes. The 1994 operating income also
reflects the benefits of enhanced utilization of the domestic dedicated
system associated with the business gained during the April 1994 strike.
Emery management is increasing its marketing efforts to gain additional
domestic business while continuing the programs that have been successful
in the international arena. Cost controls are still at the forefront as
Emery management seeks to further reduce costs associated with the
international airhaul and agency relationships.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had $102.0 million in cash and cash
equivalents. Net cash flow from operations during the first nine months of
1995 of $59.7 million was primarily the result of income from operations,
depreciation and amortization offset in part by increased accounts
receivable levels. Since 1994, the Company has been experiencing a
deterioration in the timeliness of receivables collection resulting in an
increase in its working capital investment. To address this, the Company
has initiated several programs to streamline its collection efforts and
enhance communication with its customers. Included in other receivables at
September 30, 1995, was approximately $43 million of refundable deposits on
equipment to be financed through leasing arrangements.
Capital expenditures for the nine months ended September 30, 1995, were
$219.3 million, an increase of $80.6 million over the same period in 1994.
The increase was due primarily to purchases of revenue equipment and real
property by CFMF and Con-Way. Capital expenditures were financed by cash
from operations and a portion of the proceeds from the issuance of long-
term debt and short-term borrowings. The Company intends to finance the
remaining capital requirements for the year with financing arrangements
supplemented by cash from operations.
The Company issued $100 million of notes in June 1995 and subsequently, in
September 1995, exchanged this privately placed debt with registered debt
with essentially the same terms. Separately, the Company increased
borrowings under
PAGE 11
its $300 million unsecured credit facility to $80 million as of September
30, 1995. The net proceeds from both sources was used for capital
expenditures and general corporate purposes.
Also in June 1995, the Company filed a shelf registration statement with
the Securities and Exchange Commission covering $150 million of debt and
equity securities for future issuance with terms to be decided at time of
issuance. The $150 million of securities includes $45 million of
securities registered under a prior registration statement and $105 million
of newly registered securities. Proceeds will be used for general corporate
purposes which may include repayment of indebtedness, capital expenditures
and working capital needs.
At September 30, 1995, $111.0 million of letters of credit were issued
under the Company's $300 million unsecured credit facility. In addition,
$79.9 million of letters of credit were issued and secured with Emery
receivables under the $100 million Emery receivables sale facility.
Also at September 30, 1995, $40.4 million of letters of credit were
issued under several unsecured letter of credit facilities.
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 clean-up is necessary, the Company takes appropriate
action.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
As previously reported, the Company has been designated a Potentially
Responsible Party (PRP) by the Environmental Protection Agency (EPA) with
respect to the disposal of hazardous substances at various sites. The
Company expects its share of the total cleanup costs of all sites to be
immaterial. Certain legal matters are discussed in Note 6 in the Notes to
Consolidated Financial Statements in Part I of this form.
PAGE 12
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Computation of Per Share Earnings
(12) Computation of Ratio of Earnings to Fixed Charges
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter ended September 30, 1995.
PAGE 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company (Registrant) has duly caused this Form
10-Q Quarterly Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Consolidated Freightways, Inc.
(Registrant)
November 13, 1995 /s/Gregory L. Quesnel
Gregory L. Quesnel
Executive Vice President and
Chief Financial Officer
November 13, 1995 /s/Gary D. Taliaferro
Gary D. Taliaferro
Vice President and Controller
<TABLE>
Exhibit 11
COMPUTATION OF PER SHARE EARNINGS
The following is the computation of fully-diluted earnings per share:
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(Dollars in thousands except per share data)
<S>
Earnings: <C> <C> <C> <C>
Net income before extraordinary charge $ 15,515 $ 20,281 $ 61,908 $ 40,744
Preferred dividends 2,155 4,768 8,620 14,265
13,360 15,513 53,288 26,479
Extraordinary charge - 5,522 - 5,522
Net income available to common shareholders 13,360 9,991 53,288 20,957
Non-discretionary adjustments under
the if-converted method:
Addback: Series C, preferred dividends - - 2,207 -
Addback: Series B, preferred dividends,
net of tax benefits 2,131 2,120 6,413 6,304
Less: Replacement of funding
adjustment, net of tax benefits (1) (1,662) (2,120) (5,008) (6,304)
Net income available to common shareholders $ 13,829 $ 9,991 $ 56,900 $ 20,957
WEIGHTED AVERAGE SHARES OUTSTANDING:
Common shares (2) 43,508,226 36,255,334 43,400,950 36,144,907
Equivalents - stock options 1,053,533 963,594 1,041,316 1,116,382
Series B, Preferred stock
if-converted method 4,229,925 4,315,273 4,229,925 4,315,273
48,791,684 41,534,201 48,672,191 41,576,562
FULLY DILUTED EARNINGS PER SHARE
Net income before extraordinary charge $ 0.28 $ 0.37 $ 1.17 $ 0.63
Extraordinary charge (0.13) (0.13)
Net income available to common shareholders $ 0.28 $ 0.24 $ 1.17 $ 0.50
<FN>
(1) Additional payment to the TASP to replace the funding lost under the if-converted method.
