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, 1995 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
Securities Registered Pursuant to Section 12(g) of the Act:
9-1/8% Notes Due 1999
Medium-Term Notes, Series A
7.35% Notes Due 2005
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_______
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 ______ No ___X___
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, 1996: $646,431,951
Number of shares of Common Stock outstanding
as of January 31, 1996: 43,935,181
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV
Consolidated Freightways, Inc. 1995 Annual Report to Shareholders (only
those portions referenced herein are incorporated in this Form 10-K).
Part III
Proxy Statement dated March 22, 1996, (only those portions referenced
herein are incorporated in this Form 10-K).
PAGE 2
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-K
Year Ended December 31, 1995
___________________________________________________________________________
INDEX
Item Page
PART I
1. Business 3
2. Properties 11
3. Legal Proceedings 13
4. Submission of Matters to a Vote of Security Holders 13
PART II
5. Market for the Company's Common Stock and
Related Security Holder Matters 13
6. Selected Financial Data 14
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
8. Financial Statements and Supplementary Data 14
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 14
PART III
10. Directors and Executive Officers of the Company 14
11. Executive Compensation 16
12. Security Ownership of Certain Beneficial
Owners and Management 16
13. Certain Relationships and Related Transactions 16
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 16
SIGNATURES 17
INDEX TO FINANCIAL INFORMATION 20
PAGE 3
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-K
Year Ended December 31, 1995
___________________________________________________________________________
PART I
ITEM 1. BUSINESS
(a) General Development of Business
Consolidated Freightways, Inc. is a company which participates through
subsidiaries in various forms of nationwide and regional trucking,
truckload and intermodal rail, domestic and international air cargo
services, ocean forwarding, contract logistics and related transportation
activities. These operations are organized into three primary business
groups: nationwide, full-service trucking (CF MotorFreight), regional
trucking and full-service truckload (Con-Way Transportation Services), and
air freight and ocean forwarding (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, 1995, 1994 and 1993,
and identifiable assets as of those dates is presented in Note 12 on pages
33 and 34 of the 1995 Annual Report to Shareholders and is incorporated
herein by reference. Geographic group information is also presented
therein. Intersegment revenues and earnings thereon have been eliminated.
(c) Narrative Description of Business
The Company, for reporting purposes, has designated three principal
operating groups: the CF MotorFreight Group provides intermediate and
long-haul, less-than-truckload freight services throughout the U.S. and in
Canada and on a limited basis in Mexico, the Caribbean area, Central and
South America, Europe and the Pacific Rim; the Con-Way Transportation
Services Group provides one- and two-day, less-than-truckload service as
well as highway, rail and multi-modal logistics services; and the Emery
Worldwide Group is responsible for all domestic and international air
freight activities and ocean forwarding services. The Company also provides
full-service contract logistics through its subsidiary, Menlo Logistics,
which is included in the CF MotorFreight Group for reporting purposes only.
CF MOTORFREIGHT
CF MotorFreight(CFMF), the Company's largest single operating unit in terms
of revenues, is based in Menlo Park, California. The CFMF group is
composed of Consolidated Freightways Corporation of Delaware (CFCD)
PAGE 4
and Canadian operating units, and three non-carrier operations. Its
carrier group provides general freight services nationwide and in Canada
and on a limited basis in Mexico, the Caribbean area, Central and South
America, Europe and the Pacific Rim. Operations consist of an extensive
transportation network that typically moves shipments of manufactured or
non-perishable processed products having relatively 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 LTL
motor carriers in terms of 1995 revenues.
Competition continues to increase in the industry with trends toward
regionalization, continued pricing pressures and new competitors moving
into the small shipment segment of the business. To address this, CFMF
made major changes to its line-haul operations in the fourth quarter of
1995. This change of operations, called the Business Accelerator System
(BAS), replaces CFMF's traditional hub-and-spoke network with one that
moves freight directly from point-to-point and streamlines the freight
network. BAS has the effect of reducing miles and handling, thereby
reducing transit times and costs as well as rationalizing system capacity.
As a large carrier of LTL general commodity freight, at December 31, 1995,
CFMF operated approximately 39,200 vehicle units including pick-up and
delivery fleets in each area served, and a fleet of intercity tractors and
trailers. At December 31, 1995, it had a network of 380 U.S. and Canadian
freight terminals, metro centers and regional consolidation centers. Under
BAS, several regional consolidation centers have become metro centers. The
metro centers reduce freight handling through more direct city to city
service, thereby improving productivity. CFMF operations are supported by
a sophisticated data processing system for the control and management of
the business.
There is a broad diversity in the customers served, size of shipments,
commodities transported and length of haul. No single customer or
commodity accounted for more than a small fraction of total revenues.
CFMF operates daily schedules utilizing relay drivers who drive
approximately eight to ten hours each day and an increasing number of
sleeper teams which in December 1995 approximated 20% of all linehaul
miles. 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. CFMF generally utilizes trailer equipment that is 102 inches in
width. The Company believes that trailers in double or triple combination
are more efficient and economical, and safer, than a tractor and single
semi-trailer combination. In 1995, the Company operated in excess of 477
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 lower than all other types of vehicle
combinations used by CFMF.
CFCD and several Canadian subsidiaries serve Canada through terminals in
the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Nova
PAGE 5
Scotia, Ontario, Quebec, Saskatchewan and in the Yukon Territory. The
Canadian operations utilize a fleet of over 1,100 trucks, tractors and
trailers.
Employees
At December 31, 1995, approximately 84% of CFMF's domestic employees were
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 in
April, 1998.
Labor costs, including fringe benefits, averaged approximately 67% of
CFMF's 1995 revenues. CFMF's domestic employment has declined to 19,200
employees at December 31, 1995 from approximately 20,700 at December 31,
1994, primarily the result of the implementation of the BAS. CFMF had
approximately 21,000 employees at December 31, 1993.
Fuel
Fuel prices have steadily declined during the last three years. CFMF's
average annual diesel fuel cost per gallon (without tax) declined from
$.621 in 1993 to $.578 and $.573 in 1994 and 1995, respectively. Most of
these savings have been mitigated by increases in fuel taxes.
Federal and State Regulation
Regulation of motor carriers has changed substantially in recent years.
The process started with the Motor Carrier Act of 1980, which allowed
easier access to the industry by new trucking companies, removed many
restrictions on expansion of services by existing carriers, and increased
price competition by narrowing the antitrust immunities available to the
industry's collective ratemaking organizations. This deregulatory trend
was continued by subsequent legislation in 1982, 1986, 1993 and 1994. The
process culminated with federal pre-emption of most economic regulation of
intrastate trucking regulatory bodies effective January 1, 1995, and with
legislation to terminate the Interstate Commerce Commission (ICC) effective
January 1, 1996.
Currently, the motor carrier industry is subject to federal regulation by
the Federal Highway Administration (FHWA) and the Surface Transportation
Board (STB), both of which are units of the United States Department of
Transportation (DOT). The FHWA performs certain functions inherited from
the ICC relating chiefly to motor carrier registration, cargo and liability
insurance, extension of credit to motor carrier customers, and leasing of
equipment by motor carriers from owner-operators. In addition, the FHWA
enforces comprehensive trucking safety regulations relating to driver
qualifications, drivers' hours of service, safety-related equipment
requirements, vehicle inspection and maintenance, recordkeeping on
accidents, and transportation of hazardous materials. As pertinent to the
general freight trucking industry, the STB has authority to resolve certain
types of pricing disputes and authorize certain types of intercarrier
agreement under jurisdiction inherited from the ICC.
At the state level, federal preemption of economic regulation does not
prevent the states from regulating motor vehicle safety on their highways.
PAGE 6
In addition, federal law allows all states to impose insurance requirements
on motor carriers conducting business within their borders, and empowers most
states to require motor carriers conducting interstate operations through
their territory to make annual filings verifying that they hold appropriate
registrations from FHWA. Motor carriers also must pay state fuel taxes and
vehicle registration fees, which normally are apportioned on the basis of
mileage operated in each state.
Canadian Regulation
The provinces in Canada have regulatory authority over intra-provincial
operations of motor carriers and have been delegated 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.
Menlo Logistics
Menlo Logistics, Inc. (MLI), founded in 1990, provides full-service
contract logistics services for manufacturing, industrial and retail
businesses. These services include transportation management, dedicated
contract warehousing, dedicated contract carriage, just-in-time delivery
programs, customer order processing and freight bill payment and auditing.
MLI has approximately 750 employees. As contract logistics is a relatively
new industry, competition is expected to come from new entrants into the
markets it serves. MLI addresses the increased competition by utilizing
technologies and its established experience. Refer to the CF MotorFreight
section for discussion of federal and state regulation affecting the
transportation activities of MLI.
Other Operations
Two non-carrier operations within the CF MotorFreight Group, for reporting
purposes only, generate a majority of their sales from other subsidiaries
of the Company. Road Systems, Inc. primarily manufactures and rebuilds
trailers, converter dollies and other transportation equipment.
VantageParts, Inc. serves as a distributor and remanufacturer of vehicle
component parts and accessories to all segments of the heavy-duty truck and
trailer industry, as well as the maritime, construction, aviation and other
industries.
CON-WAY TRANSPORTATION SERVICES
Con-Way Transportation Services, Inc. (CTS) is an operating company with
business units that provide regional LTL freight trucking; full-service
truckload freight delivery utilizing highway over-the-road and intermodal
rail stack train resources for regional, inter-regional and
transcontinental transportation; local and interstate container drayage and
international shipping. CTS has four operating units and at December 31,
1995 had approximately 12,400 employees. The regional trucking companies
face intensive competition as national LTL companies extend into regional
markets, and acquire and combine formerly independent regional carriers
PAGE 7
into inter-regional groups. New service offerings, continued expansion of
regional carrier networks, extension of next-day and second-day service and
enhanced inter-regional network capabilities are positioning CTS for growth
opportunities. Refer to the CF MotorFreight section for a discussion of
federal and state regulations.
Con-Way Regional Carriers
CTS has three regional motor carrier units, each of which operates
dedicated regional trucking networks principally serving core geographic
territories with next-day and second-day service. The regional carriers
serve manufacturing, industrial, commercial and retail business-to-business
customers with a fleet of approximately 20,500 trucks, tractors and
trailers at December 31, 1995.
Con-Way Western Express (CWX) was founded in May 1983 and today operates in
13 western states and serves Canada and Mexico. In January 1995, CWX
expanded operations into Oregon, Washington, Idaho, Alaska and Vancouver,
British Columbia. At December 31, 1995, CWX operated 95 service centers.
Con-Way Central Express (CCX) was founded in June 1983 and today serves 23
states of the central and northeast U.S., and Ontario, Canada. In February
1995, CCX expanded into New Jersey and began providing service for
metropolitan New York City in addition to launching joint service with Con-
Way Southern Express. At December 31, 1995 CCX operated 204 service
centers
Con-Way Southern Express and Con-Way Southwest Express were founded in
April 1987 and November 1989, respectively. In December 1994, the two
carriers were combined into a single operating unit under the Con-Way
Southern Express (CSE) name serving a 14-state southern market from Texas
to the Carolinas and Florida, and encompassing Puerto Rico and Mexico. CSE
operated 98 service centers at December 31, 1995.
CTS has completed certain regional service expansions that allow the
regional carriers to provide next-day and second-day freight delivery
between their principal geographic regions, utilizing existing
infrastructure. CTS can now provide full regional service throughout the
United States and parts of Canada. The regional service expansion generates
additional business by allowing each regional carrier to compete for new
traffic and provide coverage of regional market lanes not individually
serviced as part of the regional carrier's core territory.
Con-Way Truckload Services
Con-Way Truckload Services (CWT), formerly known as Con-Way Intermodal, is
a full-service, multi-modal truckload company. CWT provides door-to-door
transcontinental movement of truckload shipments by rail container stack
train and rail trailer, utilizing nationwide operating alliances with major
railroads. It also provides expedited inter-regional and regional over-the-
road truckload service with a fleet of company-owned trucks and trailers.
Additionally, CWT provides rail freight forwarding with domestic intermodal
marketing services, assembly and distribution services, and local and
interstate container drayage.
PAGE 8
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 own pre-existing air freight operation, CF AirFreight, Inc. The
combined companies expanded EWW's ability to deliver air freight within
North America and to 90 countries worldwide.
EWW provides global air cargo services through an integrated, combination
carrier, 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 sales offices and service centers, 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 primarily as an air freight forwarder
using commercial airlines, and with controlled lift used only when
necessary. Emery also operated approximately 2,000 trucks, vans and
tractors at December 31, 1995.
As of December 31, 1995, EWW utilized a fleet of 70 aircraft, 46 of which
are leased on a long-term basis, 11 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 4 million pounds.