(2) The three and nine months ended September 30, 1995 reflect the conversion of Series C Preferred stock to Common stock.
</TABLE>
<TABLE>
<CAPTION> Exhibit 12
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Nine Months Ended
September 30, Year Ended December 31,
1995 1994 1994 1993 1992 1991 1990
(dollars in thousands)
<S>
Fixed Charges: <C> <C> <C> <C> <C> <C> <C>
Interest Expense $24,760 $20,865 $27,945 $30,333 $38,893 $46,703 $40,178
Capitalized Interest 678 912 1,042 1,224 543 1,703 2,470
Preferred Dividends 9,617 9,682 12,475 12,551 12,618 12,691 12,746
Total Interest 35,055 31,459 41,462 44,108 52,054 61,097 55,394
Interest Component of
Rental Expense 53,560 46,800 62,304 57,585 55,773 58,052 54,016
Fixed Charges 88,615 78,259 103,766 101,693 107,827 119,149 109,410
Less:
Capitalized Interest 678 912 1,042 1,224 543 1,703 2,470
Preferred Dividends 9,617 9,682 12,475 12,551 12,618 12,691 12,746
Net Fixed Charges $78,320 $67,665 $90,249 $87,918 $94,666 $104,755 $94,194
Earnings:
Income (Loss)
Before Taxes $115,416 $81,476 $111,920 $91,441 $(10,733) $(43,337) $(32,678)
Add: Net Fixed
Charges 78,320 67,665 90,249 87,918 94,666 104,755 94,194
Total Earnings $193,736 $149,141 $202,169 $179,359 $83,933 $61,418 $61,516
Ratio of Earnings to
Fixed Charges:
Total Earnings $193,736 $149,141 $202,169 $179,359 $83,933 $61,418 $61,516
Fixed Charges (1) 88,615 78,259 103,766 101,693 107,827 119,149 109,410
Ratio 2.2 x 1.9 x 1.9 x 1.8 x 0.8 x(2) 0.5 x(2) 0.6 x(2)
<FN>
(1) Fixed Charges represents interest on capital leases and short-term and long-term debt, capitalized interest, dividends
on shares of the Series B Cumulative Convertible Preferred Stock used to pay debt service on notes issued by the Company's
Thrift and Stock Plan (the "TASP"), and the applicable portion of the consolidated rent expense which approximates the interest
portion of lease payments.
(2) Earnings were inadequate to cover fixed charges for the periods shown; the deficiency was $23.9 million, $57.7 million
and $47.9 million for the years ended December 31, 1992, 1991 and 1990, respectively.
</TABLE>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 101,955
<SECURITIES> 0
<RECEIVABLES> 760,358
<ALLOWANCES> (25,194)
<INVENTORY> 50,201
<CURRENT-ASSETS> 1,188,452
<PP&E> 2,175,969
<DEPRECIATION> (1,118,923)
<TOTAL-ASSETS> 2,763,834
<CURRENT-LIABILITIES> 1,081,808
<BONDS> 495,503
<COMMON> 264,668
0
145,410
<OTHER-SE> 315,154
<TOTAL-LIABILITY-AND-EQUITY> 2,763,834
<SALES> 0
<TOTAL-REVENUES> 3,939,452
<CGS> 0
<TOTAL-COSTS> 3,801,955
<OTHER-EXPENSES> 22,081
<LOSS-PROVISION> 7,713
<INTEREST-EXPENSE> 24,760
<INCOME-PRETAX> 115,416
<INCOME-TAX> 53,508
<INCOME-CONTINUING> 61,908
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,288
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.17
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