EWW's hub-and-spoke system is centralized at the Dayton, Ohio 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 1.2 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.
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 24 aircraft, of which 4 are leased on a long-term basis and 20
are owned. The original contract for this operation was awarded to EWA in
1989 and was renewed and extended through early January 1994. A ten year
USPS contract was awarded to EWA during 1993 with service beginning in
January 1994.
The Company has recognized approximately $108 million, $112 million and
$138 million of revenue in 1995, 1994 and 1993, respectively, from
contracts to carry Express and Priority Mail for the U.S. Postal Service.
In 1995, Emery Ocean Services consolidated its services with those of CTS.
Capitalizing on its international growth and experience, Emery Ocean
Services, a global freight forwarder and non-vessel operating common
carrier, provides full and less-than-container load service. In
addition, EWW established a new subsidiary, Emery Expedite!, which
specializes in urgent, door-to-door delivery of shipments in North America
and overseas. Emery's logistics subsidiary, recently renamed Emery Global
Logistics, continues to expand its service capabilities. It now operates
warehouse and distribution centers for customers in five countries.
PAGE 9
Technology
Equally important to the movement of goods is the rapid movement of
information to track freight, optimize carrier selections, interlink and
analyze customer data. EWW plans to invest more than $70 million in
technology over the next two years to upgrade its entire hardware and
software systems architecture including the tracking system at its Hub in
Dayton, Ohio. The system is expected to provide instant tracking
information for shipments to reduce missorts, potential overloads and to
signal freight with specialized handling requirements.
Customers
EWW services, among others, the automotive, aviation, machinery, metals,
electronic and electrical equipment, chemical, apparel, film and technology
industries. Service industries and governmental entities also utilize EWW's
services. Both U.S. and international operations of EWW have a wide
variety of customers.
Competition
The heavy air-freight market within North America is highly competitive and
price sensitive. In 1995, EWW had the largest market share, based on
revenues, in the North American heavy air-freight segment. EWW competes
with other integrated air freight carriers as well as freight forwarders.
The North Atlantic market is especially price sensitive due to the abundant
airlift capacity. Competition in international markets is also service and
price sensitive. In these markets, which are more fragmented than the North
American market, EWW competes with international airlines and air freight
forwarders.
Customers favor companies such as EWW with combined integrated carrier and
freight forwarding capabilities for flexible, cost effective service. EWW
believes this infrastructure and the convenience of its extensive network
of worldwide terminal, agent and service locations are its principal
methods of competing for customers seeking the service described above.
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, except security-related rules.
Airlines are subject to economic regulation by the DOT and maintenance,
operating and other safety-related regulation by the 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.
PAGE 10
Regulation of Ground Transportation
When EWW provides ground transportation of cargo having prior or subsequent
air movement, the ground transportation is exempt from the motor carrier
registration requirements and economic regulations which were inherited
from the ICC by FHWA and STB, respectively. Such ground transportation,
however, is subject to comprehensive trucking safety regulation by FHWA as
described in the CF MotorFreight section. In addition, EWW does hold FHWA
motor carrier registrations which can be utilized in providing non-exempt
ground transportation. For description of applicable state regulations,
refer to discussion in the CF MotorFreight section.
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. As provided in the Aviation Act, the
FAA is authorized to establish aircraft noise standards. Under the National
Emission Standards Act of 1967, as amended, 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 currently applicable
noise and emission laws.
The Aviation Noise and Capacity Act of 1990 establishes 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
eligible for operation in the contiguous United States 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 prepayment and/or
volume discounts. These contract purchases are supplemented by spot
purchases. The price of domestic jet fuel declined in 1994 and 1993,
respectively, but increased slightly in 1995. The 1995 weighted average
domestic cost per gallon was approximately $.60 compared with 1994 and 1993
weighted average prices of approximately $.59 and $.64 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 EWW 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.
PAGE 11
Employees
As of December 31, 1995, EWW had approximately 9,000 full-time and regular
part-time employees as compared to 8,000 at December 31, 1994 and 7,500 at
December 31, 1993. Approximately 17% of these employees are covered by
union contracts.
GENERAL
The research and development activities of the Company are not significant.
During 1995, 1994 and 1993 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 36 and 37 of the 1995 Annual Report to Shareholders and
is incorporated herein by reference.
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 will not have a
material adverse effect on the Company. 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, it does not
anticipate that such cost increases will have a materially adverse effects
on the Company.
(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 1995, 1994 and 1993 is contained in Note 12 on page 33 and 34 of the
1995 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, 1995:
Owned Leased Total
CF MotorFreight 227 153 380
Con-Way Transportation Services 51 364 415
Emery Worldwide 9 184 193
PAGE 12
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 system service centers:
Mira Loma, CA 280,672
Chicago, IL 231,159
Carlise, PA 151,100
* Columbus, OH 118,774
Memphis, TN 118,745
Nashville, TN 118,622
* Indianapolis, IN 109,460
Orlando, FL 101,557
* Minneapolis, MN 94,890
Charlotte, NC 89,204
St. Louis, MO 88,640
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
* Peru, IL 73,760
Buffalo, NY 73,380
Milwaukee, WI 70,661
Salt Lake City, UT 68,480
Seattle, WA 59,720
Kansas City, MO 55,288
Portland, OR 47,824
Phoenix, AZ 20,237
CTS - freight assembly centers
Chicago, IL 113,116
Des Plains, IL 100,440
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
PAGE 13
Location Square Footage
EWW - facilities
* Dayton, OH 620,000
Los Angeles, CA 78,264
Chicago, IL 59,976
Boston, MA 42,236
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 11 on page 33
of the 1995 Annual Report to Shareholders and are incorporated herein by
reference. Discussions of certain environmental matters are presented in
Item 1 and Item 7.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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 13 on page 35 of the
1995 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 the Company's Board of Directors suspended the
quarterly dividend. In December 1994, the Board of Directors reinstated a
$.10 per share quarterly cash dividend on common stock. The amounts of
quarterly dividends declared on common stock for the last two years are
included in Note 13 on page 35 of the 1995 Annual Report to Shareholders
and are incorporated herein by reference. Under the terms of the
restructured TASP Notes, as set forth on page 27 and 28 of the 1995 Annual
Report to Shareholders, the Company is restricted from paying dividends in
excess of $10 million plus one half of the cumulative net income applicable
to common shareholders since the commencement of the agreement.
Effective March 15, 1995, all of the 690,000 shares of the Company's Series
C Preferred Stock converted to 6,900,000 shares of Common Stock.
PAGE 14
As of December 31, 1995, there were 15,980 holders of record of the common
stock ($.625 par value) of the Company. The number of shareholders is also
presented in the "Ten Year Financial Summary" on pages 36 and 37 of the
1995 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 36 and 37 of the 1995 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 16 through 18, inclusive, of the 1995 Annual Report to
Shareholders and is incorporated herein by reference. Certain statements
included and incorporated by reference herein, including certain statements
under "Financial Review and Management Discussion" referred to above,
constitute "forward-looking statements" within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended, and are subject to a
number of risks and uncertainties. In that regard, the following factors,
among others, could cause actual results and other matters to differ
materially from those in such statements: changes in general business and
economic conditions; increasing domestic and international competition and
pricing pressure; changes in fuel prices; uncertainty regarding the
Company's ability to improve results of operations through, among other
things, implementation of BAS at CFMF; labor matters, including changes in
labor costs, renegotiation of labor contracts and the risk of work
stoppages or strikes; changes in governmental regulation; and environmental
and tax matters. As a result of the foregoing, no assurance can be given
as to future results of operations or financial condition.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Auditors' Report are presented on
pages 19 through 37, inclusive, of the 1995 Annual Report to Shareholders
and are incorporated herein by reference. The unaudited quarterly
financial data is included in Note 13 on page 35 of the 1995 Annual Report
to Shareholders and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The identification of the Company's Directors is presented on pages 3
through 8, inclusive, of the Proxy Statement dated March 22, 1996 and those
pages are incorporated herein by reference.
PAGE 15
The Executive Officers of the Company, their ages at December 31, 1995 and
their applicable business experience are as follows:
Donald E. Moffitt, 63, Chairman, President and Chief Executive Officer of
the Company. Mr. Moffitt joined Consolidated Freightways Corporation of
Delaware, the Company's nationwide, full-service trucking 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. In 1995, Mr. Moffitt was
named Chairman of the Board of Directors. 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. Mr. Moffitt is Chairman of the Executive Committee and serves on
the Director Affairs Committee of the Company.
W. Roger Curry, 57, President and Chief Executive Officer of Consolidated
Freightways Corporation of Delaware 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 CF
AirFreight in 1975 and Chief Executive Officer in 1984. Mr. Curry
relinquished both offices with CF AirFreight in 1986 when he was elected
Senior Vice President - Marketing of the Company. In 1991, he was elected
President of Emery Air Freight Corporation, relinquishing the position in
1994 to become President of CFCD.
David I. Beatson, 48, President and Chief Executive Officer of Emery Air
Freight Corporation and Senior Vice President of the Company. Mr. Beatson
joined CF AirFreight in 1977, advancing through several increasingly
responsible positions to Vice President of National Accounts. After
leaving the Company for a time, he returned to EWW in 1991 as Vice
President of Sales and Marketing. He became President and Chief Executive
Officer of Emery Air Freight Corporation in 1994.
Gregory L. Quesnel, 47, Executive Vice President and Chief Financial
Officer of the Company. 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 Executive Vice President and
Chief Financial Officer in 1993.
Robert T. Robertson, 54, 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
PAGE 16
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, 52, 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 EWW 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 12 through 15,
inclusive, of the Proxy Statement dated March 22, 1996, 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 9, 10 and 23, of
the Proxy Statement dated March 22, 1996 and is incorporated herein by
reference.
Information concerning the disclosure of delinquent filers under Section
16(a) of the Exchange Act appears on page 24 of the Proxy Statement dated
March 22, 1996, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
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, 1995.
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 25, 1996 /s/Donald E. Moffitt
Donald E. Moffitt
Chairman, President and Chief Executive
Officer
March 25, 1996 /s/Gregory L. Quesnel
Gregory L. Quesnel
Executive Vice President and Chief
Financial Officer
March 25, 1996 /s/Gary D. Taliaferro
Gary D. Taliaferro
Vice President and Controller
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 25, 1996 /s/Donald E. Moffitt
Donald E. Moffitt
Chairman of the Board, President and
Chief Executive Officer
March 25, 1996 /s/Robert Alpert
Robert Alpert, Director
March 25, 1996 /s/Earl F. Cheit
Earl F. Cheit, Director
March 25, 1996 /s/Richard A. Clarke
Richard A. Clarke, Director
March 25, 1996 /s/G. Robert Evans
G. Robert Evans, Director
March 25, 1996 /s/Margaret G. Gill
Margaret G. Gill, Director
March 25, 1996 /s/Robert Jaunich II
Robert Jaunich II, Director
March 25, 1996 /s/Richard B. Madden
Richard B. Madden, Director
March 25, 1996 /s/Ronald E. Poelman
Ronald E. Poelman, Director
PAGE 19
SIGNATURES
March 25, 1996 /s/Robert D. Rogers
Robert D. Rogers, Director
March 25, 1996 /s/William D. Walsh
William D. Walsh, Director
March 25, 1996 /s/Robert P. Wayman
Robert P. Wayman, Director
PAGE 20
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-K
Year Ended December 31, 1995
___________________________________________________________________________
INDEX TO FINANCIAL INFORMATION
Consolidated Freightways, Inc. and Subsidiaries
The following Consolidated Financial Statements of Consolidated
Freightways, Inc. and Subsidiaries appearing on pages 19 through 37,
inclusive, of the Company's 1995 Annual Report to Shareholders are
incorporated herein by reference:
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1995 and 1994
Statements of Consolidated Income - Years Ended December 31, 1995,
1994 and 1993
Statements of Consolidated Cash Flows - Years Ended December 31, 1995,
1994 and 1993
Statements of Consolidated Shareholders' Equity - Years Ended
December 31, 1995, 1994 and 1993
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 21
Report of Independent Public Accountants 21
Schedule II - Valuation and Qualifying Accounts 22
The other schedules 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.
PAGE 21
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, 33-52599, 33-60619 and 33-60625
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Francisco, California
March 25, 1996
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 1995 Annual Report to Shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated January 26, 1996. Our
audit was made for the purpose of forming an opinion on those statements
taken as a whole. The schedule on page 22 is the responsibility of the
Company's management and is presented for the purposes of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly states 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 LLP
ARTHUR ANDERSEN LLP
San Francisco, California
January 26, 1996
PAGE 22
SCHEDULE II
CONSOLIDATED FREIGHTWAYS, INC.
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1995
(In thousands)
DESCRIPTION
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
1995 $26,938 $13,343 $ - $(14,062)(a) $26,219
1994 $29,780 $ 6,676 $ - $ (9,518)(a) $26,938
1993 $26,198 $27,127 $ - $(23,545)(a) $29,780
a) Accounts written off net of recoveries.
PAGE 23
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, December 4,
1995
(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 Indenture between the Registrant and The First National Bank of
Chicago Bank, trustee, with respect to the registration of various
debt and equity securities. (Exhibit 4(b) as filed on Form S-3 dated
June 27, 1995*)
4.9 Indenture between the Registrant and Bank One, Columbus, NA,
trustee, with respect to the registration of various debt and equity
securities. (Exhibit 4(e) as filed on Form S-3 dated June 27, 1995*)
4.10 Form of Security for 7.35% Notes due 2005 issued by Consolidated
Freightways, Inc. (Exhibit 4.4 as filed on Form S-4 dated June 27,
1995*)
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
PAGE 24
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.
Exhibit No.
(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*#)
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
# Designates a contract or compensation plan for Management or
Directors.
PAGE 25
Exhibit No.
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**)
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**)
* 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.
# Designates a contract or compensation plan for Management or
Directors.
PAGE 26
Exhibit No.
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**)
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 $300 million Amended and Restated Credit Agreement dated
January 10, 1995 among Consolidated Freightways, Inc. and
various financial institutions. (Exhibit 10.27 to the
Company's Form 10-K for the year ended December 31, 1994*)
10.23 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*).
10.24 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*).
10.25 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*).
* 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.
# Designates a contract or compensation plan for Management or
Directors.
PAGE 27
Exhibit No.
10.26 Supplemental Retirement Plan dated January 1, 1990. (Exhibit
10.31 to the Company's Form 10-K for the year ended December 31,
1993*#)
10.27 Directors' 24-Hour Accidental Death and Dismemberment Plan.
(Exhibit 10.32 to the Company's Form 10-K for the year ended
December 31, 1993*#)
10.28 Executive Split-Dollar Life Insurance Plan dated January 1,
1994. (Exhibit 10.33 to the Company's Form 10-K for the year
ended December 31, 1993*#)
10.29 Board of Directors' Compensation Plan dated January 1, 1994.
(Exhibit 10.34 to the Company's Form 10-K for the year ended
December 31, 1993*#)
10.30 Excess Benefit Plan dated January 1, 1987. (Exhibit 10.35 to
the Company's Form 10-K for the year ended December 31, 1993*#)
10.31 Directors' Business Travel Insurance Plan. (Exhibit 10.36 to
the Company's Form 10-K for the year ended December 31, 1993*#)
10.32 Deferred Compensation Plan for Executives dated October 1,
1993. (Exhibit 10.37 to the Company's Form 10-K for the year
ended December 31, 1993*#)
10.33 Amended and Restated 1993 Nonqualified Employee Benefit
Plans Trust Agreement dated January 1, 1995. (Exhibit 10.38
to the Company's Form 10-K for the year ended December
31, 1994.*#)
10.34 Consolidated Freightways, Inc. Equity Incentive Plan for Non-
Employee Directors. (Attachment to the Company's 1994 Proxy
Statement dated March 18, 1994.*#)
10.35 Amended and Restated Retirement Plan for Directors of
Consolidated Freightways, Inc. dated January 1, 1994. (Exhibit
10.40 to the Company's Form 10-K for the year ended
December 31, 1994.*#)
10.36 Consolidated Freightways, Inc. 1996 Return on Equity Plan dated
March 4, 1996. #
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
# Designates a contract or compensation plan for Management or
Directors.
PAGE 28
Exhibit No.
(12) Computation of ratios of earnings to fixed charges
(13) Annual report to security holders:
Consolidated Freightways, Inc. 1995 Annual Report to Shareholders
(Only those portions referenced herein are incorporated in this Form
10-K. Other portions such as "Letter to Shareholders" are not required
and, therefore, are not "filed" as part of this Form 10-K.)
(21) Significant Subsidiaries of the Company.
(27) Financial Data Schedule
(99) Additional documents:
99.1 Consolidated Freightways, Inc. 1996 Notice of Annual Meeting and
Proxy Statement dated March 22, 1996. (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.*)
99.2 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*)
99.3 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*).
99.4 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*).
99.5 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.
# Designates a compensation plan for Management or Directors.
Exhibit 3.2
CONSOLIDATED FREIGHTWAYS, INC.
BY-LAWS
As Amended December 4, 1995
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 not later than the tenth day following the annual
stockholders meeting at such time and place as the Board may
determine. No notice of the annual meeting of the Board of Directors
shall be necessary if such meeting is held immediately after the annual
stockholders meeting and at the place where such stockholders meeting
is held. If the annual meeting of the Board of Directors is held on a
different date, or at a different time or place, notice of the date,
time and place of such annual meeting of the Board of Directors shall
be furnished to each director in accordance with the procedures of
Article III, Section 6(c) of these By-Laws. The annual meeting of the
Board of Directors 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 date, time,
place and purposes of each special meeting, and notice of the date,
time and place of each annual and regular meeting for which notice is
required to be given, 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, or by
facsimile at least twenty-four hours in advance of the time of the
meeting, to the address or facsimile number (as applicable) 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. Except as may otherwise be determined by the
Board of Directors, 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. Unless otherwise determined by the
Board of Directors in accordance with the preceding sentence, 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 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) President: The President 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 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.
(e) Vice Presidents: The Vice Presidents shall have such duties and
have such other powers as shall be prescribed by the Chief Executive
Officer. Such Vice President as may be designated by the Board of
Directors or the Chairman of the Board shall preside at all meetings of
the stockholders.
(f) 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.
(g) 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.
(h) 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.
(i) 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) Term; Number of Committee Members. The members of all committees of
the Board of Directors shall serve a term co-existent with that
member s remaining term as a member of the Board of Directors, or until
such time as the Board of Directors shall replace that member on such
committee or ask that member to accept another committee assignment in
its stead. The Board, subject to the provisions of subsection (a) and
(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, while it exists, 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, to replace any absent or
disqualified member at any meeting of the committee. If the qualified
members of a committee, in attendance at a committee meeting, believe
that the absence or disqualification of one or more members of that
committee seriously impairs the function of that committee, such
remaining qualified members, whether or not constituting a quorum, may
by unanimous action appoint another member of the Board of Directors to
act as a committee member at that meeting.
(d) Notice of Committee Meetings. Notice of the date, time and place of
each committee meeting shall be sent to each committee member 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, or by facsimile at least twenty-four hours in advance of the
time of the meeting, to the address or facsimile number (as applicable)
of each committee 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 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 4th day of
December, 1995.
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 December 4, 1995
EXHIBIT 10.20
CONSOLIDATED FREIGHTWAYS, INC.
1996 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 1996, 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 1996.
_____________________ _____________________
Date of this Election Signature of Director
Exhibit 10.36
CONSOLIDATED FREIGHTWAYS, INC.
RETURN-ON-EQUITY PLAN
CONSOLIDATED FREIGHTWAYS, INC.
RETURN-ON-EQUITY PLAN
TABLE OF CONTENTS
Article I Purpose; Effective Date; Administration
1.1 Purpose
1.2 Effective Date
1.3 Administration
Article II Award Cycles; Eligibility; Vesting 1
2.1 Award Cycles 1
2.2 Eligibility 1
2.3 ROE Units 1
2.4 Initial Value
2.5 End Value 2
2.6 Vesting 2
2.7 Change in Control
2.8 Dividends 3
Article III Awards
3.1 Equity Increase
3.2 Award Amount
3.3 Payment of Award
3.4 Amount and Form of Deferred Payment 5
3.5 Interest on Deferred Amounts 5
3.6 Payment to Beneficiary 5
3.7 Withdrawal of Deferred Amounts 6
Article IV Amendment; Termination 6
4.1 Amendment 6
4.2 Termination 7
Article V Claims Procedure 7
5.1 Submission of Claims 7
5.2 Initial Denial 7
5.3 Review of Denied Claim 7
5.4 Decision on Review 8
Article VI General Provisions 8
6.1 Attorneys Fees 8
6.2 Applicable Law 8
6.3 Notice 8
6.4 No Assignment or Alienation 8
6.5 Tax Withholding 9
6.6 Payment to Impaired Person 9
CONSOLIDATED FREIGHTWAYS, INC.
RETURN-ON-EQUITY PLAN
INDEX OF DEFINED TERMS
Term Section Page
Affiliate 2.2 1
Annual Percentage Increase 3.2 4
Award Cycle 2.1 1
Beneficiary 3.6 5
Change in Control 2.7
Committee 1.3
Dividends 2.8 3
End Value 2.5 2
Equity Increase 3.1 4
Initial Value 2.4
Participant 2.2 1
Payout Factor 3.2
ROE Units 2.3
Termination of Employment 3.3
Unforeseeable Financial Emergency 3.7
CONSOLIDATED FREIGHTWAYS, INC.
RETURN-ON-EQUITY PLAN
Article I
Purpose; Effective Date; Administration
1.1 Purpose
The purpose of the Plan is to provide eligible employees
of Consolidated Freightways, Inc. (the Company) and its
affiliates with long term compensation that is dependent on
Company financial performance and thereby provide them with an
incentive to maximize such performance.
1.2 Effective Date
The Plan shall be effective January 1, 1996.
1.3 Administration
The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the
"Committee"). The Committee shall interpret the Plan and
determine the amount, time and form of award payments based on
such interpretations. Any decision by the Committee within its
authority shall be final and binding on all parties.
Article II
Award Cycles; Eligibility; Vesting
2.1 Award Cycles
"Award Cycle" means a period of three consecutive
calendar years. Each Award Cycle shall be identified by its
first calendar year.
2.2 Eligibility
The Committee shall designate the employees eligible to
participate in an Award Cycle, a list of which shall be attached
as a schedule to the Plan. "Participant" means an employee of
the Company or one of its Affiliates who is eligible to
participate as designated by the Committee. Affiliate means a
corporation or other entity that is designated as such by the
Committee. The Participants in the 1996 Award Cycle are listed
on the attached Schedule A.
2.3 ROE Units
"ROE Units" means, for any Award Cycle, the units
granted to Participants for purposes of measuring awards payable
under the Plan for that Award Cycle. Each Participant in the
1996 Award Cycle is granted the number of ROE Units set out on
Schedule A opposite the Participant's name. Each Participant in
subsequent Award Cycles shall be granted a number of ROE Units
fixed by the Committee.
2.4 Initial Value
"Initial Value" means the book value per common share of
the Company as of the December 31 preceding the first day of the
Award Cycle, as reported in the Company's Monthly Financial
Review financial statements for that date. If an event described
in (a) or (b) below occurs during an Award Cycle, the Committee
shall make an appropriate adjustment to the Initial Value for
that Award Cycle so the result produced by the formula
effectuates the purpose of the Plan.
(a) The Company engages in a merger, spinoff, or
other transaction that alters the equity value per share
of the Company's common stock.
(b) The Company has a recapitalization that
changes the number of shares of its common stock
outstanding, such as a stock split, a stock combination,
a dividend or other distribution of additional common
stock, conversion of convertible preferred stock into
common, or a stock buy-back.
2.5 End Value
"End Value" means the book value per common share of the
Company on December 31 at the end of the Award Cycle, as reported
in the Company's Monthly Financial Review; provided, however, if
a Participant becomes vested earlier than the last day of the
Award Cycle, because of the occurrence of one of the events set
out in 2.6(a) through (d) below, the End Value shall be the book
value per common share on the last day of the month in which the
aforesaid event occurred, as reported in the Company's Monthly
Financial Review.
2.6 Vesting
A Participant shall become vested in the rights related
to the ROE units granted to the Participant for an Award Cycle if
the Participant is continuously employed by one or more of the
Company and its Affiliates throughout the entire Award Cycle or
until the occurrence of one of the events described in (a)
through (d) below. A Participant who departs from such
employment before the last day of an Award Cycle shall forfeit
all rights related to the ROE Units granted to the Participant
for that Award Cycle unless the departure coincides with one of
the following (in which case the Participant's ROE Units shall
vest):
(a) The Participant's death.
(b) The Participant's disability as
defined in the Company's Extended Sick Pay Plan
or a successor to that plan.
(c) The Participant's early, normal or
deferred retirement under the Company's tax
qualified Retirement Plan.
(d) The Participant's Termination of
Employment within 24 months after a Change in
Control of the Company.
2.7 Change in Control
A "Change in Control" shall have occurred upon any of
the following:
(a) The Company ceases to be a publicly
owned corporation having its outstanding common
stock listed on a nationally recognized stock
exchange or traded over the counter.
(b) More than 25 percent of the Company's
outstanding common stock, or the equivalent in
voting power of any class or classes of
outstanding securities of the Company
ordinarily entitled to vote in the election of
directors, shall be beneficially held or
acquired by any corporation or person or by any
group of persons acting in concert as described
in Section 14(d)(2) of the Securities Exchange
Act of 1934.
(c) During any period of two consecutive
years, individuals who at the beginning of such
period constitute the Board of Directors of the
Company cease for any reason to constitute a
majority thereof, unless the election, or
nomination for election, by the Company's
shareholders of each new director was approved
by a vote of a majority of the directors then
still in office who were directors at the
beginning of such period.
2.8 Dividends
"Dividends" means, for any Award Cycle, the total of all
distributions for each share of the Company's common stock during
that Award Cycle.
Article III
Awards
3.1 Equity Increase
"Equity Increase" means the increase in the equity value
per common share of the Company's stock during each Award Cycle
plus Dividends for that Award Cycle, determined pursuant to the
following formula: Equity Increase (EI) equals the End Value
(EV) minus the Initial Value (IV) plus Dividends (D). Namely . .
.
EI = (EV - IV) + D
3.2 Award Amount
A Participant shall receive an award amount under this
Plan for each Award Cycle equal to the Participant's ROE Units
for that Award Cycle that have become vested in accordance with
2.6 times the Equity Increase (EI) times the Payout Factor (PF):
Award= ROE Units x EI x PF
"Payout Factor" (PF) means a percentage based on the Annual
Percentage Increase for the Award Cycle. Annual Percentage
Increase" (API) means the annual percentage rate of increase
that, when applied to the Initial Value with annual compounding,
produces the Equity Increase. The Payout Factor shall be
determined by the Committee for different rates of the API.
3.3 Payment of Award
The Company shall pay a Participant's award for an Award
Cycle to the Participant in a lump sum of cash within 60 days
after the End Value is determined, except as follows. Any
Participant may elect to defer payment of the award for any Award
Cycle. Payment of the deferred award shall be made or shall
commence upon the Participant's Termination of Employment, based
upon the Participant's election. Such election shall apply only
to the Award Cycle for which it is made. "Termination of
Employment" occurs on the first date on which the Participant is
no longer employed by the Company or an Affiliate, regardless of
the reason employment ceases. An election to defer payment shall
be effective if made in writing on a form furnished by the
Committee for that purpose and returned to the Committee no later
than the following dates:
(a) For the 1996 Award Cycle, February
29, 1996.
(b) For later Award Cycles, the December
31 preceding the first day of the Award Cycle.
3.4 Amount and Form of Deferred Payment
In the election to defer payment the Participant shall
choose between payment in a lump sum or in approximately equal
quarterly installments over 5, 10, 15 or 20 years. A lump sum
shall be paid within 60 days after the Termination of Employment.
Installment payments shall be paid commencing with the first day
of the second calendar quarter after the Termination of
Employment and continuing on the first day of each subsequent
calendar quarter until the period of the installments is
exhausted.
3.5 Interest on Deferred Amounts
If the Participant elects to defer payment, the deferred
amount shall be credited with interest from the date on which
payment would have been made if it had not been deferred.
Interest shall accrue at a rate equal to the rate of return on
the Moody's Seasoned Corporate Bond Rate (reset annually), or at
such higher rate as the Committee shall determine in its sole
discretion, and shall be compounded annually. Interest shall
continue to be credited on the undistributed balance until the
Participant's award is fully paid. The size of installments
shall be based on an assumption made by the Committee as to the
rate of future interest and may be adjusted by the Committee from
time to time to reflect actual interest experience different from
the assumption.
3.6 Payment to Beneficiary
In the event of a Participant's death, the award payable
to the Participant for an Award Cycle shall be paid to the
Participant's Beneficiary. "Beneficiary" means the person or
persons designated by Participant under this Plan, or if no
person is specifically designated, as determined for the
Participant under the beneficiary designation provisions of the
Company's Executive Deferral Plan. If no designation is made
under either Plan, then the award shall be paid to the
Participant's estate. Payment to the Beneficiary shall be made
at the same time and in the same form as payment would have been
made to the Participant, except as follows:
(a) If death occurs and the Participant
had elected deferral with payment in quarterly
installments, the Committee may, in its sole
discretion, choose to make immediate payment to
the Beneficiary in a lump sum. If the
Committee does not so choose, payment shall be
made to the Beneficiary in accordance with the
installment schedule elected by the
Participant.
(b) If (a) does not apply, payment to the
Beneficiary shall be made within 60 days after the later
of the date the End Value for the Award Cycle is
determined or the date of death.
3.7 Withdrawal of Deferred Amounts
If a Participant who has elected to defer payment of the
award for an Award Cycle has an Unforeseeable Financial
Emergency, the Participant may withdraw part or all of the
Participant's award after the end of the Award Cycle. The
existence of an Unforeseeable Financial Emergency shall be
determined by the Committee upon application by the Participant.
"Unforeseeable Financial Emergency" means a severe financial
hardship of the Participant resulting from:
(a) A sudden and unexpected illness or
accident of the Participant or a dependent of
the Participant.
(b) A loss of the Participant's
property due to casualty.
(c) Such other extraordinary and
unforeseeable circumstances arising as a result
of events beyond the control of the
Participant.
Article IV
Amendment; Termination
4.1 Amendment
The Committee may amend the Plan at
any time by notice to the Participants, except
as follows:
(a) No amendment shall reduce the award
determined for an Award Cycle that has ended
before the date of the amendment.
(b) No amendment shall reduce the award
for an Award Cycle that is in progress below
the amount determined under the formula in 3.2
with the End Value based on the book value per
common share of the Company as of the date of
the amendment.
(c) No amendment shall reduce the rate of
interest credited on deferral amounts after the
deadline for a Participant's election to defer.
4.2 Termination
The Committee may terminate the Plan at any time. The
award for Award Cycles in progress shall be determined under the
formula in 3.2 replacing End Value with the per share equity
value of the Company's common stock as of the date of
termination. Upon termination of the Plan, the award of each
Participant shall be paid to the Participant or to a deceased
Participant's Beneficiary as soon as practicable after the
termination. If the date of payment upon Plan termination is
after the date the Participant would have received payment in the
absence of deferral, interest shall be included for the period
between such dates.
Article V
Claims Procedure
5.1 Submission of Claims
Any person claiming an award or requesting an
interpretation, ruling or information under the Plan shall
present the request in writing to the Committee, which shall
respond in writing.
5.2 Initial Denial
If the claim or request is denied, notice of the initial
denial shall normally be given within 90 days of receipt of the
claim or request. If special circumstances require an extension
of time, the claimant shall be so notified and time limit shall
be 180 days. The written notice of denial shall state the
following:
(a) The reasons for the denial, with
specific reference to the Plan provisions on
which the denial is based.
(b) A description of any additional
materials or information required and an
explanation of why it is necessary.
5.3 Review of Denied Claim
Any person whose claim or request is denied or who has
not received a response within the time period described in 5.2
may request review by notice to the Committee. The original
decision shall be reviewed by the Committee, which may, but shall
not be required to, grant the claimant a hearing. On review,
whether or not there is a hearing, the claimant may have
representation, examine pertinent documents and submit issues and
comments in writing.
5.4 Decision on Review
The decision on review shall ordinarily be made within
60 days. If an extension of time is required for a hearing or
other special circumstances, the claimant shall be so notified
and the time limit shall be 120 days. The decision shall be in
writing and shall state the reasons and the relevant plan
provisions. All decisions on review shall be final and bind all
parties concerned.
Article VI
General Provisions
6.1 Attorneys Fees
If suit or action is instituted to enforce any rights
under this Plan, the prevailing party may recover from the other
party reasonable attorneys' fees at trial and on any appeal.
6.2 Applicable Law
This Plan shall be governed by and construed in
accordance with the laws of the State of California, except as
preempted by federal law.
6.3 Notice
Any notice under this Plan shall be in writing and shall
be effective when actually delivered or, if mailed, when
deposited as first class mail postage prepaid. Mail to the
Company shall be directed to 3240 Hillview Avenue, Palo Alto, CA
94304, or to such other address as the Company may specify by
notice to all Participants. Mailed notices to a Participant
shall be directed to the Participant's last known home address
shown in the Company's records. Notices to the Committee shall
be sent to the Company's address.
6.4 No Assignment or Alienation
The rights of a Participant or Beneficiary under this
Plan are personal. No interest of a Participant or Beneficiary
may be directly or indirectly assigned, transferred, or
encumbered. A Participant's or Beneficiary's rights to awards
payable under this Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, or
encumbrance. Such rights shall not be subject to the debts,
contracts, liabilities, engagements or torts of the Participant
of Beneficiary.
6.5 Tax Withholding
The Company shall make any required withholding of
income taxes and of the employee's share of FICA and any other
applicable payroll taxes from payments made under this Plan. If
such withholding is required before the date of payment of
amounts deferred under this Plan, the Company shall pay the
required amount and withhold it from other compensation payable
to the Participant.
6.6 Payment to Impaired Person
The Committee may decide that because of the mental or
physical condition of a person entitled to payments, or because
of other relevant factors, it is in the best interest to make
payments to others for the benefit of the person entitled to
payment. In that event, the Committee may in its discretion
direct that payments be made to any of the following:
(a) To a parent or spouse or a child of
legal age.
(b) To a legal guardian.
(c) To one furnishing maintenance,
support, or hospitalization.
CONSOLIDATED FREIGHTWAYS, INC.
By: /s/Eberhard G. H. Schmoller
Name: Eberhard G.H. Schmoller
Title: Senior Vice President - General
Counsel
Executed: March 4, 1996
<TABLE>
Exhibit 12
CONSOLIDATED FREIGHTWAYS, INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
(dollars in thousands)
<S>
Fixed Charges: <C> <C> <C> <C> <C>
Interest Expense $ 34,325 $ 27,945 $ 30,333 $ 38,893 $ 46,703
Capitalized Interest 1,092 1,042 1,224 543 1,703
Preferred Dividends 12,419 12,475 12,551 12,618 12,691
Total Interest 47,836 41,462 44,108 52,054 61,097
Interest Component of
Rental Expense 73,004 62,304 57,585 55,773 58,052
Fixed Charge 120,840 103,766 101,693 107,827 119,149
Less:
Capitalized Interest 1,092 1,042 1,224 543 1,703
Preferred Dividends 12,419 12,475 12,551 12,618 12,691
Net Fixed Charges $ 107,329 $ 90,249 $ 87,918 $ 94,666 $104,755
Earnings:
Income (Loss)
Before Taxes $ 110,873 $111,920 $ 91,441 $(10,733) $ (43,337)
Add: Net Fixed
Charges 107,329 90,249 87,918 94,666 104,755
Total Earnings $ 218,202 $202,169 $179,359 $ 83,933 $ 61,418
Ratio of Earnings to
Fixed Charges:
Total Earnings $ 218,202 $202,169 $179,359 $ 83,933 $ 61,418
Fixed Charges (1) 120,840 103,766 101,693 107,827 119,149
Ratio 1.8 1.9 x 1.8 x 0.8 x(2) 0.5 x(2)
<FN>
(1) Fixed Charges represent 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 and
$57.7 million for the years ended December 31, 1992 and 1991, respectively.
</TABLE>
Exhibit 13
PAGE 16
Financial Review and Management Discussion
The Company's 1995 operating income increased marginally
over the prior year despite competitive rate discounting
that affected all three of the Company's operating units and
costs incurred to improve CF MotorFreight's (CFMF) freight
flow operations. Operating income at Emery Worldwide
improved primarily due to significant international growth.
Operating income at Con-Way Transportation Services (CTS)
declined from 1994 levels primarily due to expansion costs.
The 1994 results include significant losses incurred at CFMF
and benefits realized by CTS and Emery from increased
business during the strike of the unionized less-than-
truckload (LTL) carriers. Despite these factors, the
Company's 1994 operating profit increased 18.4% to $142.2
million from 1993.
Revenue increases at all three of the Company's operating
units contributed to a 12.8% increase from 1994 revenues to
a record $5.3 billion. CTS and Emery revenues each grew over
12% due to growth in domestic and international markets,
respectively. CFMF 1995 revenues increased from the strike-
affected 1994 levels despite a reduction in revenues during
the fourth quarter following the implementation of its
freight flow improvement plan. In 1994, the Company's
revenues increased 11.7% from 1993 to $4.7 billion due
primarily to significant growth at CTS and Emery that offset
the loss of business at CFMF during the strike.
Significant variances in segment revenues and operating
income are as follows.
CF MotorFreight
CFMF's 1995 revenues increased 12.8% over strike-affected
1994 levels, despite the loss of business in the fourth
quarter following changes to its freight flow network. Total
tonnage increased 6.4% with higher rated LTL tonnage
increasing 10.6%. The revenue improvement is also
attributable to an increase from Menlo Logistics' operations
which are included in the CFMF segment. CFMF's 1994 revenues
decreased 0.9% on a tonnage decline of 5.8%. Higher rated
LTL tonnage declined 5.4% from 1993.
CFMF's operating loss of $34.4 million included
approximately $14.4 million of income from its Canadian
subsidiaries and from logistics operations. The loss is a
26.2% improvement over that incurred in strike-affected
1994. The operating loss of $46.6 million in 1994 declined
from a profit of $31.7 million in 1993, primarily due to
losses incurred during the strike.
The 1995 loss includes approximately $26 million of costs
from the fourth quarter implementation of changes to
freight flow operations called the "Business Accelerator
System" (BAS). Implementation of BAS caused a decline in
productivity in dock, city pick-up and delivery, and
linehaul operations in the fourth quarter. Business levels
also declined as shippers withheld freight during
implementation of 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 reduces
miles and handling, thereby reducing transit times and costs
as well as rationalizes system capacity. With a competitive
service offering, management believes it will be able to re-
invigorate its sales and marketing efforts.
In the short-term, management expects to incur additional
losses as business levels and system productivity remain
below expectations. However, in the long term, management
believes that operating margins should improve as business
levels, system productivity and utilization improve.
Management announced a rate increase of between 5.5% and 6%
effective January 1, 1996.
Con-Way Transportation Services
Revenues for 1995 increased 13.1% over 1994 with LTL and
total tonnage increases of 6.7% and 6.4%, respectively. The
higher revenue levels reflect CTS's continued expansion into
new geographic markets, improved penetration in its
traditional markets of overnight service and growth from its
inter-regional business. CTS was not insulated from rate
discounting in its traditional overnight markets. CTS
revenues surpassed the billion- dollar milestone in 1994
with an increase of 24.5% from 1993 due to expansion and
additional business gained during the strike of the
unionized LTL carriers.
CTS's operating income declined 13.2% from the record level
in 1994 as its operating margin declined to 8.4% in 1995
from 10.9% in 1994. The decline is attributable to start-up
costs and lower system utilization associated with expansion
into new geographic areas and markets, relatively higher
costs of inter-regional business and the absence of benefits
received in 1994 during the strike of the unionized LTL
PAGE 17
carriers. Operating income increased 54.8% in 1994 with an
operating margin of 10.9% compared to 8.8% in 1993.
CTS has completed its regional expansions, allowing for full
regional service throughout the United States and parts of
Canada. As business levels increase from new geographic and
second-day markets, system utilization and productivity
should improve. CTS also implemented a January 1996 rate
increase of approximately 6%.
Emery Worldwide
Emery's revenues increased 12.7% from 1994 to a record $1.8
billion driven by 37.2% growth in international tonnage.
Sluggish growth in certain industries and a slight decline
in rates caused domestic revenue to increase only
marginally. The 1994 results included the benefits of
business gained during the strike of the unionized LTL
carriers. Emery's 1994 revenues grew 24.3% from 1993,
attributable to a 45.2% increase in international tonnage
combined with a 30.2% increase in domestic tonnage.
Operating income increased 5.3% from 1994 establishing a
second consecutive record. However, the operating margin of
4.6% represents a decline from 5.0% in 1994 due to the
increased proportion of international business.
International freight yields a lower margin than domestic
freight as Emery utilizes commercial lift, whereas
domestically Emery operates a dedicated fleet. Operating
income in 1994 represented a fourfold improvement from 1993
income of $16.6 million.
Emery management will seek to improve margins by increasing
efforts to gain additional domestic business and to continue
the strong international growth. To this end, management
has increased the sorting capacity at its Hub in Dayton and
is adding additional warehouse space. Aircraft capacity has
been added to better satisfy growing customer demands. Cost
reductions are the focus of restoring margins amid periods
of weaker demand.
Other Income (Expense)
Other net expense increased from 1994 primarily due to a
22.8% increase in interest expense from the $100 million of
newly issued 10 year notes and borrowings under a $300
million credit facility. Gains from dispositions of
properties and other miscellaneous income have in part
offset the increase in interest expense. The net expense in
1994 increased marginally from 1993 because of a 60.5%
decline in investment income from the liquidated portfolio
offset in part by lower interest expense.
Net Income Available to Common Shareholders
Net income available to common shareholders was $46.6
million and $35.7 million in 1995 and 1994, respectively.
The 1994 net income includes a $5.5 million charge for the
write-off of intrastate operating rights. Excluding this
charge, net income available to common shareholders improved
12.9% over 1994. The 1995 effective income tax rate exceeded
the 1994 rate due to a higher foreign tax rate applied to
higher foreign income. A higher effective income tax rate
in 1994, versus 1993, was due primarily to restrictions on
realizing tax benefits of operating losses in certain states
and increased non-deductible expenses. The 1994 net income,
excluding the $5.5 million charge, was a 30.5% improvement
over the net income available to common shareholders in 1993
of $31.6 million.
Liquidity and Capital Resources
At December 31, 1995, the Company had $86.3 million in cash
and cash equivalents. Net cash flow from operations during
1995 of $132.9 million was primarily the result of income
from operations and depreciation and amortization, offset in
part by increased accounts receivable levels. Since late
1994, the Company has been experiencing 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.
Capital expenditures for 1995 were $279.2 million, an
increase of $97.3 million over 1994. The increase was due
primarily to purchases of revenue equipment and real
property by CFMF and CTS. Capital expenditures were financed
by cash from operations and most of the proceeds from the
issuance of long-term debt and short-term borrowings. The
1996 capital expenditure requirements are expected to be
approximately $250 million. The Company intends to finance
capital requirements for 1996 with cash from operations
supplemented by financing arrangements.
The Company issued $100 million of notes in June 1995 and
subsequently, in September 1995, exchanged this privately
PAGE 18
placed debt with registered debt having essentially the same
terms. Separately, the Company increased borrowings under
its $300 million unsecured credit facility to $40.0 million
as of December 31, 1995. An additional $10.0 million was
borrowed against other open lines of credit. The net
proceeds from these sources were 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 the time of
issuance. Proceeds will be used for general corporate
purposes which may include repayment of indebtedness,
capital expenditures and working capital needs.
In the fourth quarter of 1994, the Company reinstated its
quarterly cash dividend of $.10 per common share. The
common dividend had been suspended in June 1990. A portion
of the funds required to satisfy the dividend came from the
absence of the Series C preferred stock dividend, which
ended with their conversion into common stock in the first
quarter of 1995.
At December 31, 1995, $111.0 million of letters of credit
were issued under the Company's $300 million unsecured
credit facility. In addition, $78.4 million of letters of
credit were issued and secured with Emery receivables under
the $100 million Emery receivables sale facility.
Also at December 31, 1995, $40.4 million of letters of
credit were issued under several unsecured letter of credit
facilities.
At December 31, 1995, the Company's ratio of long-term debt
obligations (including guarantees) to total capital
(including long-term obligations) was 40.7% compared with
37.1% at year-end 1994. The ratio increase is primarily
attributable to the issuance of the $100 million medium term
notes in 1995. The current ratio was 1.2 to 1 at December
31, 1995 and 1994.
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 qualified independent third
parties to protect the environment and comply with
regulations. Where the need for environmental cleanup 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
cleanup costs to be minimal.
PAGE 19
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, 1995 and 1994, and the related
statements of consolidated income, cash flows and shareholders'
equity for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based upon 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,
1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP
San Francisco, California
January 26, 1996
PAGE 20
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
(Dollars in thousands)
1995 1994
ASSETS
Current Assets
Cash and cash equivalents $ 86,345 $ 95,711
Trade accounts receivable, net of
allowances (Note 1) 762,134 659,191
Other accounts receivable 53,784 37,021
Operating supplies, at lower of average
cost or market 45,890 41,719
Prepaid expenses 69,374 71,277
Deferred income taxes (Note 5) 134,035 126,546
Total Current Assets 1,151,562 1,031,465
Property, Plant and Equipment, at cost
Land 177,614 163,965
Buildings and improvements 562,760 510,568
Revenue equipment 1,073,505 979,002
Other equipment and leasehold improvements 377,644 368,809
2,191,523 2,022,344
Accumulated depreciation and amortization (1,115,538) (1,077,752)
1,075,985 944,592
Other Assets
Restricted funds 11,189 12,861
Deposits and other assets 88,573 80,626
Unamortized aircraft maintenance, net (Note 1) 114,636 81,010
Costs in excess of net assets of businesses
acquired, net of accumulated
amortization (Note 1) 308,141 322,169
522,539 496,666
Total Assets $2,750,086 $ 2,472,723
The accompanying notes are an integral part of these statements.
PAGE 21
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
Current Liabilities
Accounts payable $ 296,203 $ 253,584
Accrued liabilities (Note 2) 474,028 474,854
Accrued claims costs 150,643 138,800
Current maturities of long-term debt and
capital leases (Notes 3 and 4) 2,412 3,712
Short-term borrowings (Note 3) 50,000 -
Federal and other income taxes (Note 5) 12,938 6,275
Total Current Liabilities 959,224 877,225
Long-Term Liabilities
Long-term debt and guarantees (Note 3) 384,545 286,833
Long-term obligations under capital
leases (Note 4) 110,965 111,024
Accrued claims costs 166,442 163,849
Employee benefits (Note 7) 236,131 216,853
Other liabilities and deferred credits 93,685 105,276
Deferred income taxes (Note 5) 76,734 38,034
Total Liabilities 2,027,726 1,799,094
Shareholders' Equity (Note 6)
Preferred stock, no par value; authorized
5,000,000 shares:
Series B, 8.5% cumulative, convertible,
$.01 stated value; designated 1,100,000
shares; issued 954,412 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 145,156 264,284
Deferred compensation (Note 8) (114,896) (120,646)
Total Preferred Shareholders' Equity 30,270 143,655
Common stock, $.625 par value; authorized
100,000,000 shares; issued 51,451,490 and
43,955,510 shares, respectively 32,157 27,472
Additional paid-in capital, common stock 239,696 116,209
Cumulative translation adjustment (2,028) (1,170)
Retained earnings 608,399 574,885
Cost of repurchased common stock
(7,549,174 and 7,601,382 shares, respectively) (186,134) (187,422)
Total Common Shareholders' Equity 692,090 529,974
Total Shareholders' Equity 722,360 673,629
Total Liabilities and Shareholders' Equity $2,750,086 $2,472,723
The accompanying notes are an integral part of these statements.
PAGE 22
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
YEARS ENDED DECEMBER 31
(Dollars in thousands except per share data)
1995 1994 1993
REVENUES $5,281,084 $4,680,479 $4,191,811
COSTS AND EXPENSES
Operating expenses 4,394,849 3,824,141 3,407,996
Selling and administrative expenses 606,217 580,370 528,022
Depreciation 136,117 133,734 135,636
5,137,183 4,538,245 4,071,654
OPERATING INCOME 143,901 142,234 120,157
OTHER INCOME (EXPENSE)
Investment income 841 2,205 5,586
Interest expense (34,325) (27,945) (30,333)
Miscellaneous, net 456 (4,574) (3,969)
(33,028) (30,314) (28,716)
Income before income taxes and
extraordinary charge 110,873 111,920 91,441
Income taxes (Note 5) 53,508 51,625 40,867
Income before extraordinary charge 57,365 60,295 50,574
Extraordinary charge from write-off
of intrastate operating rights, net
of related income tax benefits
of $4,056 - 5,522 -
Net income 57,365 54,773 50,574
Preferred stock dividends 10,799 19,063 18,967
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ 46,566 $ 35,710 $ 31,607
Primary average shares (Note 1) 44,362,485 37,216,044 36,187,682
Fully diluted average shares (Note 1) 48,723,790 41,541,388 40,857,876
PRIMARY EARNINGS PER SHARE: (Note 1)
Net income before extraordinary
charge $ 1.10 $ 1.11 $ 0.87
Extraordinary charge - (0.15) -
Net income $ 1.10 $ 0.96 $ 0.87
FULLY DILUTED EARNINGS PER
SHARE (Note 1) $ 1.04 $ 0.87 $ 0.77
The accompanying notes are an integral part of these statements.
PAGE 23
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
YEARS ENDED DECEMBER 31
(Dollars in thousands)
1995 1994 1993
Cash and Cash Equivalents, Beginning
of Period $ 95,711 $ 139,044 $ 152,064
Cash Flows from Operating Activities
Income before extraordinary charge 57,365 60,295 50,574
Adjustments to reconcile income to net
cash provided by operating activities:
Depreciation and amortization 148,050 145,765 146,297
Increase (decrease) in deferred
income taxes 32,844 3,417 (20,298)
Losses (gains) from property disposals (2,505) 1,147 (607)
Changes in assets and liabilities:
Receivables (119,706) (148,934) (194,320)
Notes receivable from sale of
trade receivables - - 166,399
Accrued claims costs 14,436 (9,592) (7,400)
Accounts payable 15,619 46,557 17,225
Income taxes 6,663 (10,873) (9,871)
Accrued incentive compensation (30,413) 27,074 7,396
Accrued liabilities and other 10,542 50,326 17,413
Net Cash Provided by Operating Activities 132,895 165,182 172,808
Cash Flows from Investing Activities
Capital expenditures (279,215) (181,928) (201,210)
Purchases of marketable securities - - (54,749)
Sales of marketable securities - 13,727 88,887
Proceeds from sales of property 11,890 10,325 12,270
Net Cash Used by Investing Activities (267,325) (157,876) (154,802)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt 98,890 - 32,000
Repayment of long-term debt and capital
lease obligations (2,537) (39,486) (45,236)
Net short-term borrowings 50,000 - -
Proceeds from issuance of common stock 10,460 11,949 5,387
Redemption of preferred stock
purchase rights (435) - -
Payments of common dividends (16,688) - -
Payments of preferred dividends (14,626) (23,102) (23,177)
Net Cash Provided (Used) by Financing
Activities 125,064 (50,639) (31,026)
Decrease in Cash and Cash Equivalents (9,366) (43,333) (13,020)
Cash and Cash Equivalents, End of Period $ 86,345 $ 95,711 $ 139,044
Supplemental Disclosure
Cash paid for income taxes $ 27,400 $ 56,679 $ 71,036
Cash paid for interest (net of
amounts capitalized) $ 29,856 $ 24,401 $ 30,438
The accompanying notes are an integral part of these statements.
<TABLE> PAGE 24
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(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, 1992 974,152 $ 10 690,000 $ 7 43,016,319 $ 26,887
Exercise of stock options, net of tax
benefits of $708 - - - - 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 of $4,207 - - - - - -
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
Exercise of stock options, net of tax
benefits of $2,400 - - - - 614,709 382
Recognition of deferred compensation - - - - - -
Repurchased common stock issued for
conversion of preferred stock (5,907) - - - - -
Net income - - - - - -
Common dividends declared ($.10 per share) - - - - - -
Series B, Preferred dividends ($12.93
per share) net of tax benefits of $4,039 - - - - - -
Series C, Preferred dividends ($15.40 per share) - - - - - -
Translation adjustment - - - - - -
Balance, December 31, 1994 962,748 10 690,000 7 43,955,510 27,472
Exercise of stock options, net of tax
benefits of $1,122 - - - - 583,143 364
Conversion of Series C Preferred stock
to Common stock - - (690,000) (7) 6,900,000 4,313
Issuance of restricted stock - - - - 12,837 8
Recognition of deferred compensation - - - - - -
Redemption of preferred stock purchase
rights (Note 6) - - - - - -
Repurchased common stock issued for
conversion of preferred stock (8,336) - - - - -
Net income - - - - - -
Common dividends declared ($.30 per share) - - - - - -
Series B, Preferred dividends ($12.93
per share) net of tax benefits of $3,827 - - - - - -
Series C, Preferred dividends ($3.20 per share) - - - - - -
Translation adjustment - - - - - -
Balance, December 31, 1995 954,412 $ 10 - $ - 51,451,490 $ 32,157
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
PAGE 25
<TABLE>
STATEMENTS OF SHAREHOLDERS' EQUITY (continued)
<CAPTION>
Cost of
Additional Cumulative Repurchased
Paid-in Translation Retained Common Deferred
Capital Adjustment Earnings Stock Compensation Total
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 $ 365,866 $ 2,927 $ 511,207 $(189,546) $(138,197) $ 579,161
Exercise of stock options, net of tax
benefits of $708 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 of $4,207 - - (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
Exercise of stock options, net of tax
benefits of $2,400 11,567 - - - - 11,949
Recognition of deferred compensation - - - - 8,630 8,630
Repurchased common stock issued for
conversion of preferred stock (922) - - 922 - -
Net income - - 54,773 - - 54,773
Common dividends declared ($.10 per share) - - (3,636) - - (3,636)
Series B, Preferred dividends ($12.93
per share) net of tax benefits of $4,039 - - (8,436) - - (8,436)
Series C, Preferred dividends ($15.40 per share) - - (10,627) - - (10,627)
Translation adjustment - (2,399) - - - (2,399)
Balance, December 31, 1994 380,493 (1,170) 574,885 (187,422) (120,646) 673,629
Exercise of stock options, net of tax
benefits of $1,122 10,096 - - - - 10,460
Conversion of Series C Preferred stock
to Common stock (4,306) - - - - -
Issuance of restricted stock 292 - - - (300) -
Recognition of deferred compensation - - - - 6,050 6,050
Redemption of preferred stock purchase
rights (Note 6) (435) - - - - (435)
Repurchased common stock issued for
conversion of preferred stock (1,288) - - 1,288 - -
Net income - - 57,365 - - 57,365
Common dividends declared ($.30 per share) - - (13,052) - - (13,052)
Series B, Preferred dividends ($12.93
per share) net of tax benefits of $3,827 - - (8,592) - - (8,592)
Series C, Preferred dividends ($3.20 per share) - - (2,207) - - (2,207)
Translation adjustment - (858) - - - (858)
Balance, December 31, 1995 $ 384,852 $ (2,028) $ 608,399 $(186,134) $(114,896) $ 722,360
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
PAGE 26
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 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 $26,219,000 and $26,938,000 at December 31, 1995 and 1994,
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, 6 to 10 years for tractor and trailer equipment and 3 to
10 years for most other 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 $174,233,000 and
$140,607,000 at December 31, 1995 and 1994, 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 $59,597,000 at December 31, 1995 and 1994 to accrue for this
obligation and any estimated unusable maintenance 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 classified as Unamortized
Aircraft Maintenance, net, in the Consolidated Balance Sheets.
Costs in Excess of Net Assets of Businesses Acquired: The costs in
excess of net assets of businesses acquired (goodwill) are capitalized and
amortized on a straight-line basis up to a 40-year period. Impairment is
periodically reviewed based on a comparison of estimated, undiscounted cash
flows from the underlying subsidiary to the related investment. Based on
this review, management does not believe goodwill is impaired. Accumulated
amortization at December 31, 1995 and 1994 was $69,581,000 and $59,995,000,
respectively.
Income Taxes: The Company follows the liability method of accounting
for income taxes.
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
actual costs may vary from estimates based on trends of losses for filed
claims and claims estimated to be incurred but not filed. 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 Thrift and Stock Plan (TASP) shares. The 1995 primary and
fully diluted computations include the addback of $2,207,000 for the
conversion of Series C preferred stock. The 1995 and 1994 fully diluted
computations include addbacks to earnings of $1,849,000 and $478,000,
respectively, representing the Series B preferred stock dividend net of
replacement funding.
In November 1993, the Accounting Standards Division of the AICPA
issued Statement of Position 93-6, "Employers' Accounting for Employee
PAGE 27
Stock Ownership Plans". The Company is not required to adopt this method
of accounting as the TASP was established before December 31, 1992. If
this statement had been adopted January 1, 1994, both the primary and fully
diluted earnings per share for years ended December 31, 1995 and 1994 would
have been $1.06 and $.94, respectively.
Estimates: Management makes estimates and assumptions when preparing
the financial statements in conformity with generally accepted accounting
principles. These estimates and assumptions affect the amounts reported in
the accompanying financial statements and notes thereto. Actual results
could differ from those estimates.
Reclassification: Certain amounts in prior year's financial statements
have been reclassified to conform to the current year presentation.
2. Accrued Liabilities
Accrued liabilities consist of the following as of December 31:
1995 1994
(Dollars in thousands)
Other accrued liabilities $184,297 $178,058
Accrued holiday and vacation pay 103,354 95,219
Accrued taxes other than income taxes 48,911 46,725
Wages and salaries 47,055 41,517
Estimated revenue adjustments 32,789 28,157
Accrued interest 23,593 20,216
Union pension, health and welfare 22,098 22,618
Accrued incentive compensation 11,931 42,344
Total accrued liabilities $474,028 $474,854
3. Debt and Guarantees
As of December 31, long-term debt and guarantees consisted of the
following:
(Dollars in thousands) 1995 1994
9 1/8% Notes Due 1999 (interest payable
semi-annually) $117,705 $117,705
7.35% Notes due 2005
(interest payable semi-annually) 100,000 --
6.32% to 7.25% Industrial Revenue
Bonds due through 2014 19,900 19,900
Medium-Term Notes -- 2,000
Other debt 290 876
TASP Notes guaranteed due through 2009 149,000 150,000
386,895 290,481
Less current maturities (2,350) (3,648)
Total long-term debt and guarantees $384,545 $286,833
The 9 1/8% notes due in 1999 and the 7.35% notes due in 2005 contain
certain covenants limiting the incurrence of additional liens.
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 the time
of issuance.
In January 1995, the Company entered into a $300 million unsecured
credit facility to provide for the Company's letter of credit and working
capital needs. Borrowings under the agreement, which expires in 1999, bear
interest at a rate (6.45% at December 31, 1995) based upon LIBOR plus a
margin dependent on the Company's credit rating. The agreement contains
various restrictive covenants which limit the incurrence of additional
indebtedness and require the Company to maintain minimum amounts of
tangible net worth and fixed charge coverage. As of December 31, 1995, the
Company had $40.0 million of short-term borrowings and $111.0 million of
letters of credit outstanding under this agreement. In addition, the
Company had $10.0 million of short-term borrowings under other open lines
of credit.
Of the $149 million TASP Notes, $116.4 million are subject to
redemption at the option of the holders should a certain designated event
occur or ratings by both Moody's and S&P of senior unsecured indebtedness
PAGE 28
decline below investment grade. The remaining $32.6 million of the notes
contain financial covenants including a common dividend restriction equal
to $10.0 million plus one-half of the Company's earnings since inception of
the agreement.
The Company has a $100 million receivable sale facility under which
$78.4 million of letters of credit were issued. The agreement, which
expires in 1997 with an option to renew, involves the sale of eligible
Emery receivables to a special-purpose corporation, Emery Receivables
Corporation (ERC), for use as collateral for cash or non-transferable
promissory notes and related letters of credit. The letters of credit may
be issued only on behalf of Emery Air Freight Corporation and Emery
Worldwide Airlines, Inc. for a term of one year with an option to renew.
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.
The aggregate annual maturities and sinking fund requirements of long-
term debt for each of the next five years ending December 31 are: 1996,
$2,350,000; 1997, $3,120,000; 1998, $4,220,000; 1999, $122,905,000; and
2000, $6,400,000.
The Company's consolidated interest expense as presented in the
Statements of Consolidated Income is net of interest capitalized of
$1,092,000 in 1995, $1,042,000 in 1994 and $1,224,000 in 1993.
4. Leases
The Company and its subsidiaries are obligated under various non-
cancelable leases which expire at various dates through 2014.
The principal capital lease covers a sorting facility in Dayton, Ohio
(Facility) for a 30-year lease term. The Facility is financed by City of
Dayton, Ohio revenue bonds. Of the total bonds, $46 million bear an
effective rate of 8%, while the remaining $62 million bear variable rates
of interest of approximately 4.5% at December 31, 1995. The bonds, due
through 2009, have various call provisions and are secured by the
underlying assets of the lease, a $7 million debt service fund, certain
other Emery assets and irrevocable letters of credit. Included in property,
plant and equipment is $44,986,000 of equipment and leasehold improvements,
net, related to 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,
1995, are as follows:
Capital Operating
(Dollars in thousands) Leases Leases
Year ending December 31
1996 $9,018 $163,317
1997 9,018 118,143
1998 9,018 65,942
1999 10,298 52,417
2000 10,298 35,699
Thereafter 181,470 31,759
Total minimum lease payments 229,120 $467,277
Less amount representing interest (118,093)
Present value of minimum lease
payments 111,027
Less current maturities of obligations
under capital leases (62)
Long-term obligations under capital
leases $110,965
Certain operating contain financial covenants equal to or less
restrictive than covenants on debt. Certain leases, guaranteed by
subsidiaries, contain restrictive covenants limiting additional debt and
minimum tangible net worth and fixed charge coverage of the respective
subsidiaries.
Rental expense for operating leases is comprised of the following:
1995 1994 1993
(Dollars in thousands)
Minimum rentals $231,069 $195,507 $185,425
Less:
Sublease rentals (10,273) (6,811) (10,886)
Amortization of deferred
gains (1,785) (1,785) (1,785)
$219,011 $186,911 $172,754
PAGE 29
5. Income Taxes
The components of pretax income and income taxes are as follows:
1995 1994 1993
(Dollars in thousands)
Pretax income
U.S. corporations $ 94,097 $ 99,848 $ 84,700
Foreign corporations 16,776 12,072 6,741
Total pretax income $110,873 $111,920 $ 91,441
Income taxes (benefits)
Current
U.S. federal $ 4,804 $ 37,643 $ 63,956
State and local 3,418 6,313 7,089
Foreign 12,442 5,855 5,475
20,664 49,811 76,520
Deferred
U.S. federal 28,330 (766) (31,616)
State and local 4,003 2,775 (3,642)
Foreign 511 (195) (395)
32,844 1,814 (35,653)
Total income taxes $ 53,508 $ 51,625 $ 40,867
During 1995 and 1994, the Company utilized $11 million and $62 million,
respectively, of net operating loss carryforwards from an acquired
subsidiary to reduce the income tax liability of that subsidiary. The
related tax benefits of approximately $5 million and $22 million,
respectively, were used to reduce costs in excess of net assets of
businesses acquired. The Company has remaining net operating loss
carryforwards from acquired subsidiaries of approximately $30 million,
which expire in 2002 and 2003 and when realized, will be used to further
reduce costs 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 1995 1994
Reserves for accrued claims costs $ 79,366 $ 78,890
Reserves for post retirement health benefits 56,998 53,729
Other reserves not currently deductible 47,761 42,579
Reserves for employee benefits 43,007 47,644
Foreign tax and alternative minimum tax
credit carryovers 11,604 6,707
238,736 229,549
Deferred tax liabilities
Depreciation 147,949 105,393
Tax benefits from leasing transactions 16,700 18,477
Unearned revenue 11,803 12,676
Other 4,983 4,491
181,435 141,037
Net deferred tax asset $ 57,301 $ 88,512
Deferred tax assets and liabilities in the Consolidated Balance Sheets
are classified 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. Although
realization is not assured, management believes it more likely than not
that all deferred tax assets will be realized.
Income taxes vary from the amounts calculated by applying the U.S.
statutory income tax rate to the pretax income as set forth in the
following reconciliation:
1995 1994 1993
U.S. statutory tax rate 35.0% 35.0% 35.0%
State income taxes (net of
federal income tax benefit) 5.8 6.3 2.5
Foreign taxes in excess of
U.S. statutory rate 6.4 1.3 3.0
Dividends paid to TASP (0.8) (0.7) (0.7)
Non-deductible operating
expenses 3.7 3.4 1.9
Amortization of costs in excess
of net assets of businesses
acquired 2.9 3.1 3.7
Tax rate change impact on
deferred expense -- -- (1.7)
Foreign tax credits, net (3.4) (1.9) (1.0)
Other, net (1.3) (0.4) 2.0
Effective income tax rate 48.3% 46.1% 44.7%
PAGE 30
The cumulative undistributed earnings of the Company's foreign
subsidiaries (approximately $80 million at December 31, 1995), 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 $8 million.
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. In November 1995, the Company
redeemed related preferred stock purchase rights.
In 1989, the Board of Directors designated a series of 1,100,000
preferred shares as Series B Cumulative Convertible Preferred Stock, $.01
stated value which is held by the Consolidated Freightways Thrift and Stock
Plan (TASP). The Series B preferred stock is convertible into common
stock, as described in Note 8, 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 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 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.
In March 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.
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. The
Company's annual pension provision and contributions are based on an
independent actuarial computation. 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.
Approximately 87% 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.
The following sets forth the pension liabilities included in Employee
Benefits in the Consolidated Balance Sheets at December 31:
1995 1994
(Dollars in thousands)
Accumulated benefit obligation, including
vested benefits of $339,714 in 1995 and
$242,638 in 1994 $(369,009) $(261,639)
Effect of projected future compensation
levels (99,105) (75,466)
Projected benefit obligation (468,114) (337,105)
Pension Plan assets at market value 407,868 325,102
Pension Plan assets under projected
benefit obligation (60,246) (12,003)
Unrecognized prior service costs 22,350 24,676
Unrecognized net gain (5,279) (46,673)
Unrecognized net asset at transition (17,863) (20,096)
Pension Plan liability $ (61,038) $ (54,096)
Weighted average discount rate 7.25% 8.5%
Expected long-term rate of return on assets 9.5% 9.0%
Rate of increase in future compensation levels 5.0% 5.5%
PAGE 31
Net pension cost includes the following:
1995 1994 1993
(Dollars in thousands)
Cost of benefits earned during
the year $ 21,261 $ 23,767 $ 15,789
Interest cost on projected
benefit obligation 30,832 28,736 26,378
Actual gain arising from
plan assets (81,065) (4,056) (41,891)
Net amortization and deferral 49,553 (26,309) 13,889
Net pension cost $ 20,581 $ 22,138 $ 14,165
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 1995 and 1994, the
total pension liability was $15,708,000 and $11,033,000, respectively, and
the total pension cost was $2,645,000 in 1995, $2,458,000 in 1994 and
$1,633,000 in 1993.
Approximately 52% of the Company's employees are covered by union-
sponsored, collectively bargained, multi-employer pension plans. The
Company contributed and charged to expense $111,772,000 in 1995,
$93,933,000 in 1994 and $98,090,000 in 1993 for such plans. Those
contributions were made in accordance with negotiated labor contracts and
generally were based on time worked.
The Company has a retiree health plan that provides benefits to all
non-contractual employees at least 55 years of age with 10 years or more of
service. The retiree health plan limits benefits for participants who were
not eligible to retire before January 1, 1993, to a defined dollar amount
based on age and years of service and does not provide employer-subsidized
retiree health care benefits for employees hired on or after January 1,
1993.
The following sets forth the total post retirement benefit amounts
included in Employee Benefits in the Consolidated Balance Sheets at
December 31:
(Dollars in thousands)
1995 1994
Accumulated post retirement benefit obligation
Retirees and other inactives $ 78,473 $ 50,720
Participants currently eligible to retire 23,968 26,358
Other active participants 28,591 25,692
131,032 102,770
Unrecognized prior service costs 1,814 931
Unrecognized valuation gain 11,598 36,282
Accrued post retirement benefit cost $144,444 $139,983
Weighted average discount rate 7.25% 8.5%
Average health care cost trend rate
First year 10.0% 11.0%
Declining to (year 1999) 6.0% 6.0%
Net periodic post retirement benefit costs include the following
components:
1995 1994 1993
(Dollars in thousands)
Cost of benefits earned during
the year $ 2,392 $ 3,593 $ 2,877
Interest cost on accumulated post
retirement obligation 9,069 8,396 8,683
Net amortization and deferral (1,245) (656) (411)
Net periodic post retirement benefit cost $10,216 $11,333 $11,149
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 9.2% for the year
ended December 31, 1995 and 9.6% for the years ended December 31, 1994 and
1993.
In 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for Post-
employment Benefits". The adoption of this statement in 1994 did not have a
material impact on the 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:
PAGE 32
(Dollars in thousands) 1995 1994 1993
Salaried participants
Incentive compensation $17,300 $52,200 $40,400
Participants 9,000 9,100 6,300
Hourly participants
Incentive compensation $9,100 $29,500 $14,200
Participants 13,200 13,200 10,900
8. Thrift and Stock Plan
The Company sponsors the Consolidated Freightways Thrift and Stock
Plan (TASP), a voluntary defined contribution plan with a leveraged ESOP
feature, for non-contractual U.S. employees. The TASP satisfies the
Company's contribution requirement by matching up to 50% of the first three
percent of a participant's basic compensation. In 1989, the TASP borrowed
$150,000,000 to purchase 986,259 shares of the Company's Series B
Cumulative Convertible Preferred Stock. This stock is only issuable to the
TASP trustee. Company contributions were $9,217,000 in 1995, $7,966,000 in
1994 and $7,248,000 in 1993, primarily in the form of preferred stock.
The Series B Preferred Stock earns a dividend of $12.93 per share and
is used to repay the TASP debt. Any short fall is paid in cash by the
Company. Dividends on these preferred shares are deductible for income tax
purposes and, accordingly, are reflected net of their tax benefits in the
Statements of Consolidated Income. Allocation of preferred stock to
participants' accounts is based upon the ratio of the current year's
principal and interest payments to the total TASP debt. Since the debt is
guaranteed by the Company, it is reflected in the Consolidated Balance
Sheets as debt. The TASP guarantees are reduced as principal is paid.
Each share of preferred stock is convertible into common stock, upon
the employee ceasing participation in the plan, 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.
Deferred compensation expense is recognized as the preferred shares
are allocated to participants and is equivalent to the cost of the
preferred shares allocated and the TASP interest expense for the year,
reduced by the dividends paid to the TASP. During 1995, 1994 and 1993,
$5,918,000, $5,780,000 and $5,598,000, respectively, of deferred
compensation expense was recognized.
At December 31, 1995, the TASP owned 954,412 shares of Series B
preferred stock, of which 201,979 shares have been allocated to employees.
At December 31, 1995, 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 non-employee directors 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.
Following is a summary of stock option unit data:
1995 1994 1993
Outstanding at January 1 3,778,428 3,813,599 3,552,068
Granted 647,500 736,800 650,000
Exercised (583,143) (614,709) (324,482)
Expired, canceled or
surrendered (84,590) (157,262) (63,987)
Outstanding at December 31 3,758,195 3,778,428 3,813,599
Options which became exercisable
during the year 736,800 644,500 300,000
Options exercisable at
December 31 3,110,695 3,041,628 3,163,599
Shares reserved at December 31
For future option grants 1,189,785 1,485,275 2,119,200
For issuance (including future
option grants, if any) 4,947,980 5,263,703 5,932,799
Exercise prices related to options outstanding at December 31, 1995
ranged from $10.75 to $32.75 per share and aggregated $71,815,000. Exercise
prices related to options exercised during 1995 ranged from $13.00 to
$26.38, during 1994, $10.75 to $26.38 and during 1993, $12.19 to $19.94.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123). The Company does not intend to change its
accounting for stock-based compensation but it will make the additional
disclosures in 1996 as required by SFAS 123.
PAGE 33
10. Financial Instruments
The Company has entered into interest rate swap agreements that expire in
1999. These agreements effectively convert $52 million of variable rate
obligations to fixed rate obligations. Interest rate differentials to be
paid or received are recognized over the life of each agreement as
adjustments to interest expense. The Company is exposed to credit loss on
the interest rate swaps in the event of non-performance by counter parties,
but the Company does not anticipate non-performance by any of these counter
parties. The fair values of the interest rate swaps, as presented below,
reflect the estimated amounts that the Company would receive or pay to
terminate the contracts at the reported date.
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31. Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments," defines the fair value of a financial instrument as
the amount at which the instrument could be exchanged in a current
transaction between willing parties.
(Dollars in thousands) 1995 1994
Carrying Fair Carrying Fair
Amount Value Amount Value
Payables for
interest swaps $ -- $ 2,845 $ -- $ (838)
Long-term debt 386,895 425,000 290,481 285,000
Capital leases 111,027 122,000 111,088 124,000
11. 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.
12. 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: CF MotorFreight (CFMF), a nationwide, full-service
trucking company; Con-Way Transportation Services (CTS), a regional
trucking and full-service truckload company; and Emery Worldwide (Emery),
an air freight and ocean forwarding company. CFMF provides general
freight services nationwide and in parts of Canada, Mexico, the Caribbean
area, Latin and Central America, Europe and Pacific Rim countries.
Operations consist mainly of an extensive transportation network moving
freight that is typically shipments of manufactured or non-perishable
processed products having high value and requiring expedited service. For
reporting purposes, Menlo Logistics, a full service contract logistics company,
is included in the CFMF segment. CTS provides regional one- and two-day
LTL freight trucking, full-service truckload freight delivery utilizing
highway over-the-road and intermodal rail stack train resources for
transcontinental, inter-regional and regional transportation; local and
interstate container drayage and international shipping. Emery provides
global air cargo services through an integrated freight system designed for
the movement of parcels and packages of all sizes and weights.
Revenues and expenses are allocated between the United States and
international, depending on whether the shipments are between locations
within the United States or between locations where one or both are outside
the United States.
Following is an analysis by geographic and industry group. Operating
income is net of general corporate expenses, a portion of which have been
allocated to subsidiaries on a revenue and capital basis. Intersegment
revenues and earnings thereon have been eliminated. The identifiable
assets of the parent consist principally of cash, cash equivalents and
deposits.
GEOGRAPHIC GROUP INFORMATION
(Dollars in thousands)
Consolidated U.S. International
Year Ended December 31, 1995
Revenues $5,281,084 $4,421,171 $ 859,913
Operating income 143,901 113,655 30,246
Identifiable assets 2,750,086 2,647,761 102,325
Year Ended December 31, 1994
Revenues $4,680,749 $3,981,036 $ 699,713
Operating income 142,234 114,732 27,502
Identifiable assets 2,472,723 2,388,953 83,770
Year Ended December 31, 1993
Revenues $4,191,811 $3,665,654 $ 526,157
Operating income 120,157 113,179 6,978
Identifiable assets 2,316,350 2,231,469 84,881
PAGE 34
<TABLE>
Consolidated Freightways, Inc. and Subsidiares
INDUSTRY GROUP INFORMATION
(Dollars in thousands)
Industry Group
<CAPTION>
Adjustments, Con-Way
Eliminations and CF Transportation Emery
Consolidated the Parent MotorFreight Services Worldwide
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1995
Revenues $5,281,084 $2,362,619 $1,152,164 $1,766,301
Operating expenses 4,394,849 2,095,742 876,505 1,422,872
Selling and administrative expenses 606,217 233,665 138,329 234,223
Depreciation 136,117 67,888 40,757 27,472
Operating income (loss) 143,901 $ (34,406) $ 96,573 $ 81,734
Other income (expense) (33,028)
Income before income taxes 110,873
Capital expenditures $ 279,215 $ 1,969 $ 108,503 $ 136,546 $ 32,197
Identifiable assets $2,750,086 $ 150,393 $ 929,110 $ 535,147 $1,135,436
Year Ended December 31, 1994
Revenues $4,680,479 $2,094,081 $1,018,544 $1,567,854
Operating expenses 3,824,141 1,823,792 748,086 1,252,263
Selling and administrative expenses 580,370 243,810 124,719 211,841
Depreciation 133,734 73,081 34,519 26,134
Operating income (loss) 142,234 (46,602) $ 111,220 $ 77,616
Other income (expense) (30,314)
Income before income taxes $ 111,920
Capital expenditures $ 181,928 $ (961) $ 36,849 $ 97,392 $ 48,648
Identifiable assets $2,472,723 $ 193,733 $ 866,353 $ 420,744 $ 991,893
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 $2,316,350 $ 205,280 $ 864,748 $ 338,567 $ 907,755
</TABLE>
<TABLE>
PAGE 35
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
Quarterly Financial Data
(Unaudited)
(Dollars in thousands except per share data)
<CAPTION>
March 31 June 30 September 30 December 31
1995 - Quarter Ended
<S> <C> <C> <C> <C>
Revenues $1,296,087 $1,320,586 $1,322,779 $1,341,632
Operating income 52,033 48,220 37,244 6,404 *
Income (loss) before income taxes 44,751 41,162 29,503 (4,543)
Income taxes 20,585 18,935 13,988 -
Net income (loss) applicable to common
shareholders 19,842 20,086 13,360 (6,722)
Per share:
Primary net income (loss) 0.50 0.45 0.30 (0.15)
Fully diluted net income (loss) 0.46 0.42 0.28 (0.15)
Market price range $27.00-$20.25 $27.00-$20.63 $26.75-$21.75 $27.88-$22.75
Common dividends declared - 0.10 0.10 0.10
March 31 June 30 ** September 30 December 31
1994 - Quarter Ended
Revenues $1,103,221 $1,059,775 $1,236,483 $1,281,000
Operating income 35,484 17,972 48,365 40,413
Income before income taxes and
extraordinary charge 28,758 10,805 41,913 30,444
Income taxes 13,502 5,598 21,632 10,893
Extraordinary charge - - 5,522 -
Net income available to common
shareholders 10,522 444 9,991 14,753
Per share:
Primary net income 0.28 0.01 0.27 *** 0.40
Fully diluted net income 0.25 0.01 0.24 *** 0.37
Market price range $29.25-$23.25 $27.50-$21.75 $25.13-$20.75 $23.00-$18.00
Common dividends declared - - - 0.10
<FN>
* Includes losses of approximately $26 million for the implementation of CFMF's improvements of its freight flow operations.
** Results include the effects of the 24-day Teamster strike at CF MotorFreight.
*** Includes losses per common share of $.15 primary and $.13 fully diluted for the extraordinary charge, net of related
tax benefits, for the write-off of intrastate operating rights.
</TABLE>
<TABLE>
PAGE 36
Ten Year Financial Summary
Consolidated Freightways, Inc. and Subsidiaries
Years Ended December 31
(Dollars in thousands except per share data)
<CAPTION>
1995 1994 1993 1992 1991
SUMMARY OF OPERATIONS
<S> <C> <C> <C> <C> <C>
Revenues $ 5,281,084 $ 4,680,479 $ 4,191,811 $ 4,055,589 $ 4,082,257
CF MotorFreight 2,362,619 2,094,081 2,112,237 2,184,190 2,142,603
Con-Way Transportation Services 1,152,164 1,018,544 818,301 724,195 639,443
Emery Worldwide 1,766,301 1,567,854 1,261,273 1,147,204 1,300,211
Operating income (loss) 143,901 142,234 120,157 48,581 1,736
CF MotorFreight (34,406) (46,602) 31,712 27,485 (c) 51,991
Con-Way Transportation Services 96,573 111,220 71,854 53,747 33,318
Emery Worldwide 81,734 77,616 16,591 (32,651) (83,573)
Depreciation and amortization 148,050 145,765 146,297 166,917 168,527
Investment income 841 2,205 5,586 5,041 10,558
Interest expense 34,325 27,945 30,333 38,893 46,703
Income (loss) before income taxes (benefits 110,873 111,920 91,441 (10,733) (43,337)
Income taxes (benefits) 53,508 51,625 40,867 (7,077) (2,916)
Net income (loss) applicable to common
shareholders 46,566 35,710(b) 31,607 (97,728)(d) (53,112)
Cash from operations 132,895 165,182 172,808 131,779 192,356
PER SHARE
Net income (loss) applicable to common
shareholders 1.10 .96 (b) .87 (2.78)(d) (1.52)
Dividends declared on common stock .30 .10 -- -- --
Common shareholders' equity 15.76 14.58 13.65 12.64 15.30
FINANCIAL POSITION
Cash and cash equivalents 86,345 95,711 139,044 152,064 284,645
Property, plant and equipment, net 1,075,985 944,592 910,444 886,834 896,922
Total assets 2,750,086 2,472,723 2,316,350 2,293,067 2,285,466
Capital expenditures 279,215 181,928 201,210 148,706 98,073
Long-term debt and capital leases 495,510 397,857 408,409 505,320 646,655
Shareholders' equity 722,360 673,629 623,375 579,161 547,083
RATIOS AND STATISTICS
Current ratio 1.2 to 1 1.2 to 1 1.1 to 1 1.2 to 1 1.2 to 1
Income (loss) as % of revenues .88% .76% .75% (2.4)% (1.3)%
Effective income tax rate 48.3% 46.1% 44.7% (65.9%) (6.7%)
Long-term debt and capital leases as % of
total capitalization 41% 37% 40% 47% 54%
Return on average invested capital 5% 6% 5% -- (3)%
Return on average shareholders' equity 8% 9% 8% (1)% (7)%
Common dividends as % of net income (loss) 28% 10% -- -- --
Average shares outstanding 44,362,485(a) 37,216,044 36,187,682 35,195,743 35,033,738
Market price range $27.88-$20.25 $29.25-$18.00 $24.00-$13.63 $19.63-$12.50 $21.50-$9.50
Number of shareholders 15,980 16,015 15,785 15,260 14,300
Number of employees 41,600 40,500 39,100 37,900 37,700
<FN>
(a) Reflects the conversion of Series C Preferred stock to Common stock.
(b) Includes $5.5 million ($.15 per share primary and $.13 per share fully diluted) extraordinary charge, net of related
tax benefits, for the write-off of intrastate operating rights.
(c) Includes special charges of $17.3 million related to CF MotorFreight and write-off of Canadian operating authorities.
(d) 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.
(e) Includes one-time subsidiary closure costs of $11.3 million.
(f) Includes the results of operations of Emery Air Freight Corporation since its acquisition in April.
(g) Includes $11.3 million ($.31 per share) cumulative effect of change in method of accounting for income taxes.
</TABLE>
<TABLE>
PAGE 37
Ten Year Financial Summary (continued)
<CAPTION>
1990 1989 (f) 1988 1987 1986
SUMMARY OF OPERATIONS
<S> <C> <C> <C> <C> <C>
Revenues $ 4,208,527 $ 3,760,193 $ 2,689,075 $ 2,296,911 $ 2,124,167
CF MotorFreight 2,185,271 1,996,681 1,836,141 1,621,148 1,524,336
Con-Way Transportation Services 638,098 558,517 463,918 370,940 318,841
Emery Worldwide 1,385,158 1,204,995 389,016 304,823 281,290
Operating income (loss) 6,044 50,855 162,727 101,248 135,045
CF MotorFreight 108,462 107,895 119,116 92,456 128,927
Con-Way Transportation Services 25,547 (e) 40,365 33,373 6,404 11,359
Emery Worldwide (127,965) (97,405) 10,238 2,388 (5,241)
Depreciation and amortization 170,757 159,282 116,204 102,165 94,262
Investment income 2,531 5,418 13,950 25,182 16,942
Interest expense 40,178 38,471 6,324 6,016 7,298
Income (loss) before income taxes (benefits (32,678) 24,297 173,330 119,311 147,639
Income taxes (benefits) (4,697) 15,685 60,177 44,741 58,530
Net income (loss) applicable to common
shareholders (40,727) 12,048 (g) 113,153 74,570 89,109
Cash from operations 194,821 81,031 243,595 206,841 224,242
PER SHARE
Net income (loss) applicable to common
shareholders (1.16) .33 (g) 3.00 1.93 2.31
Dividends declared on common stock .53 1.04 .96 .88 .80
Common shareholders' equity 16.50 18.01 20.32 18.16 17.22
FINANCIAL POSITION
Cash and cash equivalents 217,680 111,081 134,783 161,590 153,334
Property, plant and equipment, net 953,504 1,016,325 760,349 622,181 573,092
Total assets 2,412,003 2,391,826 1,536,099 1,377,329 1,288,063
Capital expenditures 141,784 255,793 258,368 155,127 136,278
Long-term debt and capital leases 673,611 652,169 47,677 50,935 58,700
Shareholders' equity 581,979 630,122 766,248 687,857 665,048
RATIOS AND STATISTICS
Current ratio 1.2 to 1 1.2 to 1 1.3 to 1 1.4 to 1 1.5 to 1
Income (loss) as % of revenues (1.0)% .3% 4.2% 3.2% 4.2%
Effective income tax rate (14.4)% 64.6% 34.7% 37.5% 39.6%
Long-term debt and capital leases as % of
total capitalization 54% 51% 6% 7% 8%
Return on average invested capital (2)% 2% 12% 9% 11%
Return on average shareholders' equity (7)% 2% 16% 11% 14%
Common dividends as % of net income (loss) 46% 315% 32% 46% 35%
Average shares outstanding 34,988,778 36,791,182 37,712,402 38,579,572 38,586,375
Market price range $26.88-$10.75 $37.75-$25.25 $34.75-$25.25 $41.25-$22.75 $36.50-$23.67
Number of shareholders 14,500 13,427 12,789 12,202 11,622
Number of employees 41,300 40,800 29,400 26,300 24,600
</TABLE>
EXHIBIT 21
CONSOLIDATED FREIGHTWAYS, INC.
SIGNIFICANT SUBSIDIARIES OF THE COMPANY
December 31, 1995
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
United Terminals LTD. 100 Canada
Menlo Logistics, Inc. 100 California
Road Systems, Inc. 100 California
VantageParts, Inc. 100 Oregon
Con-Way Transportation Services, Inc. 100 Delaware
Con-Way Truckload Services, Inc. 100 Delaware
Emery Air Freight Corporation 100 Delaware
Emery Worldwide Airlines, Inc. 100 Nevada
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 86,345
<SECURITIES> 0
<RECEIVABLES> 788,353
<ALLOWANCES> (26,219)
<INVENTORY> 45,890
<CURRENT-ASSETS> 1,151,562
<PP&E> 2,191,523
<DEPRECIATION> (1,115,538)
<TOTAL-ASSETS> 2,750,086
<CURRENT-LIABILITIES> 959,224
<BONDS> 495,510
<COMMON> 271,853
0
145,166
<OTHER-SE> 305,341
<TOTAL-LIABILITY-AND-EQUITY> 2,750,086
<SALES> 0
<TOTAL-REVENUES> 5,281,084
<CGS> 0
<TOTAL-COSTS> 5,137,183
<OTHER-EXPENSES> 33,028
<LOSS-PROVISION> 13,343
<INTEREST-EXPENSE> 34,325
<INCOME-PRETAX> 110,873
<INCOME-TAX> 53,508
<INCOME-CONTINUING> 57,365
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,566
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.04
</TABLE>